The investor who sold his bear fund in the wake of the 2008 financial crisis has given Wall Street a grim long-term forecast.
From the S&P 500 to Big Tech to Bitcoin, David Tice warns that it is a “very dangerous time” for investors right now.
“The market is very overpriced in terms of future earnings. We’re building up debt like we’ve never seen before, ”the former Prudent Bear Fund manager told Trading Nation on Friday. “We have very strange behavior in the treasury market with interest rates falling dramatically.”
Known for placing bearish bets in bull markets, Tice now advises the AdvisorShares Ranger Equity Bear ETF, which manages $ 70 million in assets. The fund is up 3% last month but is down 62% over the past two years.
He admits that timing the next big pullback is difficult, and it’s often too early. However, Tice believes that a market collapse is inevitable.
“We’re not out of the woods yet and this is a dangerous market,” Tice repeated.
He encourages investors to weigh the risks: are you trying to make short-term gains of 3% to 5% while grappling with an impending 40% retreat? Tice thinks it’s a bet that’s not worth it.
Tice is particularly concerned about Big Tech and the FAANG stocks, which include Facebook, Apple, Amazon, Netflix, and Alphabet, formerly known as Google.
“There was a lot of money tossed around the alphabet and Microsoft, Apple and Facebook, Twitter, and so on,” noted Tice. “The costs are increasing in this sector.”
Bitcoin is “very dangerous to hold” today
He also urges investors to be vigilant in the cryptocurrency space. Tice, who started the year as a Bitcoin bull, turned bearish on Bitcoin when it hit an all-time high in March.
“We had a bitcoin position when bitcoin was $ 10,000,” said Tice. “However, when it got to $ 60,000, we felt it was a long time in the teeth … There has been a lot more turmoil lately from central bankers, the Bank for International Settlements [and] the Bank of England has made profound negative statements. I think it’s very dangerous to hold today. “
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Due to its general bear market, Tice co-founded the hedge fund Morand-Tice Capital Management almost exactly a year ago. It is geared towards metal and mining stocks. A longtime gold and silver bull, Tice believes this is a once in a lifetime opportunity for investors.
“You look at this lack of discipline in the money and fiscal markets. Gold is really the place,” Tice said. “Gold and silver are very suitable as protection against fiat money for over 5,000 years.”
Gold closed at $ 1,812.50 an ounce on Friday. It’s down 4% so far this year and it’s up 28% over the past two years. Tice expects the precious metal to soar 10% to $ 2,000 by December.
“I would own gold, especially gold and silver mining companies. Those companies have never been cheaper. Many are in the single digits, but even with this flat gold price, they have a potential profit growth rate of 15-20%,” Tice said. “But then there is what we think is a 20% annual increase in gold prices and these companies will be great opportunities.”
Disclosure: David Tice owns gold, silver and mining stocks.
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