A bear investor who got out of the 2008 financial crisis is saying that now is not a good time to invest in stocks or cryptocurrency. He says that the stock market is heading for a crash soon.
Not A Good Time To Invest In Stocks Right Now
David Tice, a former Prudent Bear Fund manager, warned that 2021 is shaping as a dangerous year for investors. The market is overvaluing future earnings. In addition, debt is accumulating as we’ve never seen before. “We have the Treasury market acting very strange with rates falling dramatically,” he added.
Tice, a well-known bear investor even during bull markets, now advises the AdvisorShares Ranger Equity Bear ETF. This fund holds more than $70 million in assets under management.
It is currently up 3% over the past month, but off 62% over the last two years. Tice said that it’s tough to determine when exactly is the next pullback, and he’s often early. But, he does know that the market meltdown will happen. “We’re not out of the woods yet,” Tice reiterated. The market remains a dangerous place.
Weigh The Risks Before You Invest In Stocks
In addition, Tice is encouraging investors to weigh the risks. Is it worth the risk of losing 40% in a pullback in order to post 3 to 5% gains near term? In particular, the bearish investor worries about investing in Big Tech stocks, including those comprising FAANG: Apple, Amazon, Netflix and Alphabet (Google).“A lot of money has been thrown at Alphabet and Microsoft, Apple and Facebook, Twitter, etc.,” noted Tice. “Costs are going up in that sector.”
Cryptocurrency Very Dangerous to Hold Right Now
At the same time, Tice also warned against investing in cryptocurrency. He said that Bitcoin is ‘very dangerous to hold today’ just like tech stocks. He started the year bullish on cryptocurrencies like bitcoin but is now bearish thanks to its current slide. Bitcoin last hit all-time highs in March and is sliding down ever since.
Tice himself sold off Bitcoin before things got too hot. “We had a bitcoin position when bitcoin was at $10,000. However, when it got to $60,000 we felt like that was long in the tooth…
Lately, there’s been a lot more uproar from central bankers, Bank for International Settlements [and] the Bank of England have made profound negative statements. I think it’s very dangerous to hold today,” he added.
Metal And Mining Stocks
As a result of his bearishness, Tice co-founded the hedge fund Morand-Tice Capital Management last year. The fund devotes itself to metal and mining stocks.
Tice is a long-time gold and silver bull and believes that instead of stocks, this is where the money should be. “You look at this lack of discipline in monetary and fiscal markets. Gold is truly the place to be,” he said. “Over 5,000 years, gold and silver do very well as protection against fiat money.”
Last Friday, gold closed at $1,812.50 an ounce. While down 4% so far this year, it remains 28% up over the past two years. Tice expects the precious metal to rise in value by 10% to $2,000 by year-end. “I would be owning gold, especially gold and silver mining companies.
These companies have never been cheaper. Many are at single-digit multiples yet have potentially 15 to 20% growth rate in earnings even with this flat gold price. But then you add on what we think is going to be a 20% annual increase in the gold price, and these companies are going to be outstanding opportunities,” he advised.
Watch the Inside News report that it’s ‘very dangerous’ to invest in stocks and bitcoin right now:
Do you agree with David Tice that the stock market and crypto are currently overvalued? Do you think moving investments to gold and other precious metals are a good idea? Let us know what you think. Share your comments below.