How to invest with the S&P 500 at risk of falling up to 28% in the next 3 months as valuations contract, according to an investment chief and 5-star fund manager

• Doug Ramsey, chief investment officer of The Leuthold Group, sees big risks ahead for stocks.
• Valuations in past downturns suggest that the S&P 500 could fall another 28%.
• Here’s how Ramsey is investing now to protect his portfolio from further pain.

Don’t be surprised if the S&P 500 plummets by up to 28% in the next three months, said Doug Ramsey, chief investment officer of The Leuthold Group, in a recent interview with Insider.

“I think there’s a good chance we eventually trade down to a two-handle,” Ramsey told Insider, meaning the S&P 500 could fall all the way to the 2,000 to 2,999 range. The index started the year at 4,766 and is now down 24.5% to 3,600 as rampant inflation and rising interest rates have crushed stocks.

His reasoning for this bearish outlook is simple: Although this year’s stock market selloff has been one of the worst ever, investors may soon be even less willing to pay up for a company’s future earnings.