– Marc Faber “US Stocks Need To Drop 40% To Become Attractive” (ZeroHedge, Feb 5, 2014):
“The market is way overdue for a 20 to 30% drop,” Marc Faber warns, “but that is not what worries him.” Sarcastically reflecting on the typical talking-head that appears on financial media, Faber adds you won’t “hear this view from someone who is fully invested,” as he “hopes the market drops 40% so stocks will become – from a value point of view – attractive.” The outspoken Faber channels Jim Grant as he exclaims, “the experience with quantitative easing is a complete failure. It has lifted asset prices and created asset inflation, but it hasn’t lifted the standard of living of most people in the U.S. nor worldwide.”
“I think the market is way overdue for a 20 to 30 percent correction,”
“nothing worries me… In fact, I’m hoping for the market to drop 40 percent so stocks will again become—from a value point of view—attractive.”
“But that is not the view of someone who is fully invested—obviously not.”
“Stocks are by-and-large fully priced”
“I think the experience with quantitative easing is a complete failure. It has lifted asset prices and created asset inflation, but it hasn’t lifted the standard of living of most people in the U.S. nor worldwide.”
On the chance of a bounce (and what next?)
“If the rebound fails around 1,820 [on the S&P 500] and then the market starts to drift again on the downside, and we see important shares for the market such as General Motors, GE, MMM, Coke … failing to make new highs, then I think we can assume that something more serious is in the offing.”
Drop 40% to be attractive?
85% of all market volume is skim and sell high frequency transactions……..large amounts of securities are bought and sold in less time than it takes to blink an eye.
Only 15% of the US market is comprised of real investors. Even then, we don’t know how many are buying on margin.
Max Faber’s numbers are still way off….the US stock market is nearly empty. It is all numbers on paper, the real money is long gone.
Standard business practice became to take $100 million and leverage it into $100 Billion. Now, they are leveraging the leveraged funds…….it is insane.