As one of Investment Advisor’s asset allocation panelists, Gary Shilling of A. Gary Shilling & Co. shifted his September allocation recommendations to more heavily favor bonds. “I think stocks are still in trouble and bonds will probably rally further,” he says.

But in a market such as ours, this adjustment might have some planners questioning his purpose. His response: get out of equities now while you still can. And while accepting your losses and taking what’s left of your money may not be a popular decision, Shilling believes the market hasn’t bottomed out just yet and investors “could probably save themselves some money if they [got out] earlier rather than later.”

Decreasing stock allocations and increasing bonds is simply, in Shilling’s opinion, the way to go. “I don’t think there’s much you can do to convince people that stocks are a wonderful place to be after they have lost 50% or more of their assets,” he says. Expecting people to “rush back into stocks” is unreasonable.

So where should you and your clients go from here? Shilling offers some suggestions on moving forward. First, he says, “restoring confidence in some sense implies we’re heading back to the wild bull markets of the late 1990s, which is nonsense.” So it is necessary to dissuade people that stocks are the get-rich-quick scheme they once were. “Planners should be honest, and explain to people that that was an extraordinary period [the long bull market from 1982-2000] and we are not going to see anything like that in the future,” he says. Investors also need to lower their return expectations tremendously. “The idea of 20% to 30% returns, I think, is just unrealistic,” he says.

His long-term investment suggestions are as follows: find companies with dividend returns. Dividends “assure investors that the company has real earnings and real cash flow,” he says. “And with today’s accounting questions, that is important. I think if stocks–including dividends–return 4% to 6% in the years ahead, it will be good.”

He also says he believes it is wise to have clients “try to psychoanalyze themselves and decide whether or not they are really long-term investors,” he explains. “Most people think they are, but they really aren’t, and they end up panicking and dumping at the absolute bottom.” That’s why you should instead consider a good bond.

For those planners who firmly believe in stock-heavy investing, Shilling had only this to say: “It is kind of like the economist who never forecasts a recession and then tells you it is almost over. It’s not very reassuring.”