“Stay away from anything that has the stamp of government on it because you can’t trust it.”

That was one of the many stark investment recommendations Swiss hedge fund manager Felix Zulauf issued to investors at Mauldin’s virtual Strategic Investment Conference on Wednesday.

“You have to move to private assets you can analyze, where responsible people are managing the situation,” said Zulauf of Barr, Switzerland-based Zulauf Consulting. “That’s the way to go.”

In a question-and-answer session replete with similarly strong, mostly bearish investment admonitions, Zulauf said the Standard & Poor’s Index could sink to “around 3,000 ... very late in the year” and the yield on the 10-year Treasury could slip 3% amid a slowdown in the economy.

You can trade bonds, he said, but “as a long-term investor I would not own bonds.”

The strategist also sees value stocks beginning to outperform growth, gold going “a lot higher," and the next bubble forming in oil, with a barrel hitting “$250 or so…sometime in 2026, 2027” amid a war scenario.

There could be a “quick shakeout” in gold and oil if we get a recession, he warned. Oil, for example, could sink “15% or something like that, easily.”

“But you buy it and you hold it because two, three years from now, it will be a lot higher,” Zulauf added. “That’s the next bubble I see. The bubble will probably peak when the meltdown in the bond market is at its highest.”

Some big wall Street brokerage firms such as Oppenheimer see the benchmark S&P climbing up to 5,500 by the end of the year from 5,058 as of yesterday. They cite risings earnings, potential of artificial intelligence and the apparent soft economic landing. Zulauf, on the other hand, remains squarely in the bear camp on equites and the economy.

“I think we have hit the high in most of the indices in the U.S.,” he said. “I would give the European indices the chance that they could go to a minor new high, but only minor.”

Declaring we’re in an environment of rising inflation and interest rates, Zulauf said it’s “conceivable that we have some sort of a recession beginning sometime this year into next year.”

The Swiss hedge fund manager had dire warnings for governments here and abroad. Citing rising fiscal deficits, fiscal spending and the possibility of expansive fiscal policies, Zulauf sees trouble ahead for economies in the Western world.

“It’s obvious that some governments will go bust over the coming years,” he told investors at the conference. “I think it’ll start with Europe, not with the U.S.,” where the government has land it could sell it to fix its balance sheet.

The strategist said that we’re in a “crack-up boom,” which is part of an economic crisis. That boom is when authorities manage the economy and pursue an inflationary policy, creating a boom in nominal terms but a recession in real terms.

In more layman’s terms, “The crack-up boom is really that you have a nominal boom but in real terms for the average Joe, it is a negative experience,” explained Zulauf.

“You have a straight lineup in the stock market, but that’s not the sign of current and future prosperity,” he added. “That’s a sign of misery.”

Overall, the strategist sees volatility ahead for the markets, in which market timing might be the best approach.

“If you can time the cycle, you should do it,” he said, “You should do it because the roller coaster can give you tremendous returns on both sides of the market.”

He said the benchmark S&P could rise to highs of 6,000 to 7,000 “late this year or early next year” if, among other things, the central bank continues to pursue a monetary policy that injects liquidity into the financial system. The top could come in 2026 or so, according to Zulauf.

If the economy turns more recessive than expected and earnings “become a problem ... we’re talking a big decline,” he warned. Investors, he suggested, should also be nervous that the rally is being driven by a “tremendous concentration in a few stocks like never before.” Therefore, a selloff in those stocks would be dramatic, he said.

“That’s the roller coaster I see,” Zulauf said, noting that impending fiscal crises and continuing wars will create a “messy situation [that] will probably end sometime late this decade or early next decade.”

The strategist offered detailed portfolio recommendations for investors who cannot time the market: “Go one-third into gold and one-third into index-type of stocks or ETFs heavily weighted towards commodities. That would be a mix with two-thirds equities heavily weighted to the back-end side to value stocks.”

For bond investors: “Use the next decline in bond yields later this year into the second half to sell out of bonds and go short money market or into gold…the best asset class you can have.” 

In the coming month and years, investors should prepare for “wild times, interesting times, very challenging,” he said.

“Do not stay on the wrong side of the market,” he advised.