CNBC: These Three Conditions Imply Stocks Will Plunge More Than 40 Percent During Next Bear Market

BArticle by Stephanie Landsman on CNBC Financial

Wall Street veteran Sam Stovall is warning stock investors the longest bull market on record will end with an epic meltdown.

According to the CFRA chief investment strategist, it's a side effect of an unprecedented business cycle.

"Three conditions: Very long, very high, very expensive," Stovall said Tuesday on CNBC's "Futures Now." "History would imply that be careful because now we're likely to fall into a very deep bear market when it does finally hit with the average decline being close to 40 percent plus."

Referring to history as a guide, Stovall noted that the fourth quarter is pretty strong during midterm election years, and seasonality points to more gains. However, 2019 may be where the troubles begin.

"A lot of the euphoria, a lot of the optimism, is already built into share prices," he said. "How much more [in earnings] can companies deliver? Expectations are for a 22 percent gain for the entire calendar year 2018. Then it slips to a 10 percent gain in 2019. Those optimistic numbers are already built into the market."

"Nobody knows for sure when the music will actually stop," Stovall said. "But I think it's just a matter of time."

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