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    A Stock Market Crash Of 65-80% This Year?

    Analyst David Hunter predicts the current melt-up will soon end violently
    by Adam Taggart

    Friday, January 8, 2021, 11:38 AM

A year ago, macro strategist David Hunter predicted a massive melt-up in financial assets, to be followed by an equally tremendous market crash.

Well, he’s certainly been right so far on the melt-up prediction.

All major stock indices are trading at record highs.  And valuations have never been more stretched.

Market Cap to GDP (the famed “Buffet Indicator”) has never been higher. Nor has the market’s price-to-sales ratio.

As analyst Sven Henrich puts it “everything has gone vertical“.

So, having correctly called the current melt-up, will Hunter’s prediction of a 65-80% crash in prices this year also come true?

Time will tell. But as extreme as that kind of drop may seem, history is on David’s side.

Whenever excessive debt has enabled market multiples to distort to unsustainably excessive heights — which is what’s happening now on an unprecedented level —  a painful correction to clear out the bad debt and malinvestment has always occurred.

But despite his dire forecast, Hunter is more sanguine about what will follow. He predicts that those who preserve their capital through the coming crash will have the opportunity to deploy it at very advantageous terms as the next recovery begins. And like previous guests Jim Rogers and Steen Jakobsen, he sees a very bright future ahead for commodities and the companies that source, refine and deliver them to market.

Which is why now, more than ever, is the time to partner with a financial advisor who understands the nature of the risks and opportunities in play, can craft an appropriate portfolio strategy for you given your needs, and apply sound risk management protection where appropriate:

Anyone interested in scheduling a free consultation and portfolio review with Mike Preston and John Llodra and their team at New Harbor Financial can do so by clicking here.

And if you’re one of the many readers brand new to Peak Prosperity over the past few months, we strongly urge you get your financial situation in order in parallel with your ongoing physical coronavirus preparations.

We recommend you do so in partnership with a professional financial advisor who understands the macro risks to the market that we discuss on this website. If you’ve already got one, great.

But if not, consider talking to the team at New Harbor. We’ve set up this ‘free consultation’ relationship with them to help folks exactly like you.

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12 Comments

  • Sat, Jan 09, 2021 - 4:25am

    #1
    planfortomorrow

    planfortomorrow

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    Joined: Dec 28 2017

    Posts: 2

    2

    planfortomorrow said:

    Adam, I was stunned but not surprised at the headline from the thread at all. If anything the full podcast only reiterated what has been the dominant theme here in our community for 12 years. Had we stayed the course from the beginning featured articles of that day then we would have lost a fortune. Thankfully many of us did not. All the experts then, basically sound just like the ones today. Good Folks who just got it mostly wrong but can hang their hat on their opinions because some day it may just happen but for way different reasons. Still, mentally, they will be vindicated.

    Everything said and opinioned today was stated 12 years ago and that's important to understand. This is a huge economy and takes a long, long time to turn around. Public settiment or investor sentiment is what changes markets and with all the stimulous fiscal and by the Fed and the anticipation of more and the end of Covid is what people see, investor see and can put pencil to paper feels like that 2021 will be the greatest year in stock market history, These are some serious tail winds and it isn't a suprise that what Trump did the other day did nothing to the market that sees 6 months ahead. Strangely, I thought the 68 convention in Chicago was way worse than what I saw this past week. Nixon, JFK killing, Bobby Kennedy, Martin Luther King, the riots of 67, Malcolm X, German Sheppard's eating the arms and legs off of black people, water cannons, 08-09 Financial Crisis and now Covid, the list goes on and on. This country is resilient as hell, no doubt about that and we have been through so much this year that we are desensitizes by it all. I think for us who haven't gotten sick or tested positive feels great about this but still, the pressure and the mutations and the vaccine roll out and the disinformation,  best practices and the bullshit from Fauci, the FDA, Hydra and Vermectin and the truth but no serious mention as a viable strategy. My God, Vitamin C and they can't see the obvious, the data. and the WHO and China and, and, and. Now Trump and his bazar leadership, I mean, what a forking kook. So I won't go out and change anything that I haven't researched first, trusted my gut on because had I followed the experts I wouldn't be in the position now that I am. Incidentally through everything Barb and I have had a good time with this. We have planned and talk and busted ass, took risks and are rewarded then now we are but a few months from the completion of a life long dream plus having little debt is a beautiful thing from two folks who did a good job raising and providing for our son's and now are just beginning the best part of our lives is simply cool. We all fully understand that a day is coming when a correction will really mess with our cash but, I believe the first half of the year is all I need. Then it's building time and all cash will be out of the market but a nice chunk will still be in the oil space and will get my full attention still. I just believe what Art has said is the truth so I'm going with it because it would be a nice cash add that I'm willing to risk. It would be an imbalance of not enough Supply to Demand ratio and oil will be way higher than thought. That's a lot of profit worthy of the risk.

    Difficult to understand of course is the 2 trillion in stimulus that hasn't fully deployed from the early year stimulus, little of the roughly 1 trillion just passed is in the market today and I dare guess another 2 trillion in stimulus just days after Biden takes office will even be deployed for yet another 6 to 12 months from now.

    Add to this the vaccine will finally get some serious action and into our arms in a massive injection of vaccines going forward thus making it possible to open the economy and get things rolling and of course all the stimulus may not be enough so a really big one can be planned for so that we force feed a strong injection so that every corner of our country will begin to do the things they used to. This is not when inflation will begin to make a move and not until the 20 odd million people without a job and those others that rely on welfare and food stamps get off the role, start getting jobs and begin paying taxes that anything close to normal or high inflation can even exist. It's all about the vaccine and then the stimulus and then lowering the high employment. Demand for everything is going up, especially the travel industry which by the way will start by being dominated by energy, specifically oil.

    So, I do believe we will get a strong pullback in the future, my gut doesn't share that 65 to 80 percent but what do I know. I don't even think we get this type of correction perhaps for years with all the cash in play, and destruction that has already occurred because of covid and because of all the personal changes everyone has made in their lives continuing into the future because of Covid., This world has changed, a lot and our habits have changed, a lot. What this does going forward will play out differently than we all think. Rip up the history books because the future will not be like the past. My God, is it time now to roll out Robots, AI!? My God, we are living in different times and I'm excited to see it all happen. To be allowed to watch it unfold. None of us is smart enough to understand what all that means not even the Great Reset do goobers. I have read way more than needed about this Reset and I have no belief that they can pull this off.

    I will on May 1st pull all my cash out of equities. I will remain fully loaded up as I have been in oil and that has worked out unbelievably well. I will then build my Cabin with the the cash I have set aside but, that was yesterdays plan. I have begun by requesting a construction loan and then will mortgage the cabin when the home is complete. My reasoning is I have already about $70k in sweat equity in this project and will do a lot of the work myself so will get that back as well, plus the cash needed to complete the project. I will have a manageable payment and no other debt. I will have a mortgage around $210k and a nice piece put on top of my cash off to the side. where I will simply wait to deploy. I believe this strengthens my position for after the correction or rather crash to then redeploy all my assets basically in oil. Why? Oil is usually the first into a Depression and first out of a Depression and that will be a Dougy Kass moment. At some point we will hit bottom and from that point forward oil will be a monster profit play.

    I have thought about this and thought about it and are fortunate that my priority is Barb's wanting a home and I agree, time to get that done so it will. It is the reason for this plan, to make sure the cash is there to do it irrespective of what happens in the market. We have no issues with Barb losing her job and tremendous salary so we will be able to set some heavy wages aside and wait for the time when things look brightest. I still will maintain my position in oil and believe me it's a heavy commitment.

    One last point: No disrespect to our guest but he could be wrong at the size of the correction, it could be 25% and that looks a lot less frightening and if the Fed and Fiscal policy to halt such a dramatic drop then they will have thrown a zillion dollars at the problem perhaps before it even gets started and thus changes the trajectory. He is right about one thing for sure, this correction will hit every corner of the globe and the Demand coming out of it will look like 2008-09. and we will really do well into the turn around this time too.

    My only goal is to be self sufficient, for me to be a bit risky but get out on a pre determined date. Basically I have been living off the VIX and it is for me the most useful data point of every day I do this. It's a profound forward indicator.

    I love, absolutely love doing what I do, I listen intently to all honored guests but I don't know their book, I have no idea their integrity, their character or the reason's they do what they do. So, I do my work, make my own decisions and then I can live with the results. I'm not saying he's not a wonderful Man but I have lived this life a long time and when push comes to shove everyone will do what they can live with, they will talk up their book and then sell every share as their leaving your home. I guess I'm saying I don't really trust completely, why? Like I said, my decisions I can live with. I like the finger pointed at me, then Man up.

    I love your weekend segment because it's usually a bit extreme and I love giving my biases a good kick often so I don't get complacent. 65 or 80% drop would be a monster of an event so I take it very seriously even though my biases says but, we have already thrown 3 trillion at this beast that hasn't even been rolled out fully yet, another two million soon and probably 2 trillion on infrastructure with another 3 trillion from the private sector. That's a lot of dollars, employment, spin off economy, oil, etc... I am always going to do oil first, middle and last. I love oil, I understand it and by June I expect I will have benefitted to my wildest dreams. frankly just duplicate from October until today and I may just get out of this completely but, I love it. I'll just go really conservative, still play oil or start getting into other things I have been watching for a long time that I follow from my watch list. I jumped in PLUG a while back and that has panned out so we'll see. I pretty much am an energy investor.

    Good Luck Folks, I truly wish you all the best. BOB...PS: I was notified by my hospital here in Michigan that I will be scheduled for my vaccine shot within the next week, I cannot wait.

     

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  • Sat, Jan 09, 2021 - 10:09pm

    #2
    MKI

    MKI

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    Well done intervew

    Well, another well done interview A pleasure to listen to.

    The wildcard is politics, IMO. I'm unsure how the US political game will unfold, if the Dems will get enough traction to push real spending legislation through the Senate. There is a lot, lot, lot of anger on the election, and by people who were generally apolitical in the past. I'm unsure how Senators in Republican states will be able to respond. A lot depends on moderates, and I'm unsure how moderate they will be as the noose tightens. Honestly, I've never seen anything like this, and I don't think it will be business as usual for a long while.

    I couldn't disagree more with SHF suggestions at the end, though. Why is everyone so afraid of a melt up? Just put stiff stop losses in, ladders if needed. Inflation is  to be lethal if inflation predictions come true. Trying to time the deflation/inflation cycle is far more risky IMO than a market crash that misses judicious stop losses.

    One last thing: I simply go crazy listening to people try to explain this stock market using "fundamentals". There are no fundamentals in a "market". There hasn't been so-called-fundamentals since 2008 at least! There is no value here. This is a momentum bubble, and has been for over a decade. Why guys like Hunter keep trying to "time" the market leave me baffled. I doubled my money with very little risk in a single year in 2008, and will gladly do so again in 2021 if we have another crash. Index funds are now the whole market, and have changed the market profile completely so there is no telling how big this bubble can get, driving up all other costs and forcing everyone to play. IMO it's been that way for over ten years. I could see it lasting another 10. Just use stop limits.

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  • Sun, Jan 10, 2021 - 6:50am

    #3

    timeandtide

    Status: Bronze Member

    Joined: Apr 03 2010

    Posts: 63

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    timeandtide said:

    The point made about the VIX is important. As Sven Henrich points out in a recent video (The Ugly Truth), there is a significant gap in the VIX chart which it has remained above. As someone who spends hours watching the US indexes I note that, despite the upward bursts (which appear to be short squeezes), it is getting harder and harder to suck the shorts in. My impression is that the shorts ( I am not referring to sellers of stock that they own) are getting tired of being hammered. Once they are out of the picture it will be up to the sellers of owned stock as to whether the markets continue on upwards. This is because the short sellers must buy the market to either make their profit or cut their losses. A lot of attention is paid to the all the new speculators buying the market but I believe the short sellers are providing most of the means to drive the market to these excessive levels.

    At these levels, I doubt that sideways movements will last for long if the shorts are pulling out. It will be either more rises or the reverse. Any reverse from here is liable to be a waterfall. While the Fed and other central banks have certainly had a major role in driving this bubble in equities and Treasuries, it does not mean that unlimited printing can hold it up. It has always failed to hold a collapsing market.

    When the bear sets in, it is always a behavioural event. It usually starts off a bit slowly and most people don't wake up to the new reality until it's half way over. The advice of John and Mike is absolutely right - you need to be in safe harbour well before the storm. Jeremy Grantham reiterates the point in a recent post. You may feel a fool for a while as you watch the market sail on upward but you are cashed up, mentally unstressed and in a much better position to take advantage of cheaper stock prices.

    Of course, the patience required to wait the market out and then the courage to go in requires great discipline because you will be going against the herd. I suspect the index lows will be worse than 80% because this will most likely be at least a 1929 type event where losses were greater than 90%. If the losses reach this level, there will not be a V shaped recovery. It will be much more hesitant. It will be the classic wall of worry to climb with many setbacks. It is likely that the Fed and other central banks will cease to exist in such circumstances. Their assets will become worthless.

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  • Sun, Jan 10, 2021 - 10:27am

    #4
    French connexion

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    French connexion said:

    Thank you for this excellent podcast.

    I invested in the 1980 81 markets. For me that was the real last recession. It was brutal. Volker pushed the interest rates up to such a rate that for Canada Savings Bonds - a 1 year investment - I think we got 20% !  Plus the Hunt Bros got shot out of the silver market.

    Rolling of TBills was a safe bet. But all the brokers were like gun slingers trying to pick the bottom. Short selling definitely caught my eye.

    Fast forward to today. The FED is the market. Short selling is a fool's game regardless if it's Tesla. Gold (and Silver) get man-handled at each and every futures option expiry. Paper beats rock for the time being until the music stops.

    Can you really compare a 1980 America to 2021? 1980- 81 was a real bear market which was allowed to play out tto cure the excesses. The Banks cannot let that happen again.

    Sorry to sound so negative. With leverage and an active derivative market you can do wonders.

    The SP Futures market started in August 1982 - the bottom of that recession and the cause of the 1987 melt-down (program trading).

    Best wishes,  French Connexion

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  • Sun, Jan 10, 2021 - 5:53pm

    #5
    springbank1

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    Well done as usual...

    Great interview with David H.  I do wonder about Au and Ag (I own some, but not more than 15 percent allocation).  In an time of rising rates (at least recently) they have underperformed (last week especially)...Although real rates continue to plunge further negative.  Interestingly in late 1970s this dynamic absolutely did not hold as silver and gold exploded along with nominal rates...Given manipulation of CPI data etc and the Fed's continually lying about inflation I worry about silver and gold NOT melting up with other assets in this last blow-off top...

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  • Mon, Jan 11, 2021 - 3:37am

    French connexion

    French connexion

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    French connexion said:

    For what it's worth:

    I am expecting a systemic (banking) breakdown. Where gold and silver will vault suddenly to prices that they should be trading at if the Central Banks were not rigging the markets.

    This has nothing to do with inflation but rather preservation of wealth. When the choices remaining are exposed, you will not be able to buy either Gold nor Silver for any price.

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  • Tue, Jan 12, 2021 - 5:52pm

    #7
    Wallpaper

    Wallpaper

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    Wallpaper said:

     more on the macro scale.... UST10s need to go up for the bond market.

    everytime they go up the stock market starts to tremble/

    the USD DXY goes down. If they favor the DXY then the stock market goes up  but the bond market goes down. It seems to me that they are not in the final stage of the liquidity trap. NO room left to maneuver///

    thoughts?

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  • Fri, Jan 15, 2021 - 12:53am

    #8
    alexaadams455

    alexaadams455

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  • Fri, Jan 15, 2021 - 5:39pm

    ridgecrest

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    ridgecrest said:

    Just use stop limits.

    You can't use stop limits if crash is happening pre-market

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  • Sat, Jan 16, 2021 - 8:54pm

    MKI

    MKI

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    pre-market crash

    You can't use stop limits if crash is happening pre-market

    You can't protect against an asteroid hit, either. Personally, I set my limits where it would catch anything we've seen in my investment lifetime in pre-market moves. Crashes never happen that way anyway for long, as T&T says above they start slowly and limits work because always some up-and-down on the way into a serious bear market crash. Trying to make the perfect the enemy of the good is foolish and costly. One cannot eliminate all risk, one can only take reasonable precautions, which been a very profitable approach for the last 100 years.

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  • Mon, Mar 29, 2021 - 6:14pm

    #11
    enjblog

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    Thoughts on the current market

    Guys, i have a question for you all. Im currently the owner of a few properties in the Australian market. Will there be a big ripple effect from a market crash in the American market that would effect the Australian one too? Looking for suggestions on what I can do now to prepare for anything that might happen this year because of things like Corona. just putting it out there. happy to hear from the pros. Thanks guys!
    I liked the video as well.

    KellyH | Makeup Artist

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  • Sun, May 09, 2021 - 11:39pm

    #12
    Keneatha

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