25-50% Market Correction in 'Month or So': Financial Pro

Stocks opened higher on Friday, the final trading day of January, after the GDP report showed the economy grew more than expected in the fourth quarter. However, Dan Deighan, founder of Deighan Financial Advisors, and Bill Spiropoulos, chief executive of CoreStates Capital Advisors, warned investors to brace for a market correction.

“Short-term, we’re in a little bit of a trouble,” Spiropoulos told CNBC.

“In the last week, we were looking for a 5 to 10 percent correction, but we think it may be a little bit deeper than that—we’re going to go through 10 percent.”

Spiropoulos advised investors to use a “multi-faceted strategy” when approaching stocks.

“You should be investing in things that you eat, drink or smoke—managed futures, commodities, currency strategies, equity, long-short—invest somehow, but don’t just sit back and do nothing,” he said.

“There’s still a lot of cash out there that is homeless.”

In the meantime, Deighan said although there could be a 6 to 10 percent upside in the next few months, he sees a huge market drop looming.

“I see the potential for a 25 to 50 percent drop,” he said. “It could be abrupt—it could take a month or so to happen.”

He also expressed concerns regarding the bond market.

“We’ve got a massive bond bubble, a steepening of the yield curve, the Fed is going to have to start pulling back on buying Treasurys, Greece is having troubles…the yield curve is really scary,” he explained.

“For every dollar that went into stock funds in the last year, 13 dollars went into bond funds—we’ve got a huge, huge bond bubble right now.”

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No immediate information was available for Deighan or Spiropoulos.