But – Dr. Doom does not dismiss Prechter’s call altogether (Details on Prechter’s latest predictions here). CNBC reports on Faber’s outlook in his August 2010 Doom, Boom, Gloom Report newsletter:
Marc Faber says before dismissing Prechter as a lunatic you should look at his record. In 1978 when he predicted the Dow would reach 2,300 in his book Elliot Wave Principle no one believed it possible.
“Prechter is right when says that when manias come to an end, prices tend to retreat to where the mania started. So from this point of view, a Dow Jones at 1,000 should not be excluded,” Faber said.
Faber also sympathizes with Prechter’s view that there will one day be a complete credit collapse. Where he differs from Prechter is on that crucial factor, timing.
“It is likely that if the Dow where to fall by more than 20 percent from the present level there would be further massive fiscal and monetary stimulus packages – not just in the US but worldwide,” Faber said.
“These economic policy measures would likely fail to boost economic activity in the US but could support asset markets,” he added.
In terms of trading DOW 1000, Faber (perhaps tongue-in-cheek) suggests “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.”
Faber can often go “over the top” in his conclusions on how to deal with the upcoming societal breakdown he fancies. I personally do not think that running and hiding out in the woods will help you much. I prefer to take a more practical approach – build up my connections and friendships with like-minded people. I’d rather have friends and allies in high places, low places, and everywhere in between when the sh*t really goes down – instead of setting up a fortress in the middle of nowhere. Just my $0.02.
Faber is a classic contrarian investor. If you like his insights, you’d probably enjoy our daily newsletter, The Contrary Investing Report.
Recommended Reading: Marc Faber’s Latest Predictions for Summer 2010 and Robert Prechter’s Latest Predictions and Recommendations (Protect Yourself Now, He Says)