There was already a Bear Market Beneath The Surface of The Stock Market in The US for a long time

Q: How do you read the picture right now? You are bearish on China and I don’t think that 6.9 percent gross domestic product (GDP) number is something that you were in agreement with, now we have central banks hinting at some kind of action, there are experts talking about action in Japan and of course in the ECB, how do you read this fall that we have seen so far in January and just the overall set up?

Marc Faber : Basically the market in the US began to decline a long time ago if you look at the average stocks in the US. It is down over the last 12 months by 26 percent from their highs, the average stock but the indices held up very well until the end of December because the indices do not reflect what is happening in the market. For example, you have an index, you have 500 stocks, if three stocks are very strong, they can push up the index while 497 stocks go down. So we have to look at the market beneath the surface and beneath the surface there was already a bear market in the US for a long time, for a year or more but there are some stocks and maybe another 20 shares such as Facebook, Amazon, Google that were driving and keeping the index up. The interventions by the Central Banks have a numerous unintended consequences - they lead to rise in stock prices. But for many people, this is not favourable because particularly in real estate, the affordability becomes an issue, they don’t have the money to buy expensive homes and so the home ownership rate in the US has been way down.

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Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.Dr. Doom also trades currencies and commodity futures like Gold and Oil.