Marc Faber, the editor and publisher of the Gloom, Boom & Doom Report, told the CNBC on Tuesday that the US stock market is setting up for a decline more painful than the sudden crash of 1987.
Faber has recently called for growth stocks to decline and he says the pain in the Internet and biotech sectors is just starting.
"I think there are some groups of stocks that are highly vulnerable because they're in cuckoo land in terms of valuations. They have no earnings. They're valued at price-to-sales. And this is not a good metric in the long run," he said.
It is not just momentum stocks that Faber is wary of, he says that investors are coming to a stark realization. "I believe that the market is slowly waking up to the fact that the Federal Reserve is a clueless organization. They have no idea what they're doing. And so the confidence level of investors is diminishing, in my view."