Billion-Dollar Fund Manager Predicts Dow 5,000, Gold $2,000
David Tice, who manages the $1.1 billion Prudent Bear Mutual Funds from the Virgin Islands, offered a bleak assessment of the financial future in an interview with Bloomberg TV anchor Carol Massar on Sept. 30.
â€śUnfortunately Carol, we donâ€™t believe that the pain is over,â€ť Tice said. â€śWe think that weâ€™re going to have to pay for the excesses of really the last five to 10 years of this excessive credit growth with a dramatic slowdown in the economy, dramatically lower markets. Weâ€™re still above 10,000. We think weâ€™re going to, you know, fall below 5- or- 6,000 on the Dow and we think weâ€™re going to have to readjust the
Tice has made similar predictions in the past. In 2002, he said the Dow would drop to 3,000, although the 10-year low for the Dow is just below 7,500 â€“ occurring in late 2002. However, if his prediction were to come true, the Dow Jones Industrial Average would reach depths not seen since the early 1990s. Tice didnâ€™t have a definitive timeline for his market plunge.
â€śIt all depends on â€“ who the heck knows, Carol, as far as timing â€“ because thereâ€™s so many bailouts, so much â€“ Bernanke has essentially been known as, you know, possessing the printing press, etc. and, you know, it depends a lot on foreigners as far as how quickly they lose confidence in the dollar and what happens throughout the world as well,â€ť Tice said.
â€śI think you certainly invest some time in analyzing whatâ€™s going on and I think you reduce equity exposure,â€ť Tice said. â€śI think you do own gold. I think you own precious metals because this is a time when the bailouts are going to be so expensive. Our currencyâ€™s going to be diminished even though gold has been very, very volatile â€“ down $250 just over a few months. I think itâ€™s going to head to $2,000 eventually and it will protect you. And I do think less equity investments make sense.â€ť
In recent months, traders who engaged in short selling were criticized for being behind some of the bank collapses. The Security and Exchanges Commission banned short-selling of nearly 800 financial stocks on Sept. 19 to prevent short sellers from â€ścreating chaos in the market,â€ť according to the Sept. 26 Boston Globe. Tice defended short sellers in his interview, explaining that it is a legitimate trading practice.
â€śOur fund does short the market,â€ť Tice said. â€śWeâ€™re diversified through a number of industries. It really has not hurt our ability to be able to be short. Short sellers are not really bad people. Theyâ€™re just trying to take â€“ utilize well-known investment techniques in order to hedge investors and we do think shorting stocks does make sense.â€ť