Templeton Asset Management’s Mark Mobius says that a 15% to 20% correction isn’t unlikely for the stock market, but that investors shouldn’t mistake one for the start of another big downturn.
“In a secular bull market, where we are now, you will see corrections can be as much as 15-20 percent, but we shouldn’t be concerned that this represents a bear market,” Mobius tells CNBC. “A 20 percent correction is not unusual, we’ve seen it in China already last year … so you will see that on an individual market basis.”
Mobius says not to expect the huge gains of the past 10 months to occur again in 2010, but he does think underlying momentum will help push the market higher. Investors should be ready to buy when corrections do pop up, he says.
Mobius also says that he doesn’t think the market is in a bubble, despite the big gains off the March low. The two greatest threats for the global economy, according to Mobius: the derivatives market and a potential tightening of the money supply.