on April 11, 2014
US technology stocks suffered their sharpest dive in more than two years on Thursday night, setting the scene for an equities apocalypse, Swiss investor Marc Faber says.
Dr Faber is predicting a 1987-type stock market crash this year – only it will be worse.
He told CNBC that the pain in the internet and biotechnology sectors was just getting started, and the market was beginning to realise that US Federal Reserve was a “clueless organisation”.
“I think it’s very likely that we’re seeing, in the next 12 months, an ’87-type of crash,” Dr Faber told CNBC. “And I suspect it will be even worse.”
S technology stocks suffered their sharpest dive in more than two years overnight. Photo: AFP
Major US tech stocks Thursday close vs 2014 high
- Google: -10.34%
- Apple: -1.67%
- Yahoo: -15.44%
- Yelp!: -35.08%
- Tesla: -19.18%
- Facebook: -17.34%
- Twitter: -23.98%
- Netflix: -26.19%
- Cisco: +3.57%
- Intel: +7.86%
- Microsoft: +3.28%
- Zynga: -28.47%
- Amazon: -14.84%
- eBay: -8.12%
- LinkedIn: -18.17%
Dr Faber’s prediction comes after another high profile investor, Jeremy Grantham, said last month the ”next bust will be unlike any other”.
The US technology-heavy Nasdaq plummeted by 3.1 per cent on Thursday night (US time), its biggest one-day drop since November 2011. A sharp sell-off in biotechnology and momentum names, including Gilead Sciences and TripAdvisor weighed on the market, fuelling fears among inventors of a broader pullback.
Very painful’: World heading for bust ‘unlike any other’, says Jeremy Grantham
Mr Grantham – the cofounder and chief investment strategist at the $US112 billion ($123 billion) Boston-based fund manager GMO –said he wouldn’t invest his clients’ money in US stocks for at least the next seven years because of the Fed’s ”misguided policies”.
Mr Grantham has an impeccable track record, having called both the internet bubble and then the US housing bubble. In November he said he believed the US sharemarket could rise another 30 per cent, although he believed it was overvalued, before crashing again.
”We invest our clients’ money based on our seven-year prediction,” Mr Grantham told Fortune.
”Over the next seven years we think the market will have negative returns. The next bust will be unlike any other because the Fed and other central banks around the world have taken on all this leverage that was out there and put it on their balance sheets. We have never had this before.
”Assets are overpriced generally. They will become cheap again. That’s how we will pay for this. It’s going to be very painful for investors”.