"Bubbles and bubbles and bubbles"

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Dr. Doom Says There’s Big Downside Risk to the Market … and Nowhere to Hide

You have to give Marc Faber credit: He certainly doesn’t waver in his investing philosophy.

It just so happens that his investing philosophy is pretty darn depressing — evidenced by the very title of his Gloom, Boom & Doom Report and his media moniker “Dr. Doom.”

Faber appeared on Bloomberg Surveillance with Tom Keene and Alix Steel yesterday, and once again warned of “considerable downside risk” for the U.S. stock market and fear of another “systemic crisis.”

Oh yeah, and don’t try and hide out in gold. Marc Faber contends that central bank cash is fueling asset bubbles and speculation — which makes it “difficult to hide” from the downturn, even in the precious metal.


Check out the Marc Faber video here, and review the highlights below:

The Recent Rally

“In the U.S., March is up and consumer confidence in March is down. Emerging markets are performing badly relative to the U.S.. the dollar is strong, indicating a tightening of international liquidity. I do not think the U.S. market will go up a lot from here. I rather think there is now considerable downside risk.”

Can We Fix Europe?

“They can repair it and actually Europe now has a current account surplus, which is positive. But obviously the economy is contracting. We are in recession in Europe. This will have an impact on the corporate profits of U.S. corporations as well because 40% of S&P earnings come from overseas, but the bulk actually comes from Europe and not emerging countries. I think that corporate profits in the U.S. will continue to contract as they have actually — according to S&P — contracted in the first quarter of 2012.”

On Taxes and Wealth

“Until now, the bailouts in Europe and the U.S. were at the expense of the taxpayer. And from now onwards, in my view, the bailouts will also be at the expense of the asset holders, the well-to-do people. So if you have money I am sure the governments will one day take away 20%-30% of my wealth.”

Gold Won’t Help

“When you print money, the money does not flow evenly into the economic system. It stays essentially in the financial service industry and among people that have access to these funds, mostly well-to-do people. It does not go to the worker. … Now from time to time it will lift the NASDAQ like between 1997 and March 2000. Then it lifted home prices in the U.S. until 2007. Then it lifted the commodity prices in 2008 until July 2008 when the global economy was already in recession. More recently it has lifted selected emerging economies, stock markets in Indonesia, Philippines, Thailand, up four times from 2009 lows and now the U.S. So we are creating bubbles and bubbles and bubbles. This bubble will come to an end. My concern is that we are going to have a systemic crisis where it is going to be very difficult to hide. Even in gold, it will be difficult to hide.”

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Jeff Reeves is the editor of InvestorPlace.com and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP.

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