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10 million dollars were spent on each of the six different bonds the year was 2005 and everyone thought he was crazy he predicted the U.S mortgage-backed security that was once a stable and reliable investment is now a ticking bomb and it was just a matter of when but his bet was no gamble but by the time the rest of the world would notice it would be too late it took until the 11th of October 2007 for the S P 500 to top out at 1576 points a year and a half later on the 10th of March 2009 the s p closed at just 676 points a 57 crash he ended up making a personal profit of a hundred million dollars his investors were also Safe in His Arc amassing over 700 million in cumulative profits from his single bet he's the physician that doubles as an investor and hedge fund manager he's Dr Michael Berry had caught up to prospectuses and I read the prospectuses and I looked at these polls I could see the credit standards Within These pools deteriorating just quarter to quarter first how could you tell it there was essentially crappier mortgages being put into these pools but in the Years leading up to this amazing success Dr Berry received constant criticism from the investing world and even his own investors criticism that ultimately led him to close his fund after all had been said and done but why do we mention this now after all this was 15 years ago well you guessed it history is currently repeating itself just as he was the one to see that something was seriously amiss in the burgeoning subprime mortgage Market he's also making dire predictions for this fiscal year and Beyond Michael Berry originally forewarned of significant inflation as a result of the fed's massive money printing back in February last year he was tweeting about getting ready for inflation using the hashtag Doom to repeat and criticizing the Federal Reserve and the U.S government for their trillion dollar stimulus program at the time he was the contrarian but everything appeared to be going according to plan you know the Fed was printing money yeah but the inflation remains low at the moment the most recent data available indicated an annual inflation rate of only 1.7 percent that's less than the federal government's goal but in typical bury form he was simply early again one year later we're currently experiencing an inflation rate of 8.6 percent and Michael Berry believes the worst is yet to come he predicts it would be so bad that the S P 500 could lose another 50 from where it sits today on May the 3rd Barry tweeted regarding Paradigm shifts and speculative Peaks the S P 500 bottomed 13 lower than 2002's bottom in 2009 17 lower than 1998's LTC M crisis low in 2002 and 10 percent lower 1970s low in 1975 going centuries back it was 15 lower than the covered low SMP value of 1862.
roughly it'll appear to be 16 nominal P of 9 in historic range but what he's nothing is the trend we've seen over the past 25 years the bottom of a current market crash usually lower than the one that came before it by about 10 to 15 adding that 15 below the S and P low that we saw in 2020 takes us down to 1862 points that's crazy because it shows that Michael Berry is anticipating a peak to truff fall at 61.4 percent which would bring us back down to the historical normal Schiller P of roughly 16.
Michael Berry projects a further stock market decline of more than 50 percent the market has risen by 6.5 percent over the past few weeks but as far as we've seen over the past few days short-term bounces don't necessarily mean we're out of the woods and Michael Barry actually commented on this potential scenario it is a bold prediction that was once again met with criticism he recently tweeted quote dead cat bouncers are the most epic 12 out of the top 20 NASDAQ one day at least happens during the 78th drop from the 2000s top nine of the top 20 S P 500 one day rallies happens during the 86th drop from the 1929 top again that's a lot of numbers to wrap your head around but what he's alluding to here is that even during the worst times the statistics show that it's actually quite common to see strong short-term recoveries amongst the longer term downward Trends 12 are the top 20 NASDAQ bounces happens along this slope nine are the top 20 S P 500 bounces happens along the slope on the 5th of may he added quote after 2000 the NASDAQ had 16 bear Market rallies over 10 averaging 22.7 before bottoming out 78.
after 1929 the Dow had 10 bear Market rallies over 10 averaging 22.8 percent before bottoming down 89. so Barry certainly seems confident that we're simply in the early stages of a much bigger problem and to further his point he also took the time to comment on the comparatively low trading volumes we've seen during the 2022 downturn this far withdrawals from the markets haven't even really started so in Barry's eyes we're likely going to see a lot more selling volume coming over the next few years which would lead to much larger declines in the stock market and it's a scenario that he said he's not looking forward to facing on the 24th of May he tweeted as I said about 2008 it's like watching a plane crash it hurts it's not fun and I'm not smiling and that's the interesting thing to remember with Michael Barry claims to have witnessed all of this before first during the.com bubble and then again in 2008 he is repeatedly observed these recurring patterns in human behavior and he has researched the excess and greed that led to the most significant booms and bursts I believe that this is what gives him such Assurance when he discusses these issues he tweets about them and he just shared this white graphic on Twitter which I found to be pretty Illuminating the 10-year S P 500 run-up is shown in yellow followed by the.com Bubble run up and the run-up prior to the Great Depression it's pretty scary how similar they are and Michael Barry comments on this saying third time's a charm Gotta Love human nature nothing if not consistent you know that this pattern of human behavior is familiar to him because he has seen it often and knows where it leads he tweeted that he had just witnessed the biggest speculative bubble of all time by two orders of magnitude just a year prior it may have reached its breaking point in his eyes now but the stock market is simply a market after all we must keep in mind that the economy is of course the main justification for Barry's viewpoints we already know Barry's views on inflation and it's true that the FED is Raising interest rates to make it more difficult for businesses to borrow money however it's important to keep in mind that Rising interest rates also have an impact on consumers who are the basic pillars of the economy knowing that more of their savings and income are going towards paying off debts consumers unfortunately have less money to spend in tough inflationary settings that result in significant interest rate increases this typically triggers a downward spiral because ideally lower discretionary spending results in lower sales for the businesses in which we have Investments Barry has made hints that the current state of the consumer Market isn't great personal savings decreased to 2013 levels the savings rate to 2008 levels and revolving credit card debt increased at an all-time high returning to its pre-coverage peak despite the trillions of dollars that were dropped in their laps which were accompanied by the threats of a consumer recession and additional earnings difficulties bury is plainly concerned about the shrinking of savings since it not only encourages individuals to use credit cards more frequently in a climate of rising interest rates but also because it results in less spending which affects the bottom line of the companies in which we have Investments you know one anecdotal piece of evidence Barry mentioned lately was the q1 revenue figures from Amazon as reported by CNBC who stated quote Revenue at Amazon climbed seven percent during the first quarter compared with 44 expansion in the prior year it is the second consecutive quarter of single-digit growth and the slowest rates for any quarter since the.com implosion in 2001.
Barry also published this tweet in response contrasting U.S personal savings with GDP as you can see the savings are covering less and less of America's GDP at a point where America's GDP is shrinking so overall in Barry's opinion yes we have inflation interest rate hikes reduction in consumer savings thus less discretionary spending which ultimately leads to lower profitability of businesses and what we've seen thus far re-ratings on their stock Dr Michael Berry is Infamous for deleting his tweets but we know he knows more than he's letting us on do you think Barry is right with his stock market predictions chop your thoughts in the comment section below don't forget to like share and subscribe to our YouTube channel so you don't miss out on any of our videos see you next time bye
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