The Problems Are Close To Being Unmanageable: Get Out Of Stock Market For Next 12 To 15 Months!! Michael Belkin Predicting Greatly Lower Profits, Sustained Job Losses And A Stock Market Drop Of Up To 40%
October 10th, 2012
The Case For A 40% Drop In The Markets
Michael Belkin, author of the Belkin Report, declared the U.S. to be in recession, or very close to starting one, pointing to stock market highs on Sept. 14 – the day after Bernanke announced QE3 – as the harbinger of the downturn. Belkin said that his research of the past 110 years found that economic expansions last about 45 months; taking out the last three expansions which he said were fueled by Fed policies, that number is about 37 months. Somewhat ominously, he noted that the current expansion has lasted 40 months.
“It’s usually two to three months from the market’s peak to the start of the recession,” said Belkin, who added that on average recessions over the past 110 years have lasted 15 months and seen a 31% decline in the Dow Jones Industrial Average.
Belkin was unimpressed by the argument that Fed will keep the stock market pushing higher.
“The Fed does not control company earnings or the stock market,” he said.
Belkin said for long-only investors, staying out of stocks for the next 12 to 15 months was a recommended course – “just avoid risk,” he said. But at the same time, he did recommend some investment strategies.
Overweighting consumer staples, health care, utilities and maybe financials could be a good approach, said Belkin, while he suggested avoiding technology, industrials and materials and consumer discretionary stocks.
But even with his strong views – predicting greatly lower profits, sustained job losses and a stock market drop in the next year of up to 40% — Belkin also sounded a note of caution.