A strategy chief shares why a recession that causes stocks to fall 20% to 25% from their highs could be only 3 to 4 months away

• Stocks could fall 25% from all-time highs, said Merion Capital Group strategy chief Richard Farr.
• A recession may hit as consumer spending slows and inflation continues to rise.
• These four industries may be home to opportunities thanks to a curious catalyst.

Richard Farr, the chief market strategist at Merion Capital Group, isn’t afraid to rock the boat and declare that US stocks are a sinking ship.

Expect the S&P 500 to plunge 20% to 25% from the all-time high of 4,818 it set in late 2021, wrote Farr and fellow strategist Jim McGovern in an April 6 note. In fact, the pair wrote that the drop “could be much worse” if the historically strong job market starts to weaken.

“We believe this is a bear market with significant downside risk,” Farr and McGovern wrote. “You buy deep dips and sell rallies.”