원문 보기
well I don't know what else to say the stock market is just depressing we just closed out the first six months of the year so time to celebrate everyone we're halfway through we've made it halfway through 2022. I hope you're all having a great 2022 because the stock market is not the market just posted the worst first half of the year in decades when they say decades they're not exaggerating accelerating inflation and Rising interest rates fueled a month-long route that left few markets unscathed the S P 500 fell 21 through Thursday suffering its worst first half of a year since 1970.
so this is literally the worst start to a year halfway through the year since 1970. that's what we're investing in so if someone tells you uh this sell-off is just run-of-the-mill it's not that bad they're being dishonest this is a bad sell-off like this is a really bad one we are going through a really bad sell-off and that should be said we are making it through the this now I will say if you've made it this far you just got to Pat yourself on the back you're staying invested through this turbulence through this volatility through non-stop depressing sell-off month after month then you probably have what it takes to be a long-term investor in my opinion you'll probably keep going which is a good thing but it's times like this when you really want a pickup you want some positive news we've already been investing this year for six months and the sell-off started a couple months into the end of last year so we've been in a bear market now for quite some time this constant painful drag and sell off in the market and you just want to hear some positive news just some relief that things are going to be better in the future well in comes Michael burry and Michael burry is not someone to paint a Rosy picture that's not really his thing in fact his thing is kind of the opposite he is the the one that gives the warnings right and the latest warning he just gave this is just today adjusted for inflation 2022's first half of s p 500 is down 25 to 26 percent so if you actually factor in inflation you're actually more poor this year than just your losses in the the stock market because you have to factor in the little money you do have after the big decline is even worse less due to inflation so the S P 500 is down 25 to 26 percent the NASDAQ is down 34 to 35 percent Bitcoins down a staggering 64 to 65 percent that was multiple compression next up earnings compression so maybe halfway there maybe just maybe the NASDAQ can fall another 35 percent maybe the S P 500 will fall another 25 that's Michael Berry's thoughts and you know a lot of people say that he's kind of like the one hit wonder he's the big short guy I made a video on this he's not he's made consistently good calls all throughout his career and I consider him to be one of the best five investors alive today actively investing I really think he's top tier so These Warnings that he's giving you know I don't think that they're just fun tweets for him I actually think that he he does have a thought that the S P 500 the market will continue to go down to some extent um of course Michael burry has positioned his portfolio with this in mind Dr bury has both long positions and short positions he's long a bunch of very low valuation deep value stocks like Pharmaceuticals and he's short companies like apple which was it's kind of one of the big tech companies the last one to follow it was trading around 155 when he started his short so he's probably already made money on that short position so he's actually positioning his portfolio in a way that reflects I think his bearish view on the market so in this video we're going to go over a few different things first of all we'll be examining the implications of Michael Berry's claim that there's going to be earnings compression on top of multiple compression and what that even means what's the difference between earnings compression and multiple compression I'll explain it and I'll go over an article where other strategists think that this could be a problem and I also want to give an opposing view to Michael burry one where they think that things aren't quite as bad as a Market's preparing for both Goldman Sachs and JP Morgan have research out that shows that the markets are already pricing in a pretty significant downturn and they think there's a chance that investors might be overdoing it so in this video we'll be going over both perspectives Michael burries and the big Banks and we'll try to mix this is just the worst there's no other way to say it you know this is the worst start to the stock market since 1970.
so since a lot of us have been alive you know I look at the analytics here a lot of us are young enough that we weren't even born before 1970. I know I have some older viewers that are in that camp but I was born in 89 9. so this is the worst first half of the stock market since literally before I was even born that's how bad this year has been and it shows I was not spared from this you know I don't try to time the market I've looked at the data and in aggregate over long periods of time it's best to just keep invested so that's what I've been doing I'm currently down 31 percent on my growth portfolio the dividend portfolio with those defensive companies has held up better but this one is just getting crushed in this market it has not been spared so looking at this we have really bad news it's just depressing we have Michael burry saying this is going to get worse we're only halfway there we have literally people right now quitting just throwing in the towel this news made me laugh the Jupiter CEO quits a 68 billion dollar firm to sit on the beach and quote do nothing this guy is just done he's checked out he's been dealing with this market for the past seven months and he's probably like you know what I don't need this I already have money I want to sit on the the beach and do nothing and you know what I don't blame him I don't blame the guy if I had enough money to retire I'd probably want to sit on a beach and do nothing as well especially with the market over the past two years it's been absolutely horrible so you know this is the attitude people have and I want to go into Michael burry's prediction what he's claiming is that we've first experienced multiple compression multiple compression means if a company was trading at a let's say 30 p e ratio and it gets down to a 15 p e ratio but the earnings are are expected to be the same that's just multiple compression meaning the multiple that people are willing to pay for that same earnings has been cut in half from a 30 to a 15.
that's basically what happened in Netflix Netflix didn't really say that they're going to be earning less money in fact they actually beat their earnings estimate by 40 so they actually beat on their earnings but investors didn't like the story there was qualitative news that change so the multiples come pressed and Netflix isn't the only company that's had this happen basically all of them have had this happen multiples compressed for Facebook Facebook is still expected to earn a lot of money but the multiples came down multiples came down for PayPal still expected to earn a lot of money it was the multiples that compress the same thing for for apple and Microsoft and Alibaba and basically all of these companies the earnings projections are still positive for the S P 500 this year it's still expected that these companies are going to earn more and more money but the multiples have compressed now Michael burry saying part two we've had the First Act and now we're going to have the second act after the multiple compression which is that that p e ratio compressing next up earnings compression the actual earnings are going to go down here's an example of this with Microsoft you have the p e ratio everybody knows about this it's the price to earnings multiple so the multiple you're paying for the earnings of the company the P stands for Price which is the multiple Microsoft's price went from 35 p e to 24.
so it's the same earnings but we're paying a lower multiple form but now we have a risk a new risk in the market of the actual earnings going down if Microsoft earns less money over the next six months than they are expected to then the E has to get revised lower which would make the stock price drop even further than what it has and this is already starting to crack just a little bit take a look at Microsoft's this is their projected earnings and you can see the earnings revision earnings or visions up are five and EPS revisions down are 15.
that means five analysts think that they'll earn more 15 think that they'll earn less so the aggregate analyst estimate for Microsoft their earnings in the future has been moved down which makes this stock more expensive and it makes the company sell off and this is exactly what Michael burry's talking about so let's go ahead and dive into the reasons this poses a risk for the stock market we know that multiples have come down but now it's time for earnings to get compressed as well U.S profit margin estimates are too optimistic putting stocks at risk of more declines when Wall Street analysts downgrade their expectations this is according to Goldman Sachs group they say quote while rotations within the equity Market have signaled expectations of slowing growth index valuation does not appear to be providing a buffer for uncertainty around the path of future earnings so this is kind of their fancy way of saying investors kind of expect that we're going to see slowing growth potentially at least like a technical recession people not spending quite as much money because of inflation but that's really not being priced into the earnings the earnings models of these companies analysts have not brought the models down they say economists have begun to cut their top-down economic forecasts for GDP and yet fundamental company analysts are sitting there like a Darren headlights not knowing what to do with the numbers so we have economists saying hey look everyone the economy is slowing down GDP is going to slow down we might go into recession people are going to spend less money and then we have fundamental company analysts saying they're going to earn just as much my company is doing good look at the bright future it has right there's this conflict between economists and fundamental company analysts and they're not agreeing together Goldman Sachs thinks the economists are probably right the economy is slowing down and eventually the fundamental company analysts the analysts that make these earnings projections they're going to have to lower these earnings projections that's what the economists that's what Goldman Sachs thinks is going to happen and Goldman Sachs goes on to say quote we continue to recommend investors focus on stocks where they can be relatively confident confident in the forward trajectory of earnings including firms with stable growth and the health care sector Michael burry's top holding right now is Bristol Myers Squibb so he's right there with him he has most of his money 13 percent in a company that is in health care right a pharmaceutical company people still have to buy drugs especially Cancer Treatments whether or not we go into recession those earnings are pretty solid he says which has grown in earnings in the last several recessions so even during recessions pharmaceutical companies continue to grow their earnings so I think that Michael burry is correct in the analysts eventually eventually and I think it's going to be late in the game analysts are eventually going to revise the earnings of these companies lower and we've seen enough hints of this I just did a video on people getting laid off from work there's more and more companies in fact a huge uptick of companies laying more and more people off work the reason that they do that is preparing for bad times we also have little hints from different companies like Microsoft look what Microsoft has done over the past three months they said that they're going to earn less money because of Foreign Exchange right that was the first thing they said that they're cutting their advertising budget that was the second thing then they said that they're actually not really hiring anymore right they're slowing down on their hiring not layoffs they don't want to give that term but they're slowing down on their hiring all these companies they have a big connection with the economy like Microsoft like Salesforce like so many other companies are starting to just pull things back a little bit they're giving these little warnings these little hints that they're concerned about the future and I wouldn't be surprised at all in fact I kind of expected to go into this next earnings season and here that this stock sold off 10 percent because of lowered guidance this stock sold off five percent because of lowered guidance that's is the word you're going to hear over and over and over again lowering guidance lowering guidance earnings revisions downward lowered guidance that's what I think this next earnings season is going to be all about so while I have that concern and I fully believe that the stock market could go down another 10 20 percent I remain invested because I know that my companies can make it through this this might be a difficult time but all the companies that I'm invested in have very strong balance sheets and even though the earnings May compress along with the multiple I have a very long-term View and my strategy is just to write it out and just to hang on and I know that this is kind of the bearer of bad news the negative use so I wanted to offer a positive View and this comes from JPMorgan JP Morgan actually has the view that things might not be so bad that the fears of the recession might be overblown and I wanted to give this perspective as well because Michael burry's view is kind of like the most bearish one and JP Morgan's is a lot more optimistic here's the summary of it right off the bat they say if there there is no recession which is our view their view is that there's literally no recession right off the bat they're saying that their base case is that we're not going to go into a big recession which is definitely a positive thing so there's still people that believe even analysts that work at Banks like JPMorgan they don't necessarily think we're going into a terrible recession and they say that if we don't go into recession like investors are expecting right now then the really risky asset prices right now are too cheap so the riskier stocks that have just been crushed over the past six months they're too cheap if we don't go into a recession now they go on to clarify this because JP Morgan here is saying that they have kind of a contrarian view everyone thinks things are going to crap right now they think everything is going down the drain which it certainly feels that way right if we've been investing in the past six months you just think the world's basically coming to an end and JPMorgan sing We don't think things are great right now but we think that investors might be pricing in too much they say that many Equity market segments are down 60 to 80 and that is a substantial decline 60 to 80 percent and we know that's true many companies that we follow have been down that much or more they say positioning and sentiment of investors is at multi-decade lows that's also true so it is not that we think that the world and economies are in great shape but just that the average investor expects an economic disaster if that does not materialize risky asset classes could recover most of their losses from the first half are bullish and are out of consistent out of consensus view is hence a forecast of a lost year a recovery of H1 losses and risky assets so that's basically a summary of their take care that it's not that things are in great shape but investors are expecting economic Calamity economic disaster and if that doesn't materialize then there's a lot of upside to these stocks and I'm kind of viewing things in line with uh in line with JPMorgan here you know I think that there might be earnings or visions lower in the future but I don't know how much I view us going into a horrible recession like an 09 recession I think many investors have recency bias we know this is a true phenomenon where we view things are going to happen just like the res recent past and the most recent past real recession we've ever gone through was the 0809 Great Recession and that was a particularly devastating horrible recession because we had a housing mortgage crash a credit crunch a financial financial disaster with banks going under we had things happening that I really don't think are going to happen again and even though we're facing inflation right now we're facing Logistics problems these things could unravel there is a chance that inflation will come down and if things don't go quiet as bad as investors are expecting there could be upside to many stocks now here's where they get into the details of their contrarian view here that stocks may actually have more upside than downside they say that Equity sentiment investor positioning and Market internals have been bearish resulting in the worst annual start for equities in around 100 years with the exception of the Great Depression so this has been an extraordinarily bad first half of the Year portfolios are defensively positioned for recessionary outcome and corporate fundamentals should exhibit relative resilience for the rest of the year despite some softness and corporate guidance so they're saying that even if there's some softness in corporate guidance and we get all those revisions downward and lowered guidance that we're probably going to get even so portfolios are defensively positioned people raced into dividend stocks and Consumer Staples they raced into all the defensive companies and left all the risky ones and recessionary outcomes and corporate fundamentals should exhibit relative resilience so even companies right now their balance sheets are very strong they're set up well for a big recession for example the financial market like JPMorgan Bank of America Citigroup Ally Financial all these different financials are selling off like crazy and that's again because investors get really scared when we think we're going into recession but they don't have the same balance sheet they had back in oh wait companies right now are much better capitalized much better prepared to go through rough times than they did back then now they also mentioned the earnings projection here JPMorgan does hold the view that the S P 500 will grow its earnings this year in aggregate so they don't have the same view as Michael burry that earnings are going to compress across the board they think it's going to grow but less than the consensus there are estimates for for 2022 is for the S P 500 to have earnings per share of 225.
compared to the consensus of 229 so JPMorgan thinks that the s p 500's earnings will grow around seven percent for the year and this is less than consensus but it's still positive so you have the two point of views here one from JPMorgan where they have more of a positive view on things they think there's actually upside to the second half of the Year simply because investors are expecting total devastation and they think there's a chance that's not going to happen if Devastation and disaster economic disaster doesn't happen then JPMorgan will probably be right people will probably make money the end of this year if Michael burry's right and the earnings forecast just get crushed for these companies and the economy compresses and we have all sorts of issues then obviously this sell-off has further to go so let me know what side you fall on do you think the second half of 2022 will be a positive experience for the stock market will it go up from here or do you think Michael burry's right or about halfway through this sell-off it will go down maybe another 20 25 percent let me know what you think I'll look in the comments below and I'll talk to you in the next episode
Comments 0