Van Sun says Sprott predicts severe market downturVan Sun says Sprott predicts severe market downturn
2009-12-30 09:15 ET - In the News
The Vancouver Sun reports in its Wednesday edition the Standard & Poor's 500 Index will collapse below its March lows as an expected rebound in economic growth fails to materialize. The unbylined item says the prediction comes from hedge fund manager Eric Sprott. The Toronto money manager, whose Sprott Hedge Fund returned 496 per cent over the past nine years while the S&P 500 lost 32 per cent, said the index's 67-per-cent rally since March reflects investors misinterpreting economic data. He is predicting the gauge will fall 40 per cent to below 676.53, the 12-year low reached on March 9. "We're in a bear market that will last 15 or 20 years, and we've had nine of them," said Mr. Sprott, chief executive officer of Sprott Asset Management LP, in an interview. Mr. Sprott said the U.S. Federal Reserve has kept bond yields and interest rates artificially low through its program to buy agency debt and mortgage-backed securities. The central bank expects the securities purchase program to finish by the end of March. Expiration of the program would reduce demand for fixed-income securities, forcing up bond yields and interest rates and hurting economic growth.