Morgan Stanley’s chief U.S. equity strategist warns savvy investors to take cover because the seemingly endless bull-run stock market may be headed to a sudden halt.
“The Nasdaq could correct by 15 percent plus, the S&P 500 probably goes down about 10 [percent],” the firm’s Michael Wilson recently told CNBC.
“The market has just been getting narrower and narrower. So what we’ve seen is every sector within the S&P has gone through about a 20 percent correction on valuation except for two: technology and consumer discretionary — basically growth stocks,” Wilson said.
Wilson was explaining his theory reported earlier this week that a big stock market drop looms for all U.S. investors.
“Our view is that this rolling bear market has to complete itself by hitting those two sectors, and we think that’s actually begun,” he said.
“If the growth stocks get hit disproportionately hard, it’s going to be very difficult for that money to leak into other parts of the market without having some loss of value,” he said.
“There are definitely a lot of signs already that there’s a view that things are going to slow materially next year whether there is a recession or not,” Wilson said.
Meanwhile there are just 14 trading days to go until the bull market becomes the longest of all time (3,543 days, according to BofAML), Bloomberg reported.
“The three-day meltdown in tech that began with Facebook’s flop last week hasn’t been forgotten (just ask the panic sellers who rid their portfolio of every momentum stock), but the worries over a widespread collapse fade with every hint of resilience,” Bloomberg reported.
(Newsmax wire services contributed to this report).
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