Bears Run Amok in Market Prophet's Vision

Rumors of the 2003 market rally's imminent death have been greatly exaggerated in recent months. But according to one analyst with an enviable track record, the end days are finally here, and it's time to prepare for a sickening plunge into December and beyond.

The doomsayer is Michael Belkin, one of the few investment analysts who has emerged from the recent boom, bust and reboom with his reputation not just intact, but aglow.

Most independent researchers build careers as all-bull or all-bear, but not this guy. Operating out of a home office on Bainbridge Island in the Puget Sound near Seattle, Belkin writes a $36,000-per-year weekly report on equities, bonds and commodities for leading managers of mutual funds, pension funds and hedge funds worldwide. The report rises above the straitjacket of specialization to treat the global landscape holistically as an interlocking economic, political and social system.

Two weeks ago, Belkin abandoned his yearlong (and initially very lonely) bullish posture and put on the fur. He expects the broad market indices to sink significantly through the end of the year, led by cyclical industrial stocks, and does not see much of a recovery on the horizon for 2004.

Belkin's Street Cred

Why take him seriously? He's been right about the last few major swings.

In mid-1999, he advised clients to buy into the Nasdaq bubble through the first quarter of 2000, noting that the Federal Reserve had printed so many billions of dollars to battle a nonexistent Y2K problem that money would spill into stocks and fuel a boom.

On March 2, 2000, he turned around and advised clients to bail out of tech stocks and buy U.S. government bonds, contending big market indices could get cut in half.

A month later, after the Nasdaq had plunged 1,000 points from its March 20 peak, he stunned clients who thought the worst damage had already been done by proclaiming the tech-heavy index would sink at least another 65%.

In November 2002, with the Nasdaq having fallen about 70%, he turned full circle and advised clients to aggressively buy the most-volatile tech and gold stocks and sell low-volatility defensive stocks and bonds.