Anyone who has followed Josef Schachter's monthly commentaries on Canadian energy stocks since he started them in 2002 got a shock in October.

A perennial bull through eight years of price slumps and supply gluts, Schachter reversed his view.

Schachter warns investors to sell. (CBC)

The commentary, headed Significant Stock Market Risk, advised, "sell/take profits — raise cash."

The following 16 pages, dotted with technical graphs and price charts, argued what recovery there's been has come largely from government stimulus, the benefits of which have flowed mostly to Wall Street. That has created a boom on the financial markets but has left much of Main Street mired in recession. What's more, it said, the signs are there — both in the real economy and on the financial markets — that another economic downturn is near.

"I think we are seeing a lot of evidence that there will be a double-dip," Schachter told CBC News.

Much of the prevailing economic wisdom suggests a recovery is taking hold, despite disappointing August gross domestic product numbers released on Oct. 30, showing the Canadian economy contracted by 0.1 per cent.

'I think we are seeing a lot of evidence that there will be a double-dip.' —Josef Schachter, Commentator, Maison Monthly

Diana Petramala, an economist with TD Bank, argued that underlying strength in the Canadian economy still suggested that it was set to advance at a one-to-1.5 per cent annualized pace in the third quarter.

The Conference Board of Canada last month suggested that the U.S. economy has hit bottom and predicted that aggressive government stimulus around the globe would lead to growth over the second half of 2009 and into next year.

Even Finance Minister Jim Flaherty, however, has acknowledged that the data suggested the recovery is still "fragile and tentative."

Nymex oil traders: Schachter says oil prices don’t reflect supply and demand. (CBC)

Schachter, who provides research and analysis on Canadian oil and gas companies for Maison Placements Canada, a Toronto-based buyer and seller of investments for large institutions, disagreed.

Schachter's focus on oil has been telling him something.

American demand has fallen enough that the U.S. Strategic Petroleum Reserve now exceeds the legally-required required 59-day supply by nine days. That much supply suggests the price should be about $50 barrel, according to Schachter.

'Main Street is suffering'—Josef Schachter, commentator, Maison Monthly

Much of the reason for its current price, in the mid-to-high $70s US, he said, has been triggered by trillions of dollars in stimulus from the Federal Reserve and the U.S. Treasury, none of which is going into building productive assets such as highways, airports or hospitals, but has produced a chain reaction and a flow of funds into the oil markets in a bet that the recovery is taking hold.

"Wall Street is fiendishly enjoying the punchbowl again," he said, "while Main Street is suffering."

Much of the hope for recovery relies on the consumer, who in the past provided two-thirds of domestic economic activity in the U.S. That spending, however, came largely from borrowing against home equity. As home values slide below those of mortgages, and with unemployment headed above 10 per cent, Schachter said there's little reason to expect a strong rebound in consumption.

"Forty per cent of housing in the United States is below water," he said, "so people don't have money."

If there is a double-dip, and the soaring U.S trade and fiscal deficits push the American dollar lower, Schachter warns, that raises questions not only about the ability of the American government to fund further stimulus but also even about its very solvency.

Schachter has listed several issues which, if they take effect together, could tilt the North American economy back into recession. (See sidebar.)

Artificially high energy prices create a problem for Canada, as well, Schachter suggested. Oil and gas are Canada's biggest exports to our biggest trading partner, the U.S.

"If you remember, going back a few months ago, when energy prices were in their $30s back at the end of last year and early this year," he said, "remember where the Canadian dollar was. Much, much lower.

"The Canadian dollar at 96, 95 cents that we saw at the high is impossible for the industrial heartland of Canada to work in," Schachter said. He predicted that if oil prices pulled back to more realistic levels, the Canadian dollar will too, to the mid-to-high 80 cents U.S., which would be "a lot more conducive to industrial activity."

Since his career began in the early 1970s, Schachter has seen a number of economic corrections, each one for different reasons. This one, he said, is different.

"It's just that this is one of those few times when I see such a large gap between the reality on Main Street and the world according to Wall Street and Bay Street. And when you have those large gaps, you have to be cautious."

These are the days, Schachter advised, to sell on rises in the market, the better to be a buyer when good times return.

That's something he said might take six months to a year.