Gary Shilling, president of A. Gary Shilling & Co. and Forbes magazine columnist, speaks to Yahoo! Tech Ticker about his outlook for stocks. He says that investors need to approach things “very cautiously” and that earnings on the S&P could come in at $40 per share next year. Assuming you have a multiple of 15 times earnings this puts the S&P at 600 (15 multiple x $40 per share for the S&P = 600) for sometime in ’09, estimates Shilling. Currently the S&P 500 trades above 890, so 600 on the S&P would imply a 32% decline from the levels we’re at today.

Shilling thinks the only place to hide is 30-year treasury bonds. He says that over the years all asset classes have moved in unison and become more correlated with each other as the smart money piles in and out of varying asset classes. If you are going to be long in this market, Shilling suggests defensive names, like utilities, that have high dividends.