About David Tice

Tice founded the Prudent Bear Fund (BEARX) and served as portfolio manager from 1996-2008. For the ten years ended 12/08 when Tice sold the fund, BEARX increased in value at a 8.0% annualized rate, while the S&P 500 lost 1.4% annually. Tice utilized short sales of overvalued common stocks and stock indices, as well as being long mining companies to achieve a negatively-correlated investment return profile. Mr. Tice began his investment career in 1988 by publishing Behind the Numbers, an investment research service that focused on “Quality of Earnings Warnings and sell recommendations” for more than 150 money managers who collectively managed more than $2 trillion.

His work gained national recognition through several Barron's articles he wrote, and from more than 200 appearances on business television. Tice has taken the role of a Cassandra to warn investors about the dangers of investing near the end of a secular bull market and the problems with relying on credit growth to expand the economy, and he has debated nearly every bullish Wall Street strategist. In September 1999, Mr. Tice hosted the New York symposium, "The Credit Bubble and its Aftermath" to alert the media, investors and policy makers about the risks created by the historic expansion of credit. The Symposium was covered by the next day’s front page of the Wall Street Journal. In June 2001, Mr. Tice testified before Congress regarding conflicts of interest of Wall Street and the consequences of capital markets that lack integrity.

Since his role at Federated, Tice currently serves as President of Tice Capital and executive producer and financier of a major motion picture entitled Soul Surfer, released in 2011. He’s also on the Advisory Board of XBullion, a gold-backed secure token and the Vantage Point Australian Macro Fund, a fund designed to make money in an expected Australian mortgage crisis. He’s also been a very active board member and investor in a cybersecurity SaaS company that provides ‘intelligent data’ protection.

In the Media

Hear David speak on King World News

In this interview David discusses the U.S. stock market, U.S. Dollar, gold, silver, the Fed, bailouts, sentiment, the consumer, a coming funding crisis, threats to our freedoms, capital controls and much more.

The Long-Term Buffet Stock Market Indicator is Flashing Warning Signals

The Long-Term Buffet Stock Market Indicator is Flashing Warning Signals. Comparing the capitalization of the stock market to the GDP is a long-term valuation indicator that is used by many well-regard professionals as part of their decision-making process on how to play the market.  In fact, it has been dubbed the “Buffet Indicator” because back in 2001 the “Oracle of Omaha” told Fortune Magazine, “It is probably the best single measure of where valuations stand at any given time.” As you can see from the chart below, the ratio of corporate equities to GDP is 156.3%, up from 156.0% the previous quarter. Which is only surpassed by the ratio of 159.2% in 2000, followed by the two-year dot.com crash through 2002. That sent the market down by about 49% from peak to trough.

Also note the elevated ratio around the time of the financial crisis which caused the S&P 500 to fall 56.4% from 1565.15 to it its low of 682.55 on March 5, 2009. So, it is this ratio and other indicators signaling the market is vastly overvalued that have Buffett and other market sages like hedge fund guru Stanley Drukenmiller so concerned. In a speech to the Economic Club of New York, Drukenmiller recently said: “The risk-reward for equity is maybe as bad as I’ve seen in my career.”

The Long-Term Buffet Stock Market Indicator is Flashing Warning Signals
The Long-Term Buffet Stock Market Indicator is Flashing Warning Signals

No doubt the stock market is overvalued by many measures, which is historically a setup for a major downturn. But the big question is when? This year? Next year? Remember, the GDP to market capitalization ratio is viewed as a long-term indicator. So, what could the trigger be?  Drukenmiller, like many others, is concerned about very serious long-term economic effects of the coronavirus. But then again, there could be mitigating circumstances. Drukenmiller adds:  “The wild card here is the Fed can always step up their (asset) purchases.”

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