The S&P 500 could fall as much as 30 percent over the next three years to 850, according to Barry Ritholtz, market commentator and CEO/director for equity research for Fusion IQ.
Ritholtz was on Bloomberg TV saying that that we are currently in a bear market, and that markets move in long cycles and are driven by large underlying events:
"We're in a secular bear market that began in 2000 and will run till whenever it ends. We could guesstimate sometime between Thursday and 2017, somewhere in that range. And history shows that secular bear markets have major sell offs and rallies, very very significant moves, and by the time its all said and done you haven't made a whole lot of progress."
Ritholtz went on to explain that on average the middle sell-off is the worst of the three major sell-offs in a secular bear market and that before the bear market is over there will be one more recession that will cause a significant bear market.
"We have no idea if its 20 percent, 30 percent, 35 percent, again playing the odds its not going to be as bad as '08-'09 but its not unthinkable that you get a recession in 2013 / 2014 that causes a 30 percent move. 30 percent off of 1,250 is about 850."Don't Miss: Damodaran - These Are The Seven Most Dangerous Words In Investing >
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- Barry Ritholtz