Legendary investor Dr. Marc Faber called the precise bottom of the current bull market in March 2009. What does he say today about the record high stock markets? Dr. Faber contends, “The advance/decline is not quite as strong as before. The list of new highs is not as strong as before, and we are overbought. We are not as overbought as in 1987, but we are more overvalued than in 1987. In 1987, we did not have the unfunded pension fund liabilities. Debt to GDP (in 1987) was still relatively low. It did go up under President Reagan, but now it is in the sky. In particular, and I have to point this out, we have incredibly inflated and artificially manipulated European and Japanese sovereign bond markets. . . . I don’t think the market will be supported much longer from a decline in interest rates. They can be supported by money printing. That we have to see.”
Dr. Faber goes on to say, “It’s difficult to tell if the market will peak out tomorrow . . . but it seems to me the cash positions are very low, and the level of optimism is very high.”
Another big difference between the market today and that of the 1987 crash is unfunded pensions. Dr. Faber, who holds a PhD in economics, says, “The unfunded liabilities have gone up. They did not go down. So, if in rising asset markets the pension funds unfunded liabilities go up, can you imagine what will happen when markets fall? So, they will have to print money. . . . Bear markets do not occur just because of one event. It’s a series of circumstances that lead to a loss of confidence with people exiting markets, and then with people exiting markets in a panic. . . . Fed Head Janet Yellen said if conditions would warrant further measures, the Fed would take further measures. So, she (Yellen) said . . . if the Fed thought the economy was weakening, or their beloved asset markets go down, then she may again ease and introduce QE4 (money printing out of thin air.) . . .In today’s situation, the asset market is less overbought, but the asset bubbles are everywhere. . . .Each bubble has fraud cases, and I mean massive fraud. That’s the characteristic of each bubble. There is fraud.”
Dr. Faber will also talk about recent accusations that he is a racist because of some politically incorrect comments he made on his popular “Gloom, Boom & Doom Report.” Dr. Faber says he has no history of racism, and he adamantly denies this charge. Dr Faber says, “In my view, I am about as little a racist as you can be.” Dr. Faber will explain himself in detail.
After the Interview:
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Greg is the producer and creator of USAWatchdog.com. The site’s slogan is “analyzing the news to give you a clear picture of what’s really going on.” The site will keep an eye on the government, your financial interests and cut through the media spin. USAWatchdog.com is neither Democrat nor Republican, Liberal or Conservative. Before creating and producing the site, Greg spent nearly 9 years as a network and investigative correspondent. He worked for ABC News and Good Morning America for nearly 6 years. Most recently, Greg worked for CNN for shows such as Paula Zahn Now, American Morning and various CNN business shows.