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Harry Dent Jr.

Portfolio > Economy & Markets

Harry Dent: ‘Crash of a Lifetime’ Coming After ‘One More New Low’

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For at least six years now, controversial strategist Harry Dent Jr. has been forecasting “the crash of a lifetime.” Now he’s getting specific.

His “line in the sand” is “one more new low” to break Nasdaq’s low of 10,088 hit last October. “The next thing you know, we’ll be down 50-60%,” the “Contrarian’s Contrarian” predicts in an interview with ThinkAdvisor.  

That will cause a major recession, if it’s not already here. “You won’t be able to put Humpty Dumpty together again,” Dent argues.  

“The [market] top in our lifetime” came when the everything bubble peaked with the 34% Nasdaq crash from November-June 2020, Dent insists. That was the top for the S&P 500 and the Russell 2000 too, he says.

This year, will be, says the well-known newsletter publisher, “the worst” for the U.S. economy since “1973 or 1974 or 81-82, or even back to 1931.” And “we won’t come out of this till 2025,” he predicts.

Three or four decades or so ago, Dent was prominently, consistently bullish. But numerous and ubiquitous market bubbles turned him bearish, he says.

Right now, the market is super-inflated with what he terms “the first everything bubble” — both stocks and real estate.

It’s more damaging than the bubble of 1929, he says. “And that ended up with an 89% stock crash.”

Dent correctly predicted Japan’s 1989 bubble bust and recession, the dotcom crash and the populist surge that catapulted Donald Trump into the White House.

A number of his prognostications, however, never panned out.

He is no fan of the Federal Reserve, which, he says, is trying to “play God” by manipulating the U.S. economy.

By the time the central bank brings down inflation close to its target 2% by hiking interest rates, the market “will be down 50-60%,” he contends.

The stock market rally that began last October will continue two more months at most and won’t be “terribly strong,” he says.

Dent’s independent research firm, HSD Publishing, produces monthly newsletters that Dent and partner Rodney Johnson, president, each write.

There is also a free newsletter available prior to subscribing to the HS Dent Forecast and the Rodney Johnson Report. The latter covers practical issues and includes a strong focus on bonds.

In the interview, Dent, whose father was special White House counsel in the Richard Nixon administration, discusses his current safe investments and predicts that bitcoin will be “the global standard for a digital monetary system.”

ThinkAdvisor interviewed Dent by phone on Jan. 11. He was speaking from his base in San Juan, Puerto Rico.

Any hope for a soft landing for the economy? 

“That makes zero sense,” he says. “There’s no soft landing from a major bubble ever, ever, ever, ever.”

Here are highlights of our conversation:

THINKADVISOR: What can prevent the crash of a lifetime that you’ve been forecasting?

HARRY DENT JR.: The best way to prevent a big crash is not to let a bubble get out of control because bubbles burst. 

What sort of bubble is the one we have in the stock market now?

In 2021, there was an extreme bubble in stocks, and now real estate has joined at the same time.

This is the first “everything bubble.” It’s more extreme than 1929, and that ended up with an 89% stock crash. 

The bigger the bubble, the bigger the burst and the harder they crash.

Bubbles get extreme. They get into an orgasmic phase, which is pretty obvious because they go almost straight up and then go back to a predictable point.

I looked at every bubble since the 1700s. What I found was when bubbles crashed, [the market] never went back to new heights.

When will the everything bubble peak?

When we got that 34% Nasdaq crash from November to June 2020, I said the bubble finally peaked and we’re not going to make new highs.

So to me, it’s already confirmed that we made a long-term top in Nasdaq, the S&P and the Russell 2000 with that crash. That’s the top in our lifetime.

Stocks and real estate in the U.S. and most of the developed countries have peaked forever as far as our lifetime is concerned.

When do you think the crash will occur?

As soon as we make one more new low — 10,088 [the low hit last October] is my line in the sand in the Nasdaq. The next thing you know, we’ll be down 50%-60%, and this thing falls apart.

People will then realize this is not a correction. This is a major downturn there’s no stopping.

We’ll probably see the S&P at 2,190 or lower. 

The stock crash will cause a major recession, if it’s not already here.

This is going to hit the high end much harder than the Homer Simpsons [lower income consumers] because rich people — the top 1%-10% — spend a lot more money, hands down. They’ll be crying, “I just lost my $3 million condo!”

But what about the rally in the stock market that we’ve been having? How long do you think it will continue?

We’re in a bounce since October. But it’s not likely to last more than days or a couple of weeks. It could last a month or two, but I don’t think it’s going to be terribly strong.

Do investors feel more optimistic now?

Yes, [the rally] gave them a little sobriety. People are hoping we saw the worst in June. Most would say, “We’ll probably see a new high in the next year or so.” I’m saying: No!

2023 will be the worst year we’ve seen in the economy since 1973 or 1974 or 1981-1982, or even back to 1931.

We don’t come out of this till about 2025 with the millennial generation. We’re still in the long demographic downturn between the baby boom and the millennial boom that doesn’t end till about 2024.

When is the next boom?

The boom will be 2025-2037, roughly, but won’t take stocks and real estate to new heights because the [highest levels] we achieved were in bubbles. Once major bubbles burst, [new] bubbles don’t appear for decades and decades.

So stock and real estate valuations won’t get back to those levels for a long rime.

What will happen as soon as the crash occurs?

Once the stock market goes down that much, people will lose confidence in the Fed, lose confidence in the economy, will be scared about their financial assets.

That’s when things will change, and you won’t be able to put Humpty Dumpty together again.

Many people are still expecting or at least hoping for a soft landing. Your thoughts?

That makes zero sense. The only way to have a soft landing is not to have a hard bubble. There’s no soft landing from a hard boom — a major bubble — ever, ever, ever, ever.

This bubble is worse than the one in 2000 or the peak into 2007. This one tips us into recession.

The Fed is fighting inflation by raising interest rates to slow economic activity … but further rate hikes might trigger a recession. Right?

The Fed thinks it’s their job to prevent a recession at all cost. That shows they’re dumber than hell and don’t understand a damn thing about the economy.

For them to think they can turn the economy into a machine and grow 3% a year with 1% or 2% inflation with the right amount of stimulus and never have a recession is so stupid that it makes me proud I never took economics as a major.

What is the Fed’s primary M.O.?

Trying to manipulate the economy and play God. The central banks decided we shouldn’t have booms and busts and up and down cycles.

They decided to create a new economy that never has a friggin’ recession. Well, sorry! You’re getting one!

The buzz is that the Fed will ease up on interest rate increases this year. What do you think? 

The economy is going to get weak quickly without the stimulus, and the Fed is going to look really stupid if they tighten and turn around too quickly. 

Everybody is expecting … that the Fed is going to back off [interest-rate increases] because the economy is slowing.

But the Fed wants to whip inflation and is going to make sure it comes down near their target — except by the time they do that, stocks will be way down 50%-60%.

What was a main cause of rising inflation last year? 

All the money the Fed printed when they panicked after COVID hit is highly inflationary … This inflation is sticky near-term but not long-term.

The Fed is deluded by their own stimulus. It took 13 years of nonstop stimulus and a huge amount of COVID [to] fall into recession. 

Doesn’t that tell you the economy is very weak?

When the everything bubble bursts, what do you think the Fed will do?

It will say, “We’ve got to stimulate more.”

But there’s a point where stimulus gets so ridiculous that people will say, “Sorry, screw you,” [meaning that] the Fed will lose credibility.

They’ve called this The Grand Experiment — that you can keep the economy going by printing money.

Well, at some point, it became obvious that the experiment failed.

What should investors be doing now to protect their financial assets?

There isn’t much diversification in a crash like this because this is an everything bubble.

Here’s my hierarchy [of recommendations]: The best place to be is in 30-year Treasury bonds. It’s the best because it’s the longest duration of the safest bond in the world. It’s the best safe haven.

In a matter of months or a year or so, you can make up to 5 to 6 percent holding high-quality long-term Treasury bonds. If you’re wrong, they eventually will keep paying you dividends.

Next in the hierarchy is the 10-year Treasury bond, and after that, comes 20-year Triple-A corporate bonds.

If you’ve got a 401(k) and they have investment-grade corporate bonds, they’d be [safe] but won’t do as well as Treasurys.

What do you advise as a vehicle for these Treasury bonds?

The easiest way to invest in the 30-year bonds is with two ETFs: One is ZROZ [PIMCO 25+ Year Zero Coupon US Treasury Index ETF], which has an average of 10- and 30-year bonds.

The other is a larger fund, TLT [iShares 20+ Year Treasury Bond ETF] … It’s more liquid. TLT has an average 20-year duration. So half 10-year bonds, half 30-year bonds.

Those are my No. 1 and No. 2 choices. That’s where I am right now.

But isn’t gold the safe haven?

Gold is not. Gold is doing the same thing it did in the 2008 crash — holding up in the earlier stages or going sideways. By the end of 2008, stocks were down big time, real estate was caving. Gold even caved. All commodities were on their backs.

Right now, commodities have crashed except for gold. Gold will come next. Mark my words!

Gold isn’t the worst place to be now, but it’s not going to go up in this downturn.

What, if anything, looks good for the future?

The real new money is going to end up being digital, with bitcoin as the global standard for a digital monetary system, whereas gold will not be a suitable standard by size or value or relationship to the new economy.

Please elaborate.

Crypto is the new money long-term. Now it’s been in a bubble — the bubble of bubbles.

My target for the bottom of bitcoin is 3,250. I know some big crypto people down here because Puerto Rico is where they’re moving.

Bitcoin has to go to 3,000 or 4,000. That’s when I’m going to step up and buy the damn stuff — invisible coin or not — because it’s the basis for the new digital global monetary system. We need a new monetary system.

I’m holding out for 3,250 because bitcoin is the most volatile asset, and it has to be really on sale before I think it’s been knocked down to size.

In general, what’s vital about knowing what the last low was?

[In bubbles] people don’t “get” how far you have to go down to the last major low, which is always the best target for a crash.

I’m just talking about [going back to] 2009 in stocks, 2012 in real estate and in bitcoin the end of 2018 or early 2019. I’m not talking about wiping out the 1982-2021 greatest bull market in history.

What should advisors be telling their clients now?

If you’ve got a stockbroker that’s cautious and warning you, you’ve got a smart cookie there.

If the broker is telling you, “Don’t worry. We’ve got you diversified, and you’ll be OK. Markets may be overvalued, but we’ll get through it” — the same thing they always say — you shouldn’t listen to that guy. 

He’s in the bubble. He’s high, smoking [financial] crack. I would fire him.

What should advisors tell clients instead?

Stockbrokers are really in a jam here. With the everything bubble, everything is going to go down; and diversification won’t protect you. Rebalancing won’t protect you.

Clients are going to hate their stockbrokers, and it’s not the brokers’ fault.

Brokers should listen to me. They used to in the 80s and early-to-mid 90s, when I was the most bullish guy on earth.

Now they don’t want to listen when I say the bubble is going to burst. They choose to listen to the con: “We can have a soft landing,” blah, blah, blah.

Brokers don’t understand that they’re in the bubble too. “Just hold on” doesn’t work this time.

They don’t see the light. There’s no chance for a turnaround. We’re beyond that point.

Why did you stop being bullish?

I’m a long-term guy. I turned from being the most bullish guy to one of the most bearish because we have bubbles — globally — more than at any time in history, and they’re in everything.


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