Marc Faber, legendary contrarian investor and editor of the Gloom, Boom & Doom Report, is continuing his bearish ways on the United States stock market and overall economy as he believes U.S. stocks are overvalued.
“I don’t regard this as a very healthy market,” Faber told CNBC on Thursday from Singapore. “The U.S. market is in a very dicey position where it could easily drop 10, 20 percent.” He added that some stocks have already declined by these percentages, such as technology and biotech shares.
Faber noted that he would not feel comfortable allocating a substantial percentage of his money into equities because they were too expensive. However, if he were to acquire equities it would be in the emerging markets.
He added that owning 10-year Treasury notes has provided financial security and could prove to be a benefit in the long-term.
“I think we are bracing for a general asset deflation,” Faber said. “I think the system is still very vulnerable. I’m not predicting a complete collapse because money printing can go on almost endlessly but it will have…unintended consequences.”
For quite some time now, Faber has repeatedly called for significant drops in the market because of excessive money printing schemes perpetrated by central banks across the globe. Since a financial collapse has yet to occur, some are speculating the sincerity of Faber’s analysis.
However, even the mainstream establishment is concerned of a pullback in the market.
This week, the Chicago Board Options Exchange Volatility Index (VIX), which measures volatility in the stock market, plunged as it hit a 14-month low. Although some see this is an excellent sign that the U.S. economy is improving amid low interest rates and quantitative easing tapering, New York Federal Reserve Bank President William Dudley said he believes danger is on the horizon.
“Volatility in the markets right now is unusually low,” explained Dudley. “[That] makes me a little nervous.”