Thomas Paine
Member
- Joined
- Nov 10, 2007
- Messages
- 1,561
What I am assuming is that it is rather convenient for David Tice to predict a stock market decline of 50%-60% since the more investors that are scared into placing sell orders with their brokerage firms tomorrow morning after hearing his interview, then the more likely the stock markets will decline, which will actually increase the value of Mr. Tice's bear funds. If Mr. Tice had predicted a stock market correction of only 10%-15%, then investors would be less inclined to sell out their positions and more inclined to just wait out the downturn, which would likely result in a moderate selloff in the equity markets and less money for Mr. Tice.
The last time there was a 50% decline in the equity markets was due to the tech bust in 2000-2002 when nearly the entire tech sector evaporated (because they never had any true value to begin with). While the sub-prime debacle has hit the financial sector pretty hard, only one bank (a relatively small one in Germany) has actually gone out of business (or was bought out). Furthermore, as bad as the housing sector is right now, this sector is only 4% of the national economy.
I think the stock markets will be volatile over the next six months, but I don't think they will decline anywhere near the 50% predicted by Mr. Tice. Regardless, I am diversified between domestic equity funds, domestic bond and TIPS funds, international equity funds, commodities (including gold fund), large caps and small caps. Plus, I have a 20 year investment horizon so even if the market declines 50%, I know the markets will recover such losses before I reach retirement age. Moreover, more investors have learned to not place all their eggs in one sector like in 2000 and are more diversified between various asset classes so there will be less of a selloff this time around compared to 2000-2002.
The last time there was a 50% decline in the equity markets was due to the tech bust in 2000-2002 when nearly the entire tech sector evaporated (because they never had any true value to begin with). While the sub-prime debacle has hit the financial sector pretty hard, only one bank (a relatively small one in Germany) has actually gone out of business (or was bought out). Furthermore, as bad as the housing sector is right now, this sector is only 4% of the national economy.
I think the stock markets will be volatile over the next six months, but I don't think they will decline anywhere near the 50% predicted by Mr. Tice. Regardless, I am diversified between domestic equity funds, domestic bond and TIPS funds, international equity funds, commodities (including gold fund), large caps and small caps. Plus, I have a 20 year investment horizon so even if the market declines 50%, I know the markets will recover such losses before I reach retirement age. Moreover, more investors have learned to not place all their eggs in one sector like in 2000 and are more diversified between various asset classes so there will be less of a selloff this time around compared to 2000-2002.
