- John Hussman is calling for a 65-70% drop in the S&P 500.
- He says he sees “fresh deterioration” in a key market indicator.
- His comments come as stocks sit at record highs amid euphoric investor sentiment.
Investors are by now conscious of the heightened risk of a stock-market pullback in the near future, given the euphoric speculation that has continued to drive valuations upwards.
Eighty-nine percent of financial professionals surveyed by Deutsche Bank earlier this month said that they saw bubbles in financial markets, and Bank of America and Charles Schwab both recently warned that investor sentiment is approaching extremes, making stocks vulnerable to a sell-off.
But if market conditions are solid, over-enthusiastic investor sentiment by itself often isn’t enough to make the market liable to a downturn. When investors should become worried is if indicators start to deteriorate, according to Charles Schwab’s Chief Investment Strategist Liz Ann Sonders.