American Economist Harry Dent recently waved a red flag for investors by predicting a stock market crash that he believes could be even worse than the 2008 mortgage crisis. He cautioned investors to be wary of what he calls the 'everything bubble.'
His comments come at a time when the US stock market is touching new all-time highs, thanks to the tech stocks gaining massive investor interest owing to the AI boom.
On year-to-date basis, the S&P500 index has given a healthy double-digit return of more than 13 per cent. Whereas, NASDAQ has surged by a massive 2,577 points or 17.46 per cent, during the same period.
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Harry Dent pointed out that most bubbles go for about five to six years, but this one has been inflating for 14 years. ''So you'd have to expect a bigger crash than we got in 2008-09,'' he said in an interview with Fox News.
During the 2008-09 market crash, the Indian stock market had also followed a similar trail and witnessed a sharp plunge of over 50 per cent.
But Dent's outlook, atleast for now, sharply contradicts the current Wall Street optimism. He believes that investors might witness the crash as early as the middle of next year.
''I think we're going to see the S&P go down 86 per cent from the top, and the Nasdaq 92 per cent. A hero stock like Nvidia, as good as it is, and it is a great company, [goes] down 98 per cent. Boy, this is over,” he said.
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He blames the entire situation on the Federal Reserve's rapid actions to control inflation by tightening monetary policies.
"Bubbles are not followed by recessions. They're followed by depressions," Dent said. "I can tell you there has not been one bubble — and this is far larger and longer — on major bubble in history that has not ended badly, period."
While Harry Dent's track record of predicting major economic fallouts has been pretty accurate, such as the Japanese 1989 bubble burst and the dot-com bubble burst in 2000, some netizens didn't take his recent comments quite well and called him a "fear-monger."
But what exactly, he believes, will lead to this crash?
The economist believes that the US government is the one to blame for the huge bubble that the economy has been stuck in.
"From 1925 to '29, it was a natural bubble. There was no stimulus behind that, artificial stimulus per se. So this is new. This has never happened. What do you do if you want to cure a hangover? You drink more. And that's what they've been doing. Flooding the economy with extra money forever might enhance the overall economy long term. But we'll only see when we see this bubble burst,'' Dent said.
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And besides the 'artificial' stimulus that has caused a delay in this crash, the real estate market will once again be at the center of the problem, according to him.
While many of Dent's predictions have turned out to be accurate, his views surely come at an odd time. US's inflation figures have displayed a declining trend, although at a slow pace. Meanwhile, the nation has been adding jobs at a steady pace, as well.
