This weekend marks the halfway check-in with the Barron’s Roundtable and I only got through the first interview with Felix Zulauf before having to put it down for some fresh air. Zulauf is mega-bearish, more so than I remember him being in either January’s magazine or in any prior issue.
Why this is troubling is that Zulauf’s been pretty damn good, better than most of the other Roundtable prognosticators, from what I remember of recent editions.
Basically, he’s saying (paraphrased):
- The pain in European states has been peripheral, now the contagion will penetrate into the bigger, more important countries.
- The only real shot of a stock rally is when another stimulus is attempted or when more money is printed, but these efforts will produce only a temporary bump.
- The potential upside for equities here is only 5%, the downside looks more like 20%-ish.
- Even gold will correct because the party got too crowded lately, but it should be bought close to $1000 an ounce when that happens.
- US Treasuries are a good bet for the intermediate term (2 to 3 quarters).
- Blue chip stocks should only be bought if one’s time horizon is 10 years or greater, anyone with a 1 to 3 year time horizon should watch from the stands.
- The stock market will make a lower low than the March 2009 bottom after more attempts to stimulate fail. He notes that we are trading at 2 times book value now (1096 vs $500) and that stocks didn’t bottom until they were trading at half of their book value during the Great Depression.
So I’m gonna go for a walk right now.