Friday, December 9, 2016

Harry Dent on CNBC

Yesterday, Harry Dent showed up on CNBC Futures Now program and unbelievably, I agreed with his views.  He sees this up move in stocks as a blowoff move that will form a top in 2017 and believes that Treasuries are the place to put your money when it tops.

He has been bearish for quite some time, and I don't think he's a good market forecaster, but he's got the facts right.  Trump's economic plan will be a bust, Europe is a mess, with Italy in trouble, China's real estate bubble is about to blow up, and aging demographics will keep growth low.  I also believe his timing is finally right this time, he was bearish way too early, and CNBC called him out on that, and his views were met with a lot of skepticism.  And they didn't refute his facts, but just stated that he's been wrong by being bearish, so he can't be believed.  But at least he hasn't gone from bearish to bullish near the top, which would be MUCH worse.

In any case, the upside in the S&P is limited, unless we enter a bubble.  I put the odds of a bubble forming at around 10%.  I would consider a move above S&P 2400 in 2017 as a bubble.  I don't believe the market is a bubble now, but it is very overvalued.  A bubble has to have two essential things:  1) very overvalued 2) going up quickly.  We have the overvalued part, but not the going up quickly part.

I am thinking more and more that the good news top will happen when Trump gets all his tax cut and infrastructure spending plans passed through Congress.  Hard to guess what level the S&P will be at that point, but the higher it goes, the harder it will fall in the second half of 2017.
Dow to rally another 10-20%, then plunge to 6,000: Economist Harry Dent

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