When the bull market breaks, it’s ‘likely to break hard,’ warns longtime bear who suggests investors are putting too much faith in the vaccine

‘I’m a believer in the Austrian School of Economics that says that the magnitude of the decline is proportional to the excesses created during the prior boom. I was early in 1998, 1999 and in 2006 to 2007… When it breaks, it’s likely to break hard’

That’s David Tice, the former manager of the Prudent Bear Fund
explaining to CNBC in a recent interview why he believes the market will eventually take a 30% hit that will last two years.

“We now have a Biden administration that has a Senate and a House. They’re likely to enact very much more anti-capitalist policies,” he said on Friday. “They have already raised the minimum wage. That’s going to hurt earnings on the cost side.”

Tice, known for making bearish bets through his career, has had his share of misfires. In fact, the AdvisorShares Ranger Equity Bear ETF HDGE , where he now serves as an advisor, has lost about a third of its value over the past three months.

The fund, however, is designed to benefit when the market gets beaten up, and Tice believes that day is coming. The problems, he said, are piling up, whether it be lofty valuations or perhaps putting too much faith in getting control of the pandemic.

“The vaccine is not really a panacea,” Tice told CNBC. “We’ve seen a lot of optimism about that, but there are new strains of the virus, and there is certainly risk going forward.” So what’s an investor to do in this climate? Tice is bullish on gold

and bitcoin

“Gold is dramatically under-owned by individuals and portfolio managers,” he said. “I don’t think that bitcoin can be ignored. We have seen the price of bitcoin go from $10,000 to $40,000 which I think is foreshadowing potentially what might happen in gold.”

Here are his comments:

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