Hey guys, it's sasha, a big problem with donkeys is that they are stubborn. You point out that a donkey made a mistake and instead of taking the l, they go and double down on the dumb thing that they said in the first place. So yesterday the chicken man responded to a video i made, and in that video he decided to just repeat the same exact points to previous thesis, ken, the inventor of absolutely risk-free options trading. That makes you guarantee the billionaire without having to do any work said this look at this chart i'll leave it here, and the big version of it is on my twitter i'll link it below it's very kind of him to provide the detail.

Chart that accurately points out the exact opposite of what he thinks he was trying to prove apparently taking any two charts that go up and lining up the bottom and the top proves correlation and causation. But let's assume for just a second that these two variables are specifically indirectly correlated and have a causal relationship. The points chicken genius made in this video is that when the us balance sheet goes down, it automatically causes the stock market to go down. At the same time, that was the entire thesis for his video, where he instructed everyone to categorically not buy into the stock market under any circumstances on this very chart the two times that the net inflows dropped, the s p 500 went up here in 2018 and In 2020 and then chicken genius decided to dig himself an even bigger hole when you have a 2 trillion sell order.

Do you think the stock will go down 2 trillion? To imagine someone to think? Yes, it's as dumb as a donkey, so unfortunately it appears that he doesn't understand how quantitative tightening works or what the effects are. There is no cell order placed on the u.s stock market directly or indirectly. In fact, the u.s federal reserve's quantitative easing program over the last two years did not buy stocks. The purchases were limited to bonds, bond-based securities and mortgage-backed securities.

Now that the balance sheet is going to start reducing the policy announced at the fed meeting last week does not even include the sales of any assets full stop. This is really critical to understand and most people are aware, except for people who aren't. The strategy is only waiting for the existing assets held on the balance sheet to mature and then write them off, so the treasuries that the fed owns, reach their maturity and the fed then pays those back to themselves and effectively deletes the money from the system. This is how the fed's balance sheet is going to reduce according to their own plan, as the fed will not replace these with new treasuries.

There will be a reduction in the number of the total treasuries available in total, although this reduction will be a paper reduction since the fed bought them from the market already they were not in circulation or affecting the natural demand supply equation. Up to this point after they were repurchased, they were off the market. There will be some long-term implications of the fact that no new bonds are being issued to replace those expiring ones because they will reduce supply in total and, as we have high inflation and as the rates are going up that will stimulate bond yields. I do get that point.

This will take some time to filter through, though this is really critical to understand, and if the inflation situation and the market moves in the interim during that period, the effect may be very hard to see relative to the overall picture for any donkeys in the back. The fed is not selling any stocks, there are no sell orders being placed, i know i know he probably didn't mean it literally because as the money is taken off the table, there is less liquidity in the market. But here is what the fed balance sheet is made up of. This data is from june 16th very recent and out of the 8.9 trillion dollars sitting on the balance sheet, 5.8 trillion is in u.s treasuries and another 2.7 trillion is in mortgage-backed securities and the rest is relatively nominal.

In the may press release, the fed announced that they will be reducing their treasury's balance by 30 billion per month for the first three months of the program, that's june july and august, and then after that they will start to increase that reduction to 60 billion per Month and the current expectation is that it will remain at that 60 billion per month to the end of 2023 for context. The fed was purchasing 80 billion dollars per month from march 2020 through to march 2022, so this level of reduction is already going to be considerably slower, but because the fed is not doing active quantitative tightening the effect is not the exact opposite of quantitative easing during Quantitative easing money was thrown straight into the bank accounts of the banks, whose securities, bonds etc were being purchased, and that found its way into the economy from there relatively quickly and relatively directly in this quantitative, tightening no money is moving anywhere. The fed is burning. The government bonds, when they expire there, will be an element of reducing the mortgage-backed securities pile, but that is going to be a relatively small part of the program.

Apparently, i know that there will be a lot of chicken genius fans watching because you all showed up to the last video, and i want to address a very popular argument that i saw in the comments. What, if chicken genius, is right? What if the market does go down and the messiah's prophecy comes true? Will i bow down before the oracle and concede defeat, because he was right and i was wrong? Well, you see the thing is i don't actually pretend that i know which way the market is going to go. I'm not here to tell you that it's definitely going to go one way or definitely going to go another, because i actually understand that. I don't know, and neither does anybody else.

I am not saying that i think the market is going to go into a sharp v-shaped recovery. No, that is actually what the chicken man was saying back in february and in march i've predicted in a previous video. I drew this v-shape and so far so good, and here is why i'm confident this will happen. The guy, who is always perfectly right, was telling you.

This is exactly what's going to happen. So here is a chart of the s p, 500, and in january he was saying that you should definitely be buying. I showed these clips in the last video and in february he was still saying that you should definitely buy, and in march he was also saying that you should buy even after the war has started, but now that the market is down gone by down by over 20 now he is saying you should not buy and instead short the market. Now you should be holding cash instead.

So i guess the all-seeing oracle didn't seek quite everything, and maybe he is a bit of a fan of a buy high and sell low investing strategy, or at least he makes content based on which way the wind is blowing that day. So when the market goes up, make content about buying everything and when the market is down make content about selling everything makes perfect sense. He has absolutely no idea where the market bottom was going to be. Neither do i by the way, because nobody does, even if they pretend that they do and his 100 risk-free options trading strategy can lose a giant load of money.

If the market decides to move in the wrong direction, it is pure gambling to think that you know exactly where the price of an asset is going to be in the short term, and here is the thing i do understand. The macroeconomic argument that i think chicken genius is trying to make if the fed is going to reduce his balance sheet in overtime that will reduce their buying of bonds in the market and it will create a mild version of a selling pressure. Absolutely not the same thing as actual selling pressure but kind of similar. I guess, and that will to some degree push up the yields because they are inversely proportional, and that will mean that there will be some indirect pressure in the stock market, because higher yields mean money will start moving over.

Alongside with all the other pressures that are currently on the market, et cetera, et cetera, i do get it, but although there is some truth to this argument, the stock market is affected by a million different things of which this is just one thing, and this is Not the biggest thing, the stock market had massive booms and big crashes long before 2008, when the feds started printing money, and even during this period, the stock market was doing its own thing almost irrespective of what the fed was doing and just because there is a Short period at the end of the chat where the two sort of maybe line up proves absolutely nothing, and here is the funny thing i kind of agree with chicken genius that the outlook for the stock market is not great. I said as much in some of my recent videos. There are plenty of reasons to be fearful when inflation is running riot, probably going to go and hit over 10 and the fed is still not really taking any real control. It's funny because i don't even have an opposing point of view on this one.

I do have an opposing point of view on two other things. One, the stock market is way more complex than chicken genius wants to believe. It is just because chicken genius invested in one company tesla at one point that made him a lot of money once does not make him an oracle and a magic fortune, teller. In fact, there were many other strong recommendations from him during his youtube career, including the shameless shelling of nano cryptocurrency, which inevitably collapsed to nothing shortly after he told everyone, it was absolutely going to the moon so yeah.

I guess if a gambler wins big on the roulette table, the best thing that you can do is go and ask him what the next number to come out is going to be and bet everything you've got on it. What could possibly go wrong? The stock market is affected by a huge number of factors every day from long-term macroeconomic variables, to short-term news and to simplify it down to say this one factor trumps, everything else. Everything else is irrelevant. You know categorically which way the market is going.

That is only a sign that you simply don't understand financial markets. Well enough, you need to do a little bit more homework if you think it is possible to make huge bets in the stock market using this sort of analysis and make gazillions of percent of returns on forever and ever and ever as long as you keep doing It you're going to unfortunately, find the hard way that life ain't quite that simple and if you're, one of the fanboys who's going to smash the dislike button and leave. Some comment telling me that i'm a donkey after you've done your worst in the comment. Section go and take a minute to just have a think about what you're doing what you're listening to who you're listening to how you're making your financial decisions.

Ken is! Not your friend and ken is not your financial advisor ken is guy, who hates people who sell investing courses on youtube? How dare they make money despite selling a much more disgusting options trading course himself, with pathetic claims of huge returns, with no requirement to do any work? He was selling these courses two years ago. Not much time has passed but sure. Now he is a changed man. The guy who shafted people and stole their money by selling get rich quick courses with claims a few months ago has magically become your guardian angel and he is there to look after your best interests.

He doesn't have it in his heart to her to fly. He is literally the nicest guy on youtube. He is so incredibly transparent that he tells you to buy at the top and not to buy at the bottom, despite apparently doing the exact opposite himself and shorting the market, while he was telling you to buy on youtube or he wasn't shorting the market at the Time and is now lying about that one of those two things has to be true: the most transparent guy on youtube, only talks about his one, epic trading win and somehow forgets to mention the huge losses from all the other stuff for anyone out there. Who is not a sophisticated investor? Listening to this sort of advice, options are not an easy and risk-free way to amplify your gains.

Options are not a guaranteed way to manage your downside with zero risk whatsoever, but hey there will be plenty of fans defending all of this in the comments, because that's how youtube and social media works, a scammer with a big fan base will still be put up On a pedestal by the dedicated followers, my advice to you is be very careful who you listen to when it comes to finances. There are donkeys out there in chicken's clothing.