Chua Soon Hock is the latest voice to join the Bear Camp - and I certainly am paying attention

Chua Soon Hock, the man whom I respect thoroughly and who predicted correctly that stocks were about to make great recoveries last year has now made an about turn - he now says stocks are too expensive, and are poised for a fall. When will this happen? During July to October.
Markets are priced for a sharp earnings recovery, but the probability of disappointment is high. Chua says there is a possibility of a deep recession next year due to the following reasons:

1) There is too much industrial capacity globally, but global consumption may not increase as consumers in US, Japan and Europe are tapped out. Unemployment is also heading higher.

2) Likelihood of increased housing loan defaults plus high inventory in the US

3) Problems of excessive debt, overleveraging and unfunded liablities cannot be addressed with "print more money" policies.

4) Japan's economic recovery will be weak due to weak demand for its goods.

5) Effect of cheap money wearing off due to high commodity prices and weak US dollar

6) Investors not prepared for bad combination of high commodities inflation + asset deflation + high structural unemployment

7) High commodity prices are not in China's long-term interests.

Chua is uncannily accurate in his stock market predictions. Very contrarian views, yet pinpoint accuracy. He correctly warned of the bear market in July 2007. He also correctly predicted the current bullish phase (refer to my Nov 2008 blog). Therefore, it is time to be "cautious and brace ourselves for a possible market reversal", as Chua succintly puts it.