Citi forecasts 35% downside to equities by Q2 next year

It is pretty shocking to hear a top Citi analyst telling Bloomberg’s Linzie Janis that they are forecasting a scenario with a 35 per cent downside to equities by the second quarter of 2012 in line with what happened in the dot-com crash.

This is a reminder as if we need one that the downward trend in stocks that started in earnest in August is likely to continue for some time. Of course we do not know if this will be a repeat of 2008 with a severe fall this month and next followed by a rally and then another crash into a new low next March.