Legendary Swiss investor and jovial doom-and-gloom forecaster Marc Faber says a market crash “worse than 1987” is coming in 2014.
Faber told CNBC that the internet and biotechnology sectors were in for severe pain, and that the market was beginning to realise that US Federal Reserve was a ''clueless organisation''.
''I think there are some groups of stocks that are highly vulnerable because they're in cuckoo land in terms of valuations,'' Faber said on CNBC show Squawk Box, ''They have no earnings. They're valued at price-to-sales. And this is not a good metric in the long run.''
''I think it's very likely that we're seeing, in the next 12 months, an '87-type of crash,'' he said, ''And I suspect it will be even worse.''
He also blamed the Federal Reserve for the situations, saying ridiculous stock valuations were not the only crash catalysts.
Related: Nasdaq sinks more than 3 per cent
“I believe that the market is slowly waking up to the fact that the Federal Reserve is a clueless organisation. 'They have no idea what they're doing. And so the confidence level of investors is diminishing, in my view," Faber said,
''This year, for sure—maybe from a higher diving board—the S&P will drop 20 per cent,'' he said, I think, rather, 30 per cent. Who knows. But all I'm saying is that it's not a very good time, right now, to buy stocks.''
The tech-rich Nasdaq Composite Index dived more than three percent in afternoon trade as anxiety over pricey technology equities again pushed US stocks into the red.
The Nasdaq has been exceptionally volatile over the last week, losing 2.6 percent last Friday before notching large gains on Tuesday and Wednesday.
Related: 'A bust is coming, and it's going to be very painful'
Analysts say investors are worried that high-flying technology stocks like Facebook and Priceline may be overvalued. The biotechnology sector has also seen major swings during this period.
Faber, who’s the editor and publisher of The Gloom, Boom and Doom Report, had also claimed earlier last month that China's economy is only growing at just over half the rate that authorities are reporting.
"I think 4 percent growth in a world that is has no growth is actually very good," he said.
"It's like a hedge fund manager, he told me last year he makes 4 percent. So I say this performance not particularly good, and he said yes, compared to zero percent interest rates, that is a fantastic return," added Faber.