Down, down, down: so says Todd Schoenberger of LandColt Trading. He is at odds with the majority of forecasters, who say the market will rise.
Reuters recently reported 2012 expectations showed an average anticipated return for the S&P 500 next year as a gain of about 7.5%, right smack in the middle of what you might call the cautiously optimistic camp.
That’s why this forecaster is unique. He is a true contrarian.
“We’re predicting the S&P 500 will be down 20% by mid-year, and by the end of the year, we’ll be down 35%,” Schoenberger says in the attached video. “Buyer beware.”
Why is he pessimistic?
“Here’s the thing, the debt issue is poison, not just to the economy and national security around the globe, but to the stock market,” he says. “Revenues are going to take a big hit next year.”
He’s also convinced that the U.S. will slide in to recession in 2012, pointing out that since 1948, anytime GDP has slipped below 2% the U.S. economy has always ended up in a recession. The number right now is at 1.6%.
Citigroup has published a forecast that projects 6 quarters of recession in Europe, beginning in 2012. I think this is a reasonable forecast. This wilkl hurt U.S. firms with large-scale operations in Europe. “Guess what’s happening in Europe? A recession will have a big impact on a stock like McDonald’s.”
Instead, he’s positioning himself defensively in stocks “that mimic the economy” such as Public Storage (PSA). “People are losing their homes but won’t sell the family dining room set so they stick all their junk in a storage facility,” he explains.
So-called dollar store discounters like Family Dollar (FDO) and Dollar General (DG) are also seen as timely beneficiaries. “This is a frugal world we live in,” he says.
He thinks debt counts. He thinks we are not going to solve this problem in 2012.