Don't be surprised if four horsemen start riding down Wall Street.
US technology stocks suffered their sharpest dive in more than two years on Thursday night, setting the scene for an equities apocalypse, legendary Swiss investor Marc Faber says.
He told CNBC that the pain in the internet and biotechnology sectors was just getting started, and the market was beginning to realise that US Federal Reserve was a ''clueless organisation''.
Faber is predicting a 1987-type stock market crash this year - only it will be worse.
''I think it's very likely that we're seeing, in the next 12 months, an '87-type of crash,'' Dr Faber told CNBC. ''And I suspect it will be even worse.''
The US technology-heavy Nasdaq plummeted 5.6 per cent on Thursday night, it's biggest one day drop since August 2011.
A sharp sell-off in biotechnology and momentum names, including Gilead Sciences and TripAdvisor weighed on the market, fuelling fears among inventors of a broader pullback.
''I think there are some groups of stocks that are highly vulnerable because they're in cuckoo land in terms of valuations,'' Faber said.
''They have no earnings. They're valued at price-to-sales. And this is not a good metric in the long run.''
Faber, the editor of the Gloom, Boom & Doom Report, has already called for growth stocks to decline this year.
He said ridiculous stock valuations were not the crash catalysts, saying the Federal Reserve was also to blame.
After beginning tapering its massive bond buying program, minutes from the Fed's last meeting March indicated that it may not be as eager to end its easy money policy.
''I believe that the market is slowly waking up to the fact that the Federal Reserve is a clueless organization,'' Faber said.
''They have no idea what they're doing. And so the confidence level of investors is diminishing, in my view.
''This year, for sure-maybe from a higher diving board-the S&P will drop 20 per cent,'' Faber said, before correcting himself.
''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.''
CNBC noted that Faber predicted in August last year a 1987-type crash was looming. Since then the S&P 500 has risen about 9 per cent.
- Sydney Morning Herald