John Hussman, president of Hussman Investment Trust, predicts that the end of the current economic cycle will result in market losses of approximately 64% for the S&P 500 and 69% for the Dow. This according to a July article in MarketWatch.

Hussman, known for predicting the market collapses of both 2000 and 2007-2008, is described as a “permabear” based on what the article calls his “oft-repeated mantra for ‘overbought, overvalued, overbulllish’ as the bull market continues into its ninth year by some measures.” While admitting that his market dip forecasts seem harsh, Hussman says they are supported by the “Iron Law of Valuation: The higher the price investors pay for a given set of expected future cash flows,” Hussman asserts, “the lower the long-term investment returns they should expect. As a result, it’s precisely when past investment returns look most glorious that future investment returns are likely to be most dismal, and vice versa.”

Hussman also notes other signs of weakness in the market, including “deterioration in interest/credit sensitive sectors as well as tepid participation (the number of individual stocks participating in various market advances), divergent leadership (for example, a large number of stocks simultaneously hitting 52-week highs and lows) and the divergences we observe in an array of other sectors.” He believes that these factors point to investors becoming more risk averse, a negative sign, since stocks tend to do well when investors are “willing to make risky bets,” the article argues.

Hussman warns that the market won’t be able to emerge from this “danger zone” until it moves to a less onerous combination of valuations and internal conditions.