1 00:00:00,100 --> 00:00:03,000 Well I don't know what else to say the stock market is just 2 00:00:03,000 --> 00:00:05,600 depressing. We just closed out the first six 3 00:00:05,600 --> 00:00:07,900 months of the year. So time to celebrate everyone. 4 00:00:08,000 --> 00:00:11,000 We're halfway through we've made it halfway through 2022. 5 00:00:11,300 --> 00:00:15,000 I hope you're all having a great 2022 because the stock market is 6 00:00:15,000 --> 00:00:18,900 not the market. Just posted the worst first half 7 00:00:18,900 --> 00:00:22,400 of the year in decades when they say decades. 8 00:00:22,400 --> 00:00:26,000 They're not exaggerating accelerating inflation and 9 00:00:26,000 --> 00:00:29,300 Rising interest rates. Fueled a months-long route that 10 00:00:29,300 --> 00:00:34,000 left few markets unscathed, the S&P 500 felt 21% through 11 00:00:34,000 --> 00:00:39,100 Thursday suffering, its worst first half of a year since 1970. 12 00:00:39,500 --> 00:00:42,800 So this is literally the worst start to a year halfway through 13 00:00:42,800 --> 00:00:45,900 the year since 1970. That's what we're investing in. 14 00:00:46,200 --> 00:00:48,900 So if someone tells you this sell-off is just 15 00:00:48,900 --> 00:00:50,600 run-of-the-mill, it's not that bad. 16 00:00:51,100 --> 00:00:52,900 They're being dishonest. This is a bad cell off. 17 00:00:52,900 --> 00:00:56,700 Like this is a really bad one. We are going through a really 18 00:00:56,700 --> 00:00:59,900 bad sell-off and that should be said we are making it through. 19 00:01:00,000 --> 00:01:04,599 This now I will say if you've made it this far, you just got 20 00:01:04,599 --> 00:01:06,800 to Pat yourself on the back, you're staying invested through 21 00:01:06,800 --> 00:01:08,900 this turbulence. Through this volatility through 22 00:01:08,900 --> 00:01:12,200 non-stop depressing, sell-off month, after month, then you 23 00:01:12,200 --> 00:01:14,500 probably have what it takes to be a long-term investor in my 24 00:01:14,500 --> 00:01:16,900 opinion, you'll probably keep going, which is a good thing. 25 00:01:17,400 --> 00:01:21,100 But it's times like this, when you really want pick up, you 26 00:01:21,100 --> 00:01:24,400 want some positive news. We've already been investing 27 00:01:24,400 --> 00:01:27,500 this year for six months and the sell-off started a couple months 28 00:01:27,500 --> 00:01:31,000 into the end of last year. So we've in in a bear market. 29 00:01:31,000 --> 00:01:35,800 Now, for quite some time, this constant painful dragon sell-off 30 00:01:35,800 --> 00:01:39,000 in the market and you just want to hear some positive news. 31 00:01:39,000 --> 00:01:41,100 Just some relief that things are going to be better in the 32 00:01:41,100 --> 00:01:45,300 future. Well, in comes Michael burry and 33 00:01:45,700 --> 00:01:48,700 Michael burry is not someone to paint a Rosy picture. 34 00:01:48,800 --> 00:01:51,700 That's not really his thing. In fact, his thing is kind of 35 00:01:51,700 --> 00:01:54,500 the opposite. He is the the, the one that 36 00:01:54,500 --> 00:01:57,200 gives the warnings, right? And the latest warning, he just 37 00:01:57,200 --> 00:01:59,800 gave. This is just today. 38 00:02:00,200 --> 00:02:05,600 Adjusted for inflation, 2022 is first, half of S&P, 500 is down, 39 00:02:05,600 --> 00:02:09,300 25 to 26 percent. So if you actually factor in 40 00:02:09,300 --> 00:02:13,000 inflation, you're actually more poor, this year than just your 41 00:02:13,000 --> 00:02:16,100 losses in the stock market because you have to factor in 42 00:02:16,400 --> 00:02:19,300 that, the little money you do have after the big decline is 43 00:02:19,300 --> 00:02:21,100 even worse less due to inflation. 44 00:02:21,600 --> 00:02:25,300 So, the S&P 500 is down, 25 to 26 percent. 45 00:02:25,500 --> 00:02:29,900 The NASDAQ is down 34 to 35 percent Bitcoins down a A 46 00:02:29,908 --> 00:02:34,400 Goering, 64 to 65 percent that was multiple compression. 47 00:02:34,700 --> 00:02:39,800 Next up, earnings compression. So maybe halfway there, maybe 48 00:02:40,100 --> 00:02:45,300 just, maybe the NASDAQ can fall another 35%, maybe the S&P, 500 49 00:02:45,300 --> 00:02:48,300 will fall another 25%. That's Michael burry Staats and 50 00:02:49,100 --> 00:02:51,300 you know, a lot of people say that he's kind of like the one 51 00:02:51,300 --> 00:02:53,200 hit wonder. He's the big short guy. 52 00:02:53,200 --> 00:02:55,900 I made a video on this. He's not he's made consistently 53 00:02:55,900 --> 00:02:58,300 good calls all throughout his career and I consider him to be 54 00:02:58,500 --> 00:03:01,200 one of the best five. Is alive today, actively 55 00:03:01,200 --> 00:03:03,000 investing. I really think he's topped are 56 00:03:03,200 --> 00:03:05,900 so These Warnings that he's giving, you know, I don't think 57 00:03:05,900 --> 00:03:07,800 that they're just fun tweets from. 58 00:03:07,800 --> 00:03:11,200 I actually think that he does have a thought that the S&P 500, 59 00:03:11,200 --> 00:03:14,800 the market will continue to go down to some extent, of course, 60 00:03:15,000 --> 00:03:18,000 Michael burry has position as portfolio with this in mind. 61 00:03:18,000 --> 00:03:21,500 Dr. Burry has both long positions and short positions. 62 00:03:21,700 --> 00:03:24,800 He's long a bunch of very low valuation. 63 00:03:25,100 --> 00:03:28,200 Deep value stocks like Pharmaceuticals and he's short 64 00:03:28,200 --> 00:03:31,700 companies like apple, which was It's kind of one of the big tech 65 00:03:31,700 --> 00:03:33,600 companies. The last one to fall, it was 66 00:03:33,600 --> 00:03:36,900 trading around 155 when he started his short. 67 00:03:37,100 --> 00:03:39,800 So he's probably already made money on that short position. 68 00:03:39,800 --> 00:03:43,900 So he's actually positioning his portfolio in a way that reflects 69 00:03:43,900 --> 00:03:45,600 I think his bearish view on the market. 70 00:03:45,700 --> 00:03:47,900 So in this video, we're going to go over a few different things. 71 00:03:48,100 --> 00:03:51,500 First of all, we'll be examining the implications of Michael 72 00:03:51,500 --> 00:03:55,100 buries claim that there's going to be learning compression on 73 00:03:55,100 --> 00:03:58,100 top of multiple compression. And what, that even means what's 74 00:03:58,100 --> 00:04:00,900 the difference between earnings compression and Oppression, I'll 75 00:04:00,900 --> 00:04:02,400 explain it. And I'll go over an article 76 00:04:02,400 --> 00:04:04,800 where other strategist think that this could be a problem. 77 00:04:05,100 --> 00:04:08,400 And I also want to give an opposing view to Michael burry 78 00:04:08,600 --> 00:04:11,900 one where they think that things aren't quite as bad as a markets 79 00:04:11,900 --> 00:04:16,200 preparing for both Goldman Sachs and JP Morgan have research out. 80 00:04:16,200 --> 00:04:19,300 That shows that the markets are already pricing in a pretty 81 00:04:19,300 --> 00:04:22,200 significant downturn and I think there's a chance that investors 82 00:04:22,200 --> 00:04:24,700 might be overdoing it. So in this video we'll be going 83 00:04:24,700 --> 00:04:27,800 over both perspectives, Michael buries and the big Banks and 84 00:04:27,800 --> 00:04:30,200 we'll try to make sense of it. Now before we jump, Into that. 85 00:04:30,200 --> 00:04:31,900 Just a quick shout-out to today's sponsor. 86 00:04:31,900 --> 00:04:35,200 It's FTX u.s., they have a desktop website on mobile app. 87 00:04:35,200 --> 00:04:38,000 I have both links in the description below and they've 88 00:04:38,000 --> 00:04:39,900 been a great sponsor, the show, they've been really great to 89 00:04:39,900 --> 00:04:42,700 work with. They, they're building out a big 90 00:04:42,700 --> 00:04:44,100 platform that does a lot of things. 91 00:04:44,100 --> 00:04:45,800 Obviously, they're huge in a crypto. 92 00:04:45,900 --> 00:04:47,900 This is where they've kind of made their name, but they're 93 00:04:47,900 --> 00:04:51,900 also in the NF T's stocks OTC. They have the FTX card. 94 00:04:51,900 --> 00:04:53,600 They're just going into a ton of different things. 95 00:04:53,600 --> 00:04:56,200 The one that I'm personally, most interested in is the stock 96 00:04:56,200 --> 00:04:58,100 portion, and I've been testing this out. 97 00:04:58,200 --> 00:04:59,800 It's currently in beta but it works really. 98 00:05:00,000 --> 00:05:02,900 Well, I've been increasing my shares in Amazon, buying more of 99 00:05:02,900 --> 00:05:05,700 it, basically, every day, a couple shares of Amazon. 100 00:05:06,000 --> 00:05:08,200 And I'm going to continue to throughout this year because I 101 00:05:08,207 --> 00:05:10,300 think the Amazons on a pretty good deal right now. 102 00:05:10,400 --> 00:05:14,000 Now if you want to try this out, the beta will be out soon, you 103 00:05:14,000 --> 00:05:16,600 can sign up your account right now for free, it takes two 104 00:05:16,600 --> 00:05:18,900 minutes. You just download the app with 105 00:05:18,900 --> 00:05:21,200 the link below and when you download the app, make sure to 106 00:05:21,200 --> 00:05:24,400 use the name Carlson. My last name that not only helps 107 00:05:24,400 --> 00:05:26,800 out the channel because it lets them know that I sent you, but 108 00:05:26,800 --> 00:05:29,600 it also gives you $10 on your first hundred dollar trade. 109 00:05:29,600 --> 00:05:33,000 So, So you instantly get a 10% return on your first trade. 110 00:05:33,000 --> 00:05:34,900 All right, now, let's go ahead and jump into this news. 111 00:05:34,900 --> 00:05:37,000 Like I said, this is just the worst. 112 00:05:37,000 --> 00:05:40,000 There's no other way to say it, you know, this is the worst 113 00:05:40,000 --> 00:05:43,100 start to the stock market since 1970. 114 00:05:43,500 --> 00:05:47,100 So, since a lot of us have been alive, you know, I look at the 115 00:05:47,100 --> 00:05:50,000 analytics are a lot of us are young enough that we weren't 116 00:05:50,000 --> 00:05:53,300 even born before 1970. I know I have some older viewers 117 00:05:53,300 --> 00:05:56,400 that are in that camp but I was born in 89. 118 00:05:56,500 --> 00:05:59,700 So this is the worst first half of the stock market. 119 00:06:00,300 --> 00:06:03,900 Since literally before I was even born, that's how bad this 120 00:06:03,900 --> 00:06:07,700 year has been and it shows I was not spared from this. 121 00:06:07,700 --> 00:06:09,200 You know. I don't try to time the market. 122 00:06:09,200 --> 00:06:12,900 I've looked at the data and in aggregate over long periods of 123 00:06:12,907 --> 00:06:14,800 time. It's best to just keep invested. 124 00:06:14,800 --> 00:06:17,900 So that's what I've been doing. I'm currently down 31% on my 125 00:06:17,900 --> 00:06:21,000 girls portfolio, the dividend portfolio with those defensive 126 00:06:21,000 --> 00:06:24,000 companies has held up better, but this one is just getting 127 00:06:24,000 --> 00:06:26,200 crushed. In this market, it has not been 128 00:06:26,600 --> 00:06:29,300 spared. So looking at this, we have 129 00:06:29,300 --> 00:06:31,400 really bad news. It's just depressing. 130 00:06:31,400 --> 00:06:34,000 We have Michael burry saying this is going to get worse. 131 00:06:34,000 --> 00:06:36,900 We're only halfway there. We have literally people right 132 00:06:36,900 --> 00:06:39,700 now quitting just throwing in the towel. 133 00:06:40,000 --> 00:06:43,900 This news made me laugh. The Jupiter Co quits a 68 134 00:06:43,900 --> 00:06:47,700 billion dollar firm to sit on the beach and quote, do nothing. 135 00:06:48,100 --> 00:06:50,400 This guy is just done, he's checked out. 136 00:06:50,500 --> 00:06:52,800 He's been dealing with this market for the past seven 137 00:06:52,800 --> 00:06:55,100 months, and he's probably like, you know, I don't need this, I 138 00:06:55,108 --> 00:06:58,000 already have money. I want to sit on the beach and 139 00:06:58,000 --> 00:06:59,400 do nothing. And you know what? 140 00:06:59,400 --> 00:07:01,000 I don't blame. Him, I don't blame the guy. 141 00:07:01,000 --> 00:07:03,100 If I had enough money to retire, I probably want to sit on a 142 00:07:03,100 --> 00:07:05,700 beach and do nothing as well, especially with the market over 143 00:07:05,700 --> 00:07:08,500 the past two years. It's been absolutely horrible. 144 00:07:08,500 --> 00:07:12,500 So you know, this is the attitude people have and I want 145 00:07:12,500 --> 00:07:14,500 to go into Michael buries prediction. 146 00:07:14,500 --> 00:07:19,200 What he's claiming is that we first experienced multiple 147 00:07:19,200 --> 00:07:22,500 compression. Multiple compression means if a 148 00:07:22,500 --> 00:07:28,300 company was trading at a, let's say, 30 PE ratio and it gets 149 00:07:28,300 --> 00:07:31,800 down to a 15 P/E. But the earnings are expected to 150 00:07:31,808 --> 00:07:34,200 be the same, that's just multiple compression. 151 00:07:34,500 --> 00:07:37,000 Meaning the multiple that people are willing to pay for that same 152 00:07:37,000 --> 00:07:40,500 earnings has been cut in half from a 32A 15. 153 00:07:40,600 --> 00:07:43,500 That's basically what happened in Netflix Netflix, didn't 154 00:07:43,500 --> 00:07:45,300 really say that they're going to be earning less money. 155 00:07:45,300 --> 00:07:48,300 In fact, they actually beat their earnings estimate by 40%, 156 00:07:48,500 --> 00:07:51,600 so they actually beat on their earnings, but investors didn't 157 00:07:51,600 --> 00:07:54,400 like the story. There was qualitative news, it 158 00:07:54,400 --> 00:07:57,000 change. So the multiples compressed and 159 00:07:57,000 --> 00:07:59,500 Netflix isn't the only company that's had this happen. 160 00:08:00,000 --> 00:08:02,400 Basically, all of them have had this happen, multiples? 161 00:08:02,400 --> 00:08:05,100 Compress for Facebook. Facebook is still expected to 162 00:08:05,100 --> 00:08:07,200 earn a lot of money, but the multiples came down. 163 00:08:07,400 --> 00:08:10,700 Multiples, came down for PayPal. Still expected to earn a lot of 164 00:08:10,700 --> 00:08:12,300 money. It was the multiples that 165 00:08:12,300 --> 00:08:17,100 compress the same thing for for apple and Microsoft and Ali 166 00:08:17,100 --> 00:08:18,800 Baba. And basically, all of these 167 00:08:18,800 --> 00:08:22,400 companies the earnings projections are still positive 168 00:08:22,400 --> 00:08:25,500 for the S&P 500, this year, it's still expected that these 169 00:08:25,500 --> 00:08:27,900 companies are going to earn more and more money, but the 170 00:08:27,900 --> 00:08:32,200 multiples have compressed now. Michael burry sing part 2. 171 00:08:32,700 --> 00:08:35,600 We've had the First Act and now we're going to have this second 172 00:08:35,600 --> 00:08:39,900 act after the multiple compression, which is that that 173 00:08:39,900 --> 00:08:44,300 PE ratio compressing next up, earnings compression. 174 00:08:44,300 --> 00:08:45,700 The actual earnings are going to go down. 175 00:08:46,000 --> 00:08:48,900 Here is an example of this, with Microsoft, you have the PE 176 00:08:48,900 --> 00:08:52,200 Ratio, everybody knows about this, it's the price to earnings 177 00:08:52,500 --> 00:08:54,500 multiple. So the multiple you're paying 178 00:08:54,500 --> 00:08:57,500 for their earnings of the company, the P stands for Price, 179 00:08:57,600 --> 00:08:59,800 which is the multiple Microsoft price. 180 00:08:59,900 --> 00:09:04,800 Went from 35 PE to 24 so it's the same earnings, but we're 181 00:09:04,800 --> 00:09:09,000 paying a lower multiple form. But now we have a risk, a new 182 00:09:09,000 --> 00:09:11,100 risk in the market of the actual earnings. 183 00:09:11,100 --> 00:09:15,000 Going down, if Microsoft earns less money over the next six 184 00:09:15,000 --> 00:09:18,000 months, and they are expected to, then the E has to get 185 00:09:18,000 --> 00:09:20,900 revised lower which would make the stock price drop even 186 00:09:20,900 --> 00:09:24,300 further than what it has. And this is already starting to 187 00:09:24,300 --> 00:09:27,800 crack just a little bit. Take a look at Microsoft's, this 188 00:09:27,800 --> 00:09:31,100 is their projected earnings. And you can see the earnings 189 00:09:31,100 --> 00:09:35,400 revisions earnings revisions up our five and EPS revisions down 190 00:09:35,400 --> 00:09:37,700 or 15. That means five analysts think 191 00:09:37,700 --> 00:09:40,800 that they'll earn more 15 think that they'll earn less. 192 00:09:41,000 --> 00:09:44,700 So the aggregate analysts estimate for Microsoft their 193 00:09:44,700 --> 00:09:47,500 earnings in the future has been moved down which makes the stock 194 00:09:47,500 --> 00:09:49,600 more expensive. And it makes the company sell 195 00:09:49,600 --> 00:09:52,300 off and this is exactly what Michael burry he's talking 196 00:09:52,300 --> 00:09:54,000 about. So let's go ahead and dive into 197 00:09:54,000 --> 00:09:56,600 the reasons. This poses a risk for the stock 198 00:09:56,600 --> 00:09:58,600 market. We know that multiples have come 199 00:09:58,600 --> 00:10:01,600 down but now it's time for earnings to get compressed as 200 00:10:01,600 --> 00:10:03,200 well. U.s. profit margin. 201 00:10:03,200 --> 00:10:07,100 Estimates are too optimistic putting stocks at risk of more 202 00:10:07,100 --> 00:10:09,300 declines. When Wall Street analysts 203 00:10:09,300 --> 00:10:12,400 downgrade their expectations this is according to Goldman 204 00:10:12,400 --> 00:10:15,600 Sachs group they say quote while rotations within the equity 205 00:10:15,600 --> 00:10:18,400 Market have signaled expectations of slowing growth 206 00:10:18,700 --> 00:10:20,500 index. Valuation does not appear to be 207 00:10:20,508 --> 00:10:24,400 providing a buffer for uncertainty around the path of 208 00:10:24,400 --> 00:10:27,700 future earnings. So this is kind of their fancy 209 00:10:27,700 --> 00:10:30,900 way of saying investors. Kind of expect that we're going 210 00:10:30,900 --> 00:10:33,800 to see slowing growth. Potentially, at least like a 211 00:10:33,800 --> 00:10:36,300 technical recession. People not spending quite as 212 00:10:36,300 --> 00:10:39,200 much money because of inflation, but that's really not being 213 00:10:39,700 --> 00:10:42,900 priced into the earnings earnings models of these 214 00:10:42,900 --> 00:10:45,800 companies analysts have not brought the models down. 215 00:10:45,900 --> 00:10:49,600 They say economists have begun to cut their top down, economic 216 00:10:49,600 --> 00:10:52,900 forecasts for GDP. And yet fundamental company. 217 00:10:52,900 --> 00:10:56,000 Analysts are sitting there like a deer in headlights, not 218 00:10:56,000 --> 00:10:57,400 knowing what to do with the numbers. 219 00:10:57,800 --> 00:11:00,800 So we have economists saying, Hey, look everyone. 220 00:11:00,800 --> 00:11:02,200 The economy. Slowing down. 221 00:11:02,200 --> 00:11:04,800 GDP is going to slow down. We might go into recession. 222 00:11:04,800 --> 00:11:06,900 People are going to spend less money, and then we have 223 00:11:06,900 --> 00:11:09,800 fundamental company analysts saying, they're going to earn 224 00:11:09,800 --> 00:11:11,800 just as much. My company's doing good. 225 00:11:11,800 --> 00:11:13,800 Look at the bright future. It has right? 226 00:11:13,900 --> 00:11:17,500 There's this conflict between economists and fundamental 227 00:11:17,500 --> 00:11:20,000 company analysts and they're not agreeing together. 228 00:11:20,300 --> 00:11:22,500 Goldman Sachs thinks the economist are probably right. 229 00:11:22,700 --> 00:11:25,700 The economy is slowing down and eventually the fundamental 230 00:11:25,700 --> 00:11:28,900 company analyst the analyst it make these earnings projections. 231 00:11:29,200 --> 00:11:31,100 They're going to have to Are these earnings projections. 232 00:11:31,100 --> 00:11:33,600 That's what the economists. That's what Goldman Sachs thinks 233 00:11:33,600 --> 00:11:36,000 is going to happen. And Goldman Sachs goes on to say 234 00:11:36,000 --> 00:11:40,000 quote we continue to recommend investors focus on stocks where 235 00:11:40,000 --> 00:11:44,200 they can be relatively confident confident in the for trajectory 236 00:11:44,300 --> 00:11:48,200 of earnings including firms with stable growth and the healthcare 237 00:11:48,200 --> 00:11:50,500 sector. Michael buries top holding right 238 00:11:50,500 --> 00:11:53,900 now is Bristol-Myers Squibb. So he's right there with them. 239 00:11:54,200 --> 00:11:58,900 He has most of his money 13% in a company that is in healthcare, 240 00:11:58,900 --> 00:11:59,700 right? A pharmaceutical. 241 00:11:59,800 --> 00:12:03,300 Coal Company, people still have to buy drugs, especially, Cancer 242 00:12:03,300 --> 00:12:04,800 Treatments. Whether or not we go into 243 00:12:04,800 --> 00:12:07,000 recession, those earnings are pretty solid. 244 00:12:07,300 --> 00:12:10,000 He says, which has grown in earnings in the last several 245 00:12:10,000 --> 00:12:12,600 recession. So even during recessions 246 00:12:13,000 --> 00:12:15,400 pharmaceutical companies continue to grow their earnings. 247 00:12:15,400 --> 00:12:17,800 So I think that Michael burry is cracked in the analysts 248 00:12:17,800 --> 00:12:20,500 eventually eventually, and I think it's going to be late in 249 00:12:20,508 --> 00:12:23,400 the game and I'll start eventually going to revise the 250 00:12:23,400 --> 00:12:25,100 earnings of these companies lower. 251 00:12:25,500 --> 00:12:27,100 And we seen enough hints of this. 252 00:12:27,100 --> 00:12:31,300 I just did a video on people. Laid off from work, there's more 253 00:12:31,300 --> 00:12:33,600 and more companies. In fact, a huge uptick of 254 00:12:33,600 --> 00:12:36,000 companies laying more and more people off work. 255 00:12:36,200 --> 00:12:38,900 The reason that they do that is preparing for bad times. 256 00:12:39,100 --> 00:12:41,800 We also have little hints from different companies like 257 00:12:41,800 --> 00:12:44,500 Microsoft like what Microsoft has done over the past three 258 00:12:44,500 --> 00:12:46,200 months. They said that they're going to 259 00:12:46,200 --> 00:12:48,400 earn less money because of Foreign Exchange, right? 260 00:12:48,400 --> 00:12:50,700 That was the first thing. They said that they're cutting 261 00:12:50,700 --> 00:12:53,200 their advertising budget. That was the second thing. 262 00:12:53,500 --> 00:12:56,000 Then they said that they're actually not really hiring any 263 00:12:56,000 --> 00:12:57,700 more. Right there are slowing down on 264 00:12:57,708 --> 00:13:00,100 their hiring, not layoffs. They don't want to give that 265 00:13:00,100 --> 00:13:01,700 term, but they're slowing down on their hiring. 266 00:13:01,900 --> 00:13:04,900 All these companies, they have a big connection with the economy, 267 00:13:05,100 --> 00:13:09,100 like Microsoft, like Salesforce, like so many other companies are 268 00:13:09,100 --> 00:13:11,800 starting to just pull things back a little bit, they're 269 00:13:11,800 --> 00:13:13,800 giving these little warnings. These little hints that they're 270 00:13:13,800 --> 00:13:16,900 concerned about the future and I wouldn't be surprised at all. 271 00:13:16,900 --> 00:13:20,200 In fact, I kind of expect it to go into this next earning 272 00:13:20,200 --> 00:13:22,700 season. And here, that this stock sold 273 00:13:22,700 --> 00:13:26,500 off 10% because of lowered guidance, this stock sold off 274 00:13:26,500 --> 00:13:29,700 5%, because a lowered guidance, that's the word you're going. 275 00:13:29,900 --> 00:13:31,900 Here over and over and over again. 276 00:13:32,100 --> 00:13:34,900 Lowering guidance, lowering guidance, earnings revisions 277 00:13:34,900 --> 00:13:37,700 downward lowered, guidance. That's what I think this next 278 00:13:37,700 --> 00:13:40,000 earnings season as going to be all about. 279 00:13:40,100 --> 00:13:42,400 So, while I have that concern and I fully believe that the 280 00:13:42,400 --> 00:13:45,600 stock market could go down another 10, 20 % I remain 281 00:13:45,600 --> 00:13:48,700 invested, because I know that my companies can make it through 282 00:13:48,700 --> 00:13:51,400 this, this might be a difficult time, but all the companies that 283 00:13:51,400 --> 00:13:54,700 I'm invested in have very strong balance sheets and even though 284 00:13:54,700 --> 00:13:58,200 the earnings May compress along with the multiple have a very 285 00:13:58,200 --> 00:14:02,000 long-term View and my Rata G is just to write it out and just to 286 00:14:02,000 --> 00:14:03,500 hang on. And I know that this is kind of 287 00:14:03,508 --> 00:14:06,100 the bearer of bad news the - you. 288 00:14:06,100 --> 00:14:09,500 So I wanted to offer a positive View and this comes from 289 00:14:09,500 --> 00:14:12,200 JPMorgan. JPMorgan actually has the view 290 00:14:12,200 --> 00:14:16,000 that things might not be so bad. That the fares of the recession 291 00:14:16,400 --> 00:14:20,600 might be overblown and I wanted to give this perspective as well 292 00:14:20,600 --> 00:14:23,500 because Michael buries view is kind of like the most bearish 293 00:14:23,500 --> 00:14:26,400 one and JP Morgan's is a lot more optimistic. 294 00:14:26,400 --> 00:14:28,100 Here's the summary of it right off the bat. 295 00:14:28,100 --> 00:14:30,200 They say if there is no reception Action. 296 00:14:30,400 --> 00:14:32,900 Which is our view. Their view is that there's 297 00:14:32,900 --> 00:14:34,900 literally no recession right off the bat. 298 00:14:34,900 --> 00:14:36,700 They're saying that their base case is that we're not going to 299 00:14:36,700 --> 00:14:39,600 go into a big recession, which is definitely a positive thing. 300 00:14:39,800 --> 00:14:43,100 So there's still people that believe even analysts that work, 301 00:14:43,100 --> 00:14:45,900 at Banks like JPMorgan. They don't necessarily think 302 00:14:45,900 --> 00:14:49,000 we're going into a terrible recession and they say that if 303 00:14:49,000 --> 00:14:51,900 we don't go into recession like investors are expecting right 304 00:14:51,900 --> 00:14:56,600 now then the really risky asset prices right now are too cheap. 305 00:14:56,700 --> 00:14:59,700 So the riskier stocks that have just been crushed over the past. 306 00:14:59,800 --> 00:15:02,500 Six months, they're too cheap if we don't go into a recession. 307 00:15:02,600 --> 00:15:06,000 Now they go on to clarify this because JP Morgan here is saying 308 00:15:06,000 --> 00:15:08,700 that they have kind of a contrarian view. 309 00:15:08,700 --> 00:15:11,100 Everyone thinks things are gone to crap right now. 310 00:15:11,100 --> 00:15:13,400 They think everything is going down the drain, which it 311 00:15:13,400 --> 00:15:16,400 certainly feels that way, right? If we've been investing in the 312 00:15:16,400 --> 00:15:18,800 past six months, you just think the world is basically coming to 313 00:15:18,800 --> 00:15:22,400 an end and JP Morgan saying we don't think things are great 314 00:15:22,400 --> 00:15:24,800 right now, but we think that investors might be pricing in 315 00:15:24,800 --> 00:15:27,300 too much. They say that many Equity market 316 00:15:27,300 --> 00:15:31,500 segments are down 60 to 80%. That is a substantial decline 60 317 00:15:31,500 --> 00:15:34,900 to 80% and we know that's true, many companies that we follow 318 00:15:34,900 --> 00:15:38,000 have been down that much or more, they say positioning and 319 00:15:38,000 --> 00:15:42,200 sentiment of investors is at multi-decade lows. 320 00:15:42,500 --> 00:15:46,000 That's also true. So it is not that we think that 321 00:15:46,000 --> 00:15:48,400 the world and economies are in great shape. 322 00:15:48,900 --> 00:15:52,000 But just at the average, investor expects an economic 323 00:15:52,000 --> 00:15:55,000 disaster. If that does not materialize 324 00:15:55,100 --> 00:15:58,900 risky, asset classes could recover, most of their losses 325 00:15:58,900 --> 00:16:01,900 from the first half. Half are bullish and are out of 326 00:16:01,900 --> 00:16:05,300 consistent. Out of consensus view is hence a 327 00:16:05,300 --> 00:16:09,700 forecast of a lost year, a recovery of H1 losses in Risky 328 00:16:09,700 --> 00:16:11,500 assets. So, that's basically a summary 329 00:16:11,500 --> 00:16:13,900 of their take care. That it's not, that things are 330 00:16:13,900 --> 00:16:16,000 in great shape. But investors are expecting 331 00:16:16,000 --> 00:16:19,500 economic Calamity, economic disaster, and if that doesn't 332 00:16:19,500 --> 00:16:22,600 materialize, then there's a lot of upside to these stocks and 333 00:16:22,600 --> 00:16:27,100 I'm kind of viewing things in line with in line with JPMorgan 334 00:16:27,100 --> 00:16:28,300 here. You know, I think that there 335 00:16:28,300 --> 00:16:30,500 might be earnings or visions In the future. 336 00:16:31,000 --> 00:16:33,900 But I don't know how much I've you us going into a horrible 337 00:16:33,900 --> 00:16:37,900 recession, like an 09 recession. I think many investors have 338 00:16:37,900 --> 00:16:40,000 recency bias. We know this is a true 339 00:16:40,000 --> 00:16:43,800 phenomenon where we view, things are going to happen, just like 340 00:16:43,800 --> 00:16:47,500 the recent past and the most recent past real recession. 341 00:16:47,500 --> 00:16:51,400 We've ever gone through was the 08-09 Great Recession. 342 00:16:51,800 --> 00:16:55,700 And that was a particularly devastating horrible recession, 343 00:16:56,000 --> 00:16:59,100 because we had a housing mortgage crash, a credit crunch 344 00:16:59,100 --> 00:17:03,400 a Little financial disaster with banks going under, we had things 345 00:17:03,400 --> 00:17:05,900 happening that I really don't think are going to happen again. 346 00:17:06,300 --> 00:17:08,700 And even though we're facing inflation, right now, we're 347 00:17:08,700 --> 00:17:12,800 facing Logistics problems. These things could unravel, 348 00:17:12,800 --> 00:17:15,900 there is a chance that inflation will come down and if things 349 00:17:15,900 --> 00:17:18,700 don't go quite as bad as investors are expecting, their 350 00:17:18,700 --> 00:17:21,500 could be upside too many stocks. Now, here's where they get into 351 00:17:21,500 --> 00:17:24,200 the details of their contrarian view here. 352 00:17:24,500 --> 00:17:27,500 That stocks may actually have more upside than downside. 353 00:17:27,599 --> 00:17:30,600 They say that Equity sentiment investor Meaning and Market 354 00:17:30,600 --> 00:17:33,500 internals have been bearish. Resulting in the worst annual 355 00:17:33,500 --> 00:17:36,700 start for equities and around, 100 years with the exception of 356 00:17:36,700 --> 00:17:39,100 the Great Depression. So this has been an 357 00:17:39,100 --> 00:17:42,600 extraordinarily bad first half of the Year portfolios are 358 00:17:42,600 --> 00:17:46,100 defensively positioned for recessionary outcome and 359 00:17:46,100 --> 00:17:50,500 corporate fundamentals should exhibit relative resilience for 360 00:17:50,500 --> 00:17:53,000 the rest of the year despite some softness and corporate 361 00:17:53,000 --> 00:17:55,000 guidance. So they're saying that even if 362 00:17:55,000 --> 00:17:57,500 there's some softness and corporate guidance and we get 363 00:17:57,500 --> 00:18:01,000 all those revisions downward and Lowered guidance that were 364 00:18:01,100 --> 00:18:05,600 probably going to get even. So portfolios are defensively 365 00:18:05,600 --> 00:18:09,200 positioned people raced into dividend stocks and Consumer 366 00:18:09,200 --> 00:18:11,000 Staples. They raced into all the 367 00:18:11,000 --> 00:18:14,200 defensive companies and left. All the risky ones and 368 00:18:14,200 --> 00:18:17,200 recessionary, outcomes and corporate fundamentals. 369 00:18:17,200 --> 00:18:19,400 Should exhibit, relative resilience. 370 00:18:19,700 --> 00:18:23,700 So, even companies right now, their balance sheets are very 371 00:18:23,700 --> 00:18:27,500 strong, they're set up. Well, for a big recession, for 372 00:18:27,500 --> 00:18:31,400 example, the financial Market, JP Morgan Bank of America 373 00:18:31,400 --> 00:18:35,100 Citigroup Ally Financial, all these different financials are 374 00:18:35,100 --> 00:18:37,800 selling off like crazy. And that's again because 375 00:18:37,800 --> 00:18:40,500 investors get really scared when we think we're going into 376 00:18:40,500 --> 00:18:43,000 recession, but they don't have the same balance sheet. 377 00:18:43,000 --> 00:18:45,700 They had back in 2008 companies right now are much better 378 00:18:45,700 --> 00:18:47,900 capitalized. Much better prepared to go 379 00:18:47,900 --> 00:18:50,700 through rough times and they did back then, now they also mention 380 00:18:50,700 --> 00:18:53,400 the earnings projection hair. JP Morgan does hold the view 381 00:18:53,700 --> 00:18:57,500 that the S&P 500 will grow, its earnings this year in aggregate, 382 00:18:57,500 --> 00:18:59,600 so they don't have the same view as Michael. 383 00:18:59,700 --> 00:19:02,400 Barry that earnings are going to compress across the board. 384 00:19:02,400 --> 00:19:05,000 They think it's going to grow, but less than the consensus 385 00:19:05,500 --> 00:19:10,700 their estimates. For for 2022, is for the S&P 500 386 00:19:10,700 --> 00:19:14,700 to have earnings per share of 225 compared to the consensus of 387 00:19:14,700 --> 00:19:17,000 to 29. So JP Morgan thinks that the S&P 388 00:19:17,000 --> 00:19:20,500 500 earnings will grow around seven percent for the year. 389 00:19:20,900 --> 00:19:23,500 And this is less than consensus but it's still positive. 390 00:19:23,500 --> 00:19:25,400 So you have the two point of views here. 391 00:19:25,600 --> 00:19:28,400 One from JPMorgan, where they have more of a positive view on 392 00:19:28,400 --> 00:19:30,900 things they think there's actually Upside to the second 393 00:19:30,900 --> 00:19:35,500 half of the Year simply because investors are expecting total 394 00:19:35,500 --> 00:19:37,700 devastation. And they think there's a chance 395 00:19:37,700 --> 00:19:41,600 that that's not going to happen. If Devastation and disaster, 396 00:19:41,600 --> 00:19:43,900 economic disaster doesn't happen. 397 00:19:44,200 --> 00:19:46,600 Then JP Morgan will probably right people probably make money 398 00:19:46,600 --> 00:19:48,800 the end of this year, if Michael berrer. 399 00:19:48,800 --> 00:19:51,600 He's right, and the earnings forecasts, just get crushed for 400 00:19:51,600 --> 00:19:55,200 these companies and the economy compresses and we have all sorts 401 00:19:55,200 --> 00:19:57,600 of issues. Then obviously this sell-off has 402 00:19:57,600 --> 00:19:59,200 further to go. So let me know what side you 403 00:19:59,200 --> 00:20:01,000 fall on. Do you think the second half of 404 00:20:01,000 --> 00:20:04,500 2022 will be a positive experience for the stock market? 405 00:20:04,500 --> 00:20:07,200 Will it go up from here or do you think Michael berrer? 406 00:20:07,200 --> 00:20:10,100 He's right, we're about halfway through this sell-off and we'll 407 00:20:10,100 --> 00:20:13,000 go down maybe another 20, 25 percent. 408 00:20:13,300 --> 00:20:15,600 Let me know what you think. I'll look in the comments below 409 00:20:15,800 --> 00:20:17,700 and I'll talk to you in the next episode.