1987 was a bad year for music � think Jefferson Starship and Wang Chung, but an even worse year for stocks. Between Oct. 1 and Dec. 31, the Dow Jones Industrial Average fell 27%, including the infamous "Black Monday" drop on Oct. 19 of more than 500 points.

The only solace was the correction wasn't completely related to movement in the broader economy. And the rebound in markets was relatively swift.

In an interview on Bloomberg's "Market Makers" Friday, Passport Capital's John Burbank said he sees a liquidity problem in today's markets that could lead to a correction like the one we saw 27 years ago.

"I'm very bullish about the companies, U.S. companies," he said. "I'm bullish about many different sectors, but I'm very bearish actually about liquidity because we're in a tightening environment. We have bad liquidity in the marketplace. Strange environment."

Bloomberg's Erik Schatzker then asked what would happen if investors decide the stock market has been mispriced. Here's Burbank's response, via a Bloomberg transcript:

It could fall fast. But we also have a phenomenon of sovereign wealth funds out there at a size and an investment rate with � with alternatives in bonds yielding so little that we don't really know what's going to happen. If I had to say the possibility of anything, there's the possibility of a more like 1987 dislocation that doesn't actually reflect economic � long-term economic distress, but could reflect illiquidity in the market in the temporary condition. It's funny. The market's at a point like 2000, 2007 where you presume valuation, the rise, the steepness of the rise in equities with � and also seven years later, you�d presume a fall. But I don't see the suddenly weak economy. It's already not that great.

Watch the full clip below:

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