More than a decade ago, Eric Fry, a global investing expert and former hedge fund manager, published a column called “The Housing Crash of 2008.” He called it “a disaster in the making.”
That may sound like an obvious call – but he wrote that column in 2006, more than a year before the Great Recession started.
Around that same time, Eric spoke at a conference in New Orleans and shocked the crowd when he showed an image of Fannie Mae and Freddie Mac on tombstones.
Many attendees scoffed at his analysis… and didn’t hesitate to tell him how wrong he was.
Yet, he couldn’t have been more correct, as the federal government had to bail out both of these powerhouse housing lenders during the 2007–’09 crisis.
He felt so strongly about this conviction that he even debated the CEO of the National Association of Home Builders on live television. Eric shot down his rosy outlook and warned viewers that the housing bubble would burst soon.
“The housing market began to implode almost as soon as the two of us unhooked our microphones and walked out of the CNBC studio ,” Eric says today.
But he didn’t just “warn” about the coming crisis. He told his readers to short dozens of the big banks and mortgage companies that eventually went bust. People who followed this advice at that time could have walked away with gains like 1,415% on Countrywide Financial, 4,408% on Fannie Mae, and even 6,425% on Freddie Mac .
It was one of the worst bear markets in U.S. history, and it wiped out $10 trillion worth of wealth.
This wasn’t the first time Eric Fry forecasted an economic disaster. In the late 1990s and early 2000s, his research firm issued numerous warnings about the coming collapse of the dot-com bubble.
He warned against stocks like Motorola, Cisco, Ariba, JDS Uniphase, Williams Communications, and Corning. All of which fell at least 80% during the washout, and some of which went out of business completely.
In fact, his negative analysis of Corning was so compelling that Barron’s profiled it in the lead story of its December 18, 2000, issue. Corning stock tumbled more than 90% over the following 12 months.
Now Eric has issued a new warning.
“Could something like 2008 happen again? Yes!” Eric said in a recent interview. “In fact, a new crisis is a certainty. We don’t know when it’s coming. We don’t know how long it will last. We don’t know how far stocks will fall. But we do know that a financial crisis will come.”
The stock market has recovered nicely from the Great Recession. The S&P 500 has rocketed more than 350% from its lows of 2009.
“But on closer inspection, this market may be resting on a feeble foundation,” Eric says.
Mortgage debt is once again close to the nosebleed levels it hit in 2008.
Credit card debt has jumped to a new all-time high of $870 billion…
Student loan debt has skyrocketed to nearly $1.5 trillion. That’s triple what it was in 2007…
And corporate debt outstanding is hitting new all-time records, just like it was in early 2008. The difference is that the current levels are nearly 50% higher than they were then.
“Still, despite these widespread signs of distress in the real economy, stock valuations are high, just like they were in early 2008,” Eric says. “To be sure, the stock market could keep rising over the next few months – and even hit new all-time highs. But history shows the risk of a severe selloff is high.”
Eric isn’t alone in thinking so.
The National Association for Business Economics recently surveyed nearly 300 business economists. And about 75% of them believe we’ll get a recession by the end of 2021.
Nearly 40% of them expect it’ll come by the end of 2020.
So, it makes sense to make your plan for surviving a recession or bear market now – before it arrives. Whether the next one will be a “whopper” like the 2007–’08 crash or a relatively mild drop of 25%, you’ll want to be prepared.
That’s why Eric recently wrote the book, Bear Market 2020: The Survival Blueprint, on how to prepare for a bear market.
As Eric says: “The real risk is not a market downturn… it’s not being properly prepared.”
In other words… Do not wait for the news media to tell you the stock market has fallen by 20%. By then it will be too late.
For a limited time, copies of Eric’s new book, Bear Market 2020: The Survival Blueprint, are available.
We’ve printed a limited number of copies so, if you’re interested, please click here for full details.
*All investing includes risk of loss*
