The party is over on Wall Street, says Alan Greenspan

Former US Federal Reserve chairman Alan Greenspan, who famously warned more than two decades ago about ‘irrational exuberance’ in the stock market, said he doesn't see US equity prices going any higher than they are now.

In an interview aired Tuesday on CNN International’s First Move, Alan warned investors that the correction would be painful.

"At the end of that run, run for cover," he said.

On Monday, US stocks were knocked to their lowest levels in more than a year on widespread selling. Both benchmarks -- the S&P 500 and Dow Jones – are approaching to their worst ends to the year since 1931.

The S&P 500 is currently down 7.8 per cent since the start of December, and if it were to close at that level or lower, it would be the index’s worst performance in the month of December since 1931.

On whether the bull market is still intact, he said, “No, it’s beginning to fumble. You can see it by the reaction in recent days. It would be very surprising to see it sort of stabilize and then take off again.”

He said a pronounced rise in real long-term interest rates is the key factor that is pressuring stocks and bringing stock markets down.