Is Harry Dent's Stock Market Crash Prediction as Crazy as it Seems?

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Economic forecaster Harry Dent just made another dire prediction, and investors should hope he's wrong.

Dent, bestselling author and financial newsletter writer, told CNBC Tuesday that he sees a stock market crash in the United States starting in the third quarter of 2013 and continuing for a year and a half.

Dent said real estate prices and stocks would plummet more than 60% by the end of 2014, or sooner, meaning the Dow Jones Industrial Average would fall below 6,000. He also said the United States would be close to bankruptcy by then.

Dent cited U.S. demographic shifts and the nation's debt crisis as the main drivers of a crash. He said had it not been for the U.S. Federal Reserve's recent moves to stimulate the economy, the stock market would already have collapsed.

"We call this the economy in a coma," he said. "Basically, without these trillions of dollars of stimulus, we would be in a downturn, in a depression, because we also have $42 trillion in private debt, the greatest debt bubble in history, and that needs to unwind."

Dent's Stock Market Crash Theory

This isn't Dent's first high-profile prediction on the economy. He's most famous for predicting in the late 1980s that Japan, then on top of the economic world, would suffer a slowdown lasting more than a decade.

Now his theory of a "baby boomer spending wave" suggests the U.S. is heading down a dangerously similar slope.

Dent says as consumers age, they spend in patterns. When baby boomers were having kids, they spent more and the economy flourished. As those children left home, boomers spent less and less, leading to a declining economy.

This happened in Japan, where the working-age population peaked in 1995.

By 2015, Dent says the United States will see a disproportionately high number of older people and a smaller population of the younger, productive people of child-bearing age.

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  1. H. Craig Bradley | January 11, 2013

    UNCERTAINTY AND VOLATILITY NOW PERMANENT

    Nobody knows exactly when the U.S. economy and government will "collapse". Keith Fitz-Gerald favors a Japanese-like series of "lost decades" driven by declining birth rates and an aging, less productive population. He may be right.

    America may be in for a long grinding process of attrition where markets never quite seem to fully recover and returns remain subnormal ( single digits). Wages stagnant for many and unemployment stuck in the high single digits. However, we may have a number of very disruptive financial crisis along the way, such as a bond market crisis and a huge spike in interest rates that few are prepared for. Volatility and uncertainty is bound to be our partner where ever we go from here.

  2. Theo | February 3, 2013

    I don't understand why no one is pointing out that Harry wrote the book the roaring 2000's with a Dow between 20,000 to 30,000. I don't see how he or anyone else expects anyone to take any prediction he makes seriously. Yet that mealy mouthed liar has the nerve to brag in public about his prediction successes. What successes? Where?

  3. Tom | February 17, 2013

    Mr. Dent seems to be right about the general trends to come but has a history of severely overstating them. The market topped at about 14,000 instead of 30,000. If he is predicting a 60% + decline then there will probab;y be at most a 20% decline, not uncommon for bear markets and recessions are inevidable at some point but that doesn't mean a full blown depression.

    • David Baratko | March 1, 2014

      The market might have gone to 30k if the government didnt start giving houses away sometime 5 to a owner with 0 down. We had a sub prime melt down which took a lot with it the largest amount was real estate ,derivitives
      and bonds,stock just fell along with everthing else. Dents target of 6000 on the dow is just a lower support level,nothing magic about it. The next lower support is 3000. Nothing has changed since 2008-2009 except we have a lot more debt public and private. Junk bond are paying under 5% no problems there.

  4. Trader | March 2, 2013

    Market prices are dramatically inflated. Stock prices are trading up simply because nothing drastic has come to pass yet. The Fed is still printing money, right now their balance sheet is 3 Trillion. Our government can't even cut 1 Trillion out of DEFICITS over TEN YEARS.. face it, they will never be able to pay the Fed back.

    Everyone invested right now has their finger on the trigger to exit. It will once again be blamed on a "computer glitch" but its really a series of stop-loss orders as everyone scrambles to get out, and what starts with a sharp drop will result in an avalanche. There have been materially no gains economically in years, the Fed has simply printed up price increases in stocks and propped phony house prices from the former bubble. Without Fed money there would be no "growth".. all of these "gains" are cash-advances on the credit card. Don't fall for it. Don't invest in stocks, short them when the market crashes.

  5. H. Craig Bradley | March 16, 2013

    AMERICA: LAND OF COLLECTIVE "DREAMERS"

    With the amount of Government and Central Bank (FED) interventions in recent years ( 2008-2013) nobody can call this a "normal" economy today by any traditional standard. Markets and valuations have been distorted by all the liquidity. We are all living a veritable "dream" and it may be a bit unpleasant for us when investors in America wake up one morning and realize its not at all like what they thought, hoped, or dreamed.

    It certainly will be humiliating for voters to be confronted by the harsh reality they were so easily duped (twice) and left holding the bag ( $$ Trillions and Trillions of New Federal and state debt). The "mark" is the big financial loser here. Figure it out, if you can. You'll be "working" till your 75 or until you croak. Forget about social security or a traditional pension. The money won't be there for you, as promised.

  6. share market news | March 19, 2013

    Trading the stock market throughout a bearish period just after it includes crashed requires a new sizing and a innovative number of ability. The bathtub bath tub analogy maintains a whole lot of side by side comparisons for the stock market. Choose trading approaches which can be which may help you business from the turbulence existing within a sector crash, and that you will do well almost a year later on in life.

  7. TR | June 19, 2014

    He's the Larry King of the stock market..All promotion!

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