More doom from Marc Faber, forecasting a general bad mood that will turn into a deflationary spiral:
In the August edition of the The Gloom, Boom & Doom Report Marc Faber questions whether the Dow could hit 1,000 as predicted by Robert Prechter, based on his interpretation of Elliot Waves, Fibonacci numbers and socioeconomic trends.
In short, Prechter thinks the Dow went up because we were all in a good mood roughly until the dot-com crash, and that everything went to hell in a handbasket after that, and it’s going to stay there and drive the market further down.
Prechter goes onto to suggest the bear market is of super-cycle degree, the biggest since 1720-1784 and will therefore see a decline for equities deeper than the decline during the great depression, which saw the Dow fall 89 percent.
“The trend toward negative social mood that has been in progress since 2000 and which is about to accelerate will continue to curtail lending and lead to a tidal wave of defaults and a terrific deflation,” he said.
1720 was roughly the time of the collapse of the South Sea bubble — where basically the entirety of London lost their shirts via their inflated investments in a company that, among other things, underwrote the British national debt and invested in companies that made square cannon balls. Oh, and stealth startups, back before that kind of thing was cool. The only escape from that debacle was suicide or smallpox.
The best investments if the Dow hits 1K?
One suggestion from Faber is buying a self-sustainable farm in the middle of nowhere surrounded by high voltage fences and barbed wire and equipped with booby traps and an arsenal of machine guns, hand grenades and armed vehicles guarded by vicious Dobermans.
Okay, not as bucolic as my vision of retiring to the Tuscan countryside and going into the cheese and charcuterie business, but I guess I can always do that and booby-trap my prosciutto smoke vault, so no big deal.