As if investors didn’t have enough to worry about, a new land mine is lurking: “the Obama market.”

That’s what I heard over the weekend from a veteran investment adviser, Charles Allmon. “Political ramifications represent a significant added market risk that should not be ignored,” he says.

Initial polling suggests that Senator Obama will be the next president, a view Mr. Allmon shares. An Obama presidency is certain to mean a big tax increase, he says. He also points to the likelihood that the senator will seek to raise the marginal tax rate to 52% from 39.6% and hike the capital gains tax rate to at least 25% from 15%.

“He’ll cause more damage to the stock market and even make Jimmy Carter look good,” Mr. Allmon says. “Senator Obama is leading a children’s brigade, but the problem is children shouldn’t be leading this country.”

Wall Street, they say, is a young man’s game. Try telling that to our 87-year-old worrywart, who has been doggedly tracking the stock market for more than half a century and who offers a compelling argument that money managers in their golden years still have the brain power and analytical savvy to strike gold.

Mr. Allmon, who manages about $200 million of assets — individual, pension, and profit-sharing money — is outperforming this year’s crummy market, with a modest gain, he says, of between 1% and 2%. He attributes this showing to a conservative investment strategy, notably huge cash reserves (currently at 80%).

“You have to be crazy not to be conservative in this kind of market unless you’re willing to take a bath,” he says.

Further, the veteran adviser, who publishes a 46-year-old monthly investment newsletter, the Growth Stock Outlook, out of Bethesda, Md., made a marvelous market call last July with the Dow Jones Industrials hovering around 14,000 and bullish sentiment rampant. In an ominous warning to subscribers, he urged extreme caution, predicting the Dow was on its way to 8,500 to 9,000, which he noted was a forecast that “could be on the high side.”

With the index having plummeted more than 2,500 points since then, his crystal-ball gazing talent is not to be taken lightly.

At the time of his forecast, Mr. Allmon recalls, some subscribers rang him up and told him, “You’re nuts.” But now, he says, “They’re beginning to recognize something is really wrong in this country, and an 8,500 to 9,000 Dow is very possible.” Thursday and Friday’s wicked two-day Dow decline of 465 points, or nearly 4%, he says, may be a prelude to that drop.

Why a further decline? “Because there’s quicksand all around us,” Mr. Allmon says. “We’re in an economy that’s tanking, we’re looking at the most significant economic downturn since the 1930s, and the dollar is going to hell.”

All of this means that the Federal Reserve will have to raise interest rates to protect it and to stem inflation, he says. Another of his worries is profit deterioration, evident by a 25% drop in the S&P 500’s first-quarter earnings.

Mr. Allmon, who believes we’ve actually entered a period of stagflation (a mixture of rising prices and slowing business activity), is also alarmed at the deteriorating housing market, which, he expects, will get a lot worse.

“Close to 20% of this country’s homes are under water,” he says, a figure he believes will eventually rise to 25% to 30%. In this context, he’s especially critical of Fannie Mae and Freddie Mac for making loans at 105% of equity. “They’re encouraging deadbeats to become homeowners, which is a stupid thing to do,” he says. “It’s like trying to buy a car with no money down. It just won’t happen.”

Mr. Allmon is convinced that home prices are headed down for at least the next three to four years. As a result, he says, “people will see the biggest asset they own decimated, which means they’re going to cut back like crazy on their spending.”

Given his glum market view, it’s incomprehensible to him that Wall Street is pushing people to buy stocks. “They live on commissions, so maybe what else would you expect them to do,” he says.

Although bearish, Mr. Allmon favors a select number of stocks he feels can buck a falling market. In particular, he likes gold shares Barrick Gold and Newmont Mining, Philip Morris International, Altria, Chevron, ConocoPhillips, Schlumberger, and Nestlé.

His favored strategy at this point: a boring four-letter word spelled c-a-s-h. He also likes Treasury bills, namely six months, and nothing more than two years, because interest rates have to go up, he says.

Mr. Allmon’s parting words: “We’re in a bear market that’s got more to go; don’t get sucked in.”

dandordan@aol.com