Recent market volatility caused by the Fed minutes revealing a more aggressive tapering timetable and raising interest rates has led to some experts predicting a market crash in 2022.
Speaking with Kitco News, the economist and founder of HS Dent Publishing, Harry Dent, discussed what he says will be the greatest financial downturn ever occurring this year, “this is going to be the biggest crash; the biggest downturn of your lifetime” he warned.
According to Mr. Dent, investors should consider selling now ahead of a complete market wipeout:
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“I’m saying stocks in general in this crash will be closer to the 1929 to 1932 crash. I’m estimating 87% for the S&P 500 and maybe slightly higher for the Nasdaq. So this is not something to sit through and just rebalance as financial advisors say.
“You have to get out of the way of this and then we will have the buying opportunity in investments of a lifetime in around late 2023.”
Crash to take play in the first half of 2022
Additionally, the economist suggested that the first crash should take place within the first three months of 2022. He stated:
“I think it begins in the next three months and you will see that first crash, by history, within three months of that. So in the first half of this year yes I think you’re going to see this 45% to 55% crash and it will come very fast when it comes. How much more can the market go up when it’s all already gone up this much against all the trends.”
Mr. Dent revealed there does not have to be a trigger, giving the 2000 peak of the first tech bubble as an example when there was no trigger, no recession, and no significant slowdown in the economy.
According to the financial expert, now, the new stocks are the cryptos, which are not included in the Nasdaq, but they are performing the same function as the internet stocks did in 1999 and early 2000.
Bitcoin will get hit the hardest
Discussing whether people pulling out of crypto will start the crash, Dent revealed:
“I think your smart money will start shorting stocks and cryptos and then all these people that piled in it’s the dumb money. I hate to say it the everyday person that piles in the last 6 to 12 months just like in 1999. And when the smart money starts selling it doesn’t take much for them because all these people are over committed and then they get scared because they’re not sophisticated investors.”
Ultimately, Dent believes Bitcoin will get hit the hardest more than the other markets during the crash, going down to around $7,000. However, he does believe on the flip that cryptocurrency is the next emerging tech sector.
Watch the video: Stock markets to crash 90% in 2022
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