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again I said it last week I'll go out on a limb and predict my equivalent November fall predictions last fall it was at the markets were going to poop the bed my prediction now is that I think the markets are bottoming and consolidating yep 100 and this is the time I think to start nibbling and start getting ready to really rip the money in and I think there's enough signals every day that kind of like tell me at least that on the margin it's time because I think the markets do a reasonably good job of digesting news and then pricing the forward reality right like today's price is really everything we already know and so the real guess is what's about to happen in the future I'm actually pretty starting to get a little constructive here I think that the Investments that one makes in this period will probably be the best for many many years to come because they'll have the most asymmetric upside and that was true in 2008 9 and 10.
it was true in you know 2002 three and four you I mean you're talking incredible companies just in those two periods think about this atlassian Tesla Uber Google Airbnb Uber Instagram WhatsApp incredible businesses that have created tremendous value and so there are businesses that have been invested in for the first time in 2022 and will be invested in for the first time in 2023 and 24 which will be the leading winners of this next phase and this next leg up and so the real opportunity is to find out who those companies are and get behind them and here's what I just want to call out for you guys what's incredible is that other than the one in 83 so this is sort of like you know that last big one what we've seen is that the stock market has a tendency to immediately go to the conclusion very early on in a rate hiking cycle and now why is that important for normal folks listening to this thing well the reason why that's important is right now we're in month seven of a cycle we obviously don't know how long it's going to be but the odds are improving every day that we're near the end versus the beginning again if you're thinking about when to you know buy equities for example this is a really instructive guide because what it tells you is the closer we get to the end or more importantly the closer we psychologically know that the end is coming we start buying and that and that's just a broad-based statement that has been true so you know what you see right now I think is really interesting which is that despite all the bad information oh my gosh the nordstream pipeline blew up could it have been sabotaged was it the CIA was it the Russians oh my gosh big Tech is slowing spending and firing people China's in a coup I don't know if you saw that rumor yeah how about something more benign you know the the US you know us yuan is really trading in a crazy way the U.S euro is trading in a crazy way the U.S pound is going crazy despite all of that every time we trade down the market consolidates very quickly so I think we're forming a bottom I do think that Stan is right we are going to see a hard Landing recession something will break in 2023.
I hope it doesn't I hope it doesn't affect a lot of normal people but it's likely but at the same time to find hard Landing so I'll tell you in a second but at the same time I think what's happening is in the equity and financial markets we are consolidating a bottom because we're seeing through to that end state and this is where cheap Equity gets bought so why is there a reason to sell now I think a lot of the people that are selling the smart money sellers that I talk to are essentially right now selling to book in capital losses to offset other capital gains from this year a term that's called tax loss harvesting and so if you have gains through this year which some of us do this is the great moment to just sell the losers to book the loss to net it out so that you can minimize your taxes for next year that's probably I think where we are at and I think that's why they're still Consolidated by you're going to see unemployment get to an awkward and uncomfortable number five six percent I think could be something that we see and I think you're going to see a lot more companies pull way back on their spend because demand is going to really modulate you know what happens to all the people in the United States that are on arm mortgages right adjustable rate mortgages when those things reset they're going to reset two 300 basis points higher their monthly payments are going are going to go nuclear it's already happened I literally had a family member call me about this and they were like what do I do so in the UK in the UK 40 percent of all mortgage dollars are interest only arms that will reset in January to around four percent forty percent can you imagine how upside down the UK economy is going to be when people have to spend three and four times more together and then people have to go to work if you think about it one way the financial markets have always had this thing that we have called the fed put what does that mean a put is essentially the right to sell something and what Market participants have always known for the last decade is that if things got very hairy if there was uncertainty in the market the Federal Reserve would and they have consistently stepped in to create a buyer of Last Resort and so it always eliminated that last part of true you know Supply demand balance because they would just come and say don't worry in many ways in Tech what the big tech companies were were that you know you could never really find what the true market clearing price for an engineer was or what the true amount of expenses you should spend on office space or you know free services because you always always had these companies which was an escalating arms race you know if one company had a massage you know and it just kept escalating and escalating because the costs didn't matter and they wanted if nothing else to get that marginal engineer or product manager or business person to work at their company which eliminated the risk that they would actually start something to disrupt them so when you take this big Tech put out of the market you will get true price Discovery and you will find out what the real price should be for this kind of an engineer that kind of a product manager you'll find out what are the real expenses you need to bear in order to build a real lasting business it's yet another indication to me that I think broadly speaking the markets are now starting to stabilize all the irrational Behavior is starting to exit the system the party is in the last few hours volumes going down the alcohol is being taken away people are hanging around with a little bit lights are coming on they're like I've been here a little too long and I think that that's a very healthy process for an economy
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