'Aftershock' Author Wiedemer: Fed, Inflation to Spark Market Meltdown Like 2008

Friday, 07 Oct 2011 07:37 AM

By Dan Weil

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The economic turmoil coursing through the world has financial markets set for a 2008-style collapse, says Robert Wiedemer, financial commentator and best-selling author of "Aftershock."

"I do think we'll have another meltdown,” he tells Yahoo. “I think the trigger will be higher inflation. The lack of printed money short-term is going to turn the stock market down within a year.”

At that point the Federal Reserve will go on another money-printing binge, Wiedemer says. “And that’s going to run out like the sugar high we had before. That’s going to kick off a downward spiral in the stock market,” he predicts.
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“Within two to four years the meltdown will begin,” says Wiedemer, managing director of Absolute Investment Manager.

And the carnage could be worse than 2008, Wiedemer says. He sees major stock market indices dropping "quite a bit" below their March 2009 lows.

bobwiedemer200nmax.jpg
Robert Wiedemer
(Newsmax file photo)
Given the present dangerous environment in financial markets, Wiedemer recommends holding dividend stocks, gold, bonds, inverse ETFs, agricultural commodities and some foreign currency.

But investors must be nimble, says Wiedemer, who recently released an updated edition of his best-selling book, "Aftershock."

For example, while Wiedemer is currently long Treasurys, he expects to reverse that position soon.

Some other experts see a plunge in stocks coming too. Bob Janjuah, a fixed income analyst for Nomura Securities, says the Standard & Poor’s 500 Index may fall to 700 next year, down 40 percent from current levels.

Weak growth in developed economies and errors by policymakers will fuel the bear market, he writes in a report for clients obtained by CNBC.

About Robert Wiedemer
Robert Wiedemer is a managing director of Absolute Investment Management, an investment-advisory firm for individuals with more than $120 million under management. He is a regular contributor to Financial Intelligence Report, the flagship investment newsletter of Newsmax Media. Click Here to read more of his articles. Discover more about his latest book, "Aftershock," by Clicking Here Now.

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