Major stock market indexes worldwide have soared to record after record in defiance of bearish warnings about bloated valuations, crowded investments, and overbought conditions. Investors who heeded the bears early in the year have missed out on some spectacular, perhaps once-in-a-lifetime short-term gains, damaging the credibility of the pessimistic pundits. David Tice, who rose to fame as the manager of Prudent Bear Fund, has been a persistent bear, but he believes that significant further gains for perhaps another six to eight months may be possible before the bottom drops out of the stock market, in a recent interview with CNBC.

Tice gives 25% odds to a 50% drop in stock prices, but hedges by also telling CNBC that "There's potentially a 50% chance there will be a 25% rally." Pressed to be less equivocal, he said, "If you put a gun to my head, I think the market is going up some more." Nonetheless, the bear reared up again as he warned CNBC that "Longer term, I'm completely confident that this market will be down a lot."

Missing the Gains

Tice predicted stock market declines of between 30% and 50% in 2012 and 2014, per CNBC, dramatic pullbacks that never came close to materializing. Instead, from their simultaneous bottoms on March 9, 2009, the S&P 500 Index (SPX), the Dow Jones Industrial Average (DJIA), and the Nasdaq Composite Index (IXIC) have advanced by 292%, 274% and 440%, respectively, through the open on December 11. 

Even if Tice is correct this time, and the major indexes tumble 50% from their current levels, investors who shunned his advice in 2012 and 2014 still would be up by 96%, 87% or 170% from the 2009 lows, as measured by the S&P 500, Dow or Nasdaq, respectively. Back in June, Investopedia summarized the views of five other noteworthy market professionals who were predicting a significant drop in stock prices. Since the publication of that story, the aformentioned market indexes have risen by 10%, 14% and 11%, respectively. (For more, see also: Bear Market Ahead: What 5 Big Investors Forecast.)

'Ponzi Investing'

Speaking of investing in stocks right now, Tice told CNBC that "It's still a greater fool theory bet. It's a bit of a Ponzi investing type of bet." His main concern is stock valuations that are very high by historical standards, as measured by the CAPE ratio developed by Robert Shiller of Yale University, a Nobel Laureate in Economics. He also worries that a major selloff can be sparked by a "black swan event that you can't predict." Among the examples that he gave to CNBC: impeachment of President Trump, aggressive moves by North Korea, swings in the price of gold, or a credit market crisis. Besides selling equities, Tice recommends that investors put at least 15% of their portfolios into gold, per CNBC. (For more, see also: Investors Face 'Pain' in Highest Stock, Bond Values Since 1900.)