Over the past couple of months, the overall stock market has had little to no volatility, even on the most volatile days, the s p 500 moves just a little over one percent in either direction, which is definitely not much. The reason behind this low volatility is that the stock market is preparing for a breakout in either direction. Opinions have become more and more polarized regarding the stock market, with some claiming that hyperinflation is on the brink of occurring and others stating that inflation is just transitory. Most recently, michael bury tweeted some warnings about the stock market on his twitter account, which directly contradicts kathy wood's opinions.

This entire polarization behind these two investors is transcending to become not just a clash between two types of investors, but possibly one of the greatest clashes in our modern financial era. In this video, i will cover michael brewery's latest warnings and how this is exacerbating a major division within the stock market. Right now welcome to cash gains academy, if you're new to the channel, please consider subscribing for more content like this. Let's get right into it as i've covered in a previous video michael burry is predicting and betting big on the inflation rate for the u.s dollar, increasing dramatically according to bury's latest 13f filing.

He has purchased, put options on tesla in the bond market and has purchased call options and inflation hedge stocks, like google, facebook, cvs and craft times. However, these bets were filed on march 31st, so we didn't gain any insight as to what happened to bury's positions on june 15th. Michael bury tweeted people always ask me what is going on in the markets. It is simple greatest speculative bubble of all times.

In all things by two orders of magnitude hashtag flying pigs 360. - this is a very bold prediction from michael bury, especially considering that he didn't just call our current situation a bubble, but also called it the greatest one. Those words imply that he thinks that the stock market is in a situation worse than the peak of the dot-com bubble, but it's not just that as he thinks that this bubble is two orders of magnitude larger. This can be directly contrasted with what ray dalio said in march of 2021, as dalio stated that the stock market bubble was halfway to the magnitude of 1929 or 2000.

However, since dalio's statement, the stock market has risen even more, but it definitely hasn't doubled in magnitude by dalio's projections. One famous metric used to analyze whether the stock market is overvalued is the buffett indicator. The buffet indicator is essentially the entire stock market. Capitalization divided by the gross domestic product, in short form, it is the market cap divided by the gdp.

As you can see in this graph, the buffet indicator is actually two standard deviations above the normal levels. In fact, it's actually over 2.5 standard deviations, above the mean right now in statistics. A 2.5 standard deviation above the mean, is equal to a positive z-score of 2.5 by my calculation. This puts the buffet indicator in the 99.38 percentile of previous levels, in other words based on previous data, we're only at these levels, 0.062 percent of the time, which is a 0.00062 probability ratio for the data set.

However, keep in mind that the usgdp hasn't fully recovered. Yet but this graph is still using q1 2021 numbers for the usgdp, which is actually already higher than pre-pandemic levels. The last statement that bury put out was hashtag flying pigs 360, which could mean two different ideas. The first one is the idea that people are speculating so much that pigs might as well fly before the speculations actually happen in real life.

The phrase when pigs fly is an adeninetin, which means that it is hyperbole that is so exaggerated that it is practically impossible. The other idea that burley may be referring to is a famous phrase about the stock market bulls. Make money bears make money pigs get slaughtered. That phrase definitely has a lot of truth behind it.

Long-Term bulls have made substantial amounts of money in the stock market. At the same time, bears like michael, bury have successfully made money by predicting short-term crashes before. Lastly, the pigs, which are used in the analogy because pigs eat a lot, are the investors who take high degrees of risk just to make some short term profit? Most of the time, the pigs in the analogy, aren't doing much research and do not even look at risk. These pigs are slaughtered because time in the market is almost impossible to do successfully over the long term, especially considering that these pigs do not have much conviction and will sell as soon as their stocks slightly go down after the flying.

Pig's tweet michael brewery then went on to explain how he thinks that the largest crash of all time is coming soon. He stated that all hype speculation is doing is drawing in retail before the mother of all crashes, hashtag, fomo parabolas, don't resolve sideways. When crypto falls from trillions or meme stocks fall from tens of billions. Hashtag main street losses will approach the size of countries.

History, ain't changed: that's right, michael bury just warned of the largest crash ever even larger than the 2008 recession, dotcom bubble and great depression. Now, with someone like michael burry, you know that he's not just making a statement with nothing to back it up. One statistic that brewery is likely referring to is margin, debt or essentially, how much money and debt that investors are using to purchase stocks margin. Debt is highly correlated with the s p 500's performance.

In this graph. You can see how, before the dot-com bubble in the great recession margin, debt was at record highs. Our current levels of margin debt are even higher than this. In fact, our current level of margin debt is almost two times higher than the margin that, before the dot-com bubble in the 2008 recession bury stated that the next problem with hashtag crypto as in most things, is the leverage.

If you don't know how much leverage is in crypto, you don't know anything about crypto, no matter how much else you think you know essentially michael burrie is stating that there's too much speculation in cryptocurrencies and one sliver of bad news could lead to a massive crash. This is because margin calls set a downward spiral. Margin calls are when loans are taken back by the lender, which creates selling activity and decreases buying activity when margin calls occur. This causes assets to depreciate, which leads to more margin calls causing assets to depreciate.

Even more leading more margin costs to occur buried thinks that this spiral will lead to the greatest crash that we've ever seen on the other side of the debate. There is one investor who is definitely bullish on the stock market. That is none other than kathy wood. The ceo and ceo of arkhan vest michael, bury and cathy wood are polar opposites when it comes to their opinions on the stock market.

Right now, kathy wood recently went on bloomberg to mention how she thinks that her funds will 3x in the next five years. We believe that our portfolios will more than triple over the next five years. In the analogy i talked about earlier, cathy wood is the bull and michael brewery is the bear over both of their investing careers. Both have made substantial amounts of money from their respective bets.

However, now they're in a major clash against each other on the surface, the contrasts may look simple, but when we take a deeper dive, it is actually much more complex than it looks. In fact, there are actually some similarities between the two opinions hidden between the obvious differences. You might not believe me when i say this, but both kathy wood and michael bury believe that the s p 500 will go down in the next few years. That's right both of them believe that the s p 500 will crash under the surface.

The reasons behind both arguments are extremely different. Kathy wood believes that over the past decade, passive investing has led to a massive misallocation of capital in late 2020. She stated on twitter that the s p, 500 and the nasdaq are populating their benchmarks, increasingly with value traps created by innovation, stocks that are cheap for a reason. Innovation is disintermediating and or disrupting the biggest companies and traditional benchmarks.

Now this doesn't come as a surprise, as innovative companies must disrupt traditional companies and their existing market share to take the finite market share available. For example, in order for tesla to grow, other traditional automakers have to lose market share. Kathy once mentioned in an interview that she believes that 50 of the current companies within the s p 500 will eventually disappear. The s p 500 index is often regarded as a safe index over the long term, but kathy clearly doesn't think that over the past few months, we've seen value sucks increase drastically, which has boosted the buffet indicator to disproportionate levels.

However, if half of the s p gets disrupted like kathy is predicting, then the buffet indicator would crash significantly. This would lead the overall market cap to gdp to be closer to normal levels. On the other side of the debate, michael bury has been predicting a slightly different movement. He believes that similar to how collateralized that obligations inflated the real estate bubble before the 2008 recession index funds are inflating stock market valuations.

The main similarity between the 2008 recession in our current times is that cdos were seen as safe, passive investments and so are index funds when too much capital flows into the s p. 500. The valuations of those stocks inflate since the s p 500 is just a bundle of stocks. Brewery once stated that this is very much like the bubble in synthetic acid-backed ceos before the great financial crisis in that price.

Setting in that market was not done by fundamental security level analysis, but by massive capital flows based on nobel approved models of risk. That proved to be untrue. In essence, michael brewery is predicting that everything will fall because there's too much capital flowing into the market. On the contrary, cathy would think that innovative companies will thrive and wipe out traditional companies.

In addition to these contrasting arguments, kathy wood actually does think that there are bubbles occurring, but not in the stock market as a whole. She stated that if there is a bubble anywhere, it is not in the equity market. It is in the fixed income market. By that she was referring to bonds in particular, since 2018 there have been outflows of roughly 300 billion dollars from equities, excluding share buybacks from companies.

On the other hand, there have been inflows of one trillion dollars into bonds. Kathy makes a lot of bold predictions, but this one is actually not too bold at a 1.5 percent yield 10-year treasury bonds are practically useless right now, given that the inflation rate will likely be at 2 or more over the next decade. The federal reserve has definitely served a role in the bond bubble. Additionally, according to kathy private equity, which consists of companies that look to buy and resell, other companies like supreme, which is a hype clothing brand, has helped the passive investing bubble.

She stated that it's amazing that me to watch private equity with mature companies will continue to leverage them up, so they can enjoy the private equity distribution. That's become problematic for these companies and their high cash flow margins will disappear over time. Furthermore, as i've covered in the previous video before kathy also thinks that commodities are in a bubble right now due to panic ordering from businesses once these orders are cancelled, she thinks commodity prices will fall off a cliff. This brings us to our next factor, which is inflation kathy believes that over the long term, inflation is not a concern, because the disruption of traditional companies will lead prices to decrease in the short term.

She predicts that the commodity bubble crashing could also lead to lower prices. On the flip side, michael burry sees inflation as a long-term problem, similar to how germany experienced hyperinflation in the early 20th century. Overall, this debate is heated. Kathy believes that inflation is not a problem in value stocks, commodities, bonds and certain private equities are in a bubble, whereas michael bury sees a bubble in every asset class and massive inflation occurring ahead.

With that being said, investing has become more important than ever in today's complicated macroeconomic environment. I recently published a detailed stock report on one investment that i am initiating large purchases in on my patreon. If you're interested in this, as well as my buy and sell alerts, my valuation spreadsheets, my new 25 000 portfolio, which i have a goal of growing to one hundred thousand dollars, my main portfolio future, buy and sell reports and more check out my patreon in the First link down below, if you enjoyed this video, please hit the like button and subscribe and i'll see you in the next one.