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."