Investor David Tice expects stocks to fall 30% in protracted bear market
This period can last for two years..
Investor David Theis issued a new warning. He expects stocks to fall at least 30% during a two-year recession. One of the main reasons contributing to this is the unfriendly policy of Washington.
«We now have an administration Joe Biden, which also includes the Senate and the House of Representatives. A much more anti-capitalist policy is likely to be pursued, an investor told CNBC. – They have already raised the minimum wage. This will negatively impact profit margins in terms of costs.».
Tice says soft monetary and fiscal policies that support money printing will also hit Wall Street..
«This is all bad for financial markets.», – he added.
Tice is best known for managing the Prudent Bear Fund before selling it to Federated in 2008 during the financial crisis..
Now as an advisor to the exchange-traded fund AdvisorShares Ranger Equity Bear, Tice has spent most of his career making bearish bets during bull markets. His current fund, which is also focused on identifying and capitalizing on the sale of shares in companies with weak outlooks profit or having any other operating or financial problems now under pressure. Over the past three months, it has decreased by 32%.
In his final warning, Theis argues that problems are piling up. He also cites the overpriced market and fears about the coronavirus vaccine as reasons for his pessimism..
«The vaccine is not really a panacea, he said. – We are very optimistic about this, but there are new strains of the virus and there is certainly a risk in the future».
Theis admits that his expectations were not always met..
«I saw the bear markets approaching and people called me the eternal bear, ”he said. – I believe in the Austrian School of Economics, which claims that the magnitude of the recession is proportional to the excesses that occurred during the previous boom. This was the case at the beginning of 1998, 1999 and from 2006 to 2007».
Despite his bearish position, Theis does not know for sure exactly when the problems in the market will start..
«Markets tend to expand, ”he said. – But when the market breaks, it is likely to break hard and make investors suffer for a long time».
Thus, Theis continues to side with gold as the main asset for investors. Gold rallies more than 25% after stock market bottomed on March 23.
«Gold is largely under-owned by individuals and portfolio managers, he said. – Gold stocks are incredibly cheap».
He also likes Bitcoin as an investment tool..
«I don’t think bitcoin can be ignored, says Theis. – We saw the price of bitcoin go from $ 10k to $ 40k, which I think is an omen of what could happen to gold».
White House did not respond to CNBC’s request for comment on Tice’s remarks.