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Rally May Take Dow Back to 12,000: Investor

Investors should get ready for a bumper bear-market rally by building a portfolio out of the most beaten-down stocks they can find, like Taylor Wimpy, Trinity Mirror, Clem Chambers, CEO of ADVFN, told CNBC.

Chambers expects stocks to generally stage a strong bear-market rally that's going to go on for 18 months. The rally will start by New Year at the latest and take the Dow Jones Industrial Average back to 11,000 - 12,000 level, he said.

Video: watch the full interview with Clem Chambers

"I've been bullish for a few weeks now and I'm rebuilding my portfolio starting with the crazy stocks … the ones that are crushed down, the complete ultra dogs," Chambers said.

Trinity Mirror, Taylor Wimpey, Cattles and C&C are all on Chambers' risky-buy list.

"At the bottom of a crash it's risk city right, so why step back and try to pick non-risky stocks – they're all risky, it's just a question of whether you think we are now going up or down, it's a long play," he said.

After identifying various beaten-down stocks, investors should look at the companies' balance sheets to see if "they've got a horrific amount of debt" and whether they've got enough cash to survive, according to Chambers.

Looking at the company's share charts, history and management is also advisable, he said.

The strategy of adding highly risky stocks to you portfolio has to be a medium-term play, over 18 months to 2 years, Chambers said.

"If they don't go out of business, they're going to have a very strong rally," he said.

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