Financial Guru Foresees Tougher Times Ahead

NEW YORK, Jan. 7 /PRNewswire/ -- MS -- By the end of 2008, words like "bailout," "foreclosure" and even "recession" had taken over the national headlines. While some look back on the last 12 months in shock, for others the drastic turn of events in 2008 came as no surprise. Such was the case for popular radio host Lou Scatigna, otherwise known as "The Financial Physician." Just 12 months ago, Scatigna offered a dreary forecast for 2008, predicting the failure of large financial institutions and a drastic decline in the stock market among other things.

With the new year upon us, Scatigna once again finds himself offering a bleak forecast for the months ahead.

Stock Market

If investors thought 2008 made for a wild ride in the stock market, Scatigna says an even more exaggerated roller coaster ride awaits investors in 2009. While Scatigna predicts the inauguration of President Barack Obama will help the markets get off on the right foot come January, such a rally won't last forever.

"I expect the U.S. stock market to hit new lows by the end of the first half of 2009," offers Scatigna. "Investors will come to the conclusion that the worst for the economy and corporate earnings is still ahead of us."

Financial Institutions

By the end of 2008, "bailout" had become the buzzword sweeping the nation. According to Scatigna, that word will prove to have some staying power in 2009, particularly with respect to the nation's financial institutions. Although only 26 banks failed in 2008, Scatigna expects that number to exceed 300 in 2009, thanks in large part to debtors defaulting on their loans.

While the failures of banks will no doubt grab headlines, Scatigna sees the solvency of the insurance industry as an area of even greater concern.

"I expect at least one major insurer to fail in 2009 or need a bailout to stay alive," says Scatigna. "This is a major concern because many people have money in cash value life insurance and annuities deposited with insurance companies, and their failure would be catastrophic."

The U.S. Dollar

Arguably the biggest story in 2009, Scatigna predicts, will be the dramatic decline in the value of the U.S. dollar. As a result of the declining dollar, Scatigna predicts gold will reassert itself as a safe haven, possibly reaching record highs in value during 2009. Currently valued at $850 per ounce, gold could, according to Scatigna, nearly double in value over the next 12 months.

"I expect gold to trade over $1,200 per ounce in 2009," Scatigna says. "If there is a dollar crisis in 2009, as there very well may be, gold could rise to $1,500 per ounce."

For more financial forecasting, including predictions on the fluctuating prices of oil in the coming year and what scandals lie ahead for Wall Street in 2009, visit Lou Scatigna online at www.thefinancialphysician.com.