A somber gut check
126: How much more pain is ahead for financial markets and the US?
Well boys and girls, we’re certainly witnessing a crazy and volatile end to 2022. People thought things were out of control in 2020 but the last several months have shown us that things can just continue to escalate to the point of sheer absurdity.
With the end of Fed stimulus and dovish policy fueled rallies, the tide receded and we got to see who was swimming naked.
Several high profile crypto ponzis caused significant losses to retail and institutional investors.
Sam Bankman Fried was arrested recently in the Bahamas at the request of the U.S. on eight criminal counts, which include wire fraud regarding both FTX customers and investors in the exchange and Alameda, money laundering, and securities fraud conspiracy among other things.
Dude is likely going to prison for a very very long time.
But the whole thing was and still is sketchy to say the least, especially given SBF was set to testify the next day.
And the twists and turns keep coming with the massive scam that FTX was — from Kevin O’Leary testifying before the Senate, claiming Binance aimed to put FTX out of business, to the revelation that an FTX executive, Ryan Salame turned on the company, by tipping off Bahamian regulators about the chances of fraud ( according to recently unsealed court documents).
We are still of the opinion that between the money laundering implications and the documented (ad undocumented) political contributions done through FTX, that there is a more sinister piece to the story than most of us know — there usually is with these types of things.
Just this week the SEC, who has done jack shit to “protect” investors over the last several years, charged
The US Fed raised rates by 50bps this week and The Bank of England followed suit today, raising interest rates by half a percentage point to 3.5% — the highest rate in 14 years.
In the corporate and business world things are slowing down as folks get ready for the holiday season and stop caring about company goals or KPIs they are being told to hit before year end. Everyone is either gift shopping, forming their OOO replies, or planning a New Year’s vacation where they can piss off until the first week of January.
It’s the perfect time to slow down and reflect on the crazy year we just had, but, also plan ahead for what we can expect to occur in 2023.
Here’s the thing.
The pain and chaos is going to keep coming. The Fed is going to stick to it’s course until more layoffs occur and more people lose their jobs. Corrupt politicians are going to keep robbing the treasury because they know time is ticking.
The games and coincidences are going to continue as people position themselves to survive what is coming.
Crime will rise, people will be laid off, other assets will crash, and it will get quite tense in the states and in some parts of the world as things turn primal and more people are forced to survive economic and social hardships.
Many of you following Arb Letter are lucky enough to be in positions where you are insulated from what’s been happening and what wil happen, but that doesn’t mean you can’t be more prepared and better equipped to deal with the down period that is coming, if it is already not here.
We’ve been getting a lot of questions about when the bottom is coming, if tech is a buy right now, when is crypto going to go back up, and when we can expect a Fed pivot to occur
Truth is you should really be planning for the worst possible scenario at the moment, as some of the secondhand effects that the Fed is causing through rate hikes (i.e. unemployment) are just starting to play out.
Markets, which initially loved the rumors of a 50bps hike earlier this week, soon sobered up and continued aggressively selling off into Thursday afternoon.
Unless you’re a sophisticated short seller or lucky put buyer, it’s been nothing but red for your portfolio as of late.
This post is meant to be a brief and concise set of tips for powering through the end of the year and making sure you’re in a great position come January. If you missed our other two most highly engaged December posts you can access them below:
2022 Holiday Gift Guide (150+ Gift Ideas for men and women)
I’ll put out our typical markets update on Saturday with a focus on some of the most beaten down sectors and industries so you all can begin brainstorming and identifying where the most opportunity will lie soon.
The good news is that all of this chaos and noise will bring about. a fresh bull run eventually — the struggle is making sure you stay afloat long enough to profit and benefit from it. Again, this is meant to be a brief extension of our post on how to prepare for 2023 - but with an incredibly straightforward tone.
If you’re uncertain about what 2023 will bring, these tips will position you to take full advantage of the chaos and hopefully come out shining when things get better.