close
close

Harry Dent: Huge stock market crash likely within 10 months

Harry Dent: Huge stock market crash likely within 10 months

Harry Dent Jr., also known as “the Contrarian’s Contrarian,” never beats around the bush.

“Go away…!” is his message to both stock market investors and President Joe Biden, as he tells ThinkAdvisor in an interview.

In terms of investments, he said, “there is no other place to hide than in the best, highest-quality 10- and 30-year U.S. Treasuries.”

As for Biden, his advice is blunt: “Get out of the way… Otherwise you’ll be sorry.”

Dent, whose HSD Publishing publishes monthly newsletters that he writes with his partner Rodney Johnson, correctly predicted the Japanese bubble and recession of 1989, the dotcom crash and the rise of populism that brought Donald Trump to the White House in 2016.

However, many of Dent’s predictions have failed.

For several years now, he has been predicting the biggest crash ever, when the “monster bubble” of the stock market, as he calls it, will finally burst and “the crash of a lifetime” will follow.

“We’re getting very close,” he says in the interview.

He argues that the crash is a time to make money and describes a scenario for selling stocks and making the best investments right now.

He also gives his opinion on the likelihood of a recession and gives his assessment of artificial intelligence, which he calls “the screaming new baby.” It’s the future.

Before people subscribe to the HS Dent Forecast, they are offered free newsletters. He points out that each of these newsletters contains a number of his signature passages from the “Harry’s Rants” series.

Here are excerpts from our conversation, which took place on July 5:

THINKADVISOR: Do you still think the biggest stock market crash ever will happen this year?

HARRY DENT: Yes, I do. But I don’t know exactly, but we’re getting very close. It’s already starting to crack, but it could really crack in six, eight, ten months.

It is difficult to predict the timing because the economy has been disrupted by massive government stimulus.

Please provide some more information.

The 2009-2024 stimulus has created a giant artificial monster everything bubble. It is the biggest bubble in history and will have the biggest burst in history.

It will happen fast and hard. We have never pumped so much extra money into the economy — $27 trillion in stimulus — and had such growing deficits.

That money is actually going into the financial markets. (So) this bubble. We haven’t had a meaningful long-term recession since the 1970s.

The bubble is the price of putting all that money into the economy. It distorts the economy, and it distorts the market more than anything else.

So what should financial advisors tell their clients?

Get out of the market. The only thing you can do is get out of the way, give up your profits for now — whatever you make, 10%, 12%, 5%, 7% — and let this thing work itself out.

Then get back in when the market falls to fair value, which is the 2009 lows: an 86%-87% drop on the S&P 500 and 92%-93% on the Nasdaq.

What is the best investment to make when exiting the stock market?

The safest place to be is cash and T-bills. There is no other place to hide than in the best high-quality U.S. Treasuries.

This downturn and the deepest recession that follows (after) are about making money. You make money by investing in the safest long-term investments on earth: 10- and 30-year US Treasuries, the (global) king of bonds.

Why would you buy that?

If this bubble bursts, there will be deflation and all financial assets will disappear into thin air. US Treasuries are a deflationary move after a bubble.

You just have to hold them through the crisis, probably for two, maybe three years. They will appreciate in value.

When prices shoot up and stock prices fall 80% or 90%, gold falls 50% or 60%, corporate bonds fall 40%, junk bonds fall 70% or 80%, real estate falls 50% or 60%, and you know you’ve hit the bottom, you sell the bonds and look for good long-term stocks and real estate.

What would you personally buy if you think the recession has bottomed out?

Probably bitcoin, the leader in crypto. I would buy Nvidia and all (other) leaders of what is new.

Would you buy Nvidia now?

Don’t be like everyone else and think you can’t go wrong buying the Nasdaq 100 top tech stocks. They are the most overvalued in history.

The leaders in a bubble collapse the most. So you don’t buy them now. Nvidia goes down 96% or 98%.

But isn’t artificial intelligence the most popular investment model of the moment?

AI is the screaming new baby. It’s the future. Crypto is the future. Crypto is the digitalization of all financial assets.

In the coming decades, Bitcoin will become the digital standard. Then the global economy will consist mainly of intangible goods, not tangible ones.

But what about gold, the standard? It’s seen as a safe haven.

Gold does not correlate with the new economy. In fact, it does not correlate at all. It only grows 1% per year. Gold is not a digital safe haven like bitcoin could be.

So you’re also saying that the crash you predict will cause a recession in the US?

Yes. You will see a lot of debts turn bad. That will make the recession worse. It could be long lasting or it could be more severe and faster.

You have to clear the deck with a recession. You can’t have a healthy boom without a healthy boom before that.

The government went crazy and printed $27 trillion in stimulus money, and they keep pumping money into the economy. That shows that the economy is very weak at the bottom. Or why would it need all that stimulus to keep going?

The government has been preventing this necessary recession for 14 years (by injecting stimulus money).

Printing money out of thin air and running up massive deficits has consequences.

The real consequence is the biggest, longest everything bubble in modern history. Only one thing can happen: it has to burst.

When the dam finally breaks, we will be faced with the largest (collapse) of a bubble.

Of course, if (the economy) goes downhill again, they’ll just print a lot more money. But it’s going to yield less and less. It’s going to have less impact if you’ve stretched the economy a lot further.

What do you think about President Biden and former President Trump and the 2024 election?

I think God saved Biden (given his obvious cognitive and physical decline) from crucifixion.

Biden is screwed either way. He should say, “I’ll be the nice guy and get out of the way” — and then run and hide somewhere. Otherwise he’ll regret it.

I like him. I don’t like Trump. He’s the biggest a—— I’ve ever seen. He’s a smart a——, smart enough to know better.

Whoever is elected (except Biden) will enter a crisis that is already underway; and so (they) will not be blamed for it. Then we will emerge from the crisis and the party in power will benefit from the turnaround, especially the non-incumbent party.