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August 29, 2022 at 04:52 PM
Strategist Harry Dent Jr., “The Contrarian’s Contrarian,” has been predicting “a great reset of the biggest financial asset bubble in history” for some time. Now it is here, he tells ThinkAdvisor in an interview.
“The biggest crash of our lifetime is in progress,” he declares. “We’re probably about 30% of the way into it. I’m calling this ‘Tech Wreck 2’ because it’s the second crash led by tech stocks.”
Dent is strongly recommending that investors “Get out of risk assts. This is your last chance to sell. Get out of the way of the crash! Sell right now!” he urges.
“You don’t wait [till fall]. The market will go down harder and faster” than it did earlier this year, he says. By the end of 2022, it will be at “new lows. By then it will be too late for most.”
“You can burn me at the stake if I’m wrong,” he declares.
The long-time newsletter publisher is famed for his market and economic prognostications, a good deal of which have failed to come about.
But the Harvard MBA correctly predicted Japan’s 1989 bubble bust and recession, the dotcom crash and the populist surge that made Donald Trump the 45th president of the United States.
In the interview, Dent recommends “get[ting] out of real estate, normal bonds and junk bonds.” Holding them, he says, “will decrease the value of your assets; and you’ll not get back to new highs on those for decades.”
He continues. “Before we see a bottom, it will be at least the end of 2023. The S&P will be down roughly 86% before this is over, and the Nasdaq will be down 92%.
“This is not another correction,” he emphasizes. “This is a crash that has been put off now for 13 years. This is not something you sit through.”
Hence, “Do not listen to your financial advisor because they’ll say, “Well, just rebalance,” Dent counsels.
“This is truth or consequences. You’re going to be down in your stock portfolio 55%-60% or more wondering why you weren’t more cautious when the market had the biggest bubble in history,” he argues.
Dent recommends moving all risk off the table for two years, then being ready to reinvest at “the sale of a lifetime of all financial assets.”
In the interview, he reveals his personal portfolio and recommends what investors should buy now.
As for the Federal Reserve’s aggressive stance on raising interest rates, the strategist said four days before chair Jerome Powell’s August 26 comments: “I think that the Fed is saying, “Brace now.”
“The Fed overstimulated … [and] was forced to tighten because inflation finally kicked them in the butt,” he says.
Dent’s HSD Publishing, an independent research firm, generates monthly newsletters that he and Rodney Johnson, president, each write.
A free daily newsletter is available prior to subscribing to the paid HS Dent Forecast and Rodney Johnson Report.
ThinkAdvisor interviewed Dent on Aug. 22. He was speaking by phone from his base in San Juan, Puerto Rico.
He supplies his forecast for crypto, paralleling the status of the new asset class to the dotcom bubble before it burst.
“Tons of [tech companies] went down 100% or 90-something percent. That’s what’s going to happen to crypto,” he says.
Here are highlights of our interview:
THINKADVISOR: Are we in “the crash of our lifetime,” which you’ve been predicting for some time now?
HARRY DENT JR.: The biggest crash of our lifetime is in progress. We’re probably about 30% of the way into it.
This will be much worse than 1973-1974 or 2000- 2002. Before we see a bottom, it will be at least the end of 2023.
I’m projecting that the S&P will be down roughly 86% before this is over, and the Nasdaq will be down 92%.
I’m calling this “Tech Wreck 2” because It’s the second crash led by tech stocks.
This will not be a correction. This will be the crash of our lifetime unless they come up with some new magic wand, and I’m telling you they won’t.
Do not listen to your financial advisor because they’ll say, “Well, just rebalance.”
This is not another correction. This is a crash that has been put off now for 13 years. This is not something you sit through.
This is truth or consequences. You’re going to be down in your stock portfolio 55%-60% or more wondering why you weren’t more cautious when the market had the biggest bubble in history.
Why is this time different?
People will be in shock because they didn’t think the central bank would let this happen.
They’ve pumped up our economy time and again whenever there’s been a correction. They’ve stretched it so far. But they’re not going to be able to stop it from blowing.
When will it blow?
By the end of the year, we’ll be at new lows. By then, it will be too late for most.
What’s an investor to do?
This is your last chance to sell stock. Get out of the way of the crash!
So should investors sell in September or October?
No! Sell right now. Now! You don’t wait. Can I be more clear than that? This [August] bounce looks like it has already run its course. We had a 34% downturn in the Nasdaq, and then retraced about half of that.
Now it’s ready to go back down. And it will go down harder and faster than it did in January to June.
Should people sell other types of investments too besides stock?
You’ve got to get out of real estate, normal bonds and junk bonds. You’ve got to get out of risk and just be safe for about two years.
You can preserve your money near the top of the market and reinvest about two years or less from now at the sale of a lifetime of all financial assets — stocks, bonds, real estate.
What’s your rationale for selling right now?
The Nasdaq can go down another 3,000 or 4,000 points to 7,500 by January. Now it’s down over 50%.
By then, you’ll be down 50%-60% in your stock portfolio, crying, “Why didn’t I listen?”
The third wave down should take till the end of the year to possibly January of next year.
You’ll get one more bounce maybe in the spring of next year. My good guess is that you’ll get that final wave down at around the end of next year. By then, it will be clear whether we’re going into a deeper downturn.
But if you wait to see, you will have lost a lot.
You just said not to wait to sell till September or October. What will the scenario be at that time?
Down, down. The first crash was a pretty good indication of the minimum of what we’re about to see in a second wave down.
It will be down about 58% from the top in the S&P and 60-something percent in the Nasdaq.
