News
Stock market crash will occur in 2025 as asset bubble bursts: economist
- The US is about to see an epic stock market crash next year, according to Harry Dent.
- The ultra-bearish economist pointed to signs that the asset price bubble is peaking.
- The crisis could lead the US into a depression, he warned.
Thanks for signing up!
Access your favorite topics in a personalized feed while you’re on the go. get the app
By clicking “Register”, you accept our Service Terms It is Privacy Policy. You can unsubscribe at any time by visiting our Preferences page or clicking “unsubscribe” at the bottom of the email.
The stock market could undergo a sharp correction, resulting in a crash even worse than what investors saw during the Great financial crisisaccording to economist Harry Dent.
The Harvard Business School alumnus – who has been predicting a major crash and subsequent economic depression for years – has issued another warning about the state of the market.
Dent says stocks appear to be in “the bubble of all bubbles,” thanks to excessively loose monetary and fiscal policy that has inflated asset prices over the past decade.
When the bubble finally bursts, Dent estimates that the S&P 500 could lose up to 86% in value, while the Nasdaq Composite could lose up to 92%. “Hero” stocks like chipmaker Nvidia could fall as much as 98%, he said, implying a multi-trillion market crash.
“This thing has got to blow up. It’s showing signs of going to the top here,” Dent said in an interview with Fox Business Network on Sunday, noting that shares were now “barely” reaching news highs.
“We need to see a drop of about 40% to say, okay, the bubble has finally burst. And when it gains so much momentum, I think it’s hard to stop it,” she warned.
Dent estimated that the bubble it has been forming for the past 14 years, much longer than most bubbles in history, which typically last five or six years before bursting, he said.
This is partly because markets have been flooded with stimulus since the 2008 recession, Dent said. Markets have benefited from about $27 billion in stimulus since the financial crisis, he estimated, based on accumulated budget deficits and the amount of money printed since then.
Meanwhile, interest rates have also remained ultra-low for most of the last decade, which has helped inflate asset prices.
“It’s been stretched out longer, so you have to expect a bigger drop than we had in 2008 and 2009,” he said. “This is really the second version of the tech bubble,” he added, referring to the dot-com bubble in the 2000s.”
Dent predicted that investors could see the fallout early to mid-next year thanks to the Fed’s rapid tightening of monetary policy aimed at controlling inflation.
High interest rates are bearish for stocks and could send the economy into a recession through tightening financial conditions.
“Bubbles are not followed by recessions. They are followed by depressions,” Dent said. “I can tell you that there hasn’t been a single bubble – and this one is much bigger and longer – in the biggest bubble in history that hasn’t ended badly, period.”
In fact, Dent’s view is an outlier on Wall Street, with more investors warming to the prospect of a soft landing. The economy remains on a solid basis, as GDP continues to show slower, but still positive, economic growth. The US is also adding jobs at a steady pacewith the latest jobs report easily exceeding expectations.