American economist Harry Dent predicts a crash worse than the one in 2008

The largest financial bubble of our time is about to burst, warns Harry Dent, a renowned American economist. According to him, the stock market is currently inflated by an excessively accommodative monetary and fiscal policy, accumulated over more than a decade. This warning, given during a recent interview with Fox Business, highlights potential risks of a stock market crash even more devastating than that of 2008. As the global economy appears to be slowing down, Dent’s comments call for increased vigilance and rigorous preparation.

The Grim Warning from Harry Dent

Harry Dent, a renowned economist, recently sounded the alarm about a potential massive correction of the financial markets.

In an interview with Fox Business, Dent expressed his concerns about a bubble of all bubbles which, according to him, could lead to a drastic fall in the stock markets. “It needs to burst. We need to see a collapse of about 40% to say that the bubble has finally deflated, and once it gains that momentum, it will be difficult to stop.” Dent predicts a -86% drop in the S&P 500 and up to -92% for the Nasdaq, with potentially even more severe losses for certain tech companies like Nvidia, which he believes could fall by -98%.

This situation is the result, according to Dent, of 14 years of extremely accommodative monetary and fiscal policy that has inflated asset prices well beyond their real value. Unlike previous financial bubbles, which typically lasted five to six years, this one has been prolonged by continuous stimulus measures since the 2008 recession. Historically low interest rates have also played a crucial role by facilitating access to credit and encouraging debt, which has contributed to the overvaluation of assets.

Towards a Crash Worse than 2008?

According to Harry Dent, the consequences of the bursting of this bubble could be even more severe than those of the 2008-2009 financial crisis. Dent describes the current situation as a “second version of the tech bubble“, referring to the burst of the Internet bubble in the early 2000s. He emphasizes that investors need to prepare for a significant crash and anticipate strategies to adopt in the stock market. “We must expect a bigger crash than in 2008 and 2009“, he warned.

Dent explains that the current bubble is not only larger but also more complex due to the increased interconnectedness of financial markets and the importance of tech assets in the global economy. “The 2008 crisis was mainly due to a housing bubble and risky mortgage lending practices. This time, we are facing a more generalized bubble that encompasses not only real estate but also the stock and bond markets“, he specified.

According to the economist, the speed and scale of the fall could surprise many investors, especially those who have taken risky positions seeking high returns in a low-rate environment. “Investors must prepare not only for a sharp market downturn but also for a prolonged period of volatility and uncertainty. The speed and scale of the fall could catch many investors off guard, particularly those who have taken risky positions seeking high returns in a low-rate environment.”

In conclusion, in light of Harry Dent’s warnings, it is essential to adopt a proactive and diversified approach to navigate the coming turbulence. In this uncertain context, cryptos may represent an interesting solution to diversify and protect investments.