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Posted on 22 August 2012 | 2,693 views

S&P 500 to Drop 25% Before 2012 Election

The S&P 500 is likely to fall by 20 to 25 percent over the next three months according to Nomura strategist Bob Janjuah.

In a research note published on Tuesday, the “Long-Term Bear” who called the recent rally for U.S. stocks said he expects investors to be back in risk-off mode until the U.S. election is over.

Investors need to prepare for a serious sell-off between August 2012 and November 2012 — over the August 2012 to November 2012 time frame, the S&P 500 is expected to trade at or below the lows of 2011.

If the S&P 500 does fall as sharply predicted, investors should be bullish on core government bonds as more quantitative easing will come from the Federal Reserve in December 2012.

Ben Bernanke will disappoint the stock markets at Jackson Hole next week and the S&P 500 will drop at least 300 points over the next few weeks.

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