Investing guru David Tice predicts that the seemingly endless bull-run market will soar yet even higher but will eventually tumble amid a 2018 market that's "going to suck."
The odds are high a black swan event will hit stocks within the next year, according to Tice. He lists North Korea as the top threat to the rally.
Tice is urging investors to dramatically cut their exposure to the stock market, and put at least 15 percent into gold.
"There's potentially a 50 percent chance there will be a 25 percent rally," he recently told CNBC.
"[There's a] 25 percent chance that we can have a 50 percent decline," he warned. "Longer-term, the market is going to suck," he said.
"The market is going up some more... People are still not talking at cocktail parties about the hot stocks," he said.
"I've been wrong a lot by being too early, and I know where this ends long-term. Longer term, I'm completely confident this market is going to be down a lot," he argued.
"If you think you could be really smart, you think you could get out, you think you could play it for six or eight months, then I can't argue about you being in stocks," Tice said. "It's still a greater fool theory bet. It's a bit of Ponzi investing type of bet. And, I think it's dangerous."
To be sure, Tice isn't alone in his warnings that Wall Street's seemingly endless cocktail party may finally be over.
For example, Wall Street economists are telling investors to brace for the biggest tightening of monetary policy in more than a decade.
With the world economy heading into its strongest period since 2011, Citigroup Inc. and JPMorgan Chase & Co. predict average interest rates across advanced economies will climb to at least 1 percent next year in what would be the largest increase since 2006, Bloomberg reported.
As for the quantitative easing that marks its 10th anniversary in the U.S. next year, Bloomberg Economics predicts net asset purchases by the main central banks will fall to a monthly $18 billion at the end of 2018, from $126 billion in September, and turn negative during the first half of 2019.
That reflects an increasingly synchronized global expansion finally strong enough to spur inflation, albeit modestly. The test for policy makers, including incoming Federal Reserve Chair Jerome Powell, will be whether they can continue pulling back without derailing demand or rocking asset markets.
“2018 is the year when we have true tightening,” said Ebrahim Rahbari, director of global economics at Citigroup in New York. “We will continue on the current path where financial markets can deal quite well with monetary policy but perhaps later in the year, or in 2019, monetary policy will become one of the complicating factors.”
(Newsmax wire services contributed to this report).
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