This mega video is brought to you by my programs on building your wealth, with a coupon code expiring on christmas day, check it out, link down below and you get lifetime access to all the new content, that's added to them greetings and happy saturday. I got some hot coffee here and this is the perfect time to take a sip, but today we got ta talk about kathy wood, suggesting that there could be a recession ahead of us and we got ta be worried about it. Oh man, oh, that was a perfect swallow. Thank you so folks, let's take a look at what kathy wood just said because boy, oh boy, there's a lot in this now.

I want to start by saying this. This comes across as defensive, but also strong by kathy wood, uh and uh. This does not water down her message of the dangers and the prospects that our stock market faces going forward. I highly respect this piece usually on fridays: kathy wood, not every friday, but oftentimes does a video.

This time she decided to do a cold hard piece after she announced this piece on twitter. Obviously referencing her blog on her website. Uh bloomberg picked it up. Other websites picked it up, but none of them actually gave a good summary of it imo because we're actually just gon na go through the meat of the matter here and do my own version, because that's what we do! Okay here we go.

We're gon na get right into it and i'm gon na add my comments as we go so, first of all kathy wood, we need to know her funds have not done super well, with the exception of her uh autonomous and robo taxi fund, uh or or robotics Fund, i should say uh that is arc q rq. You can always go to finance.google.com to kind of compare relative to performance other than arc q. All of her funds are down for the year, which is not great and again. You can jump on over to see this yourself by uh just typing in finance.google.com, we give it a year-to-date performance.

Actually, our queue just went negative uh, my bad, but anyway uh. It's nothing to laugh at it's just is what it is, but anyway uh look at arc. W. Look at the genomics.

Look at the innovation. Look at the fintech look at the space uh i mean every every one of the popular funds is is down here, which is not great, and you compare this performance to the nasdaq you're uh up 24 on the nasdaq you're down 22 year-to-date on the rk 31. On genomics and and so on and so forth, so painful right, painful painful performance a year today got it. So what does kathy say about this? Well, this is what kathy has to say.

Kathy says that hey, perhaps some of the concern that has been rotating that has been influenced by negative headlines in the media is the volatility of our strategy. This is a core theme of what she talks about that her disruptive innovative strategies uh or are long-term investments. These are a five-year planned investment that she renews essentially as she she. This is hence the basis being an active etf.

She can change her strategies as she goes of course, but her goal is investing for five years and so she's worried that people are comparing themselves to the benchmark of the s p 500 and when they compare themselves via this relative performance, they take temporary losses and Make them a permanent, and so she believes that going forward forget about what the s p 500 does. We are going to, or at least we're expecting a 40 compounded annual rate of growth over the next five years. Just to understand what that looks like if you took a hundred dollars, multiplied it by a 40 growth rate, two times in a row, you're almost double you're at 196 dollars. If you do that for a full five years, 100 turns into 537, and so kathy is sending this warning that hey.

If you're, trying to compare yourself to the benchmark, you could be trying to invest in something that look in 2020. Did a 16 return. Kathy's rk did over 150 right. You could miss out on years like this by being worried about the 16 s p or the 24 or 25 or whatever the s p is doing this year and then be sad about the minus 22 this year.

Who cares strategies are volatile? You're gon na see that 150, then you're gon na see the 20 negative 22. Then hopefully, you see a 40 and a 60. Maybe in a time when the s p does six percent next year, maybe rkg as an example will return something like 50 and then people go. Oh, my gosh kathy did almost uh eight times or just eight times a little over eight times.

What uh? The s p did with her rg fund right this. This is the nature of volatility that she's trying to explain. I'm obviously simplifying this here, but anyway she mentions that after 11 months, in other words, basically she's saying since february, all of her strategies have kind of just been straight down, and it's been very painful and she's saying after this 11-month sell-off. We are now in a deep value territory.

She didn't take it to the level of going deep, effing value, because i mean that that could have made a big difference here. We could have gone to the to the moon on that just on momentum on monday, but she did go use the phrase deep of value and she purposefully does this, because what she's trying to do is she's trying to compare value stocks to deep value and for Her opinion, or in in her opinion - and this is what she's talked about just putting together a lot of information from kathy wood uh over time. Her opinion is that a lot of apparent value stocks like uh, like i don't know more of your classic kind of like the coca-colas of the world or whatever these companies are going to get potentially replaced by disruptive innovation and that these will end up being value. Traps, maybe coca-cola is not the best example.

Maybe a ford motor company is a better example where it's like hey is ford actually going to be able to innovate and stay the course with companies like whether it's xping motors, which kathy would recently started investing in in china or tesla, or some of the pure Ev plays you know. This is her argument right and her argument is that the same is true in a lot of the companies that have been terribly sold off this year, uh specifically in the genomic space, where they've become so cheap that not only do they look like value, but their Disruptive value, rather than potentially being value traps, that'll get all replaced by innovation. These deep value plays are things that can 5x over the next five years. This is a big selling feature she's talking about she's, like don't compare me to the s p 500.

When we're investing in deep f in value, it's so much, i mean she's got to be professional right, so let's keep it clear, but anyway uh. You know this is where she spends a little bit of time. Talking about how she does not believe that her disruptive strategies, her investments into companies like docusign, teledoc or zoom, she does not believe that these companies, uh or uh or companies that are necessarily overvalued, but she also disputes the argument that these are just stay-at-home plays. She argues that look you've got a company like zoom, that's uh, down 68 percent from peak to trough for docusign 56 teledoc, 70 top to bottom high to low right uh, and this at the same time as you've got companies like zoom and dock.

You sign crushing it in terms of revenues: ebata increased 58 uh over at uh zoom, since the fourth quarter ended july 2020.. Uh! That's that's incredible right! So so these these are things where she's saying hey. Look. We've got a lot of potential growth in these.

Don't just call them stay-at-home place now. One thing that i dispute with kathy here is that i think what they they may have missed here. A little bit is trade psychology. Now i understand she is the five-year investor trade.

Psychology is something that maybe is is, in her opinion, going to be less important over five years. I respect that, but here's what i mean when i say trade psychology. When the pandemic struck people fled uh. There was a flight, a flight of people to docusign, t-dock and zoom, because these were not just a stay-at-home place as kathy's saying, because she's saying hey, they're, not just stay-at-home place.

I agree uh here. Let's write this right, stay at home, they're not just stay-at-home place. They're innovative place, but the thing is: people were not going to uh teledoc and zoom and docusign for innovation. Kathy's like hey, i'm all in on this, for the innovation.

Well, sorry, people were not trading into these stocks for innovation. They were trading into them as a stay-at-home safety play, because if they were exposed to carnival cruise lines or the airlines or whatever they didn't have safety, so those investors were able to flee to the stay-at-home cohort to to invest in. But now stay at home has been on this downtrend and the carnival cruise lines and american airlines have been on a downtrend because of omicron, so these folks are having to go to different safety place and right now it looks like that. Those safety plays are things like apple uh, microsoft, msft.

There we go whatever it doesn't matter. You know what i mean: apple, microsoft, uh even to some degree, to some degree: okay, not as much but tesla adobe. Even though adobe had a little bit of compression recently. Facebook right these - these are big companies that people seem to be fleeing to so there's this big basket of money.

In my opinion, that flows around pandemic strikes, it flows into docusign, teledoc, zoom recovery comes that big basket of money goes into what i talked about. Those airlines and the carnival cruise lines now those are a problem, but you don't want to go back to teledoc, zoom and docusign, because we have fears of rates going up in valuation compression. So instead we u-turn that line over here and we're going to the uh. The fang right, the netflix and so on and so forth, and so i think that's the the trade psychology that was missed here and i think kathy wood and the team at arc had a missed opportunity to talk about this.

That a lot of these declines are not the market voting saying that these companies are bad. It's people leaving the stocks who never meant to be in these stocks. In the first place they just used them as a temporary uh cash park, so to speak. I think that was a missed opportunity, an explanation and that's obviously, why i'm talking about it now this either way you slice it kathy woods says, brings these to a deep value level of of pricing.

So now, let's talk a little bit about inflation. This is the next part, and this is the perfect part for you to take another sip of beautiful coffee, because folks, we got a lot to talk about with inflation, and the first thing we're going to talk about with inflation is actually this word transitory, and i Want to tell you something that just happened hold on listen to this. You don't necessarily have to listen to the coffee swallow, but you have to listen to the transitory part. Okay, jerome powell came out saying that inflation we're going to retire.

The word transitory right immediately. When he did, i made a video saying, i think, he's being politically swayed by joe biden. I do not think that jerome powell thinks that inflation is no longer transitory. In other words, i think that general powell is still strategizing, as if inflation is strategy is, is transitory, that he still thinks inflation is going to go down when these inflation or not the inflation.

When the supply chain issue subside. We know this is a fact, because if you look at the summary of economic projections from the federal reserve, not that document different document right here, if you look at the summary of economic projections - not this scribble right here, but rather this right here. What do you end up? Getting you end up getting an estimate from the federal reserve that shows that inflation is going to fall uh by half in 2022., so the fed still seems to think that inflation is transitory, which is important, because this means the fed thinks that inflation is going down. The mainstream media, especially the right wing media right before the 2022 election, not taking political sides just calling it like it, is they're going to do everything they can to back on biden and the best thing you can do to back on biden.

Right now is: go you idiot your policies, cause inflation, which don't get me wrong to some degree they may have. They may have contributed. Look i i'm. This is not political, video, okay, just saying you're gon na get the mainstream media going.

Oh yeah inflation's going to the moon uh and ironically, you even got the left-leaning media making this argument because i honestly don't think they. They understand that the flip side argument, but that's okay, we'll put that aside, so you've got the fed thinking. Inflation's going down. You've got the mainstream media thinking that inflation's going up, but then guess where kathy wood falls.

She actually somewhat aligns with the fed. Then inflation's going to go down we're going to look at this here. Look at this all right, broad-based market indices have rotated away from growth stocks towards value and defensive stock, so she calls fang defensive uh, fine, that's kind of acknowledging that sort of flight to safety. I think she missed that argument in in the uh the state home play, but no problem.

Then she says that inflation tends to benefit value stocks, but in this case she's comparing value stocks to energy, financial services, industrials and materials. In fairness, a lot of materials have gone up a lot, we'll talk about those in just a moment, with the exception, ironically, of precious metals. Precious metals have not done very well uh in 2021, but anyway she mentions that higher interest rates tend to hurt aggressive growth stocks that sacrifice short-term profitability for the benefit of substantial growth in the future. In other words, in english, oh and then this is the bs part from drone powell, which we just talked about on the side.

But i'll come right back to that. In other words, kathy wood is saying that look when we have inflation and fears of inflation companies or or investment managers, institutions they're going to look around at property or companies they're going to look around at other investment opportunities in companies and say: hey wait a minute. If we're going to have higher inflation, then, and we're going to do our discounted cash flow models, which discounted cash flow, does two things what it takes into account, a discount rate and it takes into account future cash flow. The problem is, if you reduce the value of future cash flow on companies that already have very little future cash flow, then the present value, the pv of the companies, is going to look a lot less, and so she makes this argument here that companies investment companies Are uh unfairly uh, ignoring the fact that there are companies that are aggressively positioned for massive growth that yes sacrifice short-term profitability, but in doing so i'll let them take advantage of massive growth opportunities, because they're investing now into what they know will be bigger growth rather Than hear more dividends or here's, you know whatever here's some stock, buybacks or whatever they're investing what they know or expect is going to make big money in the future and this uh.

In addition to this, this inflation narrative, which he doesn't necessarily agree with, is giving reason to investors to tax lost harvest the innovation sector, leading the innovation sector to sell off more right. In addition, this is i've also kind of touched on this. She believes that algorithms are are doing 70 of the trading and because of the formulas that we just talked about, are automatically crushing these sorts of stocks. In fact she mentions during march and april.

The big strategies during march and april of 2020 were look for companies that have a lot of cash on their balance sheet and then calculate their cash burn. In other words, this was very, very common. I remember this stuff, i mean this. This is great and not that it was really long ago, but i remember doing even these types of calculations.

People would go in and say: okay, american airlines. They got 20 billion in the bank, they're burning 5 billion a month. Okay got it they're 4 billion or they're 4 months, rather away from bankruptcy. If they get an infusion of 10 billion dollar bailout, okay, cool that gives them six and a half uh six and a half months, all right.

We still think they're gon na go bankrupt, sell right, and this is basically the formulas these algos going. Okay. This is the new input you got it we'll sell according to the new rules, she's making this comparison that that's what's happening with this whole inflation argument. Now is this right here, where the algorithms are basically ignoring the fact that we're making big investments into big innovation and instead we're selling off companies that really shouldn't be selling off that much again, i'm going to reiterate that i personally believe missing a little bit.

The argument about how many people actually thought that docusign, teledoc and zoom were their safety stocks during the pandemic and have pulled their money out. They never were meant to be there in the first place. So the reality is the stock should have never gotten that expensive. In the first place, but if you look just to take kind of a little break from from kathy's piece right here, if you go back and you look at what's happening in the stock market right now, and you zoom out on the day chart here for something Like docusign, we've hit a freaking floor.

This is good. Look at this floor that we've hit. I mean we from from december 3rd to now. We've had some substantial red days in the market and docusign has not gone under that floor.

Let's look at uh zoom. Just for giggles to see if they've hit a floor, and then we can also just briefly look at tdoc. So so, look at zoom zoom hit a floor, hit a low of 184 on the third 182 ish on the 6th and just hit 174 here on the 15th, but notice how that's that's like a nominal decline. It feels like we're somewhere around a floor on docusign and on zoom similar with tdoc.

We fell under 100. I think we went to about 90.. We had a nice little rebound here, yeah, we went to 87. but look that floor compared that floor 87 to the low that we had on.

On 12 3, we had an intraday low of 89 intraday low of 88. uh low here of 87.27, we're at a floor on tdoc as well. Now, yeah we've come back off of it a little bit right now, an hour 97 or whatever. Okay, big deal, i mean, that's that's relatively nominal, but the point is, i feel like in simple speak: the weekends have left the party so to speak.

Okay. This is a good sign for these particular stocks. Folks, i just want to make a quick reminder that, on christmas day, i do have a coupon code, that's expiring, for the programs on building your wealth, whether it's real estate, investing or stock investing or whatever in stocks and psychology of money you get all my buy, Sell alerts you get to talk with me in all of the programs in my daily livestreams, where you get to experience where i'm building my strategies for my portfolio live. I'm talking my my theses on how things are changing, live and in more detail than we see publicly so check those out link down below use that coupon code before christmas day and then going back to our dock.

Her piece kathy reminds us that remember when the pandemic struck, the best places to go were actually the genomic sequencing, the synthetic biology, the messenger rna, tech stocks, the machine learning stocks, the molecular diagnostic testing stocks, among others, conventional wisdom, said uh, like hey, don't buy those Stocks, but those were the best things to buy, and so yeah we got a red year in 2021 that doesn't make those companies bad companies, though, is essentially what kathy's saying here. Okay, moving on kathy then says that it's really important to to remember that you have a lot of market commentators and high frequency traders right now who are warning against the mistakes made during the tech and telecom bubble, and this is true i mean, if you listen To you look like at this point eight weeks ago, uh when when i was selling, i was selling stocks eight weeks ago things were green. Things were really euphoric. I said i was setting up some short positions on certain uh opposite companies that i thought would sell down even more and in full transparency.

One of those was arc. I invested in s arc uh, which is kind of just a funny way of saying short arc, but it's not really shorting arc, because that would push the price of arc potentially down further. It was just taking the inverse position of arc. So if arc went down, one percent s arc went up, one percent now uh.

Unfortunately, i close my my short positions too early, but that's just you know, poor individual timing, the the move of selling a lot of the stocks i was doing was right, but why i was selling a lot of stocks was actually before all of this crap started. I was noticing that the market was starting to have a hate on for money losing companies, even if they were good companies. So i thought i'm gon na sell a chunk and then wait to buy back in a little price. That's that is a trade.

That's not necessarily investments trade and the trade mostly worked out. I lowered my cost basis in, i would say eight out of the ten trades that i made in some positions. It wasn't as perfect, but that's okay, that's the nature of trading. You try to be right.

Seven out of ten times right and that worked out, but here this kathy, just posted this letter and what's interesting, is over the last week. We've had people like jim cramer and the mainstream media, come out and say all right time to sell off the money, losing companies and i'm looking and i'm going wait a minute. Dude. The prices have kind of hit a bottom.

You just saw a tdoc, zoom and docusign now's, the time to maybe think about actually picking these up. So what did i do before? Kathy's letter came out? I actually bought 420 call options on kathy wood and rk fingers crossed yeah, also on hood by the way, but anyway uh hood discussions really for another video. So now kathy's saying hey, look, don't bet against d5, don't bet against autonomous electric vehicle transportation. Don't bet against the innovative disruptive innovations that we are investing in.

It is too simple to just follow the mainstream media on this. Don't do that instead now is the opportunity to capitalize on innovation, which will end up looking like quote the likes of which the world has never witnessed. Sometimes, i think there are little nods against joe biden in some pieces. I read: i could be overly looking into these things, though, anyway uh this new age is thanks to five major innovations and that's dna, sequencing, robotics, energy storage, artificial intelligence and blockchain uh.

She also talks about this, and this is a big piece for her. She talks and we've already covered this a lot, so we're not going to go crazy on this, but she talks about benchmark sensitivity about basically like don't root yourself into the muscle memory of comparing to the s p 500 that trying to beat the market in the Short term is: is i'm just going to simplify this stupid, like okay, cool yeah, you beat the market in the short term. Oh yay you're the market and you beat kathy in the short term. Oh talk to me in five years when her strategy's 5x.

That's basically the argument that she's making here, like you, actually think the s p 500 is gon na. Have a forty percent compounded annual uh rate of return, that's gon na 5x. In five years, you think the s p is going to be 20 000 in five years. Her argument is probably not because the s p is going to be weighed down by companies that folks listen.

This have already had their opportunities to have massive growth and big profit like the fangs look, she's been selling some of her amazon and apple, and some of these others, which she sees is almost more cash parks, uh and so listen to this, even the fangs could Be in harm's way as the convergence of blockchain technology and ai in the so-called metaverse attempts to destroy the roles of central data aggregators, now she's literally attacking fang got him all right. Well, we'll see, i guess we'll have to we'll have to look back. Okay. Folks now we got ta talk about the recession.

The r word shout out in the comments. If you remember, when kevin was doing meet kevin reports back in 2019, we had that like newsy music, but anyway back in 2019, i did a report. While i was in park city utah - and i did a report at the beginning - probably maybe somewhere on march april of 2019 - about how the uh yield curve was - was trending towards an inversion anytime, you get an inversion of the yield curve. You get.

This fear that we might be heading towards recession, and this is essentially when short-term dated bonds have a higher interest rate than long-term bonds. That doesn't make sense like. If somebody asked you hey, hey uh, will you lock away money? You know, invest ten thousand dollars into something: you'll get five percent on your money over ten years and somebody said hey, but if you lock it up for 20 years, it would be natural for you to think. Oh, if i lock it up for 20 years, maybe i'll get paid six percent or seven percent i'll get paid more money right.

Well, the when you have an inversion of the yield curve. Somebody goes to you and says: hey um, we'll pay you 10 interest. If you lock up your money for two years, just as an extreme example, it's like wait a minute. Why am i getting paid more for a shorter period of time? That's odd! That's when you get the inversion of the yield curve.

When that happens, the market is flashing. This red warning sign going we're heading towards a recession and that's what you don't want now, one of the reasons. This is really odd that we might be heading back to this potential inversion of the yield curve, which is what kathy wood starts talking about right here. One of the reasons we're seeing this is because in in the opinion of kathy wood, she does not believe the bond market thinks that inflation is here to stay.

She thinks that the bond market is sending us very clear signals that inflation is not going to be worse over the long term that inflation is going to go down, and in fact you can see this by looking at something a little bit simpler. It's the uh 10-year treasury yield okay, go over to the 10-year treasury yield, which is right here and remember how everybody got really nervous about inflation at the beginning of the year year, and we had this skyrocketing of the 10-year bond yield. But then the 10-year bond yield fell in the summer. As the inflation fears went away, then delta came around.

All the supply chains got whacked over the head and then we had these inflation fears come back, so the 10-year bond yield went up again now we're at like peak bond or peak inflation fears and look at where we sit we're sitting at 1.4, which is like Over here it's it's chopping out all of the big fears that we've had so why well in the mind of kathy wood, the bond market does not believe that the federal reserve is going to be capable of raising rates as much and then instead, the bond market Is telling us we are heading towards not only a very flat yield curve, but that we could potentially have an inversion of the yield curve. In fact, get this the financial times yesterday reported that the federal reserve, in their statement of or summary of economic projections, which is right here, believes that the federal funds rate right here is going to be 1.6 at the end of 2023. Well, the financial times came to us and the financial times said the bond market for fed funds futures is pricing in 1.27 end of 23 fed funds yields. That means if the yield is 1.27 but the fed is projecting 1.6.

Then the market's basically saying hey. We don't think you're going to get to that level fed. We don't think you're going to be able to raise rates that high, because inflation is going to inflict down mainstream media ain't telling you that, but the bond market is making it very clear. The people actually betting with their money on inflation, which is where you bet or where you want to bet on inflation.

You go bad in the bond market, they're saying inflation's going to go down, which is potentially reiterating that kathy could be right about her growth strategies, but anyway, listen to this. She mentions here that fi the bond market seems to be warning the fed not to titan. Since february, the yield curve, measured by the difference between the yields of the 10 year and the two year, has flattened pointing to a rising probability of recession, lower inflation or both during the next year. Folks, kathy's, basically saying look if fed chair, jerome powell stays on this harsh path.

The bond market's sending us all a signal that we could be running to not only a deflationary environment in 2022, but also a recession in 2022.. Now going back to deflation, we got to understand this. When we have inflation, we increase our discount rate, meaning we're discounting future cash flow more. It means that future cash flow is worth less to us, which means money.

Losing companies have their values, go down. Deflation, you lower your discount rate. You could potentially have a negative uh discount rate if you're looking at certain countries, especially in like europe, which would actually substantially increase the value of companies uh in the future. That right now are getting crushed under this fear of inflation, and this is why kathy believes that, if we head towards deflation, which she actually says her conviction in is growing, she acknowledges that she could be wrong.

But she believes that deflation is coming in two forms. Both cyclically and non-cyclically, which is a permanent destruction of pricing, then we are going to want to be investing in innovative companies that take advantage of things like industrial robots batteries and the innovations that she's talking about. She regularly talks about wright's law and that every cumulative doubling reduces costs by a certain percentage. She believes the cost of robots that every doubling in the number of robots.

We have reduces costs by 50 percent and the doubling we have in batteries reduces costs by 68 and ai training costs are plummeting and then basically, unless you're investing in innovative companies when it comes to deflation, you're going to get whacked, and so i like to say That, in a deflationary environment, what you want to do is, ideally you want to find two characteristics, two main ones. I agree that you want to be in innovative companies, but in addition to being in innovative companies, i think you ideally want to find companies that either are or have the potential to be high margin. The reason you want high margin is, when you have high margin and prices come down higher margin. Companies have pricing power which enables them to still retain substantial profits.

That is, of course, for profit driving companies versus maybe money losing companies, and this accelerates our ability to uh to see cost declines on the s-curve of production. That is, of course, the manufacturing ramp. She also believes that a good deflation can see not only these innovative companies explode, but she also believes that our gdp could double that our gdp could go from the 21 trillion where we sit now and double by 2040, and the big winners are going to be. The innovative companies honestly i couldn't agree more.

I could not agree more with you know there there. The thing is, i find myself very aligned with kathy's thinking, there's some things that uh that that i slightly defer on uh that uh. You know whether it's a trading psychology or or uh, you know, timing for certain things. But beyond that, i i really aligned with this this sentiment substantially, but anyway supply chain bottlenecks that could have lasted a much longer or have lasted much longer than most have expected.

Have turbocharged this inflation debate so she's talking about how uh consumer sentiment has dropped to levels below the the coronavirus pandemic in the middle of the depths of it, and that people are less confident now because of this whole inflation narrative that's going on and that some Of these things have led people to shop earlier, leading to more advan like supply chain disruptions earlier than usual. In my opinion, this is potentially going to lead to what i call shelf deflation, and this is when you have a lot of companies who are going to spend a lot of money advertising like crazy in 2022. Talking about all these discounts, they have now because they ordered too much crap for the holidays. Now their shelves are full now we're not selling as much so, what's probably going to do well, in my opinion, in 2022, well for 2022 trade strategies, i really think ads are going to do well, so advertising companies, advertising companies like your snap, your fa, facebook, your Trade desk adobe, roku, pins, twitter, reddit, uh and potentially also your buy now pay later platforms like a firm because people are going to want to continue to buy the way they had been, but they might be maxed out on their credit cards.

So what do people do when people are maxed out on their credit cards? As bank of america tells us, they use, buy, not pay letter things to know, but anyway uh now she believes that consumption growth is going to uh expand with the except - and this is where i add the note, but i also think that debt is going to Expand yeah now she also says that, if we're correct during the next three to six months, the market is likely to focus more on the risk of recession and a serious slowdown, along with a surprising drop in inflation. Now this is worth noting. If we do - and this is a countervailing argument here, if we do end up having risks of recession rise, then these are potentially going to have some risks associated with them, because, generally, when there's a risk of recession, then advertising goes down. The first thing every company did was cut their ad spending during the pandemic.

By now pay later it could be a potential issue because buy now pay later. Companies are the ones left holding the bag of debt. That's really unsecured right so so that is a if we do go towards the risk of recession, not ideal. If we don't go all the way towards risk recession, but we just go towards deflation.

These could do better my thoughts because people are going to well. You don't want to go. Google, but anyway, kathy wood does suggest that we're already seeing a plummeting in certain prices of commodities, and she lists a few here, suggesting that uh we're starting to see inflation like lumber prices falling 35 and some of these other, like iron prices, dropping 30 percent. 36 percent this uh and it is fair in fairness.

China has already substantially reduced their steel forecasts, which iron is a component of for 2022, probably because of the real estate industry, but remember folks, gas up 50 still year-to-date coffee's up 83 year-to-date lumber's up 24. Here today, fiberglass up 20 year-to-date precious metals are getting whacked and yeah. Some things like aluminum have come off their highs, but they're still relatively high. So i can't say that yet that we've seen commodities plummet just yet, although they do tend to plummet over time.

So this is where she kathy goes in. To mention that hey look, we are reiterating that we believe that innovation stocks are not in a bubble. We believe they are in a deep value territory. We believe that volatility has become a bad word, but basically they're creating opportunities for us to invest and she basically bottom lines.

Her argument by saying look: we believe that tried and true investment strategies like just buy the s p 500 are going to suck in the next five to 25 to 10 years and instead it's going to be dna, sequencing, robotics, energy storage, artificial intelligence and blockchain technology. That is going to dominate. She says we will not let benchmarks and tracking errors hold our strategies hostage to the existing world order boom. That's a good mic drop, so i have to say all in all i respect this.

I think they did a phenomenal job here. I think only one mention of tesla in here but she's, trying to she's honestly she's, been trying to distance herself a little bit from tesla, because she's kind of become known as like some people are trying to cast her as like. Oh you're, the one hit wonder who went big on tesla and and she's really trying to which i don't. I don't agree with.

I don't share that sentiment, um she's really trying to separate herself from that uh characterization. I don't blame her at all for that, but um look bottom line. I agree with her. I think there's a potential of investing in genomic plays.

I agree, i don't own any recovery stocks. I think a lot of more value traps. I think there's a trade opportunity once we get to peak delta, uh overlapping with peak omicron, which i talk about in my omicron videos. I do think that there are advertising and buy now play pay later opportunities uh going into at least the first quarter of uh 2021, i'm sorry 2022, but uh, but otherwise look in face phenomenal freaking company, a cyber security companies like uh cloudflare, absolutely amazing, especially with The log4j hack that we've seen and how cloud a flare can help companies prevent uh falling victim to these sorts of issues.

I think that's that's huge. Obviously, tesla continues to be a big investment. I'm not a big fan necessarily of kathy getting into x-ping, although i do think x-bang and neo have substantially oversold other companies that personally, i'm a big fan of etsy, although you could see some consumer excitement rotate down, although i do expect prices are going to come Down we're going to see some dramatically really good sales numbers from etsy as people clear out their inventories matterport, it's a disruptive innovation. This is absolutely phenomenal nvidia.

You can't go wrong with them. Trade desk for the advertising, absolutely freaking, love them sofi and fintech smaller position, but like um, you got headwind risk potentially, if rates go up, but we don't think rates are going to be able to stay high. That long potentially opens the door to looking at companies. Like rocket mortgage or united wholesale right uh, you know a firm as the buy now pay later option.

Expi is innovative in the real estate. Investing space, uh and a palantir has a potential, the fintechs like paypal square and, of course, the others like the other stocks. That we like, like, of course, tesla phenomenal, so these are some that i've been keeping an eye on and adding positions to roku snap for advertising as well, but anyway, these are all my thoughts on what kathy's just said: uh her warning regarding recession, something to keep An eye on regarding your portfolio, i want to balance your recession and deflation or keep in mind, keep an open mind to recession and deflation. When you look at balancing your portfolio and folks, that's it.

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