There's a distinct possibility the U.S. stock market could plunge as much as 6,000 points if the U.S. continues to rack up record amounts of debt, causing the dollar to lose its reserve currency status, says Daily Ticker favorite Howard Davidowitz.
"The dollar has never been at greater risk," he tells Henry in the accompanying clip. Davidowitz is confident that if Washington doesn't cool its spending habits, interest rates will spike and inflation will soar. Look at the value of the dollar, and the crisis is already brewing, with foreigners and sovereign nations diversifying away from dollar-denominated assets, he says.
What's an investor to do in this scenario?
Buy hard assets, he suggests. Davidowitz says investors should own physical gold, silver and diamonds. He also thinks land is a winning bet, even suggesting young adults buy and work farmland. "I think investment in farmland with water on it is a great investment. Finance will be less important," in the future, he says.
Admittedly, Davidowitz missed the V-shaped recovery in stocks. However, he was not invested in stocks ahead of the crash. Instead, he bought high-yielding bonds three years ago. He's now diversifying out of that trade, worried about higher interest rates. The bonds he does own are short-term corporates. And, he does own some dividend-paying blue-chip stocks.
- the U.S. stock market
- reserve currency status