Over the past three weeks, eager investors, after slow January stock purchases, have gone on a buying binge, pouring an estimated $11.1 billion into equity mutual funds. Judging from what veteran investment advisor Charles Allmon tells me, an anonymous saying that dates back to the 16th Century – A fool and his money are soon parted – aptly applies to these stock buyers.

Mr. Allmon, who turned 84 last week, believes “the current market risk rivals the three great market tops of the past 100 years,” notably in 1929, 1972, and 2000. Taking sharp issue with about 80% of the market seers who are essentially bullish on this year’s market prospects, our aging grizzly, in contrast, looks for the Dow to tumble about 10% to 20% in 2005.

Mr. Allmon, author of the 41-year-old biweekly newsletter, the Growth Stock Outlook in Chevy Chase, Md., is not a fellow to be taken lightly. Remarkably, the newsletter has posted a market gain in its model portfolio every year over the past 30 years, he tells me.

Running down a number of reasons why he’s such a gloomy Gus, he kicked off with valuations, especially dividend yields and price-to-book values, which, he noted, are as expensive today as they were during the great market tops of the past. “I’m a value player and I just don’t see much value in today’s market,” he tells me.

He also views the consumer, who is spending more than he earns and is borrowing more money than ever before, as basically tapped out. “America can’t go on spending beyond its means forever; at some point the economy (of which two-thirds is consumer spending) will be forced to pay the price.”

Mr. Allmon also sees much danger in real estate, which he describes as “a fool’s paradise. Noting he has never seen such an inflationary boom as he has in housing-which he views as a prelude to a huge rollback in prices-Mr. Allmon sees at least a 10% to 20% decline in home prices on the horizon. Adding to the real estate risks, he observes, many home buyers are cementing deals with down payments of 3%, 5% and 10%, and in some cases, he adds, the mortgage is 125% of the purchase price.

Taking note of the recent hike in interest rates, the sixth such boost since June, Mr. Allmon sees more increases ahead, reflecting mounting inflationary worries on the part of some Fed officials. “And when rates go higher,” he said, “the party will be over.”

Another worry, which he feels has ongoing ominous implications for both the economy and the job market: “We’re losing more and more of of our manufacturing base to China” (where wages of 90 cents an hour are not uncommon).

On another front, our worrywart points to “the Muslim conquest of Europe,” which he notes “is rolling like a steam engine.” Eventually, he said, it will flatten Western civilization, in the process setting the stage for more terrorism and more wars.

Told that a number of his worries were hardly earth-shattering revelations, that they’ve been expressed by others in the past, Mr. Allmon responded, “Maybe so, but Wall Street should know it can’t live in Dreamland forever.” Given his concerns, he said he would sell most stocks and recommends portfolios be 75% in cash.

Giving conviction to his bearish outlook, he notes former Fed chairman Paul Volcker recently said there was a 75% chance America would face a financial crisis over the next five years, replete, he noted, with all the gory aftermath visited upon a spendthrift public. In other words, he added, Mr. Volcker is saying the secular bear market in common stocks probably will continue.

Reflecting his concerns, Mr. Allmon, who also manages about $100 million of assets, is presently 76% in cash, on his way soon, he noted, to 82% to 83%. “We want to sleep well at night knowing our assets will not blow away in a market hurricane,” he said.

Asked which stocks he would own, he gave me five names, namely four dividend payers – Altria (4.4%), Bristol-Myers-Squibb (4.6%), New Plan Excel Realty, the country’s first real estate investment trust (6.1%), Chevron-Texaco (2.6%) – and, as “an insurance play,” Newmont Mining, America’s largest gold producer.