Equity markets aren't likely to rebound anytime soon and in all likelihood they'll tumble below last year's low points, predicts the head of a prominent West Coast investment research firm.
Charles Biderman, chief executive officer of Sausalito, Calif.-based TrimTabs Investment Research Inc., says that stocks will “take out the lows of 2008” this year, paralyzed by mounting unemployment figures, sinking incomes and a rapidly shrinking economy.
"We see no signs of a bottom," he said, noting that the U.S. economy is now in its worst condition since the Great Depression.
While Mr. Biderman declined to offer a specific target or range for equity market declines, he noted that both the Dow Jones Industrial Average and the Standard & Poor’s 500 stock index hit their lows Nov. 20.
The Dow closed at 7552.29 that day, while the S&P 500 finished the day at 752.44.
To return to those levels, the Dow and the S&P 500 would have to decline roughly 10% and 13%, respectively, based on yesterday's closings.
Compounding the problems of increased unemployment and slowing economic growth, investors yanked more than $225 billion from equity mutual funds last year — a record level of outflows.
"Many people have been forced to sell off some of the assets just to cover their day-to-day expenses," he said. "So this isn't money that will be reinvested in the markets — it's being tapped by many just to pay bills."