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Harry Dent Jr.

Portfolio > Economy & Markets > Economic Trends

Harry Dent: Market Crash Coming in 2-3 Years; Economy ‘Already Dead’

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With its “zombie” public companies and small-business failures, the U.S. economy is “dead,” and a second stimulus won’t revive it, Harry S. Dent Jr. argues in an interview with ThinkAdvisor.

“The Contrarian’s Contrarian,” as Dent is known, forecasts that the pandemic-afflicted U.S. economy, amid an enormous Federal Reserve-created bubble, won’t bottom out until 2023.

“The crisis ahead of us is a big detox of the biggest financial drug stimulus in history,” he warns.

The stock market will bottom late in 2022 or early 2023, he predicts. It will be “the lowest stock market of our lifetime.”

Dent, 67, accurately called Japan’s 1989 economic collapse, the dot-com bust and the populist wave that delivered the presidency to Donald Trump. He uses propriety research and bases predictions mainly on demographics and trends.

As head of HSD Publishing, the Harvard Business School MBA puts out the monthly HS Dent Forecast and Rodney Johnson Report, along with free daily insight “e-letters.” (

Detractors say Dent is mostly an ace marketer whose forecasts have often been wrong.

In the interview, he discusses his grim outlook for the market, discerned mainly from a “megaphone pattern” he sees, and provides an analysis of the “dumb money” and “smart money” going into and out of it.

Dent has written a number of bestsellers. His most recent title is “Spending Waves” (2019).

ThinkAdvisor interviewed the controversial prognosticator Tuesday. He was speaking by phone from San Juan, Puerto Rico, where he’s based year-round. Along with the dire predictions, Dent offered advice to investors who prefer to stay in stocks “this late in the bubble,” including an idea for “cheap insurance” to use as a hedge.

Here are highlights of our interview:

THINKADVISOR: What are your forecasts for the economy and stock market?

HARRY DENT: I see the economy bottoming in 2023 and the market bottoming at the end of 2022 or early 2023.

In my interview with you published on May 4, you said the country was in a depression. Have you proven yourself right?

When COVID hit, we had a short-term depression. It took GDP down [9.5% in Q2, equivalent of 32.9% annual rate of decline]. That’s a depression, not a recession. We’ve seen a V-shaped recovery for 80% of the non-travel, non-entertainment sectors — [that is], the non-heavily-affected-by-COVID sectors. People are acting now that we’re going to recover everywhere else too. Well, no!

Why not?

About 19% of publicly traded companies are zombies: They’re operating but can’t pay the principal and interest on their debt service. We have this zombie economy that’s just going to keep stumbling along; small businesses can’t float bonds [and are failing]. We’ll just keep having more business failures into early next year. The vaccine[s] won’t come out on a broad enough scale to be effective until the second or third quarter. By the time the [government] comes up with the second stimulus plan and the Fed reacts next year, it will be almost too late. The economy is already dead.

Please elaborate on your forecast for the stock market.

You-know-what hits the fan around December 2022. The cycles I look at point to our seeing the lowest stock market of our lifetime then, give or take. If you buy stocks at that time, you’ll never see those lows again. My indicators are really good as long as the central banks aren’t monkeying with the economy so dramatically [as they have been]. In late 2008, early 2009, they turned on the endless money spigot. But we can’t keep having artificial stimulus.

On what do you chiefly base your market forecast?

I’m seeing a megaphone pattern. The trend line is going up with each new high, but the trend line on the bottom is going down. The lower lows started in early 2018. The bottoms keep going lower. Right now, we’re getting a throw-over rally where it tries to break through but fails. Ever since the January 2018 bubble high, we’ve had corrections that have taken us to new lows; then the market takes us to new highs with stimulus — and then we get a new low.

What does your megaphone pattern predict?

The market can’t keep going up. We’re getting real close to a peak. The next new low is 42% down on the S&P; the Nasdaq could be down 50%.

What might happen when there’s another stock crash, and the market goes to that new low?

Investors are finally going to say, “We’ve seen enough. It doesn’t matter how much they stimulate — we always have another crisis, and the economy fails again.” You know why it fails? Because it’s dead. Banks keep zombie companies’ debt going, and [there’s all that] stimulus. The central banks have created a big monster, and [eventually] it’s going to look like a fool’s game.

Why is the stock market hitting record highs right now?

As long as this market goes up and quickly recovers, people don’t see much downside risk. That’s why the dumb money is jumping in and buying call options on 10 times leverage. They say, “How can you lose? Buy in this market. If it goes down, the Fed just drives it right back up.” And that’s what they’ve done.

What’s the smart money doing?

Selling into this rally over the last five months.

Why do you say, “We can’t keep having artificial stimulus”?

[The Fed] just can’t keep printing more money to try to stop the [already-] dead economy from dying. There’s a time when a doctor stops trying to wake up the heart with a defibrillator and says, “The patient is dead.” That’s what we’re going to have at some point. We’ll announce the funeral for this damn economy so we can go back to normal and grow again. You just can’t keep a dead economy going [without limit].

So you think that the stimulus doesn’t really help?

The Fed’s printing money is becoming less and less effective. But it will take another crash to prove it. We’re at a critical point where the markets have made that new high again, but there’s resistance.

Who, specifically, are “the dumb money” buyers?

The dumb money is small traders loading up on call options. When there was a kind of V-shaped recovery after the COVID [-caused] crash in March and the Fed stepped in, the dumb money [started investing] like there was no tomorrow. [They thought]: “You can’t lose. The Fed will always have your back. They’ll always print more money.” Of course that’s really dumb.


If people take heroin or alcohol for a long time, they always break down. You don’t drink two quarts of vodka a day and not break down. You either die or end up in detox. This crisis ahead of us is a big detox of the biggest financial drug stimulus in all of history. It has to happen at some point. It’s just a question of when. The smart money has been selling into this rally just like they did in the 2007-2008 crisis. The key thing is that when the smart money decides it’s over, they’ll start the downtrend that breaks the back of the dumb money.

How long will the smart money keep selling?

The smart money will go with this as long as they think the Fed will keep the thing going.  There’s a point when you make that new high and you don’t make a new high again. I think we’re topping now. You need to be cautious.

Suppose you’re a smart investor who doesn’t want to sell stocks now?

If you want to stay in stocks, hedge yourself. Buy a put option to hedge. You can probably do that for 3% to 4% of the cost. That’s worth doing if you want to hold onto stocks this late in a bubble. It’s cheap insurance. Once you have another serious crash, you won’t get that cheap insurance again. I think this is the last new high before another strong correction in stocks.

What are your thoughts about the federal deficit?

We have a $3 trillion deficit this year; it could [go to] $4 trillion. And this is when we’re in a somewhat modestly growing economy! Wait till we actually go into the downturn. We’ve doubled the federal debt every two administrations since George Bush [became president]. I see the deficit topping out in around 2024.

How would you sum up your forecast for the economy and stock market?

We’re at the breaking points. To be in my business and forecasting that the bubble is going to burst, you look like an idiot — until it happens. Then everybody looks — and feels — like an idiot. I’d rather see it coming a little early. Even though it will be a big crash, I’m looking forward to all this ending, when things can get back to normal and I can help people predict the future again.

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