what's up guys it's graham here so i recently came across a video from the channel new money with a rather ominous title that instantly got my attention michael bury's warning for the 2022 stock market crash this was a deep dive into the impending downfall of the u.s stock market the worsening crisis of inflation how these major issues are only getting worse and why the recent downturn has only just begun all based on the now deleted tweets from one of the most infamous contrarian investors of all time who happened to be one of the people talking about the market top right before everything went to sh so let's talk about his exact warnings the data behind his predictions what this means for you and then finally my own thoughts about the 2022 stock market collapse all coming from the same person who called out record high inflation warned about the unsustainable price of bitcoin shorted tesla before its drop and cautioned that the market was dancing on the knife's edge all before they happened right after of course you crashed the like button for the youtube algorithm by giving it a gentle tap and subscribing if you haven't done that already since after all it's totally free and as a thank you for doing that here's a picture of a baby platypus i'm also going to link to new money's video down below in the description for anyone who wants to check it out so enjoy and now with that said let's begin now for those unaware michael burry is not exactly the most formal when it comes to his warnings like instead of taking an interview with a news outlet or posting a video on a youtube channel or writing about it on reddit's wall street bets for internet points like most people do he takes to twitter where he posts his detailed research and then he immediately deletes it now thankfully in case you missed it there's an archive account that reposts each and every one of his 280 character masterpieces and well there's a lot to unpack especially because of how active he's been over these last few weeks as the new money channel mentioned michael bury wastes no time talking about speculative market peaks explaining that each market crash generally bottoms at a p e ratio lower than the one that came before it and as a result he predicts a p e ratio bottoming at 16 which would translate to an s p 500 of 18 62 or roughly 50 lower than where we are today he also backs this up by showing three graphs all outlining that past financial crisis have taken 10 years to peak including 1929 2001 and wait for it 2022. of course when elon musk calls him out as a broken clock he fires back with habitually be one to two years early on literally everything and you too could detain broken clock status and i mean he does have a bit of a point i mean after all in recent history michael bury called for inflation six months before inflation started to increase he spoke about betting against bitcoin right as it hit its peak of nearly 69 thousand dollars and subsequently fell fifty percent over the following few months his tesla short position also worked in his favor when it declined from twelve hundred to nine hundred dollars a share and his famous housing market collapse took nearly two years to play out in the way he had imagined that's why michael bury recommends that even though the market may not play out exactly on time with patience his projection should come true or as he says enough takes time as i said about 2008 it's like watching a plane crash it hurts it's not fun and i'm not smiling to make matters worse he's noted that us personal savings has fallen to 2013 levels the savings rate is the lowest it's been since 2008 and credit card debt is approaching a record amount despite the stimulus payments issued throughout the last two years for him this points to a bleak outlook that consumers have less money to spend they have less money to save and the majority of their income is being swallowed up by higher costs leading to lower earnings less profits and falling stock prices at this rate he estimates that at the current trajectory americans could run out of savings by september to december of this year before they'll have to resort to borrowing just to stay afloat of course there is some speculation that this is in michael bury's best interest to be as bearish as possible while he shorts the market although in terms of what other data says and whether or not michael bury is right look no further than today's economy because the details don't lie in terms of our current market many economists are referring to this as the end of the everything bubble while interest rates begin on their ascent upwards for the first time in well a while and the thing is he's not exactly wrong since the 1980s the u.s economy has benefited from interest rates that have continually decreased to the point where any future rate hikes have been unable to exceed the previous peak before it that means that over time our money gets cheaper the market gets more expensive and the economy grows at a rapid pace however that only works while inflation remains low of which is certainly not the case today either way if we get a federal funds rate above three and a half percent that will have broken the interest rate downtrend that was started over 40 years ago and entering a new era of investing where money is no longer free and companies actually have to make a profit if they want to stay afloat crazy right financial times argues that low interest rates have been the equivalent of a sugar high which kept the prices of stocks housing and other assets going up and up even as the fundamentals of the economy have been eroding now that got me thinking what are these so-called eroding fundamentals because besides stagnant wage growth skyrocketing costs of education high inflation a shortage of housing well at least the unemployment rate is low so that's good right right okay now in all fairness not everything is bad and even though michael bury says 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percent facebook down 50 and hundreds of companies are reaching the lowest point that they've been ever that could mean that the market has already approached or is soon approaching a bottom for certain stocks while consumer sentiment is at an all-time low two bank of america suggests that the stock market crash is almost over and is about to rocket emoji they've mentioned that a peak to trough bear market decline is 37.3 percent over the span of 289 days matching that pattern will put the end of the paint on october 19th 2022 with an s p 500 likely bottoming at 3 000. now they did go on to say that they don't believe the market selloff is over quite yet but that it could be a great time to continue buying in with the preparation that once it turns around you'll make a lot of money three costs are beginning to come down like remember how shipping container prices were going through the roof well good news prices are falling along with the average transit time lumber prices have also come down substantially and even though some metrics are still high like food energy and housing we could be seeing the beginning signs of everything beginning to slow down fourth we have really low unemployment now sure we are seeing mass layoffs throughout hard hit internet and fintech industries but overall it was reported that workers still remain scarce and that job vacancies are dropping lower and lower as more people are working now obviously things could change but we are well below historical levels of unemployment and that is good news as of right now five oil prices have declined from their peak this one has been a major driving force behind a record high inflation because higher oil prices raised the cost of well pretty much everything but i digress since hitting a high on june 10th prices have gone down and even though things are still historically high it could be a trend downwards speaking of falling prices before we go into the big picture of michael bury's overall thoughts he did make an interesting point that throughout a bear market we're likely to see a lot of rallies along the way and that's kind of what we're seeing now since the peak at the end of 2021 we've entered a pattern of falling eight to ten percent rallying five percent falling another eight to ten percent rallying five percent and it's anyone's guess as to how long this is going to continue during the bull market for example we saw the exact same pattern in reverse as the market increased like this over a period of almost two years but this time bury notes that dead cat bounces are the most epic 12 of the top 20 nasdaq one day rallies happened during the 78 drop from the 2000s top nine of the top 20 s p 500 one day rallies happened during the 86 drop from the 1929 top he also goes on to say that the dow had 10 bear market rallies of more than 10 before bottoming down 89 in 1929 suggesting that it's going to take some time before we see the true bottom organ stanley also tends to agree saying that generally speaking we don't see bear markets bottom without panic selling similar to what was seen in 2001 and 2020. historically no bear market has ever bottomed without a vix reading of 45 or more and sure enough in recent history that's true the vix hit a peak of over 70 in november 2008 before bottoming out just three months later the vix also hit 57 and 65 at the exact same time we reached our march 2020 lows so this is absolutely something to consider even though statistics like this usually hold true until the day they don't although in terms of reaching a bottom the wall street journal gave a slightly different variation saying that since 1950 the s p500 has sold off at least 15 percent on 17 occasions on 11 of those occasions the stock market managed to bottom out only around the time that the fed shifted towards loosening monetary policy again meaning that if inflation comes down and our economy begins to fall there's a chance that they could ease or even reduce rates and when or if that happens the markets could begin to recover however keep in mind that even though all of this sounds like horrible doom and gloom news it well i mean it is but it doesn't necessarily mean it's true and even though michael bury makes some great points some of his predictions have yet to come to fruition for example in 2019 he compared index funds with the subprime cdos of 2008.

for this he claimed that index funds were distorting the true valuations of the companies held within them but since then index funds have remained a fairly solid investment in 2016 he predicted a financial meltdown in world war iii and despite me spending an hour trying to find any basis to his claims whatsoever the only thing i could find was a quote saying i just did the math every bit of my logic is telling me the global financial system is going to collapse that's basically the financial equivalent of saying just trust me bro but then again in 2017 he called for an imminent stock market crash while the markets went on to rally another 55 and in 2020 at the literal bottom of the market he warned about a selling stampede so had you listened to him you would have missed out on quite the rally all of that is to say that even though i have immense respect for michael bury part of me believes that if he makes enough predictions eventually a few will come true and when there's not a definitive time frame it's easy to keep saying oh no just wait a little bit longer it didn't come true because i'm too early just keep waiting and of course by doing so you risk missing out on a market that might move way past initial expectations that's why i believe that it's best to be cautious in a market like this and prepare for the worst but also don't tailor your investment strategy to a market that may or may not turn out as expected far too many people have lost way more money sitting on the sidelines waiting for that inevitable stock market collapse those who keep buying on a regular basis regardless of where the market trades and long term they tend to come out ahead i think the main focus for everyone should simply be to stay employed and maximize your income over these next few years as best as you can that way even if the market does continue to drop you're gonna have the resources to buy in at a lower price everything else is simply a shot in the dark and regardless of what happens you're never gonna look back and think oh geez i shouldn't have worked so efficiently and made so much money over these last few years oh and by the way i'm glad i subscribed because uh that was the best decision ever and it's totally free to do hint so with that city guys thank you so much for watching also make sure to get your free stock down below in the description when you sign up at public.com gram using the code grand because that stock could be worth all the way up to a thousand dollars and also you could get all the way up to a hundred dollars with the free crypto when you sign up for ftx us down below in the description also with the code gram you may as well do them both it's pretty much like free money enjoy and until next time.