The Federal Reserve Artificially Manipulates Asset Prices

In a free market economy, you will always have price fluctuation. The Federal Reserve today, artificially manipulates asset prices up. It’s a huge mistake, but that is what they do. To answer your question specifically, we had a bear market that ended March 6th, 2009 (S&P at 666). We are at 1800 now, almost three times higher. Over the last 2 years, most equity markets around the world, most markets have been down (they are not following to the upside), but in the US an increasing number of shares are breaking down, we have had very heavy insider selling recently, high valuations and extremely high corporate profits from historical standards. My view is that in a month time, the bull market will be 5 years old. That’s the second longest bull market in the last 100 years. I would not buy shares. Can the market go up another 20%? It’s like the Nasdaq in late 1999, where the Nasdaq went up another 30% between January and March. People were crying afterwards with their losses.

So markets go up and down. I think that the upside potential now is very limited and there is considerable downside risk, probably much more downside risk than most investors consider.

- Marc Faber, Author of the Gloom Boom and Doom Report