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The man we're going to talk about today knows nothing about the stock market or economics; in fact, he could barely read or write. Yet he anticipated the bursting of the 2007 bubble ahead of all those who are now considered gurus for having predicted a major recession before it happened. How did he do it?
Well, this man had a foolproof method for figuring it out. But let's get some background. Anyone involved in investing, whether we're talking about an individual investor or an investment fund manager, must understand that a bull market with astronomical vertical rises is unsustainable in the long run.
This type of market will always, absolutely always, reach a peak and experience a sharp correction. Everyone knows that, just as everyone knows that after more than 10 years of a bull market like the one we're currently experiencing, markets are bound to correct sooner or later. And to know this, you don't have to be a guru, just have the basic knowledge to understand that this is always the case.
Now it turns out that everyone predicted the crisis of 2007 and everyone guessed right. This one that's coming, in fact, look at Robert Kiyosaki, a finance expert who's been warning about this crisis since 2012, and the financial media portrays him as the great guru who saw the 2007 housing crisis coming, even though that same year he was charging for his courses and lectures where he told people they should invest in real estate because property prices always go up.
But on the other hand, we have Michael Barry, and this man, we could say, did his homework very well, conducting an exhaustive and meticulous study of the situation, even risking the money of the fund he managed on the imminent bursting of the bubble. And while we might hold up Michael Barry as an example of genius, it was actually a huge mistake, because, as the famous saying goes, markets can remain stable and rational longer than your wallet can bear, and Michael Barry didn't bankrupt the fund purely by chance.
But let's see, who is this man I'm going to talk about today? He's not the man I put in the picture. Obviously, that's a stock photo. In fact, this man is already dead. He was a farmer of about 85 years old who, as I said, could barely read or write. One morning, he was having breakfast at 8 a.m. in a café when a young guy, about 25 years old, came in.
He worked as a bricklayer for a company. But he showed up at the door in a newly bought BMW, and his boss, a man of about 40, was waiting for him. He had quit being a bricklayer to become a builder, and this man was making a fortune. If you looked around the café at that moment, it was almost full of construction crews, drywall installers, painters, and so on.
Everyone was paying for a coffee with a 50-euro or a 100-euro bill, and this old man was looking at the café as if he were on another planet. Finally, he turned to me and said, "This is crazy. This isn't going to end well." I asked him what he meant, and he... He gave a brief summary of the situation: the guy with the BMW, a kid with no education working as a bricklayer, has a better car than the town's mayor; so-and-so, a guy with no job or prospects, has now become a builder and bought a villa and an apartment at the beach; and so he gave me a rundown of most of the people in the neighborhood, and many were agreeing at that moment in the cafeteria.
This man, far from any investment skill or knowledge of economics, ended up telling me a phrase that stuck with me: " Carlos, when you see fools making money this easily, it's because this is about to go to [ __ ], because this isn't natural." That was all this man knew how to tell me. And mind you, because this person, using common sense without being able to explain it in the technical language that a seasoned investor might use, reached the same conclusion as Rockefeller or whoever said the famous phrase: "When you see your shoeshine boy buying stocks, it's time to sell yours." At that time, I was working with a company that dealt in construction materials, and there was already something going on; almost everyone was paying with Promissory notes with a 180- day maturity date, that is, six months, which wasn't initially a problem because they were negotiated with the bank and issued over five years.
There wasn't a single note with collection problems, but a couple were already appearing that the bank didn't want to negotiate because there was a risk of default. The following month, three more promissory notes appeared with the same problem, and this simple piece of information, which may seem innocuous, was already indicating a growing trend in returned promissory notes.
Considering that this company supplied the end customer, it was clear that somewhere in the entire system, a problem was beginning to emerge, or some part was failing within that system. I remember that the owner of that company was going to build a central unit for the company that cost about three million euros; that is, new offices for the company's executives to meet in.
And notice how good an indicator this simple detail is, and how right Peter Lynch was with one of his principles: when managers engage in extravagant spending, we are close to the end. Since at that time I was already very involved in the stock market. It only took a brief analysis comparing it to the dot-com bubble with all the madness of 2007 to know that we were in a situation probably the same or probably worse.
I told the owner of this company, "If I were you, I'd save myself the trouble of building the central unit, because some indicators are already showing that this isn't going to last much longer." And you know what Carlos told me? "If everyone were like you or thought like you, nobody would do anything." And I didn't say another word.
The thing is, he built the central unit, but he didn't even get to put up the curtains, so to speak, because everything exploded before he had time to hold his first meeting in that central unit. Let's go back to the saying: "When you see fools making money easily, something is wrong." You'll understand now why cryptocurrencies can't have a future.
Look at the profile of those who have gotten rich with cryptocurrencies: a young man who hasn't read a finance book in his entire life decides to invest a thousand euros in a cryptocurrency; it goes up 10,000 percent, and the following week he's already selling you training that helps you... Getting rich by investing in cryptocurrencies...
do you know who's defending cryptocurrencies? People who need people like you to believe in them, or to believe that cryptocurrencies are the future, because for the first time they've found themselves in a privileged position, being among the first to put money in a box. And for that money to grow, more people have to put money in that same box.
Let's remember once again that cryptocurrencies are not an asset because they don't meet the necessary requirements to be considered an asset; they don't produce returns, nor do they serve any purpose beyond speculation. If anyone sees any kind of value in cryptocurrencies, I invite them to learn the basics of finance, and that way they'll stop being so foolish.
People are swayed by millionaires who believe in cryptocurrencies, for example, Marc, a great businessman. Sure, but he's not known for his investment skills, as we already explained in this video. Those Facebook twins are millionaires, okay, but they're not investors in this sense. Listen to those who have earned a reputation for being sensible investors because all the great investors agree that cryptocurrencies are crap.
And I'll finish. I'm taking this opportunity to answer a question about Facebook that someone asked me about its cost. This is just my personal opinion, but it's possible Facebook has reached its peak and all that's left is to decline. I'd have to analyze it more thoroughly, but using some of its own metrics, such as user growth, active users, and session time per user, that data is worsening considerably.
It has more and more zombie accounts. If it's still maintaining some profit, it's because now both the Facebook news feed and Instagram include almost more advertising than posts. But in the medium and long term, this doesn't look good. It's losing the war against YouTube, and it's already lost the war against TikTok.
In fact, the attempt to promote Reels to compete against text is not only causing it to lose against TikTok, but many Instagram users are already complaining because Instagram has lost its essence, so to speak. That's why Sackerberg is putting all his efforts into the metaverse; it's the company's salvation.
If the metaverse has a future, Facebook might be saved, but if it doesn't, we shouldn't rule out problems for the company's shareholders. I insist, for now, this is just an impression. We'd have to analyze it much more thoroughly. And that's all for today, guys. See you in the next video. Hugs!
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