One of Morgan Stanley’s top strategists is warning that US stocks are at unsustainable highs, and may crash by as much as 26% within months.

The Chief US Equity Strategist at the bank, Mike Wilson, noted the current level of stock valuations would be comparable to the “death zone” in mountaineering, which is an altitude that is so high, there is not enough oxygen to keep a climber alive.

Wilson wrote, “Many fatalities in high-altitude mountaineering have been caused by the death zone, either directly through loss of vital functions, or indirectly by wrong decisions made under stress or physical weakening that lead to accidents.”

He added, “This is a perfect analogy for where equity investors find themselves today, and quite frankly, where they’ve been many times over the past decade.”

His analogy is premised on the excessive highs that equity prices have reached since the beginning of the year. Wilson predicted the S&P 500 could fall within months to 3,000 points, falling 26% from its current level, adding, “it’s time to head back to base camp before the next guide down in earnings.”

Wilson’s dour warning comes after one of the worst years for the markets since the 2008 financial crisis. In 2022 all three indexes fell, with the Dow Jones Industrial Average down 8.8% for the year, as the S&P 500 was down 19.4% and the Nasdaq plunged 33.1%.

Wilson’s note said, “The bear market rally that began in October from reasonable prices and low expectations has morphed into a speculative frenzy based on a Fed pause/pivot that isn’t coming.”

Wilson has repeatedly warned of the temporary nature of the current rally, noting inflation will prove stickier than most economists are predicting, and that will force the Federal Reserve to continue to pursue interest rate hikes in an effort to bring the rate of price increases closer to the Fed’s 2% target rate.