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Kevin O'Leary "We're Going Into A CAPITULATION..." How To Prepare - YouTube
Channel: Corns Investing
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What鈥檚 up everyone, we are proceeding聽
into the second half of 2022 with caution,聽聽
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as that鈥檚 after the worst first聽
six months to a year in decades.聽聽
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So if that鈥檚 not bad enough and the capitulation聽
hasn鈥檛 come yet then we can expect some tough聽聽
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times ahead in the second half of 2022. So in聽
this video I share with you a macro perspective of聽聽
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what鈥檚 going on and what you should be considering聽
in your portfolio right now, before that聽聽
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capitulation hits us. You need to be ready people,聽
so please stick around so you don鈥檛 miss that.
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A lot of risky sentiments were seen in most areas聽
of the market, driven by soaring inflation and the聽聽
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Fed's aggressive monetary policy towards fears聽
of slowing growth and increased borrowing costs.聽聽
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This suggested that a new regime of monetary聽
policy could make a soft landing. But at the聽聽
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recent European Central Bank Forum in June, the聽
much hoped-for "soft landing" hit some turbulence,聽聽
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following remarks from the various bank聽
governors. And here鈥檚 what they had to say:
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The Fed Reserve Chairman Jerome Powell聽
said: "We are raising interest rates,聽聽
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and the aim of that is to slow growth down,聽
so that supply will have a chance to catch up.聽聽
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We hope that growth could still remain positive.聽
But if you look at the strength of the economy,聽聽
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households are in very strong financial shape,聽
they've still got a lot of excess savings,聽聽
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from forced saving of not being able to travel and聽
things like that, and fiscal transfers. The same聽聽
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thing is true with business, with very low rates聽
of default and lots of cash on the balance sheet.聽聽
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The labor market is also tremendously strong,聽
still averaging very high job growth per month.聽聽
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Overall, the U.S. economy is in the position to聽
withstand tighter monetary policy, we think."聽聽
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Which is interesting and聽
may imply plenty of buffer聽聽
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to be able to shock the impact of聽
increased interest rates and inflation.
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The ECB President Christine Lagarde added that:聽
"I don't think we are going to go back to that聽聽
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environment of low inflation. There are forces聽
that have been unleashed... that we're facing now聽聽
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that are going to change the picture and the聽
landscape within which we operate. Certainly聽聽
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in this part of the world, the energy shock that聽
we have suffered, are suffering, and will continue聽聽
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to suffer has had a major impact. I think this is聽
not specific to Europe, but there is certainly a聽聽
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dependency of European countries and the euro area聽
to external supply from foes. That is certainly聽聽
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a strong driving force of inflation on the price聽
of energy and food... as well as supply shocks."
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And the Bank of England Governor Andrew Bailey:聽聽
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"I think the U.K. economy is probably weakening聽
rather earlier and somewhat more than others.聽聽
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Unfortunately, there is going to be a further聽
step-up in U.K. inflation later this year聽聽
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because that's a product of the way the energy聽
price cap interacts with the energy prices we have聽聽
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observed over the last few months. I would imagine聽
that will put a bit more persistence [on the U.K.聽聽
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inflation rate] and we will have to explain聽
that." So some interesting perspectives there聽聽
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on how the current inflation in impacting聽
the various regions and what could happen.
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But taking it back to the markets, we have seen聽
The S&P 500 (SP500) plunge 21% since January,聽聽
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losing more than $9T in market capitalization,聽
and suffering its worst first half of a year since聽聽
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1970, while the Nasdaq Composite (COMP.IND) and聽
Dow Jones (DJI) fell 16% and 30%, respectively.聽聽
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The 10-year Treasury yield climbed from 1.5% to聽
around 3.00%, and Bitcoin has tumbled nearly 56%聽聽
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YTD to under $20,000. But one of the only聽
pockets of the market that gained in the聽聽
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first-half was commodities, with crude聽
oil going from $75 to well over $100聽聽
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a barrel and U.S. gas prices nearly tripling聽
before falling back in recent weeks.
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So as we head into H2, many are worried that聽
central bank actions could push the global聽聽
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economy into a downward spiral. The latest聽
reading from the Atlanta Fed's GDPNow tracker聽聽
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is now in negative territory, predicting聽
Q2 real GDP growth of -1.0% as of June 30,聽聽
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down from +0.3% on June 27. If that print comes聽
to fruition, it would mark two straight quarters聽聽
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of negative real GDP growth (-1.6% in Q1)聽
making it a technical recession for Atlanta.聽聽
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It's possible that "we see two negative聽
qtrs in a row," as "there are signs that,聽聽
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the foundation of the [job creation] expansion is聽
cracking," as small businesses, which make up a聽聽
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large chunk of GDP, are getting hit the hardest by聽
margin squeezes amid persistently high inflation.
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A good checkpoint on this would be Earnings聽
season, which kicks off later this month,聽聽
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as this could present the next trading聽
risk, though you never know when buy-the-dip聽聽
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institutional managers and retail investors聽
will step in and gain control of the markets.聽聽
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"If we have any words of comfort, it聽
is that, universal losses at this pace聽聽
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rarely take place in successive quarters,聽
but this is not the same as saying that,聽聽
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further losses should not be anticipated. "This聽
still very much looks to be the middle of the聽聽
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story, , as we are yet to see any signs that聽
the weather is about to turn for the better."
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During bear markets, stocks have聽
declined as little as 20% and as much as聽聽
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57% during the financial crisis of 2008-2009.聽聽
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Likewise, the peak to trough period has been as聽
short as slightly over one month (at the beginning聽聽
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of the COVID-19 crisis) and as long as 30.5 months聽
in the wake of the dot com bubble crash of 2000.聽聽
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Each one is unique and runs its course聽
differently from all the others.
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How do we keep calm and, in the midst聽
of all this?? "buy when there's blood in聽聽
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the streets" as it is commonly said? One聽
consideration is by investing with the mindset of聽聽
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a landlord rather than a short-term trader. This聽
is because, bear markets are a fabulous time to聽聽
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accumulate real estate investment trusts ("REITs")聽
into a diversified stock portfolio. This may go聽聽
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against some commonly held misbeliefs about real聽
estate during periods of rising interest rates聽聽
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and economic weakness. But here are three reasons聽
why we believe now is a great time to buy REITs:
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First, REITs historically outperform during聽
periods of high inflation as real estate values聽聽
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and rent rates rise along with general prices.
Secondly, REITs historically outperform in the 3,聽聽
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6, and 12 months after increases聽
in the Federal Funds rate;聽聽
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as rent growth during these periods more than聽
offsets any headwind of rising borrowing costs.聽
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Third and finally, REITs historically聽
outperform during late cycle periods聽聽
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and recessions as most tenants do not want聽
to give up their real estate locations聽聽
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by defaulting on their lease聽
unless they absolutely have to.
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REITs' rental revenue tends to be more stable聽
during recessions than the average non-real聽聽
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estate company. Moreover, during periods of聽
elevated inflation, businesses agree to pay聽聽
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higher rent rates so as to continue the use聽
of their valued real estate infrastructure.
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So some interesting considerations there for聽
you but the most important thing to do in a bear聽聽
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market is to prevent yourself from panicking聽
and making rash decisions with your money.聽聽
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Do not feel that you need to lock in unrealized聽
losses in order to prevent further losses.聽聽
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Instead, take on the mindset of a landlord. Ignore聽
the digital red ink and focus on the operations of聽聽
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the businesses and real estate that you own.聽
Only consider selling if you are sure that聽聽
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the business model is permanently impaired聽
and likely to go to zero. So there you go.
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This video is not financial advice, a buy聽
or a sell recommendation, but is meant to聽聽
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bring some new and exciting stocks to your聽
attention for you to do your own research..聽聽
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As always I would love to hear from you, so聽
please let me know your thoughts on these聽聽
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top stocks in the comments section below and聽
what other stocks are catching your eyes lately.聽
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And If you are new to my channel, please ensure聽
to subscribe and hit the bell so you are notified聽聽
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when I upload new videos. If you would like to聽
see more videos like this, please check out this聽聽
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video right here or this playlist right here to聽
watch equally insightful content from the channel.聽聽
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Thank you so much for being here and I look聽
forward to have you in my next video. Thank you
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