Here Comes Fredddiiieee!!!

When they were at the investment bank Dresdner Kleinwort, strategists Albert Edwards and James Montier were sometimes labeled as "permabears" because of their persistently negative views on the excesses in global financial markets, among other things.

To some, that would be enough reason to dismiss their commentaries as worthless rants. But as of 2007, in fact, those two individuals were ranked number one in the Global Strategy category for five straight years and number one as a team across all sector categories for three straight years in the annual Thomson Extel survey of analysts.

Aside from that, of course, their concerns about the underlying health of the financial system proved prescient, given the consensus view that the crisis now occuring is the worst since the Great Depression.

Anyway, Edwards and Montier left Dresdner, and over the past year or so, they have been toiling away at French bank Societe Generale, where they serve as co-heads of global strategy.

In "This Week’s Advice: Canned Food, Guns and a Ham Radio," David Gaffen at the Wall Street Journal's MarketBeat blog offers up a sampling of their latest no-nonsense insights on where things are headed.

The prevailing view among investors throughout the duration of the post-Bear Stearns recovery rally has been that the U.S. and global economy might continue to weaken, but economic performance would merely be lackluster, not terrible.

Strategists at Societe Generale say nuts to that in commentary today, lowering their recommended weighting for equities to 30% and boosting their weighting for bonds to 50%, saying “we are on the cusp of an equity meltdown that will slash and shred portfolios like Freddie Krueger.”

Soc Gen strategists have been bearish for about a decade, as they note in their commentary, as they expected equities to go through a period of “valuation de-rating similar to Japan.” Albert Edwards, strategist at the bank, increased his low equity exposure to 45% earlier in the year on expectations of a bear-market rally, but those days are long past as he considers the possibility of a further decline in stocks — and rants against those who would mindlessly advise buying equities.

“One of the clearest impressions that I will take away from working in this industry is how darned bullish everyone wants to be,” he writes. “To be sure, nobody likes to be a party-pooper but the bias towards optimism in this industry is truly staggering.”

Seriously, Mr. Edwards. Tell us how you really feel. “With many of our favored technical indicators flipping from excess bearishness in January, to excess bullishness today it is time to sell and head for the hills,” he writes.