Investors should buy Treasurys and precious metals like gold and ditch stocks and corporate bonds, which are due for further declines, says investment manager Felix Zulauf.
Gold often serves as a hedge against volatile markets, especially when currencies weaken.
"The next few weeks will be extremely volatile. I expect the market to go below the latest lows in September," Zulauf tells Barron's as reported by Pragmatic Capitalism.
|(Associated Press photo)
"After the fall low, equities will recover part of what they lost into the turn of the year and then fall again. Economies around the world most likely will be in recession next year."
The S&P 500 will fall below 1000 in the first half of 2012, Zulauf predicts, adding central banks in the U.S. and Europe will unveil measures to prop up ailing markets, which will weaken already weak currencies even further.
"Confidence in our currencies, policy makers and central banks is going down the drain. That will be reflected in a rising gold price. I have long said this isn’t an environment for investing in stocks. Hold cash in the form of short- to medium-term Treasurys. Own a lot of gold, and don’t have debt," Zulauf says.
Stock markets have roiled in incredibly wild swings recently, and those ups and downs may fray the nerves of already anxious consumers, which could send the economy relapsing back into recession, experts say.
"Money means more than just dollars and cents to people," he says. "It's their ticket to security. It's their ticket to survival," says Joshua Klapow, clinical psychologist at the University of Alabama-Birmingham, according to USA Today.
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