The Federal Reserve's massive easing program has spawned a bubble in the stock market, asserts Sean Hyman, editor of Newsmax's Ultimate Wealth Report newsletter and a Moneynews.com contributor.

"That's why a lot of hot money has gone into things like social media and biotech stocks, and it's getting very risky," he told "America's Forum" on Newsmax TV.

"That's why the NYSE margin levels are as high as they are. They're at all-time highs right now, higher than the crash of 2007, higher than the crash of 2000."

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The Fed is allowing "speculation to run rampant, and . . . that's what really drives stock market valuations to historically high levels and sets you up for the next crash," Hyman said.

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As for the stock market's recent decline, it may just be a temporary correction, he said. "But I say that with a bit of caution. On one hand, the Fed has delayed its plans to hike rates, so that gives the market an excuse to push the market back up again."

But on the other hand, the market's price-earnings (PE) ratio is high, Hyman said. "So the risks are high, the reward is low," he said. "And the chances of a 10 to 20 percent correction are high, with maybe a 2, 3, 5 percent upside for the market."

That makes for a "dismal" risk-reward scenario, Hyman said.

So how should investors respond?

"In the Ultimate Wealth Report we're telling everybody to be extremely picky about what you invest in," Hyman said. "Go to everything that has been shunned, that nobody would want to really shake a stick at right now."

Look at companies with low price-earnings ratios, he said. "It's some of the beaten down oil companies, some of the beaten down natural gas companies. It's a lot of the commodity and emerging marketplace," Hyman said.

"Things that have single-digit PEs, that have not been inflated, that have not followed the trajectory of the stock market." Institutional money will flock to these stocks as it seeks lower risk, he said.

Hyman said two things are needed to fix the economy. First, the Fed must prod banks to lend. "What's happened is the Fed has put money into the banks, and the banks have turned around and put it in conservative instruments like Treasuries to rebuild their own balance sheets," Hyman said. "It doesn't really grow the economy, it just helps the balance sheet of the bank."

Second, Congress should give big corporations a tax break to repatriate money home, Hyman said. Now companies are reluctant to do so, because of the tax bill they would face.

"There's like $1 trillion out there in foreign lands, and we could bring home a good portion of that if there was a favorable tax incentive for them," Hyman said. "If we would just come in line with the rest of the world, they would be happy to do that."

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