Charles Nenner’s David Gurwitz: Stocks to Go Down 60% Over 7 Years
Mike Norman, of the Hard Assets Investor, interviewed David Gurwitz, the managing director of Charles Nenner Research at length in late May.
Norman pointed out the terrific call Nenner’s research made on gold, calling the top at $1,900.
Gurwitz explained that cycles come from the Greek word “circle.” “What we do is we take any data series and find basically repeating top-to-tops,” he added.
Gurwitz stated, “if you find a top in gold every five weeks—forget the price—top every nine weeks, top every 14, top every 37, you have, in effect, a lot of sine curves.” He added, “when they’re all topping, we don’t know why…we don’t know why things happen..when they’re all topping, we just assume that’s a top. And they were all topping at $1,900.”
Norman brought up the randomness of markets to which Gurwitz responded, “there’s another book, called “Chaos,” which basically says there’s not randomness, that in fact it is predictable. There’s patterns within chaos; it’s the other side.”
Gurwitz added, “let me tell you what Einstein says about relativity: “When a man sits at a radiator for a minute, it feels like an hour. When a man sits with a woman for an hour, it feels like a minute.” That’s relativity. So anyway, we don’t believe it’s random. We don’t agree with that premise, so therefore we believe that you can find patterns. And we called the top on Apple.”
Gurwitz commented on natural gas and how Canadian banks lent money to the natural gas producers when gas was $6 not long ago. “Nenner Research had said that natural gas was going to a $1.70 after moving through $5, $4.50, $4. Suddenly those loans, like a lot of people’s houses, with the mortgages under water, bank loans were under water also to companies.”
Gurwitz said banks started pressuring the natural gas companies to sell to pay back the loans. When they started selling, the price fell to $3, $2.10. It got to $1.90. Gurwitz questioned what came first, the cycle top or the actions to the banks? “We think the news shows all say banks forcing producers to sell. We think it was the cycle top that said it.”
Gurwitz stated there’s a cycle bottom coming in gold very shortly as we’ve had seven up years with gold.
Gurwitz said we also do price too. “Because football … we’re both former athletes, maybe current. You know the quarterback goes 1-2-3-4 and he throws. Same with us. Cycles just give you direction. Target algorithm, which is based on rocket science, believe it or not, and quantum physics … it does get very deep, gives you level. And so we look for timing, level and direction. And when they don’t all line up, we will stay out, which is something most people have a hard time doing. So they’re in pain staying in the gold trade. Now as you probably know, a lot of people are sitting now crying because … and they’re going to probably sell.”
Gurwitz said the low in gold is coming relatively soon and there will be a great opportunity. Editors note: During this interview Gurwitz said they saw a low for gold in the high $1,300’s. Gold has traded as low as $1,269 in this latest debacle.
Gurwitz stated further about gold, “we’ll retest probably, because we want everything to line up. The cycle, the target and the other things we look at, MAC-D, there’s a triple top forming in the euro right now. Again, I won’t go through the details. This is the stuff we do. We’re a little technical, but we think the technicals are in fact fundamental.”
Gurwitz indicated that his was a correction in a long-term bull market for gold.
Norman asked Gurwitz if he felt the same way about other commodities in general. Gurwitz said that everything is different and they see gold going up, based on their cycles and forecast; along with silver. They see copper continuing down and got out of copper six, eight months ago.
Gurwitz stated, “we have a lot of sovereign wealth fund clients. They don’t want to trade next week, next month. They want to know four years from now. So copper’s down, which indicates something about not such a great economy”.
Regarding natural gas, “which went from $6 to close to $1.70, is now in the low $4 range, and very shortly we think we’re going to short it again back to its low,” Gurwitz said.
Regarding agriculture, “so grains we think are bottoming in several months. And there’s going to be a rally in grains,” said Gurwitz.
“People say stocks and bonds always go opposite direction. If you bought stocks and bonds in 1981, it was both a great trade. They both went up. If you bought them both in 2000, bonds have done well, but stocks are flat from 2000. If you bought them from 2007, bonds have done well, but stocks haven’t. So you can’t just say A implies …,” Gurwitz clarified.
Norman mentioned the strength in stocks, despite a not-so-great economy to which Gurwitz responded, “Long term, we see stocks going down for the next seven years over 60 percent.” Gurwitz claimed this forecast was based simply on cycles which is all they know.
Norman asked how they did in 2007-2008. Gurwitz said, “we took everyone out in the summer of 2008.” Norman pointed out that was right before the Lehman crisis. Gurwitz confirmed this and added, “we don’t know what’s going to be the … the reason shows up afterwards, after the cycle is set.”
Norman said, “so you really didn’t get the top in that one.”
Gurwitz responded, “we got out. Prior, when the Dow went from 10,800 to 14,500, we called that on CNBC; it’s on our site. We went back in and got out in the summer of 2008. It was not a front end of 2008, as you can remember. We went long the beginning of 2009, more or less until now.”
Gurwitz admitted in brutal honesty that they don’t know anything else but cycles. He added, so stocks are topping and they’re going to go straight down.
Norman asked if there was a signal, or sell point.
Gurwitz advised that investors should go straight to their site and get the research, “because the answer is, we’re monitoring it and we’re very close to a top now. It’s also been a top in 2000/2007/2013. Now it’s much weaker than it was in 2000.”
Norman mentioned the bond bubble.
Gurwitz said, “there was a high 30 years ago in rates. Sixty years ago it was low. The U.S. government was actually selling, as opposed to buying, savings bonds 2.5 percent in 1950. 1920 rates were high, 1918/19 rates were low, 1860 the Civil War rates were high. So the next 30 years, you’re going to see increasing rates.” He added, “starting this summer, there’s going to be one more rally…same thing-cycles…so bonds are going to be a great short for the next two decades starting this summer.”
In the middle of April, Charles Nenner provided his key support levels for the stock market and forecasted the DJIA would fall to 5,000 by 2020 [link].