Stock Market Today: Why Marc Faber Predicts a 20% Slide

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The stock market today (Thursday) is recovering slightly from yesterday's massive sell-off. Less than eight hours after President Obama gave his victory speech the Dow Jones was down 300 points yesterday in its biggest drop in over a year.

Even though the markets started today positive, many financial experts, including Marc Faber and Peter Schiff, are extremely bearish now that the president has been re-elected.

Here's what they have to say on the economy and the fiscal cliff, as well as some stocks that investors should avoid.

  • Marc Faber warns of 20% market plunge- The Swiss investment analyst and entrepreneur spoke with Fox Business Network on what to expect from the markets during a second Obama term and about the impending fiscal cliff. "I think from the peak the market will drop at least 20%. I think we will revisit the lows of June at 1,266 on the S&P." On the markets' reaction to the election he added, "I'm not surprised the market is selling off because technically the market was weak already for a couple of months and we are in a downtrend and Mr. Obama's economic policies are obviously not very good for an economic expansion."
Faber now expects the U.S. to go off the fiscal cliff and expects stocks to trade lower heading into next year's tax changes. "Well, in principle I think that actually Mr. Obama is not that bad for reducing the fiscal deficit and continuous monetization and that's why treasury bonds are rallying. But as I said, he is not good for business so stocks are selling off because the stock market is expecting a hard time for corporate profit and essentially economic weakness, which is reflected in a strong bond market and weak stocks."

Editors Note: To prepare for the looming market crash, click here .

  • Peter Schiff, "Obama will leave us worse off than Bush" - Schiff, the CEO of Euro Pacific Capital, expects the next four years to be very rough and does not expect higher taxes to translate into economic success. "When you increase taxes on companies, you make those companies less valuable. So, if companies are going to have lower after-tax earnings because they're going to have higher taxes, either on the corporate or individual level, those corporations are less valuable and stocks need to be marked down to reflect those reduced after-tax earnings. And that's what's going on."
Schiff warns that the president will not succeed during his second term and the country will face poorer conditions than it did four years ago. "If Obama thinks that Bush dealt him a weak hand, wait until we see how much weaker the hand is going to be that Obama deals his successor," Schiff says. "We're going to be in much worse shape.''

He ends by saying that our debt problems will lead to far bigger problems than Europe is currently facing. "I think what's going to happen in Obama's second term is going to be a currency crisis; a sovereign debt crisis. It's going to be the same thing that is happening in Europe or Greece," he says, "but it's going to be a lot worse."

In the second day of trading after the election these stocks continue to show signs of weakness.

  • Universal Display Corp. (Nasdaq: PANL) fell more than 12% yesterday and is down another 15% today after the company missed third-quarter earnings and revenue estimates and lowered its full-year outlook.
  • Teekay Tankers Ltd. (NYSE: TNK) is down more than 11% today after missing on its third-quarter earnings. TNK stock is now down more than 50% from its 52-week high hit in April.
  • Monster Beverage Corp. (Nasdaq: MNST) can't catch a break. After being charged with a lawsuit claiming Monster energy drinks were the result of a young girl's death, the company reported slower revenue and profit growth, and missed on estimates. MNST stock is down 4% today and 36% in the past three months.
  • Savient Pharmaceuticals Inc. (Nasdaq: SVNT) and Catalysts Pharmaceutical Partners Inc. (Nasdaq: CPRX) are two drug companies getting slammed today. SVNT stock is down 20% on missed earnings and CRPX stock is down over 60% after its cocaine de-addiction drug failed in clinical trials.
By noon the markets had turned negative with the Dow Jones down 25 points, or 0.20%, and the S&P 500 down 3.27 points, or 0.23%

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