Harry Dent has predicted that we will see a 40% stock market crash by April 2021. In this video I want to go deeper into the underlying reasons why he thinks this crash is coming…
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Harry Dent, he’s an investor who accurately predicted Japans 1989 economic collapse and the subsequent boom in Europe and the U.S to come. He also predicted the dot-com crash and wrote a best seller in 2009 called the great depression ahead.
And recently, he’s come out with some strong opinions on the U.S market and the collapse that he thinks is ahead.
He said “I expect a stock market peak right here I’d say by somewhere between early December and mid-January and we see a 2 year crash that really continues the crash that started in February”.
“I think that we’re about to see one more crash that takes the stock market to new lows, by April is my forecast. Between now and April another 40% crash”.
So that’s a big statement to make. You can’t just go out and say I expect a 40% market crash by April without some substantial evidence to back you up. So that’s what I want to do in this video. I want to go deeper into his arguments and reasons why he expects this crash.
One of the things Dent talks about is the small businesses and zombie companies falling.
This is what he said “this thing hit early this year February 2020, I give that a 9-12 month lag before you feel those small businesses, those zombie companies fall. They don’t go down over night, stocks can go down over night, like they did, but bankruptcies and chapter 7 & 11’s take time. I think by the first quarter (2021) you’re going to see more companies going under and that’s going to be the trigger”.
You see small businesses when tough times hit, they don’t just fall over, give up and shut down. No, it’s what they built for years, it’s their full-time income. They do everything that they can to keep going.
But if you’re economy is going poorly and people just aren’t willing to spend money, it’s the small businesses that often get hit the worse. And eventually, give it enough time of struggling they shut down. Dent thinks this will be one of the factors that cause the market crash that he’s predicting…
The other thing he mentioned was the zombie companies. Do you guys know much about these?
You see there’s this trend going on in silicone valley where the goal is to make a company, get as much hype around it as possible, as much people investing in it as possible, and grow it’s size as big as they can in order, just to sell it.
It’s not necessarily about having a great long-term sustainable business model, no it’s just about borrowing money, and then selling the company on and then making a fortune.
Often when you dig into the income statements and balance sheets of these companies you see that they’re barely getting by. They make just enough money to pay their costs and the interest on the debt, but not the actual debt itself.
These companies, they do fine in a bull market. They do fine when the economy is ticking along nicely. But when things start to slow down, that’s when they struggle.
And the holes, or the flaws in the company start to get pointed out. It’s as the great investor Warren Buffett says “only when the tide goes out, do you discover who’s been swimming naked”…
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DISCLAIMER: It’s important to note that I am not a financial adviser and you should do your own research when picking stocks to invest in. These are just some of my viewpoints, by no means would I recommend watching one YouTube video and then immediately buying that stock. This video was made for educational and entertainment purposes only. Consult your financial adviser.