This is a video you’re going to want to watch in its entirety, or else you’ll end up like the Karen whiners, who misrepresent my actions or what i believe is going on in the market. Now you have to know these two things, though, in order to keep going. The two things you have to know is that you’re always going to get radical transparency from me on this channel. As to what i believe is going on in the market, I will tell you everything about what i believe is going on in the market. If I’m shorting the market, i will tell you that i can’t make a video every time i fart and buy or trade a stock.
I do that in the stocks and psychology of money course down below and links. You know that, but otherwise my overall moves in the market. You know everything that i’m doing you know when i open a short. You know when i close a short: you know what i’m making a bet on the market or i’m not making a bet on the market and number two. If i say i’m going to do something, i’m going to do it so, for example, if i say i’m going to huddle amc for a year, i am going to do that, i’m not going to just say it and then a month later change my sentiment and Sell it and just not tell you about it, never bring it up again.
That happens. That’s not me, though, now something that i do may not align with your strategy. It may not align with your hopes and desires, but ultimately hope is not a strategy. The truth, a plan and conviction, is what creates the strategy and that’s what you’re going to get in this video now, let’s get into this video with starts with a quick message from stream yard and the importance of history folks, this video is brought to you by Streamyard, if you want professional, live streaming software, it’s so easy to get on your browser, whether it’s on your phone or on a computer. All you have to do is go to medkevin.
om stream yard and you can sign up for stream yard sign up for what is a phenomenal way of handling meetings, throwing comments up on screen and getting live broadcasts synced and multi-broadcast across facebook, youtube, twitter and other platforms Check them out in the link down below alright folks, let’s get started the onsen, the onset rather of world war, one sparked a boom for farming. Now, why are we talking about world war? One because we’re going to find similarities? Commodity prices, skyrocketed the price of wheat, hogs milk and corn doubled more than doubled, leading to rampant agricultural inflation thanks to substantial shortages, expecting the boom to continue. Farmers took on massive amounts of debt to expand their operations, the average price of land.
Thanks to all this new debt doubled in america, so massive inflation led to a massive real estate boom commodity prices, more than doubling, which ultimately led to a massive production boom and the short term was great. High prices. High profits, however, just like all pain comes to an end. Euphoria also comes to an end. We ended up over producing leading to an oversupply of agricultural resources.
Guess what happened next, since farmers were now under heavy debt burdens for expanding their businesses at the top of the business cycle, they had to drop their prices to stay competitive, to sell any of their products and ultimately to service their debts. As a result, agricultural prices plummeted and within 10 years, 60 out of every 1 000 farmers went bankrupt. That was just the start of the pain, though, because that’s only six percent, but the climax came with the great depression and it took another 10 years for the agricultural economy to fully recover from its pain. The great depression is often marked by black tuesday, which was october 29 1929. But what we generally don’t talk about is what led up to black tuesday the stock market experienced something that it hadn’t been used to.
It was speculation by hobbyists on stocks trading stocks became a hobby. Individuals began buying stocks solely in anticipation that price would go up. These were individuals who didn’t know anything about fundamental analysis or understanding. The true present value of a business fundamentals went out the winding, which i hate to say, sounds really familiar, but what’s worse, number two people took on massive margin debt, even though only three percent of individuals invested in stocks in 1929, one-third of all wealth in america Was concentrated in the top one-half of one percent, and a lot of this was propped up by debt financed with cheap rates and a blowing up stock market. But when stocks began losing value in 1929, especially around the time of black tuesday and fundamentals.
Finally, returned to the question, potentially even less so because people are now fearful of the markets. What came next a true trickle down economics? Consumers became fearful and stopped spending. They started hoarding cash businesses became fearful. They stopped hiring, stopped, investing and stopped spending as much.
Of course, things don’t go to zero. Capex plummeted, this, along with high debt and an overproduction of supply in many industries, even beyond agriculture, led to a massive nasty crash that took america five years to recover from it wasn’t by the dip and were good in five weeks. It wasn’t by the dip and were good in five months. It was five years see this sort of insane. Speculation has happened as well in 2000, with the internet bubble, somebody who bought in 2000 needed to wait about 14 years just to break even on prices.
They paid that means they had to ride through the 2008 recession, just to end up getting to the other side of the 2008 recession to break even on a purchase they made in 2, 000.
That’S 14 years of a zero percent return on average. Unfortunately, i can’t help but find some massive similarities to these prior markets. To today we have massive chip and shipping induced inflation, accelerated by complications arising out of societies dealing with covet in a different way or different ways. Look at china versus the united states, misinformation around masks and preventing covet, but also complete distrust in the fact that vaccines could be something that could help us and so far, they’re not doing a good job.
While some agricultural commodities are spiking now, commodities related to chips and metals and shipping have skyrocketed and businesses are expanding, their productive capacities with more and more cheap money, but that cheap money is coming to an end right now. What we’re seeing is prices and wage prices increasing and becoming so common in companies like chipotle, where they openly brag in their earnings, call about how they can charge customers more money, despite their input costs not actually rising, and then other companies who do have input costs Rising or bragging about how much as a percentage they can pass along to the consumers. This is called pricing power phenomenon that occurs when individuals have higher bank balances and the psychological mindset that prices and price increases are the norm. This is inflation, see inflation, isn’t just prices going up, it isn’t just the expansion of the money supply. It’S the psychological belief that it is okay to pay more money and, as we do, prices or companies take advantage of us as a result of these pricing powers.
The federal reserve now describes uh quote excessive valuations in the housing market and stock market, and that’s led by the fact that sellers are essentially the price makers. Companies uh, whether they’re sellers or companies are able to set prices and people are paying them. Now. The federal reserve is starting to try to rein in the madness by first increasing rates when the federal funds rate increases. It can have the effect of raising other interest rates, whether that’s margin, interest rates or just straight-up lending rates.
When rates rise, borrowers tend to reduce the amount of borrowing they do. This makes sense. Consumers borrow less money because it’s more expensive to borrow margin, debt or take out personal loans or home equity lines of credit interest rates go up when rates go up. Businesses suffer from the same aspect, but businesses also have the second factor that if consumers are borrowing less, then demand might decline. So businesses especially tend to borrow less money when rates rise.
This has the effect again of consumers reducing demand as financing costs increase, but businesses reduce investment as demand declines. This is kind of like and it’s much more complicated than this, but if you think of an analogy, it’s kind of like the federal reserve taking the foot off of the gas on a car, that’s driving way too fast on the highway 100 miles an hour or 120 miles an hour, let’s just say, and then slightly tapping on the brakes to get the car back to 80 miles an hour. The car is still going fast, we’re not in this slow down phase where we’re on the highway in stop and go traffic. That would be very bad if we slowed down that much, but we’re trying to get from 100 to 120 on this nitrous that somebody poured in the gas tank back down to a normal speed for the highways between 65 and 80.
See we were just driving too fast.
Unfortunately, driving a car is relatively easy. Driving a global economy is next to impossible, and that’s what the supposed a political body, which means not political body of the federal reserve, is tasked with they pretty much lead the global economy. Even though they’re just supposed to lead the american economy, since we are the largest economy by twofold, twice the economy, economic size and right of china, we lead the global economy, so we’re told to expect prices to fall when production meets demand, which is a known risk That, if demand plummets too rapidly, then we could end up in a deflationary spiral and ultimately a recession right. Of course, if we don’t tap the brakes, that is, the fed doesn’t tap the brakes. We might end up losing control and ending up in a hyper inflationary crash, and so this is where the federal reserve is really tasked with dealing with two extremes, i think the easiest way to picture this is a large balance, beam about eight feet tall and all Of us in america are standing under this balance.
Beam on top of the balance. Beam is a massive sheet of plywood and there are two weights on either side. And if this balance beam breaks and this plywood comes down, we’re all getting hurt or crushed in the markets and see the federal reserve is, is the one standing in the middle trying to balance uh this balancing beam on on a little pyramid and on each side Of the plywood is one the risk of a deflationary spiral slowing the market down too much to where we end up with a deflationary spiral. We’Re spending slow so much that we end up in a recession, because what is a recession? It’S two quarters of a gdp decline in a row: okay.
Well, if consumers stop spending so much that gdp turns negative, even slightly negative for two quarters you’re in a recession you’re at a technical recession, the same would be true on the opposite end. If we don’t control, prices and prices continue to explode the way they have been, and we end up with hyperinflation that leads the federal reserve to have to raise rates so substantially that then we crush demand through high interest rates, where borrowing becomes almost impossible, because rates Are so high demand gets crushed and we go into recession right. Both of these options are bad. I like to call them the two extremes, and so what we’re really all hoping for right now is we’re all standing under this balancing beam. Looking at jerome powell and the finesseness of the federal reserve to keep this balancing beam in order, unfortunately, market psychology has changed and we’ve lost some respect for jerome powell’s ability to keep this balancing beam afloat, see after joe biden’s meetings with jerome powell, whether it was For jerome powell, keeping his jobs or not his job or not, jerome powell changed his mindset after his meetings with drum powell and became much more hawkish on controlling the economy, hawkishness that could potentially benefit joe biden.
Blaming politics, though here doesn’t really matter. It doesn’t really matter what changed in jerome paul’s world. What matters most is that markets have, to some degree lost faith in jerome powell’s ability to protect us, and this could be because of his u-turn on transitory. It could be because of a sudden u-turn. After meeting with joe biden, which implies that there’s more politics here at play than uh the reality of wanting to provide factual information, but again it doesn’t really matter what matters most.
It doesn’t matter why people have lost faith. What matters is that people have lost some degree of faith, and this loss of faith has led to the rampant, fear-building speculation that will likely dampen any semblance of good news that this market expects and has been the reason every day it seems like on certain stocks. We’Re hitting all-time new lows and we’re at least 52-week new lows, and it feels like any rally that we have is really convictionless. Let me give you an example: jerome powell has made it clear that he does not expect to raise rates until the taper is complete. However, now because market participants uh do not believe jerome powell as much, they are speculating that jerome powell is going to rug, pull us on january 25th, which is just in a few days with a surprise rate hike.
Previously. The first rate hike from the federal reserve was expected on march 16th, which speaking of march 16th jerome powell and the federal reserve and their summary of economic projections project a 25 basis. Point increase. That’S a quarter of one percent, unfortunately, now again because market participants don’t really believe the fed they’re speculating that the fed may raise rates by 50 basis, points which is twice as much on march 16th, again doubting the federal reserve, which frankly is understandable but hey things – Are different now, right i mean we’ve started to get some positive catalysts right i mean like services and manufacturing pmi showed some hope on inflation, that we should be optimistic on inflation, inflecting down right and i mean j-power – wouldn’t want to crash the market right. That may be true, but folks, one of the most important things to consider is the psychology in investing – and this is what i talk about in my course on stocks on the psychology of money, where i walk you through tactics for different markets.
I don’t stick my head in the sand and maintain the same tactic over and over when markets change. I provide you rationale for that change and i provide actions that could help protect our portfolios in those times no guarantees, of course, but here’s the thing stock valuations are built on three things and we’re going to talk about is this time really different stock valuations are Built on three things: number one is fundamentals. Number two is technical trends and number three is momentum. You can kind of layer these together and layer. Three momentum can vary substantially based on individual sentiments and individuals, fears.
So, for example, if the valuation of a stock is the sum of these three different levels and then, when you add up this sort of piece of paper here, you get the valuation of stock uh and let’s say the valuation is right here: it’s x at the Top, which means we’ve gone through the fundamental layer, the technical layer and the momentum layer, then what happens when momentum potentially turns negative and we potentially see stocks trading below their fundamental, fair value? Well, those are really good by the dip opportunities right. But the point is that momentum alone could end up dragging all of these substantially negative and momentum is driven by fear people’s belief in the market. Okay. Well, let’s now compare to a time when we had a shift of psychology similar to what we’re seeing right now, now we’re seeing a shift in psychology in how much we believe the federal reserve.
Well, in 1987, we also had a shift in psychology folks trusted the fed less and, as a result, became fearful in fact consider this in a well popularized on youtube 1987 news report. The news anchor says: quote: investors previously saw the economy with a glass half full. Now they see it with a glass half empty. The same is happening in 2022.
Seventy percent of individuals are unhappy with the state of our economy and believe that inflation is out of control and likely to stay out of control for some time.
In addition, in that same 1987 report, we were told that there were quote renewed fears of inflation with a decline in the dollar. We also had rising interest rates and a huge budget and foreign trade deficits to deal with, and we were then described as a nation quote, living beyond its means. Well, folks, what do we have today so far in 2022, the dollar is declined. We have massive inflation. We have fears that inflation is going to continue.
We have fears that interest rates are going to go up and we have substantial trade deficits, especially with china, and it’s fears that drive the market not generally actual catalysts. Now actual catalysts can put fears to rest. Consider in the 2020 election, the stock market sold off substantially prior to the election, because there was fear that the transition of power would be a disaster in america. It wasn’t until a few days after the election that the market rallied and took off and we also got approval on vaccines. But the market started recovering before vaccine approval came and that’s because the fear catalyst of the election went away.
But for the two three weeks before the actual election day, we had a lot of pain in the stock market. The 1987 news report showed us the same kind of psychology at play. We saw this happen in 2018 as well. In 2018, the housing market fell 12. In one month in may, to june, when interest rates jumped one percent in four weeks well, in the last four weeks, housing interest rates for the 30-year fixed rate mortgage are up 0
6, 60 of the way to one percent folks, history does not necessarily repeat itself, but it can often rhyme and the biggest issue we have now is sentiment.
Trending down, you could be the best fundamental analysis in the world, but if you’re buying zoom when you’re, not realizing that the market has changed its sentiment away from zoom, i don’t care how good of a company zoom is markets go down and take zoom down with It substantially so, where do we stand today? Well, drone pal’s meeting on the 25th of january three days before my birthday is when the federal reserve is expected to by some raise hikes. And if the federal reserve does raise hikes on the 25th, it will come as a shock and a u-turn to what the federal reserve said. I would expect indices to follow 4-5, but i don’t actually believe the federal reserve is going to rug pull us. This means the next catalyst will be q4 earnings, massive tech companies reporting and here’s what happens with earnings.
Everyone is excited about amazing q4 earnings, but i think individuals and investors and institutions are forgetting to some degree that nobody cares about q4 earnings. They could be great. You know what everybody really cares about: guidance, q, one guidance, that’s what stocks trade off what’s happening right now: apple tomtom, google mobility data down substantially because of omicron business is closing because they don’t have enough staff. Adele canceling, her concert four hours before it’s supposed. To begin because she can’t get enough employees to actually show up for work because of omicron is everybody’s calling out sick.
Do we actually think that q1 forecasts are going to be good in the midst of of omicron? I hope so i really hope so, but here’s the reality if forecasts are bad stocks will fall if earnings beat and forecasts are good despite omicron guess what signal that sends to the person holding up the board the federal reserve, what signal does it send to the Fed well, if earnings beat heavily and forecast beat heavily during omicron, it gives the fed more reason to raise rates, and that is going to increase fears not for jan 25th, but for march 16th. So in other words, good news is bad news. Bad news is bad news: if earnings miss the stock market, punishes companies just look at peloton or netflix. Even though peloton had some potential misinformation, we don’t really have to go deep on peloton right now.
It’S not q4 earnings that matter, it’s the q1 forecast and it even if they’re positive. It’S just going to increase fears about what the federal reserve is going to do to react. The federal reserve watches earnings, they watch what ceos say, because it is the best measure we have of what’s happening in the economy is what people are actually doing with their money. Now banks have recognized that consumer saving rates are back to pre-pandemic levels. It’S not ideal.
People, saving less money means that potentially they have less discretionary money to spend. Banks also do not expect consumer bank accounts to increase in size this year. Now, even though existing bank account sizes are larger than what they were in 2019 again, banks are not expecting those consumer accounts to increase, and the savings rate is down to what it used to be not anymore. The large savings rate that we had during the year of 2020
This all together leads to a decline in spending power. I expect that some of this will potentially be evidenced in q1 forecasts, but don’t just take the this opinion, for it take a look at how home loans, searches for home loans have behaved in the past five years.
They hit the lowest bottom in q4 that they had in the past five years, but it’s not just home loans. It was also auto loans. Take a look at auto loans. Now we know there are less auto loans available and and seasonally. There could be an issue here, but the housing market, while it feels like they’re short inventory, we’re actually still selling more homes.
It’S just homes are coming in the market and selling very quickly. So to see this, this double correlation here between lows that we haven’t seen. Seasonally over the last five years, something to pay attention to who knows again. Hopefully we get really positive q1 expectations for tech companies and other companies, but anyway margin debt in our country hit a high of 935 billion dollars in october. Remember we talked about in 1929 massive debts.
Fortunately, margin debt has fallen margin. Debt has fallen two percent in november and about one percent in december, but if we compare margin debt to january of 2020 right before the pandemic, we’re actually 66 more in margin now than we were. Then that means in just 23 months margin debt exploded, 349 billion dollars. Almost all of that was added since the summer of 2020.
And now, since many stocks are revisiting where they were selling in the summer of 2020, individuals who borrowed to invest in stocks at those levels could potentially start seeing their principal get eradicated and when people’s principle starts getting eradicated, people really start getting nervous.
Remember principle is what you contributed to the market, your gains, getting better eradicated or less painful than seeing your actual hard-earned money get eradicated. The same is true of cryptocurrencies. Most people began purchasing cryptocurrencies at the beginning of 2021.. Well, if we fall below those prices, we could see the same sort of fear now.
This means all of this together. The eyes and attention on jerome powell on january 25th and march 16th are gon na, be huge, so where’s, some good news, because so far this is all painful i mean so far. It sounds like the manifestation of our future is either more stock market declines or convictionless rallies that ultimately end up selling off, which is kind of what’s been happening. Institutions seem to be selling off stocks at the last two to four hours of the trading day. Every single day, potentially taking advantage of by the dipping retail investors and offloading their bags onto them.
But what do we think in terms of positive catalyst? There has to be some positive news right yeah. I personally think the earliest positive catalyst that we could get would be cpi data cpi data comes out on february 10th for january and on march 10th for february now. This is not a guarantee, but if we finally see an inflection point down in cpi it could cool the federal reserve and since everybody’s got their eyes on the federal reserve, maybe markets could finally start rotating to the upside. So february, 10th and march 10th are going to be important days now.
I don’t know that uh february 10th will be early enough for us to see any kind of inflection. So it’s more likely going to be march 10th that we see an inflection point down inflation, though that might not even happen the next catalyst after that uh. You know if the fed does try to assuage markets and settle markets down, because cpi is going down and they end up being less aggressive. The next catalyst after that would be the market seeing rate increases and then realizing that okay rate increases are not that bad. But what i i want you to consider is what history told us about when markets reacted in the micro in the short term to actions from the federal reserve.
Consider this – and this is why those fed dates are so important. On december 19th 2018 the market fell substantially when the federal reserve raised rates two and a half percent, or two two and a half percent, but the market bottomed two days later, so the fed raised rates and the market hit bottom two days later, and the rally Of 2019 began, this could have been because the federal reserve reduced their outlook for more rate hikes. At the end of 2018, the fed reduced their expectations for rate hikes to two hikes from three hikes for 2019 and the market traded that positively within two days. S, p and nasdaq had sold off 20 and the bottom of the market came when the biggest fear date, which in my opinion, is now either march 25th or sorry january, 25th or march 16th came and went consider march of 2020
The market bottomed on march 23rd, which was literally the day the federal reserve, announced unlimited bond buying, basically unlimited quantities of of lending and spending programs to make sure that businesses and companies would stay afloat. The market rotated up on these views.
It did stumble for about 10 days after this we hit a second bottom on april 3rd. It was higher than march 23rd, but the market really started taking off, so it took about 10 days of shock and the market took off when the federal reserve acted. The irony here is, these programs were barely used. They were a mere indication that the federal reserve was willing to stop at nothing to bail out the market. It was unlimited bailout money now get this.
In october of 2008, tarp was passed a 700 billion bailout program, but the market kept falling. It kept falling until q1 of 2009
What happened in q1 of 2009, in fact, specifically in february of 2009? Ah, the fed announced liquidity in february of 2009, with the following quote. The fed is prepared to undertake a substantial expansion of the term asset-backed securities loan facility, aka telf and the expansion could increase. The size of talf as much as one trillion dollars and could broaden eligible collateral to encompass other types of entities.
How crazy is that congress announces a massive bailout in october of 2008, but the market keeps dropping it’s when the fed finally comes out with a larger bailout in february of the market bottoms. These were the bernanke days, but folks nothing has changed. The fed suite talking us with money or lowering aggressiveness to move this market is what moves the market still. Don’T believe me how about this? When did the s p?
500. Bottom after the 2000.com crash, it was q2 of 2003. guess what else happened, then the fed? Finally, got rates down to one percent: they made their final decrease of rates to one percent in q1, uh in q2 of 2003.
and because the economy was still sluggish, personal spending was down in the fourth quarter. From the federal reserve’s january. Meeting of 2003 trade deficit was widening, blah blah blah the federal reserve, reduced rates became less aggressive and what happened the market rotated up so the reality here is folks, no matter what happens in our market over the next 60 days, everybody is looking at the fed. Everybody is looking at what the fed is doing with this big bouncing beam as such, i’m making an extended outsized bet that january 25th and march 16th are going to be critical catalyst days for our market and we’re going to hit peak fear before those dates. It’S possible that we’re hitting peak fear now, but i don’t believe that we’re necessarily hitting peak fear now, because everybody’s going to be paying attention to march 16th january 25th is kind of expected to be a nothing burger.
But who knows? Maybe powell will give us some indications for march 16th, which is why january 25th is so important now. I also believe that markets are relatively quick to respond to bad news from the fed and slow to respond, sometimes taking two to ten days to respond to good news from the fed. Well, in my opinion, we have three courses forward and we’ll talk about my bad. I believe we are teetering between two dangerous paths of recession and one neutral path.
I really do believe that that neutral path path has has a likelihood of happening that we’re not necessarily going to go into that uh hyper inflationary style recession or that deflationary style recession. This this kind of just like a quick little sketch picture of what i’m talking about. I wrote myself kind of a little bit there that i’m hoping we’re going to have the chill normalized, fed and disinflation disinflation means inflation going down, not necessarily going negative right. Disinflation is is what we’re looking for we’re hoping for that inflection point down right, and so, in my opinion, i think there are three paths for individuals: portfolios number one for most passive investors into index funds. In my opinion, the best answer here is probably and not financial advice for any of this, obviously but huddle and just buy the dip dollar cost average.
Your income cut spending, increase your contribution to the market, again dollar cost average and now could potentially be a time to do that. A second path could be selling uh to uh, go to cash as a hedge, so there’s path, two a sell and go to cash as a hedge path. Two b could be huddle, but by weekly puts as a way to hedge path. Two is all about hedging. Over path, two c, you could sell just enough to eliminate your margin and then path.
Three is do nothing, so you have these three overall paths, one just dca keep buying the dab path. Two is hedge and path. Three is do nothing path. Two is more of a traitor, mentality right and, quite frankly, sometimes doing nothing is best, which is path. Three, sometimes continuing to dollar cost average is also bad best.
It’S the passive way to invest the easiest thing to do. I think it’s the wisest thing to do now in this pa case, though i personally have chosen to trade uh these market catalysts. Now i could be entirely wrong. I hope i am, i hope, we’re at peak fear and we’ve hit the bottom of the market and uh. You know we rally like crazy.
I i don’t really think markets can rally on anything other than january 25th and march 16th, going substantially better than we believe. As i’ve described how the market tends to historically react now, i’ve sold 99.15 of my stocks and my entire crypto portfolio of the cash that i have right now. I am 5
56 short, the market so of the cash i have i’m 5.5 percent short at the market, with a put option on the market uh, and it’s a short-term one.
So i want to be completely transparent. This means i have no margin. I have nearly 20 million dollars in cash and about 1 million in a short position. Now i expect to trade back entirely into the market within 60 days. This is extremely risky and has exposed me to substantial capital gains, but after buying each dip of march of 2020, i’ve been extremely consistent, extremely consistent, i mean i, you know people people like to say: oh kevin hasn’t been consistent.
That’S not actually true. If we go back to march of 2020 kevin’s been on this path, buy the dip buy the day, buy the dip always buy the dip right now. Kevin is changing directions. So it’s fair to say yeah. That is a change of direction, and this change of direction came suddenly uh.
It actually came thursday night after i uh throughout the night did a substantial amount of of additional research on top of all of the years of research. I already have into this economy and when i combined new information with all of my old experiences and all of my old research understanding this market on a day-to-day basis, i am worried that we’re really just at the lifeboat stage of the titanic. So it’s kind of like the titanic hit the iceberg. Maybe we hit the iceberg in december, it’s like ah crap the fed’s actually going to respond to inflation, but we’re now just getting on the lifeboats, we’re not at the sinking phase yet and we’re certainly not at the rescue phase. Yet that’s just my belief and so i’m making an outsized bet on this.
I believe this creates an opportunity for me to lower my risk and exposure to the market and to time a better result. Now this could be very stupid because again we know that time in the market beats timing, the market. We know that it’s much safer to dca, but when you’re exposed 100 to higher valuation tech companies, you might consider taking a more protective approach, especially if you’re also exposed to margin, and especially, if you have other cash needs coming up. But the most important bottom line out of all of this is, i expect more fear to get priced into this market between january 25th and march 16th, and so i plan to re-enter the market. Very suddenly, i’m going to very suddenly buy right back in with a balance of short-term call options and share purchases, all of which will be available to members of the stocks and psychology money course.
So i will be spending money on put contracts over the next few weeks and i will be spending money buying back into this market over the next 60 days. I’M taking the entire portfolio and i’m trading it, which is extremely risky, and i don’t advise anybody to do it. But if you want to know every single fart that i make with that 20 million dollars use that link down below and join the stocks. And psychology of money course so that you could see how and why i’m reallocating and that way i can really use my portfolio to leverage what i believe will happen in the market. However, it’s really important to follow the checklist and understand what the market needs to rise number one.
The fed fear needs to end. I don’t believe this is likely until march 16th. Cpi data needs to indicate an inflection down. We have not seen this yet. This is unlikely until march 10th number.
Three strong earnings are unlikely to convince institutions to go long, because institutions represent client money and, as long as clients are fearful about the federal reserve and uncertain about the federal reserve markets, hate uncertainty. I don’t believe that institutions can buy the dip until the fear catalysts go away, otherwise they’ll likely lose substantial clients and hedge funds do not want to lose clients. If you had a bunch of clients and 100 million dollars under management. Do you want to invest when your clients are saying hey if you’re not protecting us right now, we’re out and we’re taking our money out? It’S important to consider that that’s why we’re seeing shorts so high?
That’S why we’re seeing so much selling so again, markets and institutions need to feel like the fed’s fund rate. Increasing uh well, first of all, fear reduces at the fed, but then also the markets need to realize that the fed funds rate increasing is actually not that big of a deal. It’S usually the fear that leads up to it. That’S the bigger deal. So once these things clear, then i believe we have the conditions for a proper economic recovery, not a fake out convictionless rally, because, sadly right now, markets regularly sell off in the second half of the day, implying institutional outflows and trades or traders taking advantage of the Buy the dip crowd now to be extremely clear.
This is a massive trade and highly risky. This is not financial advice. I will be back in the market very soon, but i’m waiting for the proper catalyst to return and, if you’re not actively engaged with the market. On a regular basis, like i am literally all day every day, eight hours a day, passive, investing is probably best if you’re more of an active trader buckle up. Ultimately, though, the choice is yours, thanks, so much for watching check out the programs on building your wealth link down below with a massive coupon expiration on january 28th, especially since our path course comes out at the end of this month.
That’S super exciting and check out stream yard via the link down below thanks so much bye.