The money I'm not making...

Yeah, that's right baby... uh huh... make it rain.  OK, hopefully it's raining money for someone out there.  Times are tight, and getting tighter, financially, for most people.  I think the recession is already here, and is just in stealth mode for now.  We'll see.  Here are a couple of the financial blog posts I've written in the last year and a half about money and investing.  

Disclaimer

Life is full of ironies.  I'm a homeless guy who's been fascinated by the dynamics of the financial markets for over 30 years now.  Way back then, starting when real estate was surging in Southern California in the late1980's, I started trying to understand the dynamics of the real estate market cycles.  Then I started watching stocks, and it just kept going from there.  From time to time I write a blog post about things I think will happen in markets, or where I think we are in a particular cycle.  This post is about two of those blog posts.  

Post #1 I wrote on December 28, 2022- "What separates Warren Buffet and Charlie Munger from everyone else"

This post was sparked by a video I saw on YouTube, of CNBC TV show host, and stock market legend, Jim Cramer.  In the embedded video, Cramer talks about how the mega cap tech stocks, the stocks now known as The Magnificent 7, completely cratered in 2022.  After giving excuses for why they all tanked, he tells investors/speculators to "pare back" on those stocks the next time they rally.  "We want cheap stocks now," he says in that clip.  As a homeless guy who had been watching, studying, and learning about long term trends on my own for 30 years, I was laughing.  To me, that looked like the perfect time to buy all of those stocks.  

So I wrote that blog post talking about Berkshire Hathaway's legendary investors Warren Buffet, and the now late Charlie Munger.  Those guys made their own fortunes, and fortunes for many Berkshire investors, by doing just the opposite.  They called it "value investing."  They studied businesses, and waited for good businesses' stocks to get beat up, and be underpriced in the market.  That's when they would buy, when everyone else hated those stocks.  

I said in this blog post that I wasn't interested in buying stocks then, even if I would have had money at the time.  I was learning about the crypto world, and watching it's peak to trough cycle play out.  But if I had to buy a handful of stocks to hold, and not touch them for 5 whole years, these are the stocks I would buy:  Apple, Google (Alphabet), Amazon, Microsoft, and two companies I just liked as businesses:  Pinterest and Shopify.  Those were my "going to go live on a deserted island and just let them ride" stock picks on that day, December 28, 2022.  

All of those stocks are way up, as of right now (March 4, 2024).  Apple is up the least in 14 months, 39%.  Shopify, surprisingly, is up the most, 130% in 14 months.  Shopify has actually tanked for a while.  At its peak, it was up 412% from the day of that blog post.  The other ones I picked are now up between 30% and 130%.  

Now, I fully expect these stocks to tank in the coming months of 2024.  I'm surprised they haven't already.  I expect Jim Cramer to make another show like the one in this blog post at some point in 2024.  And I still think those six companies are solid bets for the next four years.  But I wouldn't put my money in any of them.  The Magnificent 7 stocks are absurdly high priced at this point, and I think there are much better places to put money as an investor right now.  

Yes, I'm a broke homeless guy.  But I'm a broke homeless guy who makes some interesting investment calls from time to time, because I've studied the dynamics of the markets, and learned about them, for a really long time.  I expect up and down cycles.  I don't expect stock prices to defy gravity (and common sense), forever.  So that's a few thoughts about my December 28, 2022 blog post on this blog.  

The other post I want to mention is one I wrote on November 14, 2023.  "The Great Bitcoin Play of 2023-2025 has begun."

There's a weird difference between the mostly older stock investors, and the younger Millennial and Generation Z people who are many of the investors in crypto.  Crypto investors expect downturns.  They expect crashes to happen.  "Crypto winter" is a widely used term in that world.  But stock market investors (actually most are speculators), always seem to get caught up in the late cycle hype, and think prices will go up forever.  We're at that point in the stock market right now, as the vast majority of all stocks are actually down over the last year or so, and even a couple of The Magnificent 7 may have peaked.  

Crypto's different.  The whole FTX and Sam Bankman Fried scandal in late 2021 led to a crash of the whole crypto world.  The Trad Fi world, traditional financiers, said, "See, we told you so, it's all a scam.  Worthless internet money."  The crypto world faded from public view for the most part, and went quiet.  But crypto coins didn't die off, and even NFT's kept selling.  The hardcore crypto people bought the lows over the last two years, quietly.  New ideas kept coming up, and some new crypto/DeFi/Web 3 businesses started up as well.  

Bitcoin dropped from it's November 2021 peak of  over $64,000 per Bitcoin, to a little under $16,500 per Bitcoin in the trough.  Then it slowly began to rebuild, and to rise back up in price.  In the summer of 2023, word that Blackrock planned to start a Bitcoin spot price ETF came out.  That would open up many traditional finance players to get some exposure to Bitcoin's price, without actually have ing to buy the crypto.  People argued whether that was good or bad for the crypto world overall.  But the majority expected the ETF to happen in early 2024.  The price of Bitcoin began to rise even more.  Another big milestone, the next 4 year halving, programmed into the code of Bitcoin, was set to happen in the spring of 2024.  Those two things seemed to spark talk that the next big Bitcoin cycle, which would lead crypto overall in to a big bull market, was beginning to happen.  When Bitcoin goes up over time, other cryptos follow.

On November 14th of last year, 2023, I wrote a blog post, and explained this case that many people in the crypto world were talking about.  The ETF and the halving should send Bitcoin back into another bull market cycle that would last from 12 to 24 months, or so.  Bitcoin was at 36,366 the day I wrote the post.  It had already climbed more than 100% in price from the low after the 2020 crash.  

In early January, several Bitcoin spot price ETF's were approved, and opened up for business.  Bitcoin had risen from 36,366 to over $40,000.  Then it backed off a while, and eventually started climbing again, as we head into the halving in mid April of 2024.  Today Bitcoin reached a new high of over $68,000 per Bitcoin, and was at $68,386 as I wrote down numbers to get the info for this post.  

Bitcoin, the original blockchain crypto token, is up over 314% from the low in the 2022 trough, about 14 months ago.  Bitcoin is up 88% since I wrote that post in November of 2023, about 3 1/2 months ago.  I personally think it may back off around the halving, take a breather, then start climbing again.  When the halving happens, Bitcoin miners get 1/2 as much for each time they solve a problem, and get Bitcoin through mining.  This means that the price tends to double within a few months, to compensate for the reduced payments to miners.  The overall consensus I've heard is that Bitcoin is expected to top $100,000 per Bitcoin in this next bull market.  

After working out the numbers of how much it has climbed in price in the last two bull cycles, I personally think we will see Bitcoin hover in a range between $120,000 and $150,000 per BTC, for a little while.  I think we will likely see some spikes up to maybe $180,000 per Bitcoin, probably in the first half of 2025.  And then, like before, the hype and FOMO will fade, and it will crash significantly.  

But there will be a lot more institutional money in the ETF's and much more money in Bitcoin, and other cryptos, and the next trough will almost certainly be higher than this past one of $16,500.  This is all a mixture of educated guesses, looking at the previous two bull cycles, and pure speculation on my part.  Nobody knows for sure what will happen.  But Bitcoin, and many other cryptos, are in a bull market right now, before the halving, and there are fundamental reasons it should go quite a bit higher, eventually, than the new high set today.  

So there are thoughts on two of my previous posts about investing in stocks and crypto, and how things have played out so far.  I personally think that we are already in a recession, and that will become obvious in the next two to three months.  This should cause a major correction in stocks.  But I think Bitcoin and crypto have a lot of fundamental reasons to keep going up, even in a major recession.  We'll see what happens.  

I've been doing a lot of writing on Substack lately, check it out:

Steve Emig The White Bear's Substack

Recession 2023- December into January

I'm writing this post a little after 8:00 am, Pacific time, on December 5th, 2023.  This clip above is talking about Bitcoin hitting $42,000 per Bitcoin yesterday, and hovering around $41,000 and change.  Bitcoin bottomed out, in the last trough, in December of 2022 at around $16,600 per Bitcoin.  As I write this, Bitcoin is $42,304.  So Bitcoin is up about 155% in less than a year.  Why?  It continues to attract investors as a store of wealth, a "digital gold," as some people call it.  But mostly, financial giant BlackRock will probably get the approval for a Bitcoin spot price ETF (exchange traded fund), possible as early as January 8th, 2024.  If not in January, that ill most likely happen in mid March, 2024.  That will allow major institutional investors (hedge funds, pension funds, etc.) to invest in the ETF, based on the price of Bitcoin, as easy as investing in any other stock or ETF.  That's BIG.  BlackRock has also applied for an Ethereum spot price ETF, as well, so the same could happen for Eth, most likely at a later date.

This post is written for entertainment and education purposes only, and should not be taken as investment advice.  Do all needed due diligence, and consult needed professionals, before making any investment decisions.  Please read the disclaimer linked below.

Disclaimer

But Bitcoin is not even the big news in the market today.  The real news is another huge decline in bond rates.  The benchmark U.S. 10 year treasury bond, was paying 4.98% in interest on October 18th, 2023.  To put that in perspective, on January 5th 2020, pre-pandemic, it paid 1.79% in annual interest.  In August of 2020, that rate of return dropped to about .53%, one half of one percent interest paid on your money each year.  That's not much.  

The bond market is HUGE, much bigger than the stock market.  This is where the Big Boys (and Big Girls) play, where institutions with billions of dollars (euros, yen, yuan, kroner, whatever) put large portions of their money.  Now, bonds have an inverse relationship between price and interest rates, which is tricky to get your head around.  When prices go up, when buying bonds is popular, the interest rates go down.  When investors sell bonds to buy other things, the interest rate paid goes up.  So, in the last month and a half, enormous amounts of global money have been going into bonds, and that has pushed the interest rate on the U.S. 10 year bond (a good gauge of the overall market), from almost 5% interest, down to 4.17% right now.  

At the same time, gold prices have soared.  They had hovered around $1,950 (per troy ounce)for a long time, then dipped down to around $1,850.  Now gold is up to $2,013.  It spiked up to $2,148 the day before yesterday.  

What does it mean when the biggest institutional investors in the world pour hundreds of billions of dollars into gold and U.S. government bonds?  They're scared.  This is called a "flight to safety."  The most sophisticated investors in the world are running for cover.  They know a global recession is here in places (like Germany), and that's it's coming to pretty much everywhere else.  They smartest investors in the world are hunkering down for a financial storm, an economic hurricane.  They're protecting their wealth from loss, until the storm blows over, and the big damage is done.  Then they'll look for new opportunities, when things settle down.  

Here's what that means for all of us regular people.  Here's how I see the next couple of months playing out:

Stocks- The U.S. stock market is at or near all time highs, about the same levels it was at two years ago.  But now our dollars are worth about 20% less, due to all of the inflation.  So stocks are actually worth less than they were in 2021.  It's December 5th.  On Friday, December 8th, the window for most companies to buy back their own stock closes, because the next earnings season is approaching.  So the biggest driver in stock prices, businesses buying back their own stock, will mostly shut off this coming Friday.  I expect stock prices to really begin dropping next week.  

Virtually every economic indicator has been flashing red, recession warnings, for months now.  The stock market has ignored this.  Starting next week, it looks like reality will begin to set in.  After the holidays, reality will REALLY set in on stocks.  I personally expect 30% to 50% drops in stocks in the next few months, overall.

Gold- Back in July, somewhere, I said I expected gold to pop up to around $2,150, maybe $2,200, and then back off.  I think we are near peak gold prices now.  It may get to a solid $2,200 for a week or two, maybe.  But I DO NOT think gold will soar to $3,000 an ounce.  Sorry gold bugs.  I like gold, over the long term, but our inflation is turning into disinflation now, and probably outright deflation come January.  I think gold will settle at a new level, a bit over $2,000 an ounce, and stay there for most of 2024 and into 2025.  Silver?  It should pop higher, maybe to $35-$40 and ounce, but it's stuck at $25 right now.  I don't see it soaring either.  Silver is also a good hedge against future inflation, and affordable to average people, at $25 (plus premiums) an ounce.  But I don't see it taking off in 2024.

Interest rates- Here's the good news, for average people, interest rates, overall, should drop quite a bit in 2024.  The Fed will begin lowering rates, because of the recession that we are already in (in my opinion), but that hasn't been officially recognized yet.  A banking crisis will force The Fed's hand, in early 2024, and interest rates will probably drop 1% to 2% in 2024, generally speaking.  

Credit- The bad news about interest rates dropping is that this recession will hammer the banks, who are already in sad shape.  The banks have totally tightened credit.  They will tighten more, making it harder for everyone to get loans.  Cash is king in 2024.  It will be hard to get mortgages, car loans, and credit cards, because there will be a record level of defaults and foreclosures as the recession becomes obvious in early 2024, and continues to play out.  So even though interest rates will drop dramatically, it will still be hard to get loans, unless you have excellent credit, and a low debt to income ratio.  This goes for businesses and individuals.  Alternative financing options will be huge in 2024.  Non-traditional ways, owner financing, etc., will be the way to purchase big items (which will be at huge discounts).  

Crypto- Crypto hardcores are chomping at the bit right now.  Crypto winter is over, and we're well into crypto spring.  Even though we are heading into a massive recession, huge amounts of money will pour into crypto in early 2024, because of the BlackRock ETF's, (Bitcoin and most likely Ethereum), and potentially Bitcoin ETF's by other companies.  Major crypto coins will be the only "major asset" giving good returns in 2024, in my opinion, though even Bitcoin is not a "major asset" to most investors yet.  

All investors, large and small, will be drawn to crypto, because that's where the good returns will be.  Also, the Bitcoin halving happens in about April, which also usually leads to higher Bitcoin prices, in time.  You can research that for more info.  In this post, about three weeks ago, I wrote about the Bitcoin ETF, and the case for Bitcoin going forward.  Bitcoin was $36,366 per BTC.  Bitcoin has gone up $5,938 per BTC, or over 16%, in three weeks.  Just sayin'.  I think we'll see $100,000 per Bitcoin in 2024, almost certainly.  I, personally, think the next peak will be in the $150,000 to $180,000 per Bitcoin range, maybe in 2025.  $200,000 isn't out of the question, taking all things into account.  It'll plummet after, to a new higher low.  But that's the area where I think it'll peak.

Real estate- Want to buy a house from a disgruntled Millennial who paid $40K over asking price in 2021 because of the FOMO hype?  What to buy a former Air BnB home at 50% off because the owner has 12 of them that aren't renting?  2024 is your year.  If you have CASH.  Want to buy a 20 year old office building for 80% off, or a dead mall?  2024 is your year... if you have CASH.  Otherwise, forget real estate and watch the crash from a distance.  It's going to be brutal.    

Collectibles- If you're into any kind of collectibles, keep and eye on Craigslist or eBay, there will be lots of people selling collections of one kind or another, after getting laid off, in 2024.  So, IF you know that particular market, from sports cards and comic books to exotic cars, there will be deals to be had... if you have CASH.  

OK, that's my outlook on the financial world, overall for December 2023, and into January, and farther into 2024.  This post is written for entertainment and educational purposes, and should not be taken as financial advice.  Do your own research.  Do your own due diligence.  Consult professionals wherever and whenever needed, before making any investment decisions.  

Buckle up.  We've now have four years of warm-up craziness.  Now things are about to REALLY start going nuts.  

For all of you who are trading stocks because your friend made money on Gamestop or AMC...

So, you or your friends made some "easy money" on Gamestop or AMC on the Robinhood app.  You saw how easy this stock trading game is, and you're planning to make bank, like "make it rain all weekend at the strip club" type money.  You're trying to decide which Lambo to buy next year, and what $6,000 watch will look best with it.  Watch this video.  

Every year Forbes magazine lists the 400 richest people in the United States.  The guy talking in this video, Warren Buffet, and the guy sitting next to him on the stage, Charlie Munger, are both on that list.  Of the 400 wealthiest people in the country, they are the only two who made their fortunes actually investing in stocks.  The only two.  When it comes to stock investing, these guys are Yoda and Obi-Wan.

Warren Buffet is 91 years old now, and he has a net worth of around $125 billion.  Charlie Munger is 98 years old, and has a net worth of $2.6 billion.  When they buy stocks, they plan to hold them forever, if possible.  They are what is called "value investors."  The study hundreds of businesses, figure out which ones they really like for the long term, Then the figure out what a really good price would be to buy stock in those companies.  Then they wait for the stock market to lose interest in those companies, and the price to drop to a price they want to pay.  Then they buy the stock... and hold it.  These two old guys know the game of stocks, they've been in it longer than pretty much anyone alive.  They are, arguably, the two best investors in the United States.  

If you are interest in making money in the stock markets, watch this video.  This is some incredibly solid advice from the best investors in the world.  Warren Buffet shows a list of the 30 biggest companies in the world from 2022.  Then he shows the same list from 1989.  NONE of the 30 biggest companies in 1989 made the 2022 list.  Things change.  So do businesses and the world of business and stocks.  That's his point.  

I started a new blog, check it out:

The Spot Finder     #thespotfinder