“The S&P has rallied 19 percent in 2013, which is impressive by any measure. But the market did far better in 1987, when stocks added more than 30 percent from the beginning of the year to Aug. 8,” Alex Rosenberg reports for CNBC. “The problem?”
“The market ended up tanking in the second half of that year—dropping 36 percent from the Aug. 25 peak to the October low, before closing out 1987 nearly exactly where it began,” Rosenberg reports. “And Marc Faber, publisher of the Gloom, Boom & Doom Report, predicts that the very same thing will happen in the back half of 2013.”
Rosenberg reports, “‘In 1987, we had a very powerful rally, but also earnings were no longer rising substantially, and the market became very overbought,’ Faber said on Thursday’s Futures Now. ‘The final rally into Aug. 25 occurred with a diminishing number of stocks hitting 52-week highs. In other words, the new-high list was contracting, and we have several breaks in different stocks.’ Faber says that’s exactly where we find ourselves this August… His year-end market call lives up to his ‘Dr. Doom’ moniker. Faber expect to see stocks end the year ‘maybe 20 percent [lower], maybe more!'”
Read more in the full article here.