Global stock markets are set to peak in the next few months but hungry investors should beware, according to Bob Janjuah, Nomura's uber-bearish strategist, who believes a hefty dip in global stock markets is just around the corner.
The end of this quarter till the end of the first quarter of 2014 is the buying window Janjuah sees as "the risk-on top", he said in a client note on Tuesday. After that he predicts a 25 percent to 50 percent sell-off over the last three quarters of 2014.
"While my target for this high in the S&P over the next five months remains anchored around 1,800, an 'extreme' upside target could see the S&P trade up to 1,850," he said. "I am looking – as a proxy guide – for the VIX (CBOE Volatility Index) index to trade down at 10 between now and end (of the first quarter of 2014) before I would recommend large-scale positioning for a major risk reversal over the last three quarters of 2014 and over 2015."
(Read More: S&P 500 to Dip 5-10%, Then Soar: Nomura's Janjuah)
As an extra cautionary measure, Janjuah added that an interim sell-off could occur before the end of November due to markets having priced in all the recent good news on growth. There's a possibly a period of risk-off this month could take the the S&P from 1,775 to perhaps 1,650/1,700, or even as low as the 1,600/1,650 area, he said.
And the reason behind all these concise calls? Anemic global growth, mediocre fundamentals and "dangerously" loose monetary policy, according to Janjuah. As well as too much debt, an enormous misallocation of capital and excessive financial market speculation.
"In the context of growth surely I am not the only person surprised at policymakers, especially in the U.K. and the U.S., where seemingly the only solution to massive financial market and economic failures is to resort to more of the same of what caused the original problems – namely debt-driven consumption, debt-driven asset price speculation, and the expansion of the 'ponzi' that best describes our modern day economic 'model'," he said.