The epic bull run and bubble in the US stock market is likely to continue partying on for a few more years while the Fed stays dovish in keeping interest rates low until either late 2022 or by 2023 when inflation picks up and employment improves. I wonder what would Warren Buffett do with impending doom looming on the horizon in this investing climate?
Chapters of my Macroeconomic Theories and Action Plan with Video Time Stamps in the Video:
0:00 Greatest Meme of All Bubbles on Earth: Jenga Game of Bubble Implosion by 2022/2023
1:37 Money Printing is Inflating Asset Prices – What do you think?
2:00 Bitcoin: Mother of All Bubbles vs Fiat Currency
3:47 Stock Market Bubble Thesis: Jeremy Grantham’s Late Stage Bull Market Irrational Exuberance
6:50 Warren Buffett Indicator: Wilshire 5000 Total Market Cap / Gross Domestic Product (GDP)
7:13 Robert Shiller PE Ratio (CAPE): Above 30 much like the Great Depression and DotCom Crash
7:28 The Bubble Could Burst at any Moment: Be Ready Like Buffett
7:46 Is Wall Street worried about a market bubble? GameStop, IPOs/SPAC boom
8:24 Ray Dalio warns of problem cycle forecasting weak returns in the future
8:57 Inflation and Interest Rates Pins will Burst the Bubble by 2023
9:57 Quantitative Easing (QE or Money Printing) Liquidity Story by Central Banks
11:58 La Casa De Papel / Money Heist and Money Printing vs Real Economy
13:14 US Economic Indicators: Mixed Bag of GDP, National Debt, Unemployment, Inflation
14:59 Fed Model: Low Interest Rates Justify High Stock Prices?
16:42 S&P 500 PE Ratio Forward Estimate Projected to Decline
17:06 Stock Market Crashes & Recessions at Generational Midpoints Coincidence?
18:49 New Roaring 20s Party On like 1999 until the S&P 500 reaches 5000?
19:52 Herd Immunity with Covid-19 Vaccinations: Living Normal Life Again?
20:24 Chamath Palihapitiya in 2019 Predicts a Debt Crisis by 2022-2024 Worse than GFC
21:14 Opportunity of a Lifetime to Create Generational Wealth?
21:51 My Investing Practice: Stock Wishlist and My To Do List
25:32 Warren Buffett Berkshire Hathaway 2020 Lessons: “Never Bet Against America” But Be Careful How You Invest
With the economy still trying to recover from the pandemic’s effects, it feels like world central banks’ response has been to print all the money in the world. The massive amount of liquidity injections throughout the world has led to the extreme divergence we’ve seen in how “the real economy” is doing versus the stock market and bubbles in other categories that seem to be enjoying themselves at an Alice in Wonderland tea party.
Charlie Munger recently said, “Nobody knows when bubbles blow up.” I know I shouldn’t prognosticate as I don’t know what will happen, but as a Buffett style investor I also want to prepare myself to be ready to strike when the markets are ready to have their bubbles burst.
The following is my action plan / waiting for the bubble to burst to do/checklist that is covered in the video (with figurative metaphors involving buckets, thimbles, and beds):
· Since 2018, I’ve had a bucket of cash just sitting around à la Buffett bucket-not-thimble-mantra
· Stave off some inflation by taking advantage of new credit card and bank account bonuses like spending $500 to get $200 or parking $10K to get $350 interest over 3 months
· Maintain patience, fortitude, and conviction to bravely stand (or cower) in the face of unrelenting low interest rates and inflation eating my cash alive like Pacman having a picnic
· Not completely hiding money under a bed, have small % of investments to not be totally FOMO & in case I’m wrong
· Keep studying generally and noncomittally; keep learning how to “swim” for when the tide eventually goes out
· My Wishlist is ready of stocks I’d buy at certain prices based on intrinsic business valuations I’ve calculated
· Maybe take a leap of faith by looking for undervalued stocks to buy (study and commit a little) – but a strong downward riptide will take this out in no time, is one willing to hold through the depths of despair?
· Don’t let perfection of timing be the enemy of tranching in somewhat, even if buy price isn’t precisely a % off
· Try to figure out practical ways to value invest in emerging markets? Meh. Beyond the edge of my competence.
· Brace oneself like Odysseus strapped to the ship mast, ignoring the voices that sing to buy at the highs, in case the bubble bursts by 2023 but may not bottom out til 2025? Great Depression style?
· Channeling one’s inner Warren Buffett: “You can bet on America, but you have to be careful about how you bet.”
· Meanwhile: Keep living life, spending on meaningful experiences while saving and embracing a minimalist lifestyle
Please let me know what you think in the video comments, what do you think about these trends and observations? Do you agree that we’re in a massive stock market and everything bubble or have a different take? What is your investment strategy?
All of us are on the journey towards FIRE (Financial Independence, Retire Early) and it is one filled with much gratitude and enlightenment, and I look forward to making more investor friends.
Connect with me on Instagram @ michellemarki! 🙂