(March 14) – “Sure, it has been a rough year in the stock market,” writes Susan Pulliam in today’s Wall Street Journal.

“But we haven’t seen anything yet, at least in the view of Fred Hickey, who publishes a widely followed, and very bearish, technology-stock newsletter.”

“Just how bad could it get in Mr. Hickey’s gloomy view? Try the Dow Jones Industrial Average at 5000, the Nasdaq Composite Index below 1000 and the Standard & Poor’s 500 at about 600, about half the current levels for all three indexes. And that is just for starters, he says.”

” ‘We are seeing the unwinding of a bubble, and that will take us not only back to levels of normalcy but below that,’ he says. Indeed, he says, a Nasdaq 1000 would bring the index down to a price-earnings multiple of about 40 times trailing 12-month earnings; that wouldn’t be too far removed from the average level of about 50 that Birinyi Associates cites since 1985. That multiple currently is approximately 150 times trailing 12-month earnings, according to Birinyi.”

“The Dow at 5000, by comparison, would trade at a multiple of about 10.5 times trailing 12-month earnings, roughly in line with historical levels; the Dow now stands at about 21 times its trailing 12-month earnings. In neither example, Mr. Hickey says, would the indexes fall to price-to-earnings levels seen in past bear markets.”

“Mind you, Mr. Hickey, who composes his missives in Nashua, N.H., and dispatches them via the U.S. Post Office, is a veritable grizzly compared with the average bearish investor. And his views are a far cry from the ones generally found on Wall Street, which mostly says that the market is near its bottom.”

“But some well-timed — albeit dire — prognostications, particularly concerning technology stocks, have earned Mr. Hickey a following not only among big investors on Wall Street but among small investors as well. ‘Nothing will save the computer industry’ from high saturation levels, he told subscribers in March 2000, a prediction that was borne out later in the year when demand for computers plummeted. Later in the year, he warned for the first time in an interview that the Nasdaq would drop below 1000 in the coming year.”

“Now, Mr. Hickey’s bleak predictions made at the height of the tech bubble are starting to look prescient. And — in true bear fashion — Mr. Hickey is convinced the worst is far from over. ‘I don’t think anyone knows if we are going to have a depression,’ Mr. Hickey says. ‘But I think, for sure, we are going into a recession,” he says. “It all depends on where we end up on the scale between recession and depression. It’s clear we are going to be in this for a very long time.’ “