Hey everyone we kevin here in this video we're going to talk about three things: two about the federal reserve and one about what you should do in the event that we have more uncertain times ahead. This is just sort of a broad-based recommendation and we'll talk about the details of that in just a moment, but i think it's very, very important. Okay, let's first talk about what we learned from the federal reserve, so the first thing that we learned from the federal reserve uh is that they have released their bond buying schedule and they are still this honestly just blows my mind, but they are still printing money. The federal reserve has lowered its treasury purchases by another 20 billion.

It will end its bond buying march 10th. The schedule has been released. This means. Finally, the period of tapering will be done march, 10th right before the march 15th and 16th federal reserve meeting, and on this same day that march cpi data comes out.

So this is interesting, so the federal reserve is reducing their bond purchasing. This will be the final round of money printing from the federal reserve. I'm mind-blowing that they're literally still printing money, but they are, it just seems like they're so far behind the curve, but they're still printing money, but they've released the schedule. It's just within the last 48 hours here, they've released the schedule and we finally have an end date.

So this means that the federal reserve's money printing will officially end on march 10th. This could begin the process of monetary tightening. So when we print money, we inject money into the economy when we tighten, we take it out and we expect that tightening process to begin, probably starting in may, with the first interest rate bump likely coming on that march 15th to 16th federal reserve, open market committee Meeting so mark your dates or mark your calendar for the following dates again number one march 10th: that's when we get the cpi data for february, will it worsen? Will it get better, we'll also see how the impact is of the labor market? On march, 4th mark your date for that or your calendar for that uh also mark on march 10th, that the federal reserve will be finished, injecting money into the economy march 10th is the end date uh and then it's worth commenting on what marie daley said today Or mary daley rather said today about of the federal reserve's action so remember. Last week james bullard came out he's sort of on one side.

We call him the hawkish side. Mary daley uh is, is kind of on the complete opposite end, so james bullard is on the hawkishan. Daley is on the dovish end. The dovishand is like.

Let's take it easy, let's, let's not shock markets, let's not freak people out. You know inflation is transitory, it'll go away eventually, let's just take it easy, that's the soft landing hope. Then you've got james bullard on the other side, who's like we are losing it. We are in a wage price spiral.

We should consider having an emergency meeting and raising rates in between meetings. Now a lot of talk uh after this james bullard discussion has circulated around the federal reserve having a meeting on february 14th, which is tomorrow it's valentine's day. It's also we've got a valentine's day. Coupon for the programs below on building your wealth, but the most important thing is that jerome powell has made it crystal clear, and this is, in my opinion, bullish.

Drone powell has made it crystal clear that we will not raise rates before we end money printing. Well, we have a date for money, printing, it's march 10th, so the odds of us seeing any kind of inter-meeting rate hike on this february 14th meeting or anything between now and uh march 10th is very, very unlikely and since march 10th is just six days away From their scheduled meeting, it's unlikely that they're going to do anything between now and march 16th. All eyes, however, will be focused on that cpi report that comes out on march 10th, because again, that's when the fed stops printing money and that's when that is the report that the federal reserve is going to look at to determine what should we do going forward? See marie daly or mary daley on cbs face the nation this morning said quote so what i favor is moving in march and then watching measuring and being very careful about what we see ahead and then taking the next interest rate increase when it seems best to Do that and that could be the next meeting or it could be a meeting away now right now, markets are pricing in interest rate, increases of 50 basis points in march and then 25 basis points or a quarter of a percent. Every single meeting thereafter daley here, who has regularly been more of a dove, is saying: hey: look.

We don't want to shock markets, we're going to let the data speak. The next big data piece is again march. 4Th march 10th labor report cpi report. Those are going to be the ones that we want to pay attention to and based on the federal reserve's new taper time frame.

There's a good chance. We could see relative calm between now and march 10th and march 16th unless of course, there's a war, an invasion in ukraine, uh or some form of other uh negative indicators that come out between now and then, whether those are pme pmis rather or certain earnings calls That indicate more inflationary, more lasting inflationary pressures, which has unfortunately been what we're seeing interest. Well we're seeing price hikes at insurance companies, auto insurance companies, starbucks restaurants, food distributors, logistic companies, you name it everybody's raising prices. We know that the question is how much and will that just be showing up in the january report.

Are we going to see that in the february report as well so anyway, uh mary daley goes on to say it's too early to call the number of hikes this year, but it's important that everything is measured in that our pace is, is very clear. In other words - and this is very much what jerome powell says as well - that he doesn't want to shock the markets that he wants to take things very easily now it's worth noting that nancy pelosi believes that democratic policies are not leading to inflation, that instead they Would help lead to disinflation if we pass things like the build back better plan and spend more money and joe manchin is saying the fed needs to stop pussyfooting around. We've got too much inflation it's time to hike rates already. Just do it.

So you've got a lot of different perspectives here, but i think a big bottom line is nothing's going to happen between now and march 10th, with the exception of getting more data. So every data piece that comes out is likely going to have more and more of an impact on on our markets going forward now, what what should we all, in my opinion, focus on doing in uncertain times? This is basically saying whether or not we are heading towards a recession. What what should you focus on? Well, in my opinion - and you know, i can't give you financial advice, because i don't know what your personal situation is, but in my opinion the most important thing to think about right now is potentially, if you are, if you have exposure to any kind of variable Debts, whether that's margin, interest credit card interest, whatever consider doing what you can to pay down variable debts, remember margin rates could go from two percent to four percent or five percent this year. That would double to two and a half, maybe even triple your interest.

Payments on margin, if we have a volatile market margin, also exposes you to more interest rate risk. I'm also personally a little bit skeptical about putting money into stable coins, and maybe it begins a larger video but stable coins well. Well, the yield seems enticing stable coins. Will dramatically be tested if we end up going into a recession, and the last thing i want is my money accidentally tied up in like coinbase or crypto.com uh.

Let's say the day: tesla falls to 420 dollars and i want to buy tesla. But my money's stuck in coinbase or crypto or gemini or whatever and there's some hack or glitch or whatever at the same time as the market's falling they're like. Oh sorry, we've just got to pause withdrawals for 48 hours while we figure this out. Well then, you know i'm missing opportunities to do things with my money that could be worth a whole lot more than this nominal eight percent yield, which i i'm not saying nominal, isn't small, i mean that's, that's the actual yield is like eight or eight point.

Four percent on some of these stable coins, so you just want to be careful because if you're parking money thinking, oh it's going to be readily available for you to pull the trigger. You know i just highly recommend considering putting it somewhere where you can actually pull the trigger very quickly uh, and i think that's worth you know one year of eight percent yields uh, especially since you might not have the money there for a year anyway. You might be talking about three to four months before we get to peak pain and it's buying time right so uh. These are things to consider, but do also beyond just considering paying down margin do also consider saving some more cash.

You know we don't always have to uh, and this is really again for everybody's individual situation, but um you don't have to blow all of your money on the market uh. Usually i like doing that. I'm generally a fan of that, but but not with an unaccommodated federal reserve when we're at the highest levels of inflation that we've seen in the long term. I think it's it's too easy to throw up a generic screenshot about well look how uh look, how well markets perform during uh.

You know other previous rate hike cycles, because rate hike cycles mean that the economy is growing well sure, rate hike cycles can mean that the economy is growing. That's true: the economy needs less accommodation, so rate hikes imply that the economy is growing, but if the economy is inflating and you have a wage price spiral and the fed is raising rates not just because the economy is growing, but also because inflation is getting out Of control and we're well behind the curve. Well, that kind of chart does not look very pretty. That kind of market does not look beautiful.

Remember. Warren buffett in 1969 stepped out of the market because there were not good opportunities. He was looking at valuations thinking. You know what i wouldn't buy certain stocks at certain valuations and you might be looking at the market right now thinking.

No these. These are great valuations, but remember, multiples are what matters or you know, multiples compress during recessionary or fear-based times, and even though some stocks have come down substantially in valuations, you've got to ask yourself what is the potential for them to continue going down? Remember nobody lists a penny stock penny stocks become penny stocks because their value just continues compressing and compressing and pressing. So anyway, look have some extra cash pay down some debt if you want to keep buying the dip, of course, do that uh? That's that's your prerogative but put together these perspectives, and i generally like to say now is the kind of time where you want to be more prepared, rather than less prepared. What you don't want is to be caught with your pants down where you're 50 in margin.

You've got a lot of employees for whatever ventures you've got going on. You've got too much debt, you don't have enough cash and then all of a sudden, the market falls another 30 40 percent. You get margin call. Then you go bankrupt right.

There's there's something about preserving wealth and making sure that you're, not over leveraged and so minimizing debt. In times like these, where the market is still relatively near, all-time highs. Look at the s p within five six percent, the nasdaq within nine to ten percent. We're still relatively near all-time highs.

I know some stocks have compressed quite a bit and people are like oh, but kevin tesla's, so cheap right now, tesla's doing all these wonderful things new gigafactory coming. You know the cyber truck coming at the end of the year. Uh. You know the semi truck the insurance, the autonomy, the full look, don't get me wrong.

I love tesla and, i think tesla's a wonderful company. If i, if i had to choose one company to put all my money in it'd, go into tesla uh, but does does that mean that tesla's value can't compress because of multiple compression over the next year? No it entirely could uh. You know if multiples have well then tesla's valuation halves that doesn't mean that tesla's worth half and i'm not suggesting tesla should be selling for half. It just means it could happen, and in that you it would be better to think to yourself right now.

What would i do if tesla have? Well, if you look and you're like oh my gosh, well, i'd get margin called and i'd be bankrupt. Well then, maybe you want to start changing your strategy now, if you look and you're like well, i'd have a lot of cash sitting around because now i'm 20 in cash and i'd be buying that dip. Well, great, that's perfect! That's what you want! You know you! Don't have to be, i think i think people have this impression that you know i'm, i'm somehow saying you magically need to like try to figure out how to perfectly get out at a perfect time and perfectly buy in the bottom. No, not at all.

My belief is just just be prepared for more madness, and some of the madness might sound ridiculous. You know like people might hear. Oh my gosh tesla kevin thinks tesla's going to 420 or whatever. That's not what i'm saying i'm just saying be prepared for something like that to happen, because right now - and this is what i always think is so interesting is people say - oh but kevin, there's so much fear, look how much these prices have already come down.

I don't see a lot of fear. What i see is a lot of increasing shorting, increased short selling and increased bearish put contracts like option contracts, uh and and uh and more institutional selling. But i don't see a lot of fear. I see a lot of a lot of actually enthusiasm.

There no worries, it's all good, i'm a long run investor, i'm a long run investor i could just i could just keep buying and buying and buying and buying that's fine and if you're, a long run investor and you can still afford to buy at 420, then Great then, all you've done is dollar cost average. Then you're good. But if things go down to 420 and then you poop yourself. Well, that's a problem right, and so you want to be mentally prepared for that.

What i would actually just recommend you do is is, and we talk about stuff like this in the psychology stocks and psychology money group, take out a piece of paper and write metrics down. Okay, i'm gon na go 20 in cash. Then, if tesla hits 700 i'll spend 5 percent, if it hits 600 i'll spend 5 percent, if it's hits 550 i'll spend 5 percent, and if it's 500 i'll spend 5 just as an example, you can even set the limits to do that automatically or doesn't have To be tesla, just put it into you know an index fund uh s, p, 500.. Whatever right.

Okay, we get uh spy, uh breaks 400. Okay, spend five percent of cash. You know make this very logical and reasoned and then you'll reduce the potential emotion in in your investing but uh. The the big recommendation is just be prepared, uh, the good news - and this is good news - that we we do have relaxation scheduled between now and march 16th.

Supposedly the problem is, if we get nasty readings between now and then or nasty talk between now and then and the fed ends up having to be more aggressive than expected in march. You know, jerome powell comes out, and in march says: hey things are things are getting worse, not better. It's gon na be more pain ahead and you just want to be prepared for that. That's all thanks! So much for watching folks and we'll see in the next one bye.