Many financial commentators say a 10 to 15 percent correction for stocks is long overdue. Count Jeff Reeves, editor of InvestorPlace.com, among them.
The S&P 500 hasn't declined 10 percent since October 2011.
Reeves lists seven reasons why a 10 to 15 percent correction might happen in the next few months. Basically, there's a "disconnect between fundamentals and expectations," he writes in an article for
MarketWatch.
Editor’s Note: 5 Shocking Reasons the Dow Will Hit 60,000
1. "Earnings look shaky." Earnings estimates for the second quarter already have been reduced, Reeves notes.
2. "Warmer weather isn't helping." Cold weather was blamed for the first quarter's GDP and earnings weakness. But warmer weather can't make up for all of that.
3. "Housing trouble." The industry is looking shaky, with inventories rising.
4. "Price inflation, but not wage inflation." Consumer price increases are accelerating, while wages are stagnant.
5. "Global unrest." There's turmoil in Ukraine, Iraq and Israel for starters.
6. "Interest rate risk." The Federal Reserve may raise rates earlier than many expect.
7. "The everything bubble. Valuations are stretched [in asset markets] across the board, and that just adds to the fear that many investors feel," Reeves writes.
While he is calling for the correction in stocks, he believes that in the long run the markets are sound.
"I remain convinced that the U.S. economic recovery is durable, and that we're not destined for another housing or financial crisis, which crippled the stock market and economy in 2008 and 2009."
Meanwhile, star distress-investor Wilbur Ross, CEO of WL Ross, says that with stock markets around the world hitting historic highs recently, now is a good time to unload some assets.
"On balance we've been a seller. We've sold six times as much as we've bought so far this year . . . everywhere," he tells
CNBC.
Editor’s Note: 5 Shocking Reasons the Dow Will Hit 60,000
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