A plunge may be looming for cryptocurrencies, housing and disruptive technology stocks tied to innovation.
According to Rich Bernstein, an Institutional Investor Hall of Famer, the nation’s expiring easy money policies and historic supply chain backlogs are posing serious risks for some of the market’s most popular investments.
“There’s a whole series of bubbles going on right now,” the Richard Bernstein Advisors CEO and CIO told CNBC’s “Trading Nation” on Wednesday. “There’s a bubble in long-duration assets. That’s a common theme.”
Bernstein’s cryptocurrency warning particularly applies to bitcoin. He said insatiable demand is a classic sign of a bubble.
He speculates a meltdown could resemble the tech bubble. It took 14 years for the Nasdaq 100 to break even if you invested in it on Dec. 31, 1999, he noted.
Housing is topping his watch list, too. In a tweet Tuesday, Bernstein warned rising home prices were starting to make the mid-2000s housing bubble seem rather mild.
“[Home prices are] now accelerating more than what you saw during the housing bubble,” the CNBC contributor said. “The rate of change now is higher than anything you saw during the housing bubble in 2005, 6, 7, 8.”
His other major risk is tied to chaos at the ports and its bullish effect on inflation. Bernstein sees it as a serious problem, and he warned on “Trading Nation” last April that investors were poorly prepared for it.
While he believes hyperinflation risks are very low, he believes inflation higher than consensus is extremely likely.
“They’re not going to stay this high. But where do they settle? Do they settle at the consensus 2 to 2.5% or do they settle at 3% or 3.5% or 4% or 4.5%? I think you treat it as an over/under bet right now,” he said.
And, Bernstein contends the supply chain backlogs will likely stick in investors’ psyches for years.
“It’s important to realize that the supply chain disruptions that we are seeing have lasted longer than the oil embargo in ’73-’74,” he said. “That was only a four-month supply disruption of oil, and it changed the way people thought about inflation for the next 10 years.”
‘There’s a world of opportunity out there’
In lieu of long-duration assets, Bernstein recommends owning pro-inflation assets. He finds they’re “woefully underinvested” in energy, materials and industrial stocks.
“People have been very, very myopic in terms of looking at disinflationary assets,” Bernstein said. “There is a world of opportunity out there right now. There is a world of opportunity out there right now outside of this small little bubble sector of tech innovation disruption, cryptos, that type of thing.”