Scary , but probably spot on Harry Dent: Stocks to crash 40% by April and won't rebound for decades, here's why
The cyclical bull market for equities is over; after December, stocks will begin a secular multi-year decline, starting with a 40% correction by April, said Harry Dent, founder of HS Dent.
"If we see another new low in the stock market, I predict we are not going to see new highs on the Dow, S&P, NASDAQ, biotech, you pick anything...you're not going to see new highs on anything for decades," Dent said. “You didn’t see new highs after 1929 for 24 years.”
The economic recovery has run its course, and the equities markets will soon realize this, Dent said.
“There’s a lot that’s not going to come back, I think we’ve hit the V-shaped recovery for 80% of the economy that did not get permanently damaged, but there’s this other 15%-20% that’s not coming back,” he said.
Consumer spending will also remain weak as the baby boomers enter their retirement years.
“The millennial generation will drive us up from 2023 forward but not until then, so still weakness in demographics, massive debt. I say we don’t ever fully recover from this and by early next year we realize that,” he said.
The next stock market crash will not simply rebound like the selloff of March, 2020, Dent added.
“It’s a reset for the greatest financial bubble in history, partially caused by a good economy at first, like the roaring 20s, but greatly goosed up central banks,” he said.
The trigger for this crash is more bankruptcies, Dent noted.
“This COVID thing hit early this year…I give that a nine to 12 month lag before you really feel the small businesses and zombie companies [fail]. They don’t go down overnight. Stocks can go down overnight like they did, but bankruptcies and Chapter Sevens and Elevens take time. I think by the first quarter you’re going to see more companies going under and that’s going to be the trigger,” he said.
By David Lin For Kitco News