Dr. Doom and bear market extraordinaire Marc Faber has made quite the prediction: the S&P 500 index will crash by 50 percent, Tesla Motors shares will crater to $0 and there will be massive asset inflation collapse.
First, speaking in an interview with MarketWatch this week, the editor and publisher of the Gloom, Boom & Doom Report stated that the S&P 500 will inevitably unravel and plummet to around 1,100.
“Maybe we go first to 2,300, then we would have a perfect topping formation. A widening-top formation is about the most bearish technical formation you can have,” he said.
Because of central banks printing obscene amounts of money, we’re going to be on “the Titanic” and “when things unravel a colossal asset inflation” will collapse.
Ultimately, Faber doesn’t think that the fundamentals of the stock market match the present run-up price. He explained that earnings are not going up and are actually contracting. Faber further stated that the negative-yielding government bonds make today’s stock market environment very different from others.
People often criticize Faber for his predictions (you will often see our reports of Faber’s remarks), but he dismissed those objections, saying that “everyone has good calls and negative calls.”
“There are lots of people who always criticize me,” he said. “First of all, they have no money. And I always tell them to send me their performance audited over the last 10 to 20 years and we’ll compare.”
Now, what about Tesla Motors?
Faber told CNBC this week that the company’s shares will plunge to $0. This is because of stiffer competition from the likes of Mercedes, Toyota and Nissan.
Here is what he told the business news network:
“What they produce can be produced by Mercedes, BMW, Toyota, Nissan. Anybody in the world can make it eventually, at much lower cost and probably much more efficiently. The market for Toyota and these large automobile companies is simply not big enough, but the moment it becomes bigger, they’ll move into the field and then Tesla will have a lot of competition,” Faber averred.
“I think Tesla is a company that is likely to go to zero eventually.”
His last piece of advice is to short the company.
Year-to-date, Tesla shares are down more than six percent at around $225. The company recently got into hot water with Wall Street after it merged with struggling solar firm SolarCity, which has seen its stock drop by more than 50 percent.
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