Economist, money manager, and Forbes columnist Gary Shilling says talk of a “V” shaped economic recovery is overdone, and that we’re in a bear market rally — not a new bull market.

Shilling tells Steve Forbes that he thinks stocks are in a bit of a bubble following the recent runup. “There was a realization earlier this year that the financial structure was not going to disappear into the earth, and that was certainly cause for a revival in stocks,” Shilling says. “But, to me, they’ve way outrun reality.”

Shilling thinks we’ll likely see positive economic growth in the third quarter, but that it will be largely due to “inventory gyrations”. Negative growth numbers could well pop up in the fourth quarter and first part of 2010, he predicts, and he thinks a corresponding market decline could also spill into 2010. After that, he thinks we probably will see a rebound, but he doesn’t expect a “rip-roaring stock market” over the next decade. Individual investors should stress safety, he says. “I think they ought to be very cautious and investments … should be in the defensive areas,” like consumer staples, utilities, healthcare, Shilling says. He also explains why he’s still bullish on Treasuries, and isn’t impressed by commodities.