Is it a good time to invest?
That's the question I'm asking myself right now.
You can always invest money and earn in times of crisis or prosperity. The problem is when you see that the market is going in one direction and you think the market needs to go in the opposite direction. If you're confused or don't know, it's time to stop investing and try doing some research.
Global market
Inflation or CPI are increasing every month, which means that the prices of services, food, house, or transport are increasing (you may have noticed an already at the end of the month). This was due to money printed by central banks.
The current inflation in July are the following:
US ->5.4%
UK ->2%
Euro Area -> 2.2%
China -> 1%
Russia -> 6.46%
India -> 5.59%
Australia -> 3.8%
Brazil -> 8.99%
Inflation is increasing by at least another 2% on average across all countries. For countries with good economies, this is not a concern for now. But for other countries they already starting increasing interest rates (such as Turkey and Russia).
The current Interesses rates in July are the following:
US ->0.25%
UK ->0.1%
Euro Area -> 0%
China -> 3.85%
Russia -> 6.5%
India -> 4%
Australia -> 0.1%
Brazil -> 5.25%
If we can borrow almost interest-free money and inject a ton of money into an economy, that means all assets are increasing in price (housing, stocks, and Bitcoin).
This video explains that:
The current gains since 01/01/2020 (before covid):
STOXX Europe 600 -> 13%
SPDR Gold Trust -> 16%
S&P 500 -> 38%
Google(Alphabet Class A) ->107%
Bitcoin -> 470%
Tesla -> 698%
Ethereum ->2746%
GameStop -> 2863%
Just this year
The S&P 500, Nasdaq, and STOXX Europe 600 are all-time highs. This means that investors are greedy and see a bright future.
According to "CNN Fear & Greed Index" the sentiment is fear.
Deep-dive here: https://www.youtube.com/watch?v=qzBUWCIXd_k&ab_channel=HeresyFinancial
It makes no sense, let's take a look at the super investors and see what the current moves are:
Warren Buffett - Berkshire Hathaway (Best Investor with current assets 293B) reduced his position by 0.78%, about 2B this quarter.
Bill Gates (Bill & Melinda Gates Foundation Trust) reduced his position by 11% this year.
Michael Burry -Scion Asset Management is best known for being amongst the first investors to foresee and profit from the subprime mortgage crisis that occurred between 2007 and 2010 (The industry made a movie about this called The Big Short). He already said on Twitter current stock prices are overvalued. So, He has a strategy using the options market (that's because if there is a crash tomorrow, he only loses the premium). He is CALL(Facebook, Google, and McKesson) and PUT (Tesla, 20+ Year Treasury Bond). It is a very defensive strategy.
If most known super investors aren't buying, then normal people are buying. If we look at google trends, it looks like there's been an average increase since covid.
If we try to verify behavior by country, we observe
Most countries rely on gold against inflation, the US on stocks, and we already have some countries switching to Bitcoin.
Conclusion
It's too early to say that we're going to have a stock market crash, but we need to be very careful.
All red alerts are active:
Buffett Indicator https://www.gurufocus.com/stock-market-valuations.php
Shiller PE Ratio for the S&P 500 https://www.multpl.com/shiller-pe
S&P 500 PE Ratio https://www.multpl.com/s-p-500-pe-ratio
The last time Michael Burry moved against the market, it took 3 years (imagine you now sell your Bitcoin and the crash happens in just 3 years). Meanwhile, You can use the option stop lost or the Bitcoin options for some protection.
My main focus is the velocity of money. (https://fred.stlouisfed.org/series/M1V).
If the velocity of money starts to increase before interest rates, I will buy more assets. if the opposite happens I will sell some assets. Until then I'll have half on cash and on assets. My current portfolio here: https://www.publish0x.com/you-crypto/market-and-bitcoin-intrinsic-value-updated-xdggppq
Deep-dive on the velocity of money https://www.youtube.com/watch?v=IrzCYN7wu9M.
For newbies, the history of the velocity of money is in episode 7, https://www.youtube.com/playlist?list=PLE88E9ICdiphYjJkeeLL2O09eJoC8r7Dc
