‘I’m a buyer here, and you can’t pick the bottom. You can’t. It’s just impossible. You can look at the charts, but that doesn’t help you that much. You have to average your way in on the big sell-off days, on Fridays at 900 points down, and so on. ‘re back to the old times of volatility. No big deal. We really haven’t had a real correction yet. You want a real correction?’ – Kevin O’Leary.
In a 15 minute interview with trader TV live, Kevin O’Leary, chairman of the O’Leary Financial Group, discussed where we are in the market, where he sees the crypto market heading and, of course, the hottest topic as of late, Elon Musk’s purchase of Twitter.
The general consensus is that the market is showing extreme weakness with inflation at all-time highs and supply chain issues creating shortages across many sectors. Surging energy prices and rising interest rates, many are predicting a recession is on the way, including Deutsche Bank, who was recently calling for a deep recession by the end of 2023. Their deep recession has resulted in the fed funds rate rising into the five to six percent range and unemployment rising by several basis points. Despite this, Mr. Wonderful sees a different economic outlook and suggests that if we were in a true recession, the indicators would be totally different, mainly employment statistics.
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‘You know the real issue and why the market’s fibulating and you know trading in a range is that nobody knows what percentage of inflation is coming. So, let’s call it 6.5%, and how much is baked in, so the assumption now is that there’s a lot more data on the supply chain, and I’ll give you some interesting data points. In other words, if you want to book a container from the LA port to Chicago, those have dropped 35% in the last six weeks. So there’s a supply of trucks and drivers now. That’s a good thing.
On the other hand, getting the actual product into the LA port has not improved at all. So there’s lots of evidence here that some portion of it is transitory. That’s why you really haven’t seen rates back up too much yet because the Fed is probably holding off Although they’re job owning another 50 basis points, I wouldn’t be surprised if they did only 25 basis points for the next hike and then just waited to see what would happen. It’s hard to call a recession right now when you have full employment. We’ve got full employment. Try and hire somebody right now in any sector.
So generally speaking, if you’re going into a recession, you get a dramatic slowdown. The first place you see it is in wages and employment percentages. Right now we’re below four percent unemployment, so I don’t see a major correction, I just see a lot of volatility ahead. Yeah, it’s amazing. A lot of these down 50%-80% stocks have not stopped growing. Their growth rates remain the same. It’s just what people are willing to pay for them has changed dramatically. I want to point something out prior to the pandemic in the tech sector.
There was always a lot of volatility. I asked everybody to go back 15 to 17 years and look at how much Amazon corrected every year down 30 40, 50, 60, and then came back up. We got used to that and then, all of a sudden, the PPP programs and the two and a half trillion dollars in the printing press happened, flushing the system with liquidity during the pandemic that stabilized all the fangs. It was the go-to name with all the free money. I don’t care whether they had Microsoft, Google, Amazon, or Netflix, it was money coming out of the sky for free and that’s where people put it in these big growth tech names.
Now we’re back to pre-pandemic volatility, doesn’t mean they’re bad stocks. A lot of stuff is going on sale and I think if you look at this 12 months from now, you’re going to say to yourself, “Why didn’t I buy some Facebook at under 200 bucks? Why didn’t I buy some Netflix after corrected 50 plus?” What about the current sale and a slew of other tech names?
The truth is that crypto, uh, isn’t yet an institutional product. There are a lot of good signs. Let’s start with the signs of the different bills going through the bipartisan committees in the U.S. On the hill, you’ve got the Hagerty bill on stable coins, you’ve got the Toomey bill on stable coins. You have the Lummis’ bill, which contemplates all crypto. Then you had the announcement last week that BlackRock put money into circle, which is USDC, and then Fidelity this morning or late last night announcing that they would allow in their 401k retirement programs up to 20% in Bitcoin and other certain coins, and so clearly the movement is towards putting policy in place on crypto that’s positive.
The negative is Bitcoin 2022, a couple of weeks ago in Miami. They had to open a special day just for institutions on Wednesday. 1500 institutions showed up. None of them own any cryptocurrencies. They’re trying to figure it out. They know it’s coming. They know policies are coming tomorrow at the FTX conference in Nassau. It is sold out globally, governments from every state and country are showing up there. I’ve never seen so much interest in an asset class that nobody owns.
The truth is the whole sector is under a trillion dollars, which is a nothing burger in financial services, so there’s a lot of upside to come and I think cryptocurrencies will be the next big thing in financial services. You must make a decision: do you go long before policy and regulation are implemented, or do you wait until institutions can buy and pay significantly higher prices with greater certainty? I think that’s the debate everybody has to have. I’ve made my decision. I have gone into 20% holdings across a wide range of crypto and crypto infrastructure like wonderful immutable holdings, FTX, and so on. Those are the equities I own plus 32 other coin positions.” – Kevin O’Leary.
What do you think of Kevin’s take here?
[This article is a transcription of a video made by Only The SAVVY]
Original video: https://youtu.be/Y0No8qC_KgE ]