Marc Faber: Still bearish

Marc Faber, investor and author of the Gloom, Boom & Doom Report, remains very bearish. He reckons we could be heading for "an epic decline in asset prices after eight-plus years of bull markets", which have left valuations at historically high levels. Another warning sign is that recent gains in most major indices, especially the Nasdaq in the US, have been "driven by a small number of stocks".

The market's dependence on the strong performance of a few stars is particularly worrying given that many well-known technology companies, including Amazon, Netflix and Apple, experienced hefty falls at the start of this month. Even if this was just a "correction", there has clearly been a jump in volatility. One way or another, "when things finally start going down, they'll go down a lot", says Faber.

He is also worried about political risk. Over the past 30 years "an increasing share of wealth has gone to big corporations and wealthy individuals". This will lead to demands for either "a big hike in taxes" or "policies that will lead to a big asset-price deflation". The problem is compounded by the fact that both governments and companies are hiding their true debt levels by deliberately underfunding pensions obligations. In the case of companies, they are using the money to buy back shares instead.

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Yet central banks are likely to try to delay the day of reckoning by printing even more money, meaning that there could even be an initial "lurch to the upside" with "QE99" pushing prices even higher. However, Faber is sure that "eventually the system will break". As a result, he stands by his prediction that shares prices are set to fall by up to 40%.