The winter holidays are unlikely to bring relief to jittery investors as stock markets may fall between 10 and 20 percent within the next four months, Jason Forde, fund manager at Kepler Capital Markets said Wednesday.
"I am very frightened as we go into the festive season, Thanksgiving and Christmas, we will see the worst trading period in living memory," Forde told CNBC.
The sharp downturn would result from the governments, in the U.S. and Europe, taking stakes in banks and forcing them to lend in return for the capital injections the states have promised, instead of scaling back as they do when recessions loom, he said.
"They (governments) are forcing banks to do things in lieu of all the capital injections that they are promising; to do things that from a commercial standpoint do not make sense. For example, going into a recession, banks should be tightening their credit facilities. They should be pulling back, not expanding," Forde said.
As a result, the lending that the banks have been encouraged to do will go sour in the next six to nine months, he said.
Forde also believes that if OPEC does not take the "window of opportunity" at its next meeting in November and agree and instigate supply cuts, oil will head back to $40 a barrel by the third quarter of next year as "global recession goes into its fourth quarter of negative movement."