Harry Dent forecasts election effects on markets in 2020

0:01i'm ashton addison from event chain for investmentpitch media and fintech news network and today on blockchain interviews we have harry dent economist investor and market analyst harry welcome to the show and thanks so much for taking the time to be here today nice to be here aston you're very welcome i'd love to start off our interview with just a little bit of background on

0:19yourself and your recent focuses and a little bit on your philosophy of investing right now yeah yeah it's funny like i i took economics in college because i was into forecasting i figured out they couldn't forecast anything so i quit that major and took accounting and finance by my father's friend's advice he was big political guy so he knew all these donors

0:38and then i i went to harvard business school strategic planning bain and company fortune 100 company strategic planning and i i hated large companies so i ended up focusing on new ventures in california i turned around and consulted two and then eventually started my own business and so that's where i learned everything i saw the baby boom coming back then in the early 80s because

0:59because they were emerging just into the workforce then new innovative generation young the opposite of what i was dealing with banning company fortune 100 companies dealing with old people and old products you know so so i i i really tripped on demographics just as they were creating more information than ever starting in 1981 the us bureau of labor

1:20i mean 600 categories i know everything about people just from that so new theories about how generations drive booms and bus how every phase of it will be driven by different consumer sectors how they adopt new technologies on and on i mean i just ended up tripping on to all the secrets of economics without being an economist and uh if i had been an economist i'd

1:42never see him because they're taught to think differently i thought as a business person as the consumer and that consumers drive the economy not governments and that was uh ended up being a huge advantage so so i came with an entirely different way of projecting economic trends real quickly i'm known for predicting the 90s boom before it happened that was nothing i predicted

2:03the collapse of japan in 1989 when people thought it was going to take over the world and the greatest boom in history uh in the 1990s into 2007 and that sort of thing so very simple indicators though like move forward the birth index for a generation which i just for immigrants which i can do very accurately by the way including illegal estimated um for the peak and spinning

2:27for the average person age 46 and i can tell you when the economy is going to boom and bust in any country around the world decades not years not months decades in advance that that was one of my break to innovate uh indicators of many so so again whole new way of looking at things and i also now particularly in this time with blockchain emerging and the

2:51internet maturing um that's when you get bubbles at the peak of an old cycle so i've really studied bubbles and and i've gotten my newest cycle in the last 10 years is a 45-year technology cycle with two s-curves accelerations within and that really when you take demographics and technology those are the two things that really drive the economy governments are just laggards i don't

3:17look at governments unless we're in a dictatorship and actually we're getting pretty close to that here so i might have to do that yeah well that's a great intro harry and yeah you're right down in the trenches working in the tech startups so much innovation going on right now and uh it's it's moving really quickly those are the people creating the future

3:34do you want to hang out with laggards or the innovators if you want to see the future exactly look at demographics but also look at the people creating it that's why working with entrepreneurs was the most important thing i ever did and you've been through a lot of market cycles now and it seems that we're approaching a a pinnacle point in in 2020 with the

3:54market you know look i'm sure you've been following the stock market right now covet hits there's a crash v-shape recovery on the way to the presidential election surprise surprise i'm curious how are you approaching the market post-election i know how cautious are you being with this market well you know um i i think we've either seen a peak on september 2nd or we're about to see a

4:16peak just before after the election with possibly one more slight new high originally i mean way back in the 80s i predicted that the economy would have the greatest boom ever peak in 2007 and slow down because the baby boomers would have peaked in spinning and it's a huge generation and the millennials would not be enough to replace it for a long time

4:36and and but what i found out when i got into these technology cycles uh about a decade ago every other 45-year technology cycle you get a convergence that causes the bubbles of bubbles a 90-year bubble cycle i was saying originally that 2008 to 2023 would look like 1930 to 1942 the great depression a winter season a shakeout debt deleveraging and we got

5:03that and that's why we lived on quantitative easing ever since 19 2008 did look like 1930 and the banks just went bazookas and said well we can't have a depression so we'll just print all the money in the world to prevent it which is bad policy by the way it doesn't allow the economy to rebalance and get more efficient again so we have zombie companies everywhere

5:20but the difference is in the early 30s the worst of the crash happened when the bubbles first burst since government shut that off we're going to get the worst at the end which i've always said would be by late 2022 for stocks and 23 for the economy by my demographic and other cycles so i think we're getting ready we started with the first hit because of covet but that was just

5:44the trigger that's not what's wrong with our economy and when this coveted crisis disappears incredibly rapidly over the coming months which it will in past uh viruses have we're still going to go down because we got so many zombie companies and baby boomers spending is going to be even worse and we got more death than ever so so you know i've been looking for a major crash

6:05around late 2019 in late last year i said hey it looks like the peak's going to be early to mid 2020 and then of course kovid came and i said the first crash is going to be 40 in a short period of time that's when you know the bubble is peaking finally after up and up and up and stimulus stimulus and now they have massive stimulus and now we may go back and and make a new high we've

6:31only made new highs in the tech stocks in the u.s no other major countries made new highs the small caps the russell hasn't so i think we've peaked we're going to see the final peak in the tech stock i think right around here and i'm telling it next two years is going to be the biggest stock crash of our lives all of this money printing has just made this bubble bigger and longer and

6:54we and stocks and the winter season type of crash and major bubbles don't correct 50 like in the 70s or past you know long-term decline it is 80 plus it was 89 and 29-32 so this is going to be a shocker people think i'm crazy i'm like i'm sorry i studied history and you didn't this 90-year cycle is the single clearest trend since the stock market stocks were

7:20created in the late 1700s in the industrial revolution leveraged technologies and made this 45-year technology cycle i talked about more important than ever even more important than the demographic cycles i first discovered so i see the crash of a lifetime which turns into if you're smart and get conservative here the sale of a lifetime on financial assets

7:42right now let me quote you important number that nobody talks about 500 trillion dollars in financial assets globally and 255 to 60 trillion in debt normally debt is the biggest factor after public this financial asset bubble has been so blown up by quantitative easing which injects money into financial efforts it doesn't create the inflation the gold

8:04bug said because it's not going into consumers and banks and stuff like that to multiply consumer spending in prices going into financial it this bubble burst you're going to see 200 to 250 trillion dollars disappear forever like in the early 30s stocks didn't come back to those 1929 levels until 1953 24 years later so that's going to cause deflation

8:31not inflation major crisis if you just get safe and turn your financial assets stocks and real estate and bond into safe investments in cash you're going to be able to buy the world's going to be on sale like it was for joseph kennedy in 1932-33 between 2022 and 23. this will be the greatest opportunity and the blockchain early stage companies which

8:56are still very early stage are going to see one more shake one shakeout and then they'll be the next internet they will lead us out of this next thing is a along with millennial spending by that net by that generation so this is going to be very hard down and then we're going to see another global boom and people aren't going to see either coming mm-hmm yeah super

9:19interesting point in time right now especially with you know these fang stocks growing such value and of course a lot of it is in part from the debt it was just like the nifty 50 and 72 and of course the the you know general motors ford um uh rca and those and att those were the high-tech companies they don't seem high-tech those are the high-tech companies back then

9:41tv waves and radio are you kidding me that was as high-tech as it got they crashed the hardest they bubbled the most into 29 they were the bluest chip they are like the fangs today and the fangs will go down the heart i am predicting that the nasdaq will go down to um 87 okay um so so it's going to go back to where the bubble started you

10:10know so so back to around a thousand and something like that on the nasdaq i mean people don't think that's possible that's exactly what happens at this phase and after a bubble of this magnitude and i'm telling you ashton there is not a bubble i can compare to this bubble industry this is the largest most global and most pervasive it's real estate it's even gold is bubbled

10:31it's bonds bonds have had a 40-year bubble in falling rates and after this it's going to go 20 years plus rising rates so a lot of things are going to change and i i hate to say it most people aren't going to see it and economists never have the out of the box scenario it's always like well it'll be a little and then so i mean everybody knows stocks are about

10:53everybody knows we've got way more depth anytime yeah but the fed will do that and will come out kind of a soft landing there is no soft landing in all of history to any bubble anywhere near this magnitude zero ever in any asset class yeah well a lot a lot of people right now you know they've robin hood has blown up people that don't normally invest in the stock

11:17market are putting their money there because they see they hear that the dollar is going down stock markets going up so i might as well jump in and there's other people as well that are going for a diversified approach and getting gold and silver and bitcoin as well there's people hoarding gold and silver and guess what those are going to go down too

11:33so that's what happened in 2008 stocks went down first but gold followed them when things got nasty gold sees at first a crisis and said oh good you know they're going to print money and and we're the safe haven no when it gets nasty and they see deflation see the last crisis in the 70s was an inflation crisis gold loves inflation gold is the inflation hedge and so is real estate by

11:57the way real estate does not like deflation and gold and silver did not like inflation nor do stocks or bonds anything but the highest quality bonds so so this is going to be a shocker for everybody but i mean and you know what they call the people buying call options at robin don't you the dumb money jumping in at the end full feet like there's no way this

12:19bubble can ever stop because the fed won't let it the bed has blown it up so much it is inevitable it will burst i was talking in dubai i think it was late 2007. right before their big real estate bubble birth and i told them that and they said harry it can't happen because the government won't let it and i said well that's exactly why it's going to happen

12:38government pumps it up artificially eventually it blows of its own extremes even though the government tries to support there's a point we just printed as much money in eight months the fed uh and with this uh into this covid crisis in repo crisis as we did in the entire qe cycle before it over over several years you know in one tenth of time we printed as much money

13:02and guess how much inflation we got none and guess how my a little slight new highs in the stock market this thing is not going to last much longer yeah yeah crazy times right now um and there is a prediction that you know the dollar can't sustain in the way that it is built and the next version of the dollar may be gold backed it may be central bank

13:24digital currency or blockchain backed do you have any thoughts on what is the next version of the dollar yeah yeah absolutely in the near term and i damn near guarantee you this the dollar is going to go up it did gold went down and the dollar went up in the worst of the crisis 2008. so because the dollar is a safe haven we printed way less compared to our economy

13:48than japan and a good bit less than europe we're the best house currencies don't trade in absolute values like stocks and bonds and real estate they trade relative to each other dollar will be the safe haven look what happened in the recent crash stocks down the most bitcoin down more stocks down 35 bitcoin down 46 treasury bonds the safest u.s dollar

14:11back funds up 24 that's the safe haven us dollar high quality bond now after this crash people gonna realize central banks are nuts they should never be able to control the economy like this i am so into blockchain and cryptocurrencies because it's going to take a digital broad-based bottoms-up system of creating money out of natural transactions

14:38not governments trying to push their economy trying to push down their currency so their exports do what all governments do is manipulate and over stimulate their pushers they're always giving us pills we got a market and economies on crack when this bubble burst people gonna say we need a new system so i do not see blockchain on or or or bitcoin and in cryptos being

15:02the safe haven in the crash i see them emerging out of it just like the internet emerged out of the last bubble internet stock came into late stage 1998-99 only in the last stages of that first tech bubble it crashed they had a big shakeout the amazons and stronger survived and then the greatest driver of the boom was internet stock it's going to be

15:23blockchain is going to be one of the first arenas i'm starting a fund in australia the first thing i'm going to look to invest in on the technology side along with a lot of other areas but there's going to be a shake out first it's going to take a while to replace the us dollar nobody's going to want to replace the us dollar when it holds up better than all the other

15:41currencies at first but people are going to realize central banks blew up this bubble way beyond natural means and they should never be allowed to manipulate economies from the top down again and the ant the only ant it's not going to be gold there's not enough gold to fill the damn swimming pool for crying out loud in the world gold worked in the past the

16:02economy was a commodity economy up until the early 1900s it is no longer it is going to take a digital solution like blockchain and cryptos to form a new way of creating money that cannot that is transparent and cannot be manipulated by central bank that's the whole point i think the central banks are going to get fired after this downturn i can't wait

16:27yeah it's an exciting time ahead harry and we're running out of time but do you have any last advice for whoever is left in the middle class as they face a tough road ahead especially in the coming months well you know i mean the middle class the biggest fear is losing your job you're just gonna get hit by this bubble crash the people who own it the top 20 percent

16:46own 88 percent of financial assets outside of your own home and the top one percent own 45 in the top point one percent on 22 these people gonna get crucified do you remember ted turner crying on tv he owned aol when he sold out to them aol was at 400 times earning he lost 9 billion out of his 10 billion dollars in that crash so which get hit the worst everyday

17:13people have to worry more about losing their job and doing something on the side or getting creative or having a number job but everybody if you just sell unnecessary real estate get out of stocks and and anything but the highest quality bonds just be safe and make minor return this crash will just make your money worth more in buying real estate or stocks or something else to

17:36grow your wealth in the next boom but but the middle cla i'm telling you it is going to be the rich people this economists don't know how to solve income inequality let this stupid bubble burst it'll solve it faster than the speed of light you have a lot of rich people crying and you know who i can't talk out of this rich people i can talk in ohio housewife

17:57into what i'm saying i cannot talk a rich person living in manhattan uh san francisco or london where they think real estate could never go down because they're the richest people and that's what they buy and i'm like you're not gonna have any money you're gonna be like ted turner crying two or three years from now yeah well it's uh it's an interesting

18:16road ahead and and there's lots of things that are going to happen so um you know i'm i'm excited and it's a big shift of wealth and if you're in the right positions then you will come out and it's a just like this this copic crisis has forced us into new technologies and doing more online and going work is i haven't gone to an office since 1989 when i started my

18:37newsletter ever i don't dress up i live in my bathrobe half the time i save a lot of time it's a lot more convenient so so all of this shock yes it's gonna hurt but it's gonna force us into new industries it's gonna it's gonna it's what's going to elevate new technologies like blockchain into the mainstream people gonna see why it's necessary instead of just the people the small

19:01group that's behind it now everybody's gonna start seeing we need a new way to deal with that basically blockchain is the digitization of all money and financial assets that's the simplest definition how could that not be more important than the internet because the internet's about information this is about things that are valued incredibly important

19:25for the future and the internet can't handle this stuff it doesn't have the security capacity to handle this stuff yeah well that's a great way to end it harry we're out of time is there any other way for the viewers to follow along with your work and connect with you yeah harrydent.com we have a free weekly news to get to know us we have paid newsletters and

19:44frankly by's getting on those sooner than later because i see that you know you know what hitting the band probably probably just after the election um so harrydent.com you can get on a free newsletter and learn more about us that's something thank you so much for your time harry thank you you