When bull market breaks, it’s ‘likely to break hard’, warns longtime bear who suggests investors are over-relying on vaccine



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“I believe in the Austrian School of Economics which says that the magnitude of the decline is proportional to the excesses created in the previous boom. I was at the beginning of 1998, 1999 and from 2006 to 2007… When it breaks, it risks breaking hard ”

This is David Tice, the former manager of the Prudent Bear Fund BEARX,
,
explaining to CNBC in a recent interview why he believes the market will end up taking a 30% hit that will last for two years.

“We now have a Biden administration that has a Senate and a House. They are likely to enact many more anti-capitalist policies, ”he said on Friday. “They have already raised the minimum wage. It will hurt revenue on the cost side. ”

Tice, known for making bearish bets throughout his career, has had his share of misfires. In fact, the AdvisorShares Ranger Equity Bear ETF HDGE ETF, where he now acts as an advisor, has lost about a third of its value in the past three months.

The fund, however, is designed to benefit when the market is beaten, and Tice believes that day is approaching. The problems, he said, are mounting, whether it’s high ratings or too much confidence in the pandemic being under control.

“The vaccine isn’t really a panacea,” Tice told CNBC. “We’ve seen a lot of optimism about it, but there are new strains of the virus, and there are certainly risks in the future.” So what should an investor do in this climate? Tice is bullish on GC00 gold,
-0.16%
and bitcoin BTCUSD,
+ 2.73%.

“Gold is significantly under-held by individuals and portfolio managers,” he said. “I don’t think bitcoin can be ignored. We’ve seen the price of bitcoin drop from $ 10,000 to $ 40,000, which I think potentially foreshadows what could happen in gold.

Here are his comments:

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