For years, David Tice has been one of the most bearish voices about the state of the financial markets. Last May, he predicted the credit bubble would burst, with devastating effect on both the economy and stock market. Now he's back with an even more bearish forecast for the market -- in a recent interview with Kiplinger's Personal Finance, he's predicting that the stock market could fall even further, to a level of 3500 for the Dow Industrials.

Yikes! That would be at least another 50% spike downward -- a fall that now seems almost inconceivable, given the amount of pain that has already been inflicted on individual investors. Yet, as he explained to Kiplinger's, there are a number of scenarios that could lead to more pain -- including a collapse in Eastern Europe that flows through to the banks of Western Europe or a widescale nationalization of U.S. banks.

For the skeptical, Tice explains how & why the market could fall further:

"It could fall to book value [assets minus liabilities]. That would be 3500 on the Dow industrials... People think we're near a bottom because President Obama is throwing money at the problems, the market's down 50% from the peak, and we can't stomach much more pain; therefore, stocks have to go up. Well, it doesn't work that way. Markets hit bottom not based on how bad the earlier pain was, but based on where markets should be relative to fundamentals."

The only problem is that Tice is a bit short (pardon the pun) on definitive steps to take as an investor. His advice essentially boils down to the following: "Sell stocks short and hold precious metals."

Anyone in the TradeKing Trader Network have a better idea of what prudent bears should be doing now?


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[image: David Tice from PrudentBear.com]

3500? good one....i can call a 2000, 4000, 5000 and 6000 Dow bottom too....Hell i can call a 8500 9500 and 10500 peak by the end of the year and i might be right, at least the latter part of the list has some credibility to it. I hope this guy stays short and gets crushed

I'm not going to click the links and read more about your negative banter but I would like to ask you, Tice, if you are reading this then tell us all what the solution is please!  If you were president what would you do? Seriously I'd like to know.  

dshort.com has a nice graph on how this 'depression' matches the Great Depression and it's several Bear Rallys. This rally looks like the one they had in 1930 or so...but history really doesn't repeat itself exactly,does it?.

The worst investment I made as a Newbie (IMO and about 2 months here) was buying a lot of GLD when it's price was already too high by listening to all the  gloom and doom guys. But I noted several profitable stocks even during the gloom of the first two months of this years (well, gun stocks for example...ahmmm, I had to sell mine as they didn't please my family nor my conscience). Then the amazing Irish bank stocks run of March and still going now...but how long? But gold? A waste.

Gold for one thing even in the downward slope it's purely speculative and non earning. No interest, no productivity. It only puts a few people to work. And GLD's prospectus says it's primarily driven by Demand for Jewelry which isn't something that sells in a depression. So it's pure emotion and that only lives for a while...and then u miss some real value in a stock that's moving much faster...eh, even like if it's unsustainable like an Irish 'bank stock'. (and I sold AIB too early.. then bought IRE which also is still going maybe 'til tomorrow? maybe but I would have made real money if I hadn't too much GLD..which I sold a lot of in disgust to free up cash for 'real investments'.)

The crazy Libertarian rants about FIAT Money being worthless and that only gold matters is enough for me to cry "Martians are under my bed and please take them away"! After hearing enough rants like that and the scummy gold sharks on radio, how can we excited about something so dumb?

I suspect we'll see many a downturn in the following months...but then smart investors Made Money on stocks even in the Depression. And we can always buy a inverse etf like SIJ that apparently did very well in the first two and half months of this downer of a year (although the fast and nimble made a killing in March..alas I made only a very small 'killing'). 'tis Far better than GLD. or BEARX? (he's selling his own fund ain't he??)  Just have to be nimble and think only a week or a month ahead or else 5 years ahead and not much in between. (not my original idea but a 'bear's' thoughtful statement about this market). I think the Bears will be around for quite awhile but have to admire Jim Cramer's chutspa in calling the Depression Over and it's time to Buy, Buy, Buy. We'll see if Dr. Roubini or Crazy Cramer wins this round. I admire Roubini's take too and the Cabot bunch even though I heard a bunch of gold promotion coming my way from even those two lately, Whew, even my son (age 16) wants to increase his normal stocks (ge appl n goog) with some (gold) miner's  stock.  Where do kids learn this stuff?

Bottom line remains, when do you need the money?  Also, follow the money.

If a guy tells you to buy gold, and he's running a gold fund...

I'd thought about buying Gold 3 years ago, but long term it doesn't make a lot of sense (historically.)

As others point out, there are other ways to get good returns, but they all involve research and work.

Let's look at this -- he's right (the world is a hurting place, and you should have had some cash, however, if your time frame is more than 5 years... you can buy at a lower price, but keep some cash.)

He's wrong, you should be buying now... but keep some cash.

It all seems to come down to time frames.

I invested in the S&P back in Jan 08, now, April 09, it's down a small amount, but by not jumping out at the bottom... I didn't lock in the loss.

It's also money for 20-30 years from now.

The market beats out most things over that time frame.

But, yes, I also thought about gun stocks, etc. but they are flash in the pans.

What's your time table, and your need/risk tolerance... little else matters.

Finally, a large municipal bond fund is not sexy, but stable and pays better than cash... there are lots of things out there... but I'd be wary of anyone who says buy from me... without great reasons why.