Investor David Tice – Warns on ‘Pretty Dangerous’ Stock Market
By Stephanie Landsman | April 12, 2018
The investor known for running a bear fund suggests a stock market crash may be virtually unavoidable — citing Federal Reserve Policy and geopolitical risks.
In a note to CNBC, David Tice wrote that investors should “take your money and run.”
“You guys have enjoyed the party,” he said Wednesday on CNBC’s “Trading Nation.” “There are a lot of people dancing. But I think that could be pretty dangerous. I’d say the last couple of 10 percent declines were a sign that the band is about ready to go home.”
Tice has viewed the February correction as a foreshock — predicting stocks could lose 20 to 25 percent of their value by year’s end.
“All this volatility with the VIX [Cboe volatility index] having doubled is very, very disturbing,” said Tice. “We’re testing 200-day moving averages on some of the hot stocks like Google and Facebook.”
Tice, who sold his Prudent Bear Fund to Federated Investors in 2008 just as the financial crisis was unfolding, wasn’t in the bear camp much of last year. On “Trading Nation” last July, he urged investors not to bet against stocks.
“I was actually bullish because I was thinking we’d have a melt-up,” he said.
But nowadays, Tice says he’s very worried about the trade wars and Syria. He also cites President Donald Trump’s rhetoric toward Russia as an additional source of anxiety.
In a tweet Wednesday, Trump wrote “Russia vows to shoot down any and all missiles fired at Syria. Get ready Russia, because they will be coming, nice and new and ‘smart!'” But on Thursday, he tweeted that a U.S. missile strike on Syria in response to its alleged use of chemical weapons may not be imminent.
Tice also sees rising interest rates putting the economy under pressure.
“You have a Fed that is raising rates,” he noted. “We have a Fed chairman who really doesn’t care about we’ve had two 10 percent declines both in February and then March/April. Those are not great signs.”
According to Tice, Fed rate hike cycles historically lead to recessions and deep market declines. He says this time is no different because the market is very overvalued.
He reiterates that investors should consider buying gold.
“In this kind of environment with geopolitical uncertainty and trade uncertainty, you’ve got to be in gold,” Tice said.