"There's No Safety Valve" Mark Mobius Warns Of Massive Market Slump

81-year-old investing legend Mark Mobius believes that the US market is on the verge of a 30% collapse that would essentially wipe out the gains of the last two years.

The renowned fund manager, who left Franklin Templeton after more than 30 years in January, said “all the indicators” point to a large fall in the markets.

“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 US, 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.”

As Financial News London reports, Mobius, who predicted the start of the bull market in 2009, has concerns that any fall would be exaggerated by the increasing use of ETFs.

“ETFs represent so much of the market that they would make matters worse once markets start to tumble,” said Mobius in an exclusive interview.

“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.”

Mobius did cautiously acknowledge that President Trump's policies could be beneficial: “If Trump’s policies pay off then markets could move higher but things are just looking so ‘toppy’,” he said.

“And if the US market falls, then everybody is in trouble.”

Mobius warnings follow Jim Rogers' latest prediction of the “biggest crash in our lifetimes."

Comments

El Oregonian hedgeless_horseman Mon, 04/23/2018 - 13:04 Permalink

Some things will never change; as that some things remain the same.

If you depend on others for your security, then you are dipping into a river of hope with only a sieve.

Capture your financial integrity by finding and holding onto the foundations that have withstood the test of time.

Physicals- not promises, are the only real truths in finding my true financial security.

In reply to by hedgeless_horseman

JoeTurner Mon, 04/23/2018 - 12:40 Permalink

Markets will never be allowed to correct back to something normal. It would mean the end of the greatest crime spree in history and Wall St. polices itself as witnessed by the fecklessness of the SEC, FINRA etc....

gm_general JoeTurner Mon, 04/23/2018 - 15:35 Permalink

Are you kidding? Big banks cleaned up in the bailouts, and thanks to Citigroup buying off Obama, now they can confiscate deposits to make up any losses too. These guys knew there was a clock on this giant scam, they knew it decades ago. Look at the charts on how their income at this stage is going straight up while most languish. They will maintain all these gains in hard assets when the sh*t hits the fan. This is what 9/11 was about in part, to create the impetus for a police state to keep the angry serfs in line when it blows up, and to create a reason to spend, spend spend on endless war so they can cash in more.

In reply to by JoeTurner

Ron_Mexico Mon, 04/23/2018 - 13:25 Permalink

Wait a minute. If the Fed/federal government/PPT or whatever it is can buy up the bond market, then they can easily buy up the stock market. I mean, we are often reminded that the bond market dwarfs the stock market in size.

Let it Go Mon, 04/23/2018 - 19:40 Permalink

With most shorts having been driven from this market he has a point.

A recent report from JP Morgan revealed that S&P 500 companies will buy back a record $800 billion of their own shares in 2018, far exceeding the current high of $530 billion that was recorded in 2017. If indeed we are seeing the later stages of a bull market built on valuation illusions based on share "buyback alchemy" then we can only speculate as to the downside potential of this market.

Below is the link to the second part of a two-part series. The first explored how stock buybacks have been instrumental in driving this market higher since QE fueled easy money starting in 2009. This part focuses on what is ahead and how the recently passed Trump tax plan has supercharged this trend just as it may have been reaching its natural conclusion.

 http://Stock Buybacks Driving Market-Where It Might Take Us!html