Mobius says there’s a 30% correction coming for U.S. stocks

[bostonangler]

Mark Mobius, the 81-year-old investment guru, believes the U.S. stock market is set for a 30% correction that would essentially wipe out the gains of the last two years.

The renowned fund manager, who left Franklin Templeton, the American investment house, after more than 30 years in January, said “all the indicators” point to a large fall in the S&P 500 SPX, -0.85%  and the Dow Jones Industrial Average DJIA, -0.82%  .

“I can see a 30% drop,” said Mobius, who launched one of the world’s first emerging market funds. “When consumer confidence is at an all time high, as it is in the U.S., that is not a good sign.

“The market looks to me to be waiting for a trigger that will cause it to tumble. You can’t predict what that event might be — perhaps a natural disaster or war with North Korea.”

Mobius, who predicted the start of the bull market in 2009, has concerns that any fall would be amplified by the increasing use of exchange traded funds, which account for nearly one-half of all trading in U.S. stocks. His fear is ETFs would trigger further drops once markets fall.

ETFs represent so much of the market that they would make matters worse once markets start to tumble,” said Mobius in an exclusive interview with Financial News. “You have computers and algorithms working 24/7 and that would basically create a snowball effect. There is no safety valve to prevent further falls, and that fall would escalate very quickly.”

“The market looks to me to be waiting for a trigger that will cause it to tumble.” Mark Mobius

Mobius, who ran Franklin Templeton’s emerging markets team until 2016, added that it was going to become a “stock pickers market” but conceded that if the policies enacted by U.S. President Donald Trump to stimulate the economy were successful, including his tax reforms, then markets would increase in the short term.

“If Trump’s policies pay off then markets could move higher but things are just looking so ‘toppy,’” he said. “And if the U.S. market falls, then everybody is in trouble.”

Mobius retired from Franklin Templeton at the end of January after a lengthy handover. The U.S. fund manager recruited Manraj Sekhon, a former chief executive of Singaporean fund manager Fullerton, as his successor.

At an event in Mumbai, India in February Mobius announced he is set to launch a fund aiming to bring environmental, social and governance improvements to companies in the developing world. He has created his own asset management firm, Mobius Capital Partners.

https://www.marketwatch.com/Story/mark-mobius-says-theres-a-30-correction-coming-for-us-stocks-2018-04-17?&siteid=yhoof2&yptr=yahoo

 

I wonder if his ideas hold water.

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[md11fr8dawg]

I hope not, but when someone of that caliber speaks you should at least consider where he is coming from and what events might have caused him to make such a prediction.

That would be a HUGE correction. I think I will check with my investment team and see what their take on this would be, especially since the articles posted on DV today of the 225% world debt to GDP. Something is gonna have to give. We (the US) and the world cannot continue down the current economic path we are on for much longer. JMHO.

[MyLadiesDaddy]

The first thing one should ask themselves before listening to some 80+ yr old curmudgeon is, "are you a liberal or a Conservative"?  

Liberals are so filled with hate right now that all their advice is tainted. So based on what is the market going to fail? Seriously, A booming 

economy, lower taxes, worldwide respect for America growing and this old fart thinks the market will crash. What an idiot. I predict that by Dec.

well be bouncing around 30,000, so take that liberals. 

[bostonangler]

21 hours ago, ladyGrace'sDaddy said:

I predict that by Dec.

well be bouncing around 30,000, so take that liberals. 

 

Yeah I'll take my economic advise from a truck driver over a guy who has spent his life making money off the markets... Geeez!!!

 

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[Indraman]

These predictions are about as accurate as the 2016 Election...just remember that experts can be wrong also.

 

Indy

[jg1]

Not only can they be wrong but they could be trying to influence people for their own gain. 

[bostonangler]

2 minutes ago, Indraman said:

These predictions are about as accurate as the 2016 Election...just remember that experts can be wrong also.

 

Indy

 

I heard a great line yesterday that could apply  to investing. "The best way to predict the future  is to create it".... I think the market makers and big investors have the ability to direct the markets, up or down... JMHO

 

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[bostonangler]

Just now, jg1 said:

Not only can they be wrong but they could be trying to influence people for their own gain. 

 

Exactly...

 

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[bostonangler]

Hey snowman slow down you are going to run out of rubies... LOL

 

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