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Who is David Hunter (DaveHContrarian)? Melt-Up Rally Then Bust Prediction

davehcontrarian meltup

If you’ve browsed the finance section on Twitter, YouTube, or any trading site long enough you’ll probably have stumbled across David Hunter, who goes by the username @DaveHContrarian.

He’s amassed a large following with over 180,000 followers on Twitter and is a regular guest on financial YouTube channels. He’s also very active on Twitter, frequently responding to the comments he receives at all hours of the day.

That said, he’s also been on the receiving end of a lot of criticism for his seemingly outlandish and highly contrarian calls. Many are left wondering whether David Hunter is the real deal or whether he’s just another “furu” (financial guru) leading people astray for their own benefit.

We’ve done a good amount of research on him as part of this article. The short answer is no, we don’t think David is a scammer or charlatan. His calls are certainly extravagant and unorthodox, but he genuinely seems like he’s convinced by his thesis and is simply putting his opinion out there.

Let’s dive into some more details about Dave and his background to see if you want to believe him or not.

Dave’s Forecasting Methodology

David looks at fundamentals, technicals, sentiment, macro analysis, and cross market analysis as part of his forecasting methodology. These data points, combined with his contrarian bias, help shape his opinions.

DaveHContrarian’s Predictions

Melt-up Forecast

DaveHContrarian is best known for his highly contrarian and seemingly outlandish calls, usually made well in advance of the event happening. This often leads people to believe his calls are wrong, when in fact they may just be early.

His current macro forecast is that we are in the final stages of a 40 year secular bull market that started in 1982. We are in the midst of a correction before a final parabolic upleg of this bull market, which will occur in the next 3-6 months and take the markets to new highs by the end of 2022.

This melt-up rally will be sharp and the steepest yet, perhaps even moreso than the 2000 dotcom rally. This will be followed by an unprecedented bust with an 80% decline in the indices. The highs of this year will not be revisited for decades.

David’s equity melt-up rally targets in this forecast are:

  • S&P 500 (SPX) to 6,000
  • Nasdaq (NDX) to 20,000
  • Invesco QQQ (QQQ) to 500
  • VanEck Semiconductor ETF (SMH) to 400

Presently, the SPX sits at ~4,000, NDX at ~12,000, QQQ at ~300, SMH at ~235. If his targets play out, this would be a 50% move in the major indices in just 3-6 months, which is absolutely unprecedented.

You can see why so many are skeptical of Dave and his forecasts. The closest equivalent to this “blow-off top” type of move is in 2000 during the dotcom bubble.

Dave is also bullish on the metals and miners to participate in the melt-up rally – his targets for metals and miners are:

  • Gold to $3,000
  • Silver to $50
  • GDX to $65
  • GDXJ to $100
  • SIL $75
  • SILJ $35

Gold and silver currently sit at $1,800 and $22 respectively, so these are also huge breakouts if true.

Some other forecasts Dave has are that the US10Y yields have topped, and that the US dollar and oil prices are topping and will reverse hard to the downside. The rally will truly be broad-based, as growth and value, large and small cap stocks all participate.

For those wondering, Dave does not follow crypto and does not have a view on how they’ll do in the melt-up. That said, if Dave’s other predictions turn out true it’s very likely crypto will participate in the run up as they are still a risk-on asset at this time.

What Causes the Melt-Up Rally to Happen?

The Fed started getting serious about combatting inflation in early 2022, which spooked the markets and caused the markets to enter bear market territory (-20%). With the Fed raising rates, tapering their balance sheet, and maintaining their hawkish tone, those that follow Dave wonder how his melt-up theory can possibly happen.

After all, the oft repeated mantra of “Don’t fight the Fed” works both ways, and right now the Fed’s main priority is lowering inflation, even if that means

Dave’s thesis is that the bond market led the way into the correction and will lead the way out. Rising bond yields have essentially done the Fed’s job for them, as they’ve put pressure on asset prices and tightened the economy. By raising the Fed Funds Rate further and beginning quantitative tightening, the Fed has further weakened an economy that’s already showing signs of struggle.

Similarly, the bond market will lead the way out of the correction into the rally. The US10Y yield will reverse, signaling that bond investors see the economic weakness and expect the Fed to pivot and end the tightening cycle. Signs are already there that the Street is slowly coming around to this view.

This view is predicated on the fact that the economy is much weaker under the hood than the data suggests. The Fed’s recent tightening tirade has now pushed the economy close to, if not already into, a recession. Q1 GDP came in negative already, as a point. Dave believes the Fed will have no choice but to pivot sooner than expected.

So even though the Fed may continue tightening into June, Dave expects the Fed to pause by August, if not July, as the economic data rolls in. Right now, the market is currently pricing in that we’ll end the year with a Fed Fund Rate of 2.5% with possibly 11 rate hikes. Since the market has priced in all of this negative news, a pivot would cause a strong reversal to the upside as the market has to reprice these factors.

Once the Fed pivots, investors (especially institutional investors) will rush to reposition their portfolios accordingly, back to a more risk-on skew. The ensuing short covering and FOMO will propel the market to new highs. Cash on the sidelines is at some of the highest levels in years, and even though the Fed is easing off their balance sheet there is plenty of sidelined liquidity.

cash on sidelines near ATHs in 2022

Bust Forecast

So what happens after the melt-up rally? According to Dave, he sees a deflationary bust that will cause an 80% market decline. No asset class, other than cash and maybe US Treasuries, will be safe at this point. Housing and real estate will get hit hard as well.

Dave says this is truly a cataclysmic event, the likes of which we haven’t seen yet. The bust will be deeper and feel worse from a sentiment standpoint than the 2008 Great Recession.

What Causes the Bust to Happen?

While Dave has said it’s too early to know for sure what causes the bust, one theory is that the Fed will tighten at the wrong time again. With the melt-up rally in play, the Fed will likely raise rates to combat the eventual inflation and inflated asset prices again, but do so into a highly leveraged and fragile economy that ultimately sends the house of cards crashing down.

Dave ultimately believes the Fed’s policy errors they’ve made over the years will come back to haunt them. As he says, the Fed is backwards looking and they react instead of anticipate. The Fed bases their decisions on economic reports that are by nature backwards looking. By the time the Fed reviews the data and makes policy decisions, they are already a month or more behind what’s actually happening. This results in the Fed being constantly late to policy decisions, which leads to the pendulum swinging too hard one way every time.

You only have to look back recently when the Fed consistently said that inflation was transitory in 2021. By the time the inflation data finally came in, it was too hot to control and led to the Fed having to immediately pivot to combatting inflation as their number one priority.

DaveHContrarian’s Background

David has worked in the financial industry his whole life, with 25 years of experience in investment management and 20 years as a sell-side strategist. He’s worked at banks, wealth management firms, pension funds and insurance funds. He graduated from Valparaiso University with a BS in Finance and DePaul University with an MBA.

David currently works for himself as the Chief Macro Strategist at his firm Contrarian Macro Advisors. He sends out a quarterly letter of his thoughts on the markets, macroenvironment, metals, sentiment, and anything else he tracks. If you’re interested in this paid newsletter, you can DM him on Twitter.

David very much considers himself a contrarian. One of David’s favorite books he recommends is Contrarian Investment Strategies by David Dreman. He credits a lot of his thinking on sentiment analysis and investor psychology to this book.

What’s great about Dave is he’s fully aware of how contrarian and crazy his calls seem at the time. But he fully buys into them based on the work he’s done; he isn’t just being a contrarian for the sake of being a contrarian.

Is DaveHContrarian a Scammer?

Despite what others may think of him and call him, it’s highly unlikely Dave is a scammer. A scammer is someone who knowingly lies to others for personal gain.

Dave provides all of his ideas and thoughts free of charge. If you don’t like what he has to say, you don’t have to pay him a dime. He does have a paid newsletter, but I suspect the contents are quite similar to those he shares publicly. Dave barely advertises it and makes it quite difficult to actually find out about it and pay for it. He briefly mentions it sometimes on interviews, but he doesn’t mention it elsewhere and you have to personally DM him to get on the list.

Though his calls may seem outlandish at the time, he’s worked as a macro strategist for the last 20+ years. If his calls never materialized and his track record were truly that poor, it’s unlikely he would be able to continue in the business for that long.

There’s also simply no reason at this stage of his life for him to jeopardize his own reputation (as well as his family’s) by publicly deceiving and scamming people. I genuinely think that he enjoys his work as a macro forecaster, has a unique viewpoint, and simply wants to share it with the world. If that helps people, then all the better.

David Hunter’s Track Record

According to Dave he’s had a strong record predicting major inflection points, as he successfully predicted the Japan top in the late 1980s, Nasdaq top in 2000, and 2008 hard landing.

This isn’t verifiable though, as you wouldn’t know unless you had access to his reports back then. However, in recent history Dave has had some good calls.

In late 2021, when everyone was telling him he was missing his own melt-up rally, Dave predicted we were due for a correction. His call was correct, even if his targets weren’t deep enough.

In March 2020, Dave called that the markets had bottomed and were headed to new highs. This was in the face of massive uncertainty and fear around the pandemic still.

One area Dave has not had a good track record is in his metals calls. He’s been predicting for a gold and silver rally for quite some time that has simply never materialized. He remains bullish that they will participate in the melt-up rally, though.

Is David Hunter a Broken Clock?

David’s gotten a lack of flack during this prolonged correction in 2022, as people have gone back to his timeline and resurfaced his prior calls. Many purport he’s been repeating the same call over and over again, which isn’t that impressive as even a broken clock will eventually be right.

What many people get wrong about Dave, and he says as much, is that he’s not a trader and not making day to day calls. He considers himself a cycle forecaster and his convictions are on the big picture.

While most people are on Twitter looking at the 1-minute chart, Dave is on the 1-year chart. He’s also not too worried about getting the exact timing right, since he’s most concerned with calling a 40 year cycle top. This is why he often tweets out that the market has bottomed or is close to a bottom too early sometimes.

For instance, David tweeted on February 28, 2022 that the 2022 correction lows were in and the melt-up had started. Well, if you’ve been following the markets at all you’d know that the correction then continued for at least another 3 months.

However, what many people seem to miss is that David does revise his forecasts based on current events. A few days after that tweet, Russia invaded Ukraine which caused the markets to continue falling. David didn’t change his call for a melt-up then bust, but he did admit this event would prolong the correction.

As mentioned before, Dave can be too early in his calls. It’s true he’s been calling for the melt-up and bust for years because that’s how he sees the secular bull run completing. But along the way, he’s also continuously revised and updated his call based on events that happen.

David admits the 2020 pandemic was a black swan and lengthened the cycle. He is now convinced that the melt-up will happen this year, in 2022. He has even put a timeframe on it, stating that it will occur in the next 3-6 months from May 2022. So as he says, we can all “wait and see” to see if he is indeed correct this time around.

Should You Listen to DaveHContrarian?

At the end of the day, we’re all responsible for our own choices. You can listen to as many experts as you want, but you can’t hold anyone accountable except yourself. Take Dave’s word as another data point in your investing research but don’t put all your eggs behind any one person’s word.

If Dave’s predictions play out, this final leg up will be sharp and fast. Investor psychology will quickly shift from fear and pessimism to greed and euphoria, which are hard emotions to fight. David has mentioned that he expects many investors to feel most confident at the top and buy in, just before the ensuing bust.

You may think you’ll simply play the move up and get out before the party ends, but the markets are never that easy. It takes great discipline to take profits and be comfortable missing out while others are still having fun. This is partially why Dave never provides trading recommendations or advice – he knows everyone has different risk tolerances and trading styles.

As David says, you should never buy options based on his calls. No one has a perfect track record and no one can time the markets to perfection. It would be foolish to base your trading and investing decisions based on someone’s opinion.

All that said, Dave does seem like he genuinely believes in his thesis. He’s said in tweets he’s allocated his own portfolio accordingly, implying that he has skin in the game for the ensuing melt-up.

Whether DaveHContrarian’s call plays out or not, we will know soon enough.

For more information on David Hunter, check out his most recent interview below.

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