This long bull market that needs a correction

The long bull run for stock markets could be due a correction, according to one prominent emerging markets investor.

"There could be a substantial correction in the markets," Mark Mobius, founding partner at Mobius Capital Partners, told.

A 30 to 40 percent adjustment is "not unreasonable," he said, speaking on developed as well as emerging markets. "I'm not predicting that, I'm just saying we've got to be ready for that," he added. Mobius cited the long U.S. bull market, since 2009, as the reason for the correction.

"The catalyst I believe will come from continuing increases in interest rates. The (Federal Reserve) is definitely moving in that direction," he said. "When the Fed moves, everybody else has got to move in that direction."

Mobius also cited the potential impact of political changes on markets. "Any event could also be a trigger," he explained.

"But most importantly we've seen this long bull market that needs a correction," he said.

"Over the long term emerging markets will do very, very well," Mobius said, but he added that "the short-term corrections can be quite dramatic."

But early last month, Sam Stovall, chief investment strategist at the Center for Financial Research and Analysis, predicted much more modest market moves. He expected the S&P 500 to fall only 3 percent further in the present correction before hitting the bottom.

"While we could go further lower in terms of this correction, I don't think we're going to be falling into a new bear market," he told.

Since a bottom hit early March 2009, the S&P has risen 289%, according to Reuters data.

Source: CNBC

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