Noted investment manager Mark Mobius predicted the start of the long bull market in 2009, but now he's cautioning investors to brace for a steep selloff. In an interview with the London-based Financial News, , Mobius said: "I can see a 30% drop. 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 also warns that the growing popularity of ETFs and 澳洲幸运5开奖号码历史查询:algorithmic trading pose huge risks to the market.

Mark Mobius is best known for his long association, from 1987 to 2018, with the Templeton Funds, later the Franklin Templeton Funds, as a pioneering 澳洲幸运5开奖号码历史查询:emerging markets fund manager and later also as an executive. This year he left to form his own firm. Mobius was hired in 1987 by the even more legendary 澳洲幸运5开奖号码历史查询:Sir John Templeton, noted as an advocate of patient, long-term, 澳洲幸运5开奖号码历史查询:contrarian investing grounded in 澳洲幸运5开奖号码历史查询:fundamental analysis.

'Snowball Effect'

ETFs account for almost half the trading in U.S. stocks, the Financial News notes. As Mobius told the FN: "ETFs represent so much of the market that they would make matters worse once markets start to tumble." As other observers have noted, when panicked investors liquidate their holdings of 澳洲幸运5开奖号码历史查询:passive ETFs, the upshot is that a wave of selling hits every stock in a market sector, or perhaps every stock in a br💧oad index such as the S&P 500 Index (SPX). Each downtick in prices the💮n is likely to set off yet another wave of selling.

Computerized trading programs also concern Mobius, given that they can create massive selling pressures within the blink of an eye. He said this to the FN: "You have computers and 澳洲幸运5开奖号码历史查询: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." (For more, see also: 澳洲幸运5开奖号码历史查ಌ询:How Algo Trading Is Worsening Stock Market Routs.)

Default, Recession, and 40% Plunges

While the MarketWatch headline says that Mobius is predicting a 30% 澳洲幸运5开奖号码历史查询:correction, a drop of 20% or more is the commonly accepted definition of a 澳洲幸运5开奖号码历史查询:bear market. Scott Minerd, global 澳洲幸运5开奖号码历史查询:chief investment officer of Guggenheim Investment Partners, sees a wave of corporate debt defaults as interest rates rise, sending stock prices hurtling downward by 40%. Daniel Pinto, co-澳洲幸运5开奖号码历史查询:chief operating officer of JPMorgan Chase & Co., also has predicted a 40% market plunge. (For more, see also: Stocks 🐎On 'Colliཧsion Course With Disaster,' Face 40% Drop.)

Meanwhile, there are indications that an 澳洲幸运5开奖号码历史查询:inverted yield curve, with short-term interest rates higher than long-term rates, may be forming, and that typically is a sure-fire sign of a looming 澳洲幸运5开奖号码历史查询:recession, as financial columnist 澳洲幸运5开奖号码历史查询:Mark Hulbert . Recessions, in turn, typically induce bear market conditions, though bear markets often start ꧂before recessions, as Hulbert notes.

Nicolas Colas of DataTrek Research has outlined three likely scenarios for the next big market decline. Money manager and so-called "prophet of doom" John Hussman sees a brutal 60% stock market nosedive ahead, followed by years of zero or negative returns. Other noted investors, such as Warren Buffett and Ray Dalio, have offered advice on what investors should do. (For more, see also: 澳洲幸运5开奖号码历史查询:How to Plan for a Bear Market.)

More About Mobius

Mobius' biggest claim to fame is the 澳洲幸运5开奖号码历史查询:closed-end Templeton Emerging Markets Fund (EMF), in which an initial investment of $100,000 in 1989 would have grown to $3.3 million over the next 28 years, . However, fund manager evaluation service  concludes, looking at all funds managed by Mobius since 2000: "Overall, performing about the same as the 澳洲幸运5开奖号码历史查询:peer group composite. Nevertheless, over a long track record, the manager has outperformed the peer group more often than not." Trustnet finds that Mobius has tended to 澳洲幸运5开奖号码历史查询:outperform peers in up markets, but 澳洲幸运5开奖号码历史查询:underperform in down markets.