Marc Faber predicts 20% to 30% drop in stocks

'We're not exactly in a uniformly strong market,' says the notably pessimistic newsletter publisher.

By MSN Money Partner 4 hours ago
Image: Broken-Pencil © Christian Zachariasen/JupiterimagesBy Bruno J. Navarro, CNBC

Permabear Marc Faber said Monday he expects stocks to drop 20 percent 30 percent by October.


"Don't forget many stocks are already down 10 percent. The home builders are down roughly 15 percent. Airlines have just dropped around 10 percent," he said on CNBC's "Halftime Report."


Faber, publisher of the "Gloom, Boom & Doom Report," also noted that several large-cap stocks were down by double-digit percentages.


"So, we're not exactly in a uniformly strong market," he said. "The Russell 2000 ($TOMX), which represents 2,000 companies, is down 2 percent for the year. And big deal, the S&P is up 6 percent, whereas the Philippines, Indonesia, India, Thailand, Vietnam are all up between 15 percent and 25 percent."


Earlier this month, Faber said the market is setting up for a big decline that could be as bad as the crash of 1987. But he stopped short of predicting what would set it off.


While Faber's worst-case scenarios often make headlines, he has also been criticized for making dire predictions that didn't bear out.


Last August, he called for a 1987-style crash. Meanwhile, the Standard & Poor's 500 Index ($INX) is up 17 percent since then.


After President Barack Obama's re-election in 2012, Faber joked that investors "should buy themselves a machine gun" to protect their assets. Since then, the S&P is up 45 percent.


Faber defended his record.


"Over my career, somewhere, somehow I must've made some right calls," he said. "Otherwise, I wouldn't be in business."


Faber claimed that over the past 12 years, his Barron's stock picks on average have been up 22.7 percent annually. Faber also said that the Market Vectors Junior Gold Miners ETF, which he owns, is up 42 percent this year.


Overall, higher stock prices, he added, were the result of the Federal Reserve's quantitative easing and M&A activity.


"And the asset purchases by the Fed have done little for Main Street, for the average family in the United States, for the average or median household. But it's lifted some asset prices, including luxury property prices, and particularly stocks and bonds," he said.


"And in the stock market this year -- maybe you find this healthy -- corporations are very liquid, but they don't build capacity. They don't spend on capital equipment. What they do is to buy other companies because their currency, their shares, are a good way to buy other companies. And that has driven the companies. Not so much individual buying. There has been very little individual buying."


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51Comments
3 hours ago
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Not only did he recommend getting out of the stock market last year (which was up 30%), he recommended moving all of your assets into gold (which was down 30%+ last year).  Not to mention he's been bearish since 2009.  Some expert.
3 hours ago
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He's been predicting a market drop for 5 years now; market's up 80% since then. When it does drop, he will make the rounds of the financial shows proclaiming his acumen. I've said before: "Even a blind squirrel finds an acorn once in awhile".
3 hours ago
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Even a broken watch is right twice a day.  Eventually Faber's prediction will come true, but a 10% accuracy rate isn't very impressive.
3 hours ago
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people are acting like the market made these big gains on its own. they put 6 trillion into it. they should make a cabinet post for wall st in the govt
3 hours ago
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He is right.  It is just a question of when.
3 hours ago
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"....I must have made some right calls..."    But what have you done for us lately?
Great hedging. Predicts doom and gloom, and then brags how the market rose. Typical.
2 hours ago
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David Levy has a much better track record and he's saying watch out in 2015 for a world-wide recession that could take housing lower than it did in the Great Recession. 
3 hours ago
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Yeah, Yeah.  Just another 'Bear' in the woods....
1 hour ago
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Market will tank a few months after Obama leaves office and everyone will blame the new guy just because he wasn't able to keep building the house of cards even higher. Wouldn't surprise me if big money let the market tank at the first sign of a lessening of quantitative easing just to keep the easy money rolling in.
1 hour ago
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All Faber is doing is stirring up the media pot. That's what he likes doing......and he's playing the odds. We all know a correction is coming.....IT ALWAYS IS. So what else is new? Nothing.  
1 hour ago
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What good does a stock drop do except let others in. Stocks finally have some value after all these years!! Wish want you want but things are going generally pretty well so why would we have a crash and destroy everything that was built up except to satisfy manipulator of the stock market. Stock may not have the gains they have enjoyed the last few years but remember wjere we came from to get here . 
1 hour ago
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Well here's the problem, The Global FEDS are already in it KNEE Deep. We are also far likely closer to another natural Recession Cycle. So I again ask the Question, what are the Global Feds going to do for an Encore when this current House of Cards comes unraveled. Folks always attacking pullback topics strictly as  Doom and Gloom commentary just avoids an actual Adult Conversation.

That  won't change the Fact that Global Debt has soared over 40% since the Great Recession. What caused the Great Recession, too much Debt and Leverage. Eventually the Chickens will come home to Roost, they always do. When they do, just who's going to Bail out Whom?
1 hour ago
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Sooner or later it will rain in California!
1 hour ago
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Thank goodness we have Obama & his pro business stance; up 45 percent
1 hour ago
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A 30% drop won't break us under the 10,000 mark and we will see that number come and go below it. What holds up the markets besides fake money? The entities behind the stocks are dead and do not do enterprise. I think if I wanted to own a stock, I'd be sure they knew how to make what they've been importing. Almost all do not. 
1 hour ago
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Marc:


I believe your text was written mainly  for the "Faint of Heart"..

and is well intended..

There are those who have invested most if not all of their saving in the DOW

 and a reduction of 30% or 40% would decrease that saving considerably,

effecting their retirements or the chance to retire early.


But to suggest an investment in GOLD to those same people was ill advised..

3 hours ago
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Gee what  surprise !

The market is complexly rigged , fixed by Obuma and his henchman.

Back out QE 999999 and it's  50% drop!


3 hours ago
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Obama will never let the market drop on his watch even at the continued risk of taking on more debt etc. 
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