Faber on “Giganitic financial asset bubble” and slowing growth

Marc Faber, publisher of the Gloom, Boom & Doom report, talks about the impact of Federal Reserve policy on the global economy, Bitcoin and financial markets. Here is a direct video link.

An additional thought I would add to Faber’s comments. It does seem likely that the global economy will register another year of disappointing growth in 2014 (as the global deleveraging process continues post-credit-bubble). It is also probable that North American growth will officially recess at some point, as 6 years after the last, a recession is historically due any time. But it is important to understand that an economic recession is not necessary in order to experience a bear market for stocks. As an example, in 2001 the US economy recessed only mildly and Canada did not at recess at all, and still both stock markets dropped by 50% as the market bubble burst. The extent to which asset valuations become overstretched is the most defining factor for future returns. Equity valuations that over the past couple of years have been bid up to wildly over price reasonable future growth expectations, can also wildly undershoot to deliver negative returns even in the face of still positive growth trends. Too good to be true returns are always borrowed, never permanent.

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