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

Welcome to the Phoenix Great Depression - Part 2

 

Back in the 1980's, I worked at Vision Skateboards/Vision Street Wear clothing, when their logo was iconic in the skateboard and BMX worlds.  In late 2019, I wondered what a modern version of that logo would be.  This American Struggle Wear drawing is what I came up with.  Yes, the little guy, the American worker, is bent over, holding it all up, trudging up the mountain of the stock market chart, which is heading down.  The little word bubble at the top says, "The economy is awesome - The 1%."

In the late 2010's, several economic trends that I had been watching, one for nearly 30 years, seemed to be converging.  One long term cycle said the U.S. should have a great depression, or at least a really bad recession, starting in 2020, or soon after.  Another theory, the late futurist Alvin Toffler's The Third Wave, said that the Industrial Age was still dying off, and we were creating a new kind of society, an Information Age, to replace it.  That would lead to more old industries and businesses dying off, and new ones emerging.  In addition, Rich Dad, Poor Dad author, Robert Kiyosaki, had been saying for years that we should have a big economic downturn around 2017, because that's the year the first Baby Boomers hit retirement age, and they had to start pulling their money out of the stock markets.  In addition, we were getting to the end of the normal business cycle, which ends with a recession.  The normal 4 to 7 year business cycle has now been stretched out to 15 years, through all kinds of manipulation.  We haven't had a full recession in the U.S. since 2009.  

I had a whole bunch of interconnected ideas, based on theories I'd read and heard, and my own observation of economic trends, for about 30 years.  Everything was telling me that the coming decade, the 2020's, were going to be one really crazy decade.  So I began to write and work these ideas out.  I decided to self-publish them as a book/blog.  I built the empty blog on December 21st, 2019, and began writing the first chapter that day.  I called this big project Welcome to Dystopia: The Future is Now- Book 1.  at the time, I thought there would be a "Book 2" at some point.  In paragraph 8 of Chapter 1, I wrote:

"The word "recession" is basically meaningless in today's ultra-manipulated economic world.  I'm calling this coming decade " The Phoenix Great Depression."  Whatever the numbers and economists' statistics wind up being, this decade will feel like a full blown great depression to most people.  Yes, no one wants to hear that, but that's where we're headed.  But the tough initial blows economically are setting the stage for tremendous opportunity, like the mythical phoenix being reborn from the ashes." 

I wrote that on December 21st or 22nd of 2019.  At the time the business media was saying we might have a minor recession in late 2020.  But the Repo Market Crisis had already happened in September of 2019, and The Fed was quietly putting billions of dollars a week into the banking system to keep it functioning.  "Liquidity," they called it.  Everything I had read and seen told me a big recession was coming pretty soon. 

Then Covid-19 began to spread out of China, it hit U.S. shores, and the stock market collapsed in early 2020.  Soon came the mask rules and the mandatory lockdowns, with millions and millions of people stuck inside their homes for months.  That threw us into a deep depression.  Yes, depression.  The second quarter of 2020, the GDP dropped by over 32%, and a 10% drop qualifies as a depression, by definition.  

On March 1st 2020, I was writing chapter 17 of Dystopia, about "The Phoenix Great Depression," what I believed would be 5 to 7 years of severe economic turbulence, in the 2020's.  At that point, we were halfway down in the stock crash of early 2020.  Nobody had any idea just how big a deal the pandemic would become.  I wrote the remining three chapters of Dystopia over the next three months, as the pandemic set in.  The major economic downturn that all the long term trends pointed to was actually happening, much as I had anticipated.  I did not expect a pandemic to spark the recession, but I expected a serious recession to begin in 2020.  

Then something really crazy happened.  The Fed and the U.S. government started a series of stimulus measures.  I expected a bailout, much like in 2008-2009, that would lessen the effects of the recession.  But I did not expect that they would ultimately create $6 trillion, and throw that money at not only big business and banks, but local and state governments, and everyday Americans.  Between the stimulus checks, the Cares Act, PUA, PPP, ERC, ARPA, and other programs, The Fed (Federal Reserve) and the U.S. Treasury, increased the U.S. money supply by close to 25%, roughly $6 trillion.  That stopped the 2020 depression dead in its tracks, and nearly everyone suddenly became Hood Rich.  Wealthy people bought assets.  Big businesses bought stock shares back.  Everyday Americans, the world's greatest consumers, bought all kinds of stupid shit, like putting down payments on $90,000 trucks and SUV's they couldn't afford, then not paying the payments, or buying meme stocks with their new Robinhood accounts, and other nonsense like that.  Suddenly, in late 2020 and through 2021 there was all kinds of money in the U.S. economy, and life felt good for many people, except for the lockdowns.  Recession?  What recession? 

So the great depression level economic crisis I wrote was coming started in February of 2020, and then got put on pause by this huge deluge of money throughout the U.S., and other major countries as well.  Then, as we began to emerge from the pandemic, all that new money that had been created sparked really high inflation.  Because that's what happens when you create huge amounts of a fiat currency, the value of the currency goes down, and prices go up, usually about 12 to 18 months after the money is created.  

Then The Fed raised interest rates faster than ever before, "to fight inflation," inflation that they and the U.S. treasury, caused.  We went from near zero interest rates, to more historically normal levels, 5.25% on the Fed Funds rate, and 7% 30 year mortgages, which no one was used to anymore.  The economic system just got more and more out of whack as one crazy event after another happened.  The rapid rise in interest rates caused all kinds of different problems, including for banks, who had loaded up on .75% and 1% return T-bills, which suddenly dropped in value because T-bills started paying 4% or 5% interest.

As interest rates rose, the economy, now running on trillions of dollars of "helicopter money," began to slow down.  But there was still so much new money sloshing around the system, that it took a really long time for the economy to really slow down.  Finally the Employee Retention Credit system, which was being scammed left and right in 2022 and 2023, was dialed back in late 2023.  The economy began to slow down, as inflation also dropped back down to lower levels.  The Fed wants to get CPI inflation back to 2% per year.  According to Truflation, which tracks inflation in real time (not with a lag, like The Fed's data), U.S. inflation right now (Feb. 15, 2024) is 1.42%.  The official government CPI number is 3.4%.  So prices are still going up, but much slower than they were in 2021 and 2022.  

Most of the main economic indicators now show that the U.S. is either in a recession, or heading towards one in early 2024.  Yes, there is a strong narrative in mainstream and business media, that we will have a soft landing, and there will be no recession in 2024.  But if you dig into the people studying the actual economic data, the economies of most major countries appear to be slowing down.  Personally, I think we went into a recession around October or November of 2023.  When the National Bureau of Economic Research (NBER) officially names a recession (a year or two after one ends), that's when I expect them to put the beginning around October 2023.  But two things have been keeping most people from believing we're in a recession.  The stock market indices are hitting new, all time highs recently, and the unemployment rate is still really low.  These are two things average people look to as "signs of the economy."  But, in reality, stocks usually don't drop dramatically, until well into a recession, and the unemployment rate usually rises well into a recession, as well.  Both of these are lagging indicators.  In the Great Recession of 2007-2009, the big stock drop was in September of 2008.  But the actual recession officially started in December of 2007, nine months earlier.  The unemployment level didn't really take off until May of 2008, five months after the recession started.  We were several months into that recession before the recession became obvious to average working people.  

I think we are at the time now, where I can safely call the return of The Phoenix Great Depression.  It started in February of 2020, but was put on hold by all the stimulus programs, but late summer of 2020.  I believe we are in a recession now, and this second recession of the 2020's will be deep, it will be long, and it will involve most of the industrialized world.  

Germany's manufacturing has been struggling for several months, although they aren't quite officially in a recession, but much of the Euro Zone already is.  Across the Pacific, China's gigantic, $62 trillion real estate market is collapsing.  They reportedly have over 100 cities full of condos that no one will ever live in.  They actually built at least 65 to 80 million homes and condos that no one will every live in.    There may be even more unused condos, in fact.  They just kept building condo towers to keep their growth economic growth going, but the Ponzi scheme structure of their real estate industry is imploding  now.  Giant Chinese real estate developer Evergrande has just gone bankrupt, and is being liquidated, which is spooking Chinese workers away from investing in new homes, one of the few things Chinese people can invest in.  In addition, as I was writing this today, a report came out that Japan is now in recession, and has dropped from the 3rd largest economy to the 4th, behind struggling Germany.  

There's no strong growth anywhere in the world to help pull China, the European Union, and the U.S. out of our slowing economies.  If The Fed and U.S. treasury try to bail everyone out again, they will quickly spark up more inflation, which is exactly what they don't want to do.  The biggest power players in the world of economics basically have to just let the chaos play out at this point, around the world.  There will be limited bailouts of banks, and maybe some big businesses, but each one must be weighed now against the risk of causing more inflation.  American consumers are struggling to make their regular bill payments, and can't afford even higher prices.    

So what does all this mean?  It means the serious recession, that the trends I follow predicted, is settling into most major countries, China, Japan, Germany and the European Union, and here in the U.S.A.. In tomorrow's blog post, I'll go into some of the trends I think will play out as we head into a deep global recession, one that will probably feel like a great depression, by the time it's finally over.  

I've been writing a lot lately, on a platform called Substack, designed specifically for writers, check it out:

Steve Emig The White Bear's Substack

This isn't going to be a normal recession...

In this video, Joe Brown, of Heresy Financial ,YouTube channel explains why he thinks we will not only see inflation pull back, but will actually see deflation, prices on many things actually dropping, in coming months.  

Disclaimer

For 3-4 years now, I've been blogging about a major recession, possibly a depression, I saw coming.  My views are based on what I call The Big Transition.  This is my name for the continuation of the  concept that the late futurist, Alvin Toffler, explained in his 1980 book, The Third Wave.  After a decade of research, Toffler came to the conclusion that we were leaving an industrial-based society, and moving into an information-based society.  In today's terms, we were leaving the Industrial Age and moving into the Information Age.  We're all familar with the idea now.  Most people think that happened long ago.  Most of the factories shut down, the internet got invented, and that was it.  

Toffler published his last book, Revolutionary Wealth, in 2006, and 17 years after The Third Wave, still adding more depth and nuance to that idea.  I believe this transition is still going on, now 43 years after he first explored the idea in print.  I also believe the peak decade of this change will be the 2020's.  This is one of my reasons I believed this recession will be much bigger, and much more transformative, than any since the 1930's.  I wrote on this basic idea in some depth in late 2019 and early 2020.  

Now I'm just some guy who first got interested in investing when I bought an ounce of silver, as a junior high kid, in 1981, after the big price spike and crash.  I was hoping the price would spike again.  Then, in the late 1980's, I got interested in real estate, which was soaring when I moved to southern California.  I didn't make enough money to buy a house, but I began reading about real estate.  A few years later, in 1989, I got fascinated by the dynamics of the economic world, business, investing, and long term trends that may exist in the markets.  I've been watching and learning about these subjects ever since.  

Don't listen to me.  Listen to other smart people who have been studying the economy their whole lives, and who actually run businesses and do consulting.  

In late 2019, while blogging about my thoughts on the economy, I began looking for more details and nuances about what was going day to day and month to month.  I found The Money GPS YouTube channel in late 2019.  I've been watching it almost every day since.  In the months and years since, I've found that investors Ray Dalio, Jim Rogers, investor/journalist Nomi Prins, and analyst/scholar Mohamed El-Erian are also really good people to listen to on investing and the economy, on a continuing basis.  

After the big moves up in interest rates and down in stock and some real estate prices in 2022, 2023 has been harder to figure out.  I had been trying to figure out myself , recently, just where inflation was going, and Joe Brown's argument in this video above makes sense to me.  Personally, I think we are most likely to dive into a deep recession, with inflation continuing to drop.  It looks now like that will lead to a few months of deflation, actual dropping prices on many big items and investments.  

This will wreak a lot of havoc on most everything and most everyone, financially.  The Fed will have to pivot, that is, lower interest rates over time, and create a lot of new money, to bail out banks and major corporations (maybe even cities and whole states).   Just like they did in 2022, they will do another about face, this time from raising interest rates to lowering them.  This will set the stage for more, and even higher, inflation, 12 to 18 months after the pivot.  The timing is hard to pin down now, it depends on The Fed's timing, but I think rising inflation by late 2024 or early to mid-2025, is likely.  The stage is already set for the next president of the U.S., whomever that is, to have an even bigger inflation battle to deal with then Joe Biden got hit with.  While many like ot blame this inflation on the 2020 stimulus package, all that money built upon a base of money creation and historically low interest rates through the Obama and Trump administrations.  The Biden administration was in office as we hit the tipping point.  Just for the record, presidents don't have that much to do with the economy, central banks have much more influence, the Federal Reserve here in the U.S., and others in other countries.  Both parties in the U.S. spend ludicrous amounts of money, mostly debt passed on to future generations, the just put lots of money into different programs, while racking up trillions in debt.  

Last year, as interest rates started to rise, I began to look on YouTube for other smart people with knwloedge about real estate, and other areas.  Here are the best videos, people, and YouTube channels I like, to build a comprehensive picture of the economy world in these turbulent times.

Here's the best info this year on real estate in 2023.  Adam Taggart of Wealthion channel interviews Nick Gerli of Reventure Consulting channel, who is the single best source of real estate info  that I've seen anywhere.  This video is from January 2023, before the first four bank collapses, but this is the best overview of real estate I've seen this year.  Wealthion does multiple long interviews with really smart investment and finance people every week.  Reventure focuses on real estate, and Nick spent the winter building  Reventure App, a database, which still free as I write this, where you can see exactly what real estate is doing in your area, or any area, of the U.S..  If you are thinking of buyng a home to live in or for investment in the coming years, check out this app.  

For a look at Southern California real estate, Christian Walsh of WIRE Associates puts out good videos.  He's an agent in this area, and comes across like a guy-next-door type, low key and without the hype of many YouTubers.  He explains the latest data and trends in the 5 main Southern California counties, on a continuing basis.  

Robert Kiyosaki and his wife Kim interview silver enthsusiast @SilverSlayer on Rich Dad Radio Show on The Rich Dad Channel in the linked video.  His channel is, you guessed it, Silver Slayer channel.  This interview is from October 2022.  As I write this, silver spot price is $25.66 per troy ounce.  While gold is near its all time high price, silver has been over $47 per ounce in 2011, and $36 per ounce way back in 1980, which would be about $138 per ounce in today's dollars.  Robert and @SilverSlayer talk about the one investment that many people think is completely undervalued, and the investment that anyone can afford in today's world.   

You've probably heard of the personal finance book, Rich Dad, Poor Dad, one of the best selling investment books of all time.  I think this book should be taught in high school, to give kids a basic idea about money and investing, and what an asset is, and isn't.  Here's my favorite story about the author of that book, Robert Kiyosaki, and his wife Kim.  Robert ran into troubles with his first business, importing nylon wallets and selling them.  After that, he and Kim actually lived in their car for a few weeks, in the 1980's.  They were actually technically homeless fo ra bit.  Then some friends let them live in a basement for several months.  Instead of getting jobs, they wrote a business plan, found investors, and started a business.  Robert and Kim were doing really well a few years later.  That set them up to begin buying real estate in the long, 1990's recession, when prices were really low.  Robert and Kim have been serial entrepreneurs and investors, and then financial educators, ever since.  Robert tells this story in his book Cashflow Quadrant.  My point is that they are not people born rich, they actually have hit bottom, and built their businesses and wealth back up themselves.  

What about the Big Picture?  Here are my favorite macro thinkers and analysts in recent interviews, looking at the financial chaos that is 2023.  

Blockworks Macro channel interviews macro researcher/analyst Danielle DeMartino Booth in this interview, from mid-April 2022.  She gives and incredible view of the Big Picture going on in today's crazy economic world.  Danielle was a employee of The Fed, years ago, and has a wide range of sources ot back up her views.  

Adam from Wealthion interviews macro researcher/analyst Stephanie Pomboy in this interview, from early February, 2023.  Recorded before the four (so far) bank collapses, Stephanie sees a hard landing ahead, and gives lots of nuances of her view, with a lot of info from corporate America.

A big worry of many investors right now is the future of the U.S. dollar.  There is a move by Russia, China and other countries for a BRICs reserve currency, to move away from the dollar, and the worry of possible sanctions in the future.  Is the dollar doomed in the next couple of years?

Jack at Blockworks Macro's Forward Guidance show interviews Brent Johnson, who figured out the "Dollar Milkshake Theory" several years ago, in this interview.  Recorded in late April 2023, Brent gives his case while the dollar should still be the world's reserve currency for quite a while to come.

Other YouTube channels I think have really good information investors, and anyone else interested in the crazy economic world playing out in the 2020's.  

Daniella Cambone of Stansberry Research channel interviews many really knowledgeable investors and analysts.

Stoic Finance, Eurodollar University, and George Gammon's Rebel Capitalist channel are three more I've found recently that also have some really insightful ideas on the economic world today.  

Those are the main places I look, and videos I watch, on a regular basis, because I'm a futurist and economics geek, though not an investor.  Personally, I think we are now 43 months into a great depression, which I've been calling The Phoenix Great Depression, since early 2020.  That's just my opinion, and I could very well be wrong.  My belief in some really obscure, ultra-long term cycles, led me to that conclusion.  It takes a 5 year economic contraction to officially form a great depression, which means we have 2 to 3 years before that is even possible, let alone likely.  Time will tell.  

We are definitely heading into the worst part of the major economic downturn I've been droning on about for four years or so.  All of these people and channels linked above are much better sources for up-to-date data and ideas on where the financial world is heading, in the short and mid term.  

I'm pivoting to spending more time thinkng and writing about what I call call Creative Scenes, the little groups of people who create things.  Some of these turn into major and influential businesses or movements, and many of the smaller ones create the businesses and products that will build our way out of this long period of economic chaos.  For any of you trying to figure out what's going on in the business, financial, and ecnoomic world, I hope this post is really helpful.  

What separates Warren Buffet and Charlie Munger from everyone else...

Jim Cramer, probably the best known stock market personality, talks about the horrific drop of the major tech stocks in 2022.  He's right, they tanked, a whole lot of shareholders lost a combined $5.4 trillion in value this past year.  

Disclaimer

Way back in the early 1990's, I thought becoming super rich was the key to living the life I wanted.  That life was doing as little as possible to make a living, make a ton of money, and then I could go ride my BMX bike all day.  I was 24 in 1990, and getting rich is on the minds of lots of 20-somethings, guys in particular.  Hell, Save Ferris even has a song about this mentality.  Anyhow, I started reading, and actually studying, the Forbes 400 magazine every year.  The basic idea was, "Hey, here's a single magazine with 3 or 4 paragraphs about the top 400 wealthiest people in the United States.  If I read this, I can learn what these people did right in the world of money, how they built their wealth, and what they're interested in as we head into the future.  So I did that.  Year after year, starting in 1990 or 1991, I think, I started studying that annual special issue, the Forbes 400.  

I could, and probably will someday, write a lot about what I learned from studying the Forbes 400 magazine, every year, over about 20 years.  But here's a few quick basics.  I learned that about 1/3 of the wealthiest people in the U.S. inherited their fortunes.  So being born into money is the best way to get super rich.  Ask the Walton family, and the Mars (candy) family, among others.  But that doesn't work for the rest of us, unless you marry one of those people.  (Paris Hilton is taken guys, sorry).  

The people who made huge fortunes, by and large, did it by building huge business empires, and then taking those huge businesses public, when they owned a huge chunk of the stock.  The value of their stock surges when it starts getting traded in the stock market, generally.  When I first read the Forbes 400, those main fortunes were much smaller than now, and many were big industrial companies like Levi Strauss, and Seagrams, that you'd never think of now.  The tech billionaire thing was just beginning then,  Steves Jobs and Wozniak from Apple, and Bill Gates and Paul Allen of Microsoft, were about the only tech wunderkids then.  

Another way several people became super rich was through real estate.  Even with the real estate crash of the early 1990's, a lot of the wealthiest people made a lot of their money through real estate then.  Donald Bren of the Irvine Company, here in Southern California, is a prime example from that era.

The biggest shocker to me, was that, of the 400 richest people in the U.S. then (1991-992ish), ONLY TWO people became super wealthy by investing in stocks.  Only TWO, out of 400.  Those were, of course, Warren Buffet, and his partner, Charlie Munger, of Bershire Hathaway.  Their main technique is called "value investing," which means buying large chunks of stock in really solid, well run businesses, usually ones that owned great brands (Coca-Cola, Dairy Queen, etc.).  They did lots of research, found the companies they thought were the best overall, and then they... waited.  They waited until the stocks in those companies dropped to a value they had already determined was a significant discount to the fundamental value of the business.  Warren Buffet was taught an old adage by his mentor, "Buy when there's blood in the streets."  When the world gets crazy, for whatever reasons, and investors turn their backs on solid companies, driving those stock prices down, that's when Warren and Charlie would buy big chunks of stock.  And then they held those stocks... forver, if possible.  They will sell at times, usually when a far better deal is happening, but it's rare.  But the only two guys who actually invested their way to top 400 fortunes did it with a buy and hold strategy.  Yes, there are also hedge funds and corporate raider types, that take over companies in hostile takeovers, and wind up with lots of stock.  But that's far different than simply picking stocks and investing.  Just of the record, I had one of these billionaires, Larry Ellison of Oracle, in my taxi once.  Ever have a 20 minute, one on one conversation with a multi-billionaire?  I have (He talked about his yacht, mostly, and it was 2003, he was only worth $9 billion then).

Now I'm a homeless guy, I have no money to invest, it's easy to dismiss this post.  I don't care.  I called the 2020 stock crash before it happened, and have made several other solid calls in the past 3-4 years, in this or other blogs.  I've also made bad calls, of course.  I'm not going to invest in stocks, even if I won the lottery tomorrow.  But if I was, it would mostly be the stocks Cramer is talking about in the segment above, except for Facebook.  I think they're in a long, slow downward spiral, but they'll still be around for years.  

If I WERE going to buy stocks to hold for the next 5 to 10 years, and not touch them for that whole time, it would be the stocks Cramer is telling people to avoid above,  I'd be buying them right now, or in the next month or so.  Apple, Google (Alphabet), Amazon, and Microsoft.  I'd throw in  Pinterest and Shopify stock as well, because I just like those businesses, and they're down big as well in 2022.  Then I'd just forget about them, and let them ride.  I wouldn't touch any other stock out there.  None of them.  Yes, there are plenty of stocks that will have big gains, at some point.  But I wouldn't bother looking for them.  I think crypto and other things are far more interesting in the coming years.  I'd just buy these stocks, forget about them, and hold them for at least 5 years.  That's my personal opinion.  This video above, that's as "blood in the streets" as it gets.  

That's my thought on the stock market, as 2022 skids to a close.  

Oh, by the way...  close to half of Berkshire Hathaway's stock holdings are of Apple, according to the most recents reports.  Berkshire stock, is up about 1.2% in 2022. The guys who have been buying andholding good stocks for 60 years or so.  Berkshire's stock is about even for 2022, about the same performance as gold this year, when so many stocks tanked.  Warren Buffet is 92 years old now, and Charlie Munger is 98.  I wonder what they're buying right now...

This is just my personal opinion, do your own due diligence, and consult any experts you think will help before making your own investment decisions.  And yes, this is another of my "told you so" posts that I will link to a year from now, or sometime in the future.  

Closing prices on those stocks and some other investments today, for reference when looking at this post later on- 12/28/2022

Apple- $126.04

Alphabet (Google)- $86.02

Amazon- $81.82

Microsoft- $234.53

Meta (Facebook)- $115.62

Nvidia-$140.36

Tesla- $112.71

Berkshire Hathaway- $459,800.00

Pinterest- $22.86

Shopify- $32.64

Gold- $1,809.60 (per troy ounce)

Silver- $23.71 (per troy ounce)

Bitcoin- $16,556 per Bitcoin

Ethereum- $1,193.67 per Ether

Dow Jones Industrial Average- 32,875.71

Nasdaq- 10,213.29

S&P 500- 3783.22

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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

The Best Interview I've seen on our current economy: CNBC w/ Jeffrey Gundlach

Wow, a major person in the U.S. financial world willing to actually tell it like it is.  This interview is incredibly refreshing, although depressing in the long run.  If you have ANY interest in investing, financial markets, or the future, this is worth watching. 

When I started this blog in June of 2017, bringing all my blogging into one place, I soon started talking about some longer term issues, like technology taking human jobs, the next recession, and other major trends I saw building into a serious recession.  In the beginning of January, 2018, right after President Trump signed the huge tax cut (corporate bailout) bill into law, people in the financial world were predicting the markets would take off, and soar for another 3 to 5 years.  I, however, predicted the markets would rise for 1 to 2 months, and then head downward.  That's exactly what happened.  The Dow, S&P 500, and Russell 2000 all peaked on January 26, 2018, then headed down.  The Nasdaq headed up a few more months before heading down, buoyed up by the big tech stocks everyone was clinging to. 

Largely, I got the point right that Trump signing the taxi bill was the reason stocks were heading higher early in Trump's presidency.  The big corporations and Wall Street new a widfall was coming.  After the bill got signed, and major corporations did some major buybacks of their own stock, and there was no more serious, fundamental reasons for stocks to keep heading up.

At that point, from my point of view the major recession was ready to happen.  Then something really crazy happened, that I didn't expect, stocks began grinding slowly upward again, until a huge collapse in late 2018.  Then they ground slowly upward again.  My analogy was the the stock market is now like a couple of bulldozers trying to push a dead whale up the side of a mountain.  Yeah, you can push it a bit higher, but it really just doesn't want to go.  And at some point, gravity will send it rolling back down the mountain in a big way, that's inevitable. 

While I've said for years that I have a big interest in economics, I've found in the last couple years that I make financial predictions largely on big picture trends and mass psychology.  I'd check the markets to get a take on where the financial world was in the larger cycle I saw playing out.  I never really dug into the nitty gritty numbers of economics.  Sidelined by outside pressure, and struggling to just survive, I had no reason to dig deeper, I have no money to invest.  I wouldn't put a dime in the stock markets, anyhow, at this point. But without digging deep into numbers, I could predict recessions and other market trends using the group human psychology I saw happening over the last 25 years.

What I got wrong, was the incredible level of market manipulation going on since 2008 by the The Federal Reserve, other central banks around the world, the big investment banks, and Wall Street.  While financial people often talk about "free markets," that's really the last thing they want.  The financial world wants markets highly manipulated, in their favor, to make a killing.  Since The Great Recession, though, the markets have become so manipulated, that we now, functionally, have two economies.  We have the "financial world" economy, where the Dow is hitting a new "all time high" today, yet that high is less than 6% above the high it hit on January 26, 2018.  It's up less than 3% a year in the last 23 months. 

Our second economy is the everyday economy that us average American people live in.  About 65% of America is struggling to make ends meet, and a third of everyday people are making decent salaries, but many are weighed down with a huge amount of student loan debt, and often other debts. The "financial world" economy is being pumped full of money, literally to keep it from completely collapsing at this point.  Something like $380 billion has been pumped into the Repo Market since September, a market most of us never new existed.  Yet, if it seizes up for a while again, the world economy begins to collapse.  Like, REALLY. 

We are in a complete financial Never Never Land, a place of countries putting out bonds with negative interest rates, a place where everyone is "living off their credit cards," individuals, corporations, and whole countries.  The world is piled high with more debt than ever in human history, and being pumped full of money to try and inflate markets, continue devaluing currencies, and kick the debt can further down the road.  But the biggest manipulations in history are barely keeping things functioning at this point. This current financial world can't last for long, and the collapse is going to annihilate entire regions and maybe whole countries.

In the interview above, Jefferey Gundlach, hardcore bond expert, actually gets into the reality we're facing, and gives really insightful thinking on where we are, where we're heading, and how to deal with it. 

Even Jim Cramer thinks it's a bear market now

It's the Monday morning after Thanksgiving weekend, and CNBC show host, analyst, and morning commentator, Jim Cramer, is now calling this fall's stock drops a bear market in this clip.  The Dow Jones Industrial Average was up 350 points out of the gate.  But Cramer sees it dropping back within a few days.  How does he really feel?

"It's Not a good time."
"Every time you try to make money, it (this market) cuts your heart out."
-Jim Cramer in the clip above.

Just for the record, I don't hate Cramer.  He's a longtime stock trader, he knows that world, and he's really entertaining (usually).  But his job on CNBC is not to make you the most money.  His job is to keep you in the stock market, even when you probably shouldn't be in it.

The Dow is at 24,616 as I write this, up 330 points this morning, but down from it's high of 26,828 on October 3rd.  It's down over 8% in under two months.  The Dow is an average of 30 "industrial" stocks, and has been the benchmark of the U.S. stock market since 1885.  Here are the other major averages:

Nasdaq:  High- 8,109 (8/30/18)  Today (11/26/18)- 7,041  It's down over 13% in 3 months
Index of 100 stocks, primarily tech stocks
S&P 500: High- 2,930 (9/20/18)  Today- 2,664  It's down over 9% in just over 2 months
Index of 500 different stocks
Russell 2000: High-1,740 (8/30/18) Today- 1,508  It's down over 13% in 3 months
Index of 2,000 different stocks

Meanwhile, I'm a currently homeless artist/blogger and lifelong amateur futurist.  I look a big, long term things happening in our world, and try to figure out where we're heading as a society.  In an August 10th, 2018 post I wrote this:

"There WILL, without a shred of doubt, be a serious recession in the next year or so.  This next recession WILL be as intense as the Great Recession of 2008, and it will likely be worse."

Here's that full post: "It's Time to get off the Titanic, a brief history of our future 

The Dow was at 25,313 when I wrote this post.

In the stock market, a "correction" is a drop of 10% from the recent high mark.
A"bear market" is a drop of 20% or more over a time period of two months or more.

Still think I'm full of crap?   Or maybe there's a point to looking a super long term trends.

Stocks about to plunge?

If you want deeper background into why the entire financial system is screwed, here's Nomi Prins, a former quant (super math geek) at Lehman Brothers and Goldman Sachs, explaining it fairly quickly.  As a rule, I don't embed RT (Russian Television) clips, and with today's Trump/Putin fiasco, I hate to use it.  But all of her other talks are really long.  She explains this better than anyone right now, and this is the shorted version I could find.

Two things have been holding the stock market up from a major collapse after the DOW's January peak this year:  The "FANG" stocks (Facebook, Apple, Amazon, Netflix, Google- officially called Alphabet now), and corporations buying back their own stocks with money they got largely form the Trump "tax cut" (corporate welfare).  Basically, things should have gone into a really big downturn back in early February in the stock market.  But these few tech stocks, nearly all by themselves, kept going up, and made the stock markets look much better than they actually were. 

But in this CNBC article today, Facebook, Alphabet (Google), and Netflix had big issues today, which is the F, A, and G in FAANG stocks, and shares headed lower.  Now, if these few stocks that have been going up big this year peak and turn down, major investors don't have very many other good options of where to put lots of money.  And that could be the straw that breaks the camel's back that so many of us have predicted.  It could finally send tech stocks quite a bit lower, and that will likely further reduce major investor confidence in the stock markets in general, which could send it into a serious bear market, and send us into the long overdue Next Great Recession, which is primed to happen.  We'll see what happens tomorrow. 

Watch Germany's Deutsche Bank as well, it's floundering and will likely be a domino in the financial crash we've been teetering on the brink of for more than a year now.