Stock Market Crash: 60% Decline is 'Likely' For S&P 500, Expert Says

Hussman says stocks remain about as overvalued as they were during the biggest bubbles in history.Over the long-term, stock performance is a question of simple math, saysHigher valuations mean lower returns, and vice versa. Right now, valuations remain at some of their highest levels in history, the president of the Hussman Investment Trust who called the 2000 and 2008 market crashes, said in a recent note.

Those valuations measures include his proprietary ratio of total market cap of non-financial stocks to revenue of non-financial stocks, as well as his margin-adjusted price-to-earnings ratio.As for short-term market performance, investor sentiment plays more of a role, Hussman said. Unfortunately, that's not looking great right now either.

"Our primary gauge of market internals remains unfavorable, based on uniformity and divergence of market action across thousands of individual stocks, industries, sectors, and security-types, including debt securities of varying creditworthiness," he said."A market collapse, at its core, is really nothing but risk-aversion meeting a market that is not priced for risk."

While Hussman acknowledges the boldness of his call, he said to look at history. Stocks are more overvalued relative to Treasury bonds than anytime since the late 1920 and early 1930s. Eventually, investors expect a greater return for the extra risk they're taking, and valuations fall.

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