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Markets Will 'Abruptly' Drop 25-50%: Strategist

Published: Friday, 14 Aug 2009 | 1:37 PM ET Text Size By: JeeYeon Park

Dan Deighan, founder of Deighan Financial Advisors, and Rob Stein, managing partner at Astor Asset Management, explained their positions on the economy and shared their market outlooks. (See their sector recommendations, below.)

Markets will drop 25 to 50 percent and it will happen abruptly, Deighan told CNBC.

“There’s no basic foundation for the run-up we’ve had, been far too rapid. It continues to run up on what’s normally considered bad news,†he said.

Deighan said in the past, Wall Street “shoved things down Main Street’s throat.†And now, he believes, "Washington" is trying to do the same. Main Street is slowly finding out "what’s going on with the banks, health care and the Federal Reserve’s moves" and they are “absolutely angry.â€

“None of this stuff is positive, and Americans are very angry in addition to being scared—a very dangerous combination,†he said.

In the meantime, Stein said he doesn’t expect a sharp drop in the markets, and predicts stocks will trade at the current levels for at least several months.

“I actually think we’re going nowhere,†said Stein. “These are going to be the levels that we trade at 5 percent around here for several months, if not for the rest of the year."

Stein said the economy is experiencing two types of recessions: the traditional inventory and unemployment recession, and another based on the credit crisis.

“The inventory/unemployment one is starting to abate and we’re starting to grow," he said. "I think the growth from this in 2010 will surprise everyone on the upside—and then when the credit crisis comes back again, it won’t be as doom and gloom.â€


Warning: The video interview at the above link may make bulls cry. :lol:

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Have they broken into the LHC, gone forward in time and noted what the market is doing? If not, it is nosh, Just like the vast majority of predictions.

More likely lurking on HPC. Deighan has probably read one too many of our cheery threads and has gone all doom and gloom. :rolleyes:

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Guest KingCharles1st

I would have thought it obvious that the VI traders were ramping the markets to get every sucker involved before pulling the carpet at 5 seconds to midnight

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