Stocks could be due for a correction of up to 20% ‘by fire or ice’: Morgan Stanley strategist

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Morgan Stanley’s Chief Investment Officer Mike Wilson says investors should always be positioned for a market correction of 10%, but warned that investors may not be ready for a harsher correction that could be coming soon.

“You should always be expecting a 10% correction. If you’re investing in equities, you should be prepared for that at any time,” Wilson told Yahoo Finance on Friday. “A 20% correction, which is really more disruptive, where people might want to try and position for, the catalyst for that is going to be once again an ice scenario.”

Wilson’s “ice scenario” envisions a sharp reversal of the post-lockdown “overconsumption binge,” which could slow the stronger earnings and operating leverage seen in S&P 500 companies as of late.

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