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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 that arose during the previous boom. I was in early 1998, 1999 and 2006 to 2007 … If it breaks, it will probably break hard ‘
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That’s David Tice, the former manager of the Prudent Bear Fund BEARX,
explaining to CNBC in a recent interview why he believes the market will eventually take a 30% hit that will last for two years.
“We now have a Biden administration with a senate and a house. They will likely pursue a lot of anti-capitalist policies, ”he said Friday. “They have already raised the minimum wage. That will hurt the revenue on the cost side. ”
Known for making bearish bets throughout his career, Tice has had his share of failures. In fact, the AdvisorShares Ranger Equity Bear ETF HDGE, where he now serves as an advisor, has lost about a third of its value in the past three months.
However, the fund is designed to capitalize when the market is beaten up, and Tice believes that day is coming. The problems, he said, are piling up, whether it’s high valuations or perhaps too much confidence in getting the pandemic under control.
“The vaccine is not really a panacea,” Tice told CNBC. “We’ve seen a lot of optimism about that, but there are new strains of the virus and there are certainly risks going forward.” So what should an investor do in this climate? Tice is optimistic about gold GC00,
and bitcoin BTCUSD,
“Gold is dramatically under-owned by individuals and portfolio managers,” he said. “I don’t think bitcoin can be ignored. We’ve seen bitcoin’s price rise from $ 10,000 to $ 40,000, which I think is a harbinger of what could happen in gold. “
Here are his comments: