US stocks set to plummet 40% or more as valuations high, warns Marc Faber

"We've had more than eight years of a bull market. The Nasdaq is being driven by very few stocks," said Faber on Friday's "Trading Nation." That rally "is not a particularly healthy sign from a technical point of view, and valuations are very high," the investor added.

Faber's comments come exactly two weeks after the Nasdaq set its latest intraday record high of 6,341.70.

"You know we have a lot of volatility, and when things will start to go down, they'll go down a lot," he said.

Faber is deeply concerned that wealth has flowed to big corporations and affluent people. He believes the imbalance could eventually disrupt the markets as we know it.

"Either people with money will be taxed heavily ... or we'll have a massive deflation in asset prices — I repeat: massive," he warned. "Eventually the system will break."

Faber is known for correction calls over the years which have never materialized. But he's sticking by his latest call, acknowledging critics have "questioned my sanity."

"We could print enough money that the Dow goes to 100,000. All I'm saying is it will end very badly, extremely badly," he said.

But it's not all gloom. Faber notes it could also give investors a rare "out-sized" buying opportunity similar to 2003 and 2009, when deep corrections gave traders a chance to load up on cheap assets.