In a prolonged bear market, shares will fall at the least 30%: David Tice
Longtime bear David Tice has a new warning for investors.
He believes stocks will fall at least 30% in a two-year downturn. One of his main reasons: Washington’s business-unfriendly politics.
“We now have a Biden government with a Senate and a House. They will probably take a lot more anti-capitalist measures,” the investor told Trading Nation on Friday. “You have already raised the minimum wage. That will affect the result on the cost side.”
Tice said simple monetary and fiscal policies that support money printing will hit Wall Street too.
“All of this is not good for financial markets,” he added.
Tice is known for running the Prudent Bear Fund before selling it to Federated in 2008, just as the financial crisis was unfolding.
As an advisor to the AdvisorShares Ranger Equity Bear ETF, Tice has spent much of his career making bearish bets in the bull markets. His current fund, which should also benefit from underperformance, was under pressure. It’s down 32% in the past three months.
In his most recent warning, Tice claims the problems are mounting. He also leads an overvalued market and coronavirus vaccine concerns because of his pessimism.
“The vaccine is not a panacea,” he added. “We’ve seen a lot of optimism, but there are new strains of the virus and there is certainly a risk for the future.”
Tice admits that his timing wasn’t always on the right track.
“I’ve seen bear markets approach and people have been calling me a permanent bear,” he said. “I believe in the Austrian Business School, which says that the extent of the decline is proportional to the excesses that arose during the previous boom. I was in early 1998, 1999 and from 2006 to 2007.”
“If it breaks it will probably break hard”
Despite its bear market, Tice has no timetable for when the market problems will begin.
“The markets tend to expand,” he said. “But if it breaks, it will likely break hard and make investors suffer for a long time.”
As a result, Tice continues to advocate gold, which has risen more than 25% since bottoming on March 23, as a top investor asset.
“Gold is dramatically undershot privately owned by individuals and portfolio managers,” he noted. “Gold stocks are incredibly cheap.”
He also likes Bitcoin as an investment.
“I don’t think Bitcoin can be ignored,” Tice said. “We saw Bitcoin go from $ 10,000 to $ 40,000, which I think is an indication of what could possibly happen in gold.”
The White House did not respond to a request for comment on Tice’s remarks.
Disclosure: David Tice owns gold, gold stocks, silver, and bitcoin. He also has puts on the S&P 500 and QQQ.
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