PUBLISHED ORIGINALLY ON TRADING NATION: THU, DEC 19 20198:31 AM EST
Investor David Tice warns it’s too dangerous to buy stocks right now – here’s why. Long-time bear David Tice acknowledges the market’s record-setting run could extend another six months, but the investor is too worried about a dramatic drop to try to capitalize on it.
“You should not be playing this market long,” Tice told CNBC’s “Trading Nation” on Wednesday. “This market is going to go down. There’s going to be a recession. It’s a matter of when —not if.”
Even though he sees a 50% to 60% probability the S&P 500 will “melt up” as much as 15% into the first half of 2020, Tice believes it’s too dangerous to buy stocks right now.
“The excesses are so great. Corporate debt is so significant. We essentially have exports, commercial construction and residential construction as well as capital spending at recession levels already,” he said.
He estimates there’s a 20% chance the market will plummet 40% to 60% in 2020. Due to the sell-off’s potential magnitude, he prefers not to take on the risk.
“Puts are a great play right here,” said Tice, who added buying gold and gold stocks are also good options.
Tice, who’s recognized for selling his Prudent Bear Fund to Federated in 2008 just as the financial crisis was unfolding, is known for his bearish forecasts. He now largely invests his own money.
On “Trading Nation” in May 2017, he warned the economy was months away from a 50% or more plunge, and it would be followed by a recession. He made similar predictions in 2012 and 2014, too, but they never materialized.
“This is a liquidity-driven market. We already have earnings going down. We have a lot of issues here,” Tice said.
Disclosure: Tice has holdings in gold and gold miners.