A correction hasn’t shaken the historic industry rally yet, but Wall Road legend Byron Wien says it’s “definitely” coming.
“A 10 percent correction could arrive at any time, and particularly when the market has done together with it’s done. I mean basically it’s gone directly since Donald Trump was elected,” Wien warned on Wednesday on CNBC’s “Trading Nation.”
If a correction of that magnitude were going to today, the Dow would suffer a 2,400 point blow.
Wien, vice chairman of Blackstone’s Private Wealth Solutions group, provides 50 percent probability for a deep sell-off simply by year-end. He’s experienced the correction camp all calendar year – and says he’s worried it hasn’t happened yet.
“The marketplace is overbought and investors happen to be optimistic,” said Wien. “An overbought industry with optimistic investors is certainly vulnerable, and the question is certainly what triggers the vulnerability?”
It’s not an easy reply, according to Wien. His hunch is certainly a geopolitical development, for instance a important conflict with North Korea, could trigger a correction by creating instability. But it is also practical the rally could only pause alone.
“Maybe the market just spontaneously commences to fade,” added Wien, who believes the market segments are already borrowing performance from 2018.
Regardless of how it materializes, Wien doesn’t see it as a signal a bear market is around the corner. He believes shares would bounce back again quickly, and ultimately end 2018 greater than current levels.
“Fundamentals are incredibly strong,” Wien said.
The Dow, which is up 32 percent since Trump was elected, saw its second negative session in a row on Wednesday after falling about 40 points. It shut at 24,140.