'The Gloom, Boom & Doom Report' editor Marc Faber discussed why he had a bearish outlook for tech stocks, predicting a one trading day 10 percent drop for Tesla (NASDAQ:TSLA), Amazon (NASDAQ:AMZN) and Netflix (NASDAQ:NFLX), in particular.
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Faber supported his theory by recounting market history, telling the FOX Business Networkâs Stuart Varney, âI experienced the â87 crash when not one or two stocks dropped 10 percent in a day, but the whole market dropped 21 percent in one day. And other markets overseas didnât even open, they opened 50 percent lower. Stock markets go up and up and up and when they go down, they go down more rapidly than they went up.â
According to Faber, some of the more popular stocks to own were hurt more by a bullish market.
âAnd when I started to work, we just hit the â73-â74 bear market. I can tell you, the Polaroids and the Kodaks, the so-called nifty, the most favorite stocks that everybody owned, they dropped day by day by 90 percent from peak to trough.â
Faber pointed to Amazonâs valuation as an example, saying âWell, simply because the valuations are very highâ¦I cannot tell, should Amazon sell at 100 times earnings? 200 times or twenty times? That we donât know, that will depend on many factors in the world that are outside the influence of Amazonâs direct business.â
But Faberâs concerns about over-valuation applied to the overall sector as well. When Varney summarized Faberâs perspective, âSo Marc Faber says that these tech companies are wildly overvalued and theyâre due for a fall,â Faber responded, âCorrect.â