Marc Faber: Market Overbought; Homebuilders, Tech Could Lead Stocks Lower

Marc Faber told CNBC that he was reducing his exposure to equities and the market was "overbought." He admitted however, the market might rally this year, but even if it did he foresees the market possibly plunging by as much as 40 percent in the second half of the year.

Sam Mattera
January 29, 2013 4:59 PM
Benzinga

Marc Faber, editor of the Gloom, Boom and Doom Report told CNBC's Maria Bartiromo on Tuesday that he was reducing his exposure to equities. Faber said that the market was "overbought."

Still, he admitted that the market might continue to rally this year, but even if it did, he foresaw a "'87 moment" wherein the market could plunge by as much as 40 percent in the second half of the year.

Faber said he was reducing his US equity exposure because he thought market "euphoria" was building up. "Markets move up and down," Faber said.

Geopolitically, Faber thought there could be continued issues in the Middle East, a region he described as a "boiling point" and thought that corporate profits could drop as companies face declining revenues and the inability to cut costs further.

Faber continues to like gold, saying that he owns the yellow metal because he is "fearful of systemic crises, wars and so forth."

He thought that Ukranian and Chinese stocks were cheap on a "relative" basis. In the US, he thought that mining and resource companies were not particularly expensive and, though he was a bull on homebuilding stocks in 2012, thought they had outrun their fundamentals. Faber warned that tech could continue to be vulnerable.

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