11 months, 11 months is how long it took for the market to hit lows after in January I Warned that the Federal Reserve was likely going to have to force a technical recession in order to get rid of inflation, and that it would make sense to park money into cash as it would likely be the best asset class even in a high inflation environment because cash becomes more valuable as assets decline in value. Cash and inflation only hurts if you're trying to buy things that are inflating in value like food and groceries and gas. but if you're trying to buy real estate or stocks, those can go down in value now. I'm really proud of having sold all of my real estate at the beginning of the year and having realized this change of the Federal Reserve in January.

However, I thought the change would come a lot faster and I made a big mistake I bought stocks back way too early and I kept dollar cost averaging even though we know that usually the bottom doesn't actually come until the Federal Reserve not just pivots, which is when they slow their rate reductions, but actually substantially Cuts rates to bail out markets because they realize they've gone way too far and this is where the warning from me comes from. Take a look at this folks. This here shows you: it took 11 months for the NASDAQ 100 Technologies index to bottom and the worst may not yet be over. As we sit here in December it's entirely possible that December tax loss harvesting could drive us to new lows.

This is, despite the fact that inflation is finally behaving the way that we are expecting it is falling. However, we have a Federal Reserve that says nope, sorry. We're going to continue to go until we are convinced we are at a tragic directory of achieving two percent headline Pce inflation. Now the Federal Reserve does have a back door to say hey, look, we can relax And that's simply to say that as long as inflation averages two percent Pce via their policy of Fate flexible average inflation targeting, the FED could actually U-turn pretty darn quickly.

However, I Believe expecting anything to be quick in this market is a really big mistake. In fact, if we look at the five-year break evens, we can see that even though stocks continue their plummet today, what do we have on the five-year Break Even We actually have a slight tick up in five year break evens, suggesting that we're not on a straight plummet down for five-year break evens. and we really have more work to do to convince the bond market that inflation is absolutely going to Trend down certainly below 2018 levels. Which 2018 levels are about here where I'm drawing this dotted line here, which means we're still sitting at levels where the Fed was hiking in 18.

now we're about. we're almost 200 basis points higher. Now we're with Federal Reserve rates than where we were then right rates then were about two and a half percent. Now we're at almost four and a half percent.

So yeah, we've got significantly more tightening in the pipeline today, But some some say we also have significantly more risks that inflation can move to the upside in the pipeline. So what's the big lesson? Well, I think there are two lessons. Number one. Actually, there are a few.

Let's just get started with them. Number one: If you are tax loss harvesting, the good news is you probably have an opportunity for patients. For example, if you were to sell stocks in December it seems relatively unlikely right now that within the next 30 days we would expect to see some crazy stock market rally. Because even though we're going to have another jobs report and another inflation report between now and next, uh, month of a month from now, say like January 20th or 21st.

the inflation report, for example, comes out on the 12th, we're not going to have another Federal Reserve meeting until February 1st. That, in my opinion, creates a really interesting opportunity where if you sell now, what you're doing is you're getting ahead of what could be bad Q4 earnings next month and you have that opportunity to maybe buy back in after ugly Q4 earnings or just wait for that Fed meeting on Feb 1. that's actually really interesting. I Really suggests that this could be a really powerful time to tax loss Harvest However, that also creates the second potential consideration and that's that.

Well, if everybody thinks let's tax lost Harvest We got nothing to lose Q4 Earnings are gonna suck anyway, then maybe bearish mindsets are already so strong that it's possible we could actually be in a better place next month as people who have already tax loss harvested start buying back in though. I Do have to say I Think sentiment right now is so pained after having one year of stocks in straight decline that people are basically just mad at each other. This is one of the things we actually talk about in my programs on building your wealth. Whether it's real estate investing or Stock Investing When times are toughest is when people in real estate, for example.

Same thing is true with stocks start fighting each other. Everybody blames each other for losses in their own portfolio because everybody is sad, everybody's upset, everybody's looking to point the finger, and nobody wants to take personal responsibility for the fact that we're going through a recession. Nobody knows perfectly what's going to happen, but when sentiment gets so bearish, there are actually two things that could happen. Number one, you would think is the assumptive answer, and that is sure.

we could see sentiment go from Super bearish to bullish and we can rally out of this mode. But with a year of sentiment being so ugly and so much uncertainty created by the Federal Reserve and no meeting from the Federal Reserve between now and February 1st, it potentially makes logical sense to say you know what. Just wait for the FED Feb one or potentially March 22nd and Don. Don't be anxious to get back into the stock market even though there's this rally optimism.

However, that same rally optimism could actually lead to that rally optimism not occurring. All this negative, bearish sentiment compounding, and now all of a sudden people getting so frustrated that we actually end up with a capitulation sell-off. Now this is the Other Extreme We have not yet in the 2022 sell-off had a capitulation sell-off If we end up in a capitulation sell-off, we could see stocks move in a single day substantially. If you think two or three percent on the NASDAQ is a big day, you might be surprised.

We might end up seeing seven to ten percent and circuit breakers breaking the stock market, basically freezing trading at the stock market. Because sell-offs become so severe between now and the end of the tax loss harvesting cycle at the end of the year, both of those are a possibility and I have absolutely no idea what's going to happen. But there's one thing that I will tell you. I made a big mistake this year and I would love to admit that mistake and I've admitted it many times before.

but I just want to be crystal clear. My biggest mistake this year was not mistiming the FED on my cell. it was being impatient to get back in. and that's really dangerous.

There's no in my opinion reason to be impatient to get back in with a Federal Reserve that's behaving the way it is right now, which is likely overly bearishly correcting. To the downside. Now that's unfortunate because it takes away a lot of Hope P.m for the market when the reality is I Strongly believe in five years from now, we're going to look back and want to go. Oh wow, that was a stupid recession.

Inflation was obviously transitory. Why did they push us into a recession? Wouldn't be shocked if that comes true. Wouldn't be shocked if Tesla is a four or five x. But does it potentially make sense to sell now and maybe re-buy in a few months? It potentially does.

I've had to do exactly that recently because I don't want to be exposed to margin now I still have a very large Tesla position. but I've definitely reduced my Tesla position to make sure that I'm not at any risk of having a tax bill or some kind of other Bill come up. that pushes me into a margin uh, situation where all of a sudden I'm looking at a margin bill at the same time as potentially walking into a stock market capitulation. That would be very, very dangerous because then you risk getting margin called at capitulation cycle.

Very, very bad. Now, I've never been margin called before, but sometimes That means you have to make the painful decision before getting into those environments and you have to be prepared. You have to work harder, you have to defend your portfolio from a margin call, and by staying out of margin. Best case scenario, and you have to work harder to make more money.

So hey, you know what? Yeah, I have been saying for all year long. Work harder. Make more money. There's a reason why I am filming more and more lectures every single weekend for my stocks and Psychology Money course, my real estate course.

that's going to be a huge one next year. My Elite Hustlers course helping people start businesses, build their entrepreneurial businesses, build their income as an employee. The reason I'm providing more value for all of these programs linked down below is because I believe now is a the best time to study and learn. but it's also the best time for everybody to think about how can we make more money And I think my job as a professional is to make sure during hard times.

I I'm providing as much value as possible and that's my goal. I'm not going to crawl into a hole and go into silence. It's okay to be wrong. It's important to admit mistakes.

Learn from them and move on now. Remember I am a licensed financial advisor, but I'm not your personal financial advisor. So everything that I teach or I share with you. Ultimately, you have to take the perspective that works for your situation and make the best of it.

My goal is to continue to provide value and I hope that these warnings are useful. I Do think there is an opportunity to tax loss Harvest between now and Q4 earnings I Really can't see a lot of Hopium between now and Q4 earnings. However, because sentiment is so bearish because puts are so expensive and calls are so cheap, there is always that possibility that the market flips. Remember, things could also get so bad that the Federal Reserve actually comes in before their February meeting and ends up you turning in a positive direction for markets.

I Think Unfortunately, hope is not an investing strategy and Hopium is the worst thing to have when it comes to the Federal Reserve because they're not coming to the rescue anytime soon. The only way I would foresee the Federal Reserve coming to the rescue anytime soon is if this chart started plummeting. And unfortunately, just the opposite is happening today. it's not plummeting.

If anything, it's rising. That's bad. It's the opposite that we want to see on top of that, which this is actually to some degree a little bit good. We are seeing Financial conditions tighten in the bond market by seeing bond yields rise.

Now, this is a little bit concerning because it's somewhat suggests that uh-oh we could actually be trending towards a real recession where earnings are actually going to become at risk and when earnings go down, earnings per share go down, and valuations can continue to collapse for big companies. Now right now, if you look at the 10-year bond yield, you could see the 10 years sitting up about 11 basis points today. That is a recessionary fear. So what's happening here is people are actually selling bonds off because they have the potential fear that it makes more sense to hold cash going into Q4 earnings and next year, or potentially that bond yields actually deserve to rise.

Even more that is, financial conditions are likely to tighten even more bond yields are likely to rise even more, and all of that could lead to a deeper and deeper recession. And this is where it's very, very difficult right now because we don't know exactly which companies are going to get whacked with earnings markdowns. It could be every single company that exists now. I Know this sounds bearish I Want to be very clear: I am a long run bull I am more invested in this market than I am in cash and you know listening to January Kevin 20 January 2022 Kevin that's pretty stupid I should have just sat in cash all year long I didn't but that's the way it is.

and I want to be here to share my insights with you and sort of my beliefs going forward. I Believe that the FED is going to have a massive massive rate cut cycle ahead of it at some point in the future, but we can't bet that that's coming before a big capitulation, destructive crash and that's why I Just want to warn you to just be careful. Don't look at your net worth as to what it was. look at what you have now and make sure you're protected and consider your net worth now with it, which is protected, hopefully as an option on the future.

that's all. Thanks so much for watching and seriously good luck out there.