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David Tice: Investors are missing the glaring risk of a recession

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Investor David Tice is going deeper into bear territory, predicting that the economy is months away from a deep correction that will send stocks down by as much as 50 percent.

Tice is known for his tenure as manager of the Prudent Bear Fund. He sold the fund, which depends on market pullbacks for profits, to Federated Investors just as the financial crisis was unfolding in 2008.

Since the acquisition, he's been involved in private equity, film producing and charities. But he's planning his emergence from hibernation to capitalize on the potential downturn.

"The market has tended to go down about every seven years. It went down in 1987, 1994, 2001 and 2008," Tice told CNBC's "Trading Nation" on Friday. "During these periods after the declines, it rallies like crazy. But now bad things are about to happen again."

He sold his bear fund when it had $1.2 billion in assets under management. According to Morningstar, it has just $254.7 million right now under Federated's leadership. CNBC reached out to Federated for a comment.

The steep losses could just be a stark reminder of the nature of the stock market rebound. The S&P 500 Index rebounded 92 percent since the financial crisis hit in September 2008.

Tice's timing in selling the Prudent Bear Fund may have been pretty good, but his calls on a pullback haven't materialized.

He's calling for a 30 to 50 percent S&P pullback over the next six to 10 months. He also made that prediction in 2012 and 2014. It never happened.

If there is a correction, Tice says there are two protection plays investors should consider. Gold, which is down more than 6 percent over the past three years, is one of them.

"You should own gold stocks... They're still priced very, very well compared to the bullion," he said.

Tice says bitcoin makes a lot of sense, too. Unlike the bearish activity in gold, bitcoin has soared 253 percent since 2014.

Source: Bloomberg

Junior Trader Stefan Panteleev


 Varchev Traders

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