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Mega-Bear Prediction: Dow 5,000

If you think this bear is scary, better hold your hats. It hasn’t even begun to growl.

That’s according to Michael Lewitt, Harch Capital Management president. He tells us, the stock market could drop another 40% from here. In fact, he’s predicting Dow 5,000 by mid-2009.

We know what you’re thinking. He sounds like another one of those end of the world,doom and gloom forecasters. And perhaps you’re right, but it’s worth noting that earlier in the year Lewitt warned of a coming collapse.

“'There is a distinct possibility of a sharp decline over the next 6 to 9 months", he now says, in part because economic activity “fell off a clip in September and hasn’t recovered.”

”In general earnings will be down substantially next year. But a lot of strategists are putting multiples on earnings that are way too high,” he says. That doesn’t bode well for the Dow.

And he's not just looking at the equities market. “The credit markets have been a leading indicator and they’re signaling a lot more trouble lies ahead.”

If you’re looking for a play, Lewitt suggests keeping an eye on Manitowoc as an infrastructure play. Although he’s hardly a bull Lewitt also says, “things will eventually get better but it will take some time.”

To see our complete interview with Michael Lewitt please watch the video.



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Trader disclosure: On Dec. 24 th, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders: Najarian Owns (AMR) And Is Short (AMR) Calls: Najarian Owns (MSFT): Najarian Owns (XHB) Calls: Finerman's Firm Owns (AEO): Finerman's Firm Owns (MSFT) And (MSFT) Put Spreads; Finerman's Firm Owns (OIH) Puts; Finerman's Firm Is Short (IYR), (IJR), (MDY), (SPY), (IWM), (BBT), (COF), (USO); Finerman's Firm Owns (ROH) Call Spreads; Karabell Owns (AAPL), (GOOG), (JPM), (CSCO)

Terranova Is Co-Portfolio Manager Of The Virtus Diversifier PHOLIO; Virtus Diversifier PHOLIO Owns (IGE), (DBC), (DBV)

Terranova Is Chief Alternatives Strategist Of Virtus Investment Partners, Ltd.: Virtus Investment Partners Owns More Than 1% Of (ABD), (ARE), (BIG), (OFC), (DLR), (EXR), (IGE), (MAC), (DBC), (DBV), (SKT), (UA), (CLB): Virtus Investment Partners Owns More Than 1% Of Seagate Tax Refund Rights

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