With troubles in Europe's banking system threatening to contaminate the global financial system, it's beginning to look a lot like 2008 to many observers. History doesn't repeat, but it often rhymes which is why Robert Wiedemer of Absolute Investment Management believes investors need to prepare for another 2008-style maelstrom -- or something even worse.
"I do think we'll have another meltdown within 2 to 4 years," Wiedemer says, forecasting major averages will fall "quite a bit" below their March 2009 lows.
The money manager and author does not, however, forecast an imminent decline or crash to S&P 666 (the 2009 low) and below. "We're going net long if we see the Fed printing money again, which I think is likely," he says. "After that, the sugar high will wear off and we'll be net short."
In Aftershock: Protect Yourself and Profit in the Next Global Financial Meltdown, Wiedemer details how to navigate through the market's gyration via what he calls the "Dynamic Diversified Aftershock Portfolio" that includes dividend stocks, gold, bonds, inverse ETFs, agricultural commodities and some foreign currency.
"You not only have to be diversified but dynamic," he says. For example, Wiedemer is currently long Treasuries but expects to get short in the not-so-distant future when that market turns.
"It's a bubble economy, fundamentally," he says. "Stocks in another year or two will be valued very different then they are today because the rest of the economy is going down. The forecast is not very good for the future."
Aaron Task is the host of The Daily Ticker. You can follow him on Twitter at @atask or email him at altask@yahoo.com
167 comments