Wall Street Unplugged
Episode: 867March 15, 2022

What needs to happen for the market to bottom

March Madness is almost here! Today’s podcast starts with my predictions… some comments on Tom Brady’s “unretirement”… and the unlucky fan who bought his final touchdown ball earlier this week. [0:20]

Volatility is raging in 2022… I explain why the “superbull” market of recent years is over… and why the current environment is like nothing we’ve ever seen before. [1:45] 

The bull market in SPACs and meme stocks is dead… I highlight how younger investors are getting crushed in this market… and the implications for the crypto space. [8:00]

Inflation is hitting everyone. I dig into the Fed’s tough situation… and why we’re likely to see further downside in the market. [13:07]

Next, I break down why fundamentals are useless right now… and highlight some examples of great companies getting hit in spite of their solid earnings results. [16:30]

Lots of folks are wondering when we’ll see a bottom in the current bear market. I explain what needs to happen before we see a new uptrend for stocks. [20:00]

Lastly, everyone is feeling the pain in their portfolios. I share why Moneyflow Trader is the best strategy to protect yourself AND generate gains when the market sells off. [27:57] 

Inside this episode:
  • March Madness predictions [0:20]
  • Why the “superbull” market is over [1:45]
  • SPACs and meme stocks are crushing young investors [8:00]
  • The Fed’s agenda on inflation [13:07]
  • Why fundamentals are useless right now [16:30]
  • What needs to happen before the market bottoms [20:00]
  • Moneyflow Trader: The best way to protect your portfolio [27:57]
Transcript

Wall Street Unplugged | 867

What needs to happen for the market to bottom

Announcer: Wall Street Unplugged looks beyond the regular headlines heard on mainstream financial media to bring you unscripted interviews and breaking commentary direct from Wall Street right to you on main street.

Frank Curzio: How is it going on out there? It’s Tuesday, March 15th. I’m Frank Curzio, host of the Wall Street Unplugged podcast, where I breakdown the headlines and tell you what’s really moving these markets. With March Madness right around the corner, tomorrow I’m going to break down my picks like I do every year. College basketball is my favorite sport by far. Kansas Jayhawks, as you guys know, my favorite team probably in all sports. I think the Eagles are a close second. I was watching Selection Sunday, which is really cool, seeing all the teams that get in, and cheering and meeting the coaches, the seating.

Frank Curzio: And right in the middle, what happens? You have Tom Brady, who announces he is coming out of retirement. He said that after spending one month at home with his wife and kids. He said, “I’m ready to come back right away. I don’t care what team it is.” So, he’s still signed with Tampa Bay. He is coming back. That was pretty quick. But the first thing I thought when he made that announcement was how shitty the guy felt, or feels, right now who paid $514,000 for the last TD ball that Brady threw. He paid $514,000 for that ball, last TD. Now, there’s still hope Brady could get hurt in preseason. Hopefully, that doesn’t happen.

Frank Curzio: But the value of that football just went from 514,000 to probably $514. That was my first thought. But good for him, he’s coming back. Anyways, made right in the middle of Selection Sunday of the NCAA tournament, can’t wait. Not just because it’s fun, it’s really cool, and it’s my favorite sport, but it’s really depressing times. Looking at stocks across the board, no matter what you own are getting murdered. Everyone, I don’t care, professionals, I’m seeing buy ratings on 90% of stocks are down 20%, 30%, and almost everyone is getting crushed. I’m down a ton, I know many of you are down as well.

Frank Curzio: Getting lots of questions mostly from concerned investors, subscribers on what to do next? How can you protect yourself? And before I get into that, I want to explain what’s going on right now, because I think there’s a lot out of new investors out there. When I say new investors, people just started trading maybe over the last six, seven, eight years. You go back even over the past 10 years, which means you never lived through a true bear market. You saw a couple here and there, maybe if you’re in gold and you have huge exposure to gold, you’ve seen it in there.

Frank Curzio: Where, wow, this company just reported great metrics or showing that the deposit is much bigger, higher grade. And all of a sudden the stock will go up for 5%, 10% and then crash because that’s a liquidity then everyone is looking to get out, that’s what happens in bear markets. Positive news are used as liquidity events to sell. But in a bear market, a true bear market, not one where we saw in late 2018, really quick for a couple months, that was a true bear market like this. It’s the opposite of a super bull market. I know this sounds like third grade shit.

Frank Curzio: And maybe you’re saying, “Frank, no kidding, it’s the opposite.” But hear me out. Because based on the emails I’m receiving from you, especially in the past two months, I’m not sure that a lot of investors out there understand this. So, we have a traditional bull market, traditional, not a super bull market, but traditional bull market, one where interest rates are at the lowest levels in our country’s history, basically zero. The Fed is artificially keeping those long-term rates low by buying treasuries, which means it’s injecting cash constantly into our system month after month.

Frank Curzio: What does that do? It pushes the value of every asset considerably higher. So, you’re seeing a big wealth gap, because a lot of people on low end of that gap do not own their own assets, they don’t own houses, maybe they don’t own cars. But the other end, real estate prices, cars, collectibles, and of course, stocks are roaring, roaring higher. It’s been doing this pretty much since 2010, outside a little blips here and there. Growth becomes a huge theme. Those names that have a high growth potential start trading at multiples much higher than the overall market, which usually trades as 17, 18 times sold earnings, which is like the 10-year average.

Frank Curzio: The S&P 500 was trading at 22, 23 times forward earnings. And now, with stocks coming down and earnings still holding up for now, trading I think below 20 times sold earnings. But you’re seeing companies trade at 30, 40, 50 times earnings because of that massive growth potential. So this includes technology names, FAANG names, Facebook, Apple, Amazon, Netflix, Google, also Nvidia, Tesla, biotech, AI names, cloud, cybersecurity, data analytics, all of these trade at a huge premium to the market when we have these certain conditions. All great companies to own, those conditions, low interest rate environment.

Frank Curzio: Where you have earnings growing, sales are growing faster in the market and people are willing to pay sometimes two times, three times the average multi S&P 500 to own these high growth names. What else do you see? You see companies get funded like crazy with IPOs. Massive amount of IPOs have come out in the past seven, eight years. Mergers and acquisitions, hundreds of billions of dollar in mergers and acquisitions. And it’s fun time, the S&P 500 tends to outperform or exceeds its 8% average annual returns and that’s dating back to the 50s, right? And during these times, sentiment is positive, everyone is high fiving each other, making a lot of money.

Frank Curzio: People are taking risks. The value of their assets, real estate, stocks, collectibles continue to move higher. And what does that do? It encourages more spending, especially on stupid shit, discretionary crap, like what you see at Five Below. A place that makes a fortune selling stuff that’s 100% useless. Fidgets, phone chargers that last two weeks, plushies, noodles for your pool. And you see people just pulling out of that place jam packed, right? It’s like a Dave and Buster’s too. Jam packed, right? Discretionary stuff.

Frank Curzio: Just people just spending, entertainment products, theme parks, video games, buying an extra car, more new cars, getting coffee twice at Starbucks a day. I got money to spend. I got money to burn. It’s great times, everything is going higher. Those are all things that make people happier. I don’t get the psychology of that of buying stuff making people happy because eventually it doesn’t. But that’s different argument, but you get my point. Now, these are conditions we have from 2010 to 2019, then COVID hit. Then what happened? Forced lockdowns.

Frank Curzio: Government decided to go on a printing frenzy. We all got it because everyone was staying home, not making paychecks, regardless, won’t get into the science or anything like that. But they spent trillions, 10.5 trillion to be exact, basically handing out checks directly to individuals, families, and businesses saying, “Here you go, bypassing the economy. You don’t have to work, here you go.” Then what happened? Markets came roaring back very, very quickly. Look at February through March, and that was it. That huge downturn, I think it was about 33, 35%, S&P 500, then we started coming back.

Frank Curzio: Because no one believed that the government would ever spend 1 trillion, 2 trillion, nevertheless, 10.5 trillion to shore up these markets. But hey, there’s no risk in that because we did it in 2010, we spent a ton of money and look what happened, the government made money on all the warrants. So, just spend money, it’s the perfect recipe, everybody is happy. Stocks go higher, politicians get funded, everything, right? Everybody is happy. So, this is going through early 2021. Now 2021, our government decided to keep rates low, continue to keep them at historical lows.

Frank Curzio: And they also continue to eject trillions. So this is a monetary, which is the Fed and fiscal of the government into our economy, even though asset prices went back to all-time highs. And this was over a year ago post-COVID. So what happens this creates super crazy bullish conditions. Now we see, the emergence of SPACs even further, we saw a few but they exploded last year in 2020, the end of 2020. And SPACs, there’s a reason why they disappeared a while ago, right? Because when it comes to SPACs, you have to get enough stupid people to buy these things at $10 or over without worrying about the fundamentals or looking at anything.

Frank Curzio: All they’re looking at is the story, the name of the company and they get excited. But investors were smarter than that a while ago and SPACs kind of disappeared. Now, they came back out. Again, which only worked if those Wall Street insiders created these things, getting shares at a dollar or $2 or $3, were able to sell the new company that just merged with to individual investors who are willing to buy for over a $10 a share. And they’re betting investors will buy an exciting high growth name that we just merged, like a Virgin Galactic that’s sending everybody to space. We all go to space, everybody is going to space, it’s great.

Frank Curzio: How did we get bullish? I don’t know. How are you going to generate revenue over the next five years? I don’t know, but we’ll go into space. Awesome, really, really cool. So now, you’re buying a company that you’re excited about getting covered all over the major networks, CNBC, everywhere, Fox Business, you name it. And a lot of these people buy them without looking at the fundamentals which showed a company trading at what? A 12, 15 billion dollar valuation generating less than a million dollars in sales, think about that for a minute. Think about those numbers.

Frank Curzio: And those of you still holding these names because you were told a great story while the guys who created the SPAC, Chamath and Richard Branson cashed out for hundreds of millions of dollars, you get it wrecked. So, SPACs are just one of the crazy things you see during a super bull market. The other thing is a rise of the shittiest of shittiest of stocks. Like GameStop, AMC, and Bed Bath & Beyond, and a lot of these crazy SPACs. And you are seeing a lot of these names go higher because they just in the right sector, whether it’s ESG, AI Cloud.

Frank Curzio: And people get excited, but I think don’t care about the numbers, numbers don’t make sense. So, you’re seeing an amateur investors, many young investors, start to make a lot of money in the stock market and they start believing that they’re experts, they know more than everybody else who’ve been doing this for 20, 30 years. Again, these trends happen often, just hasn’t happened in a very, very long time. Because our Fed doesn’t allow us to go into a recession, we’re not allowed to have a recession ever. They’re just going to print, print, print. Even though recession is people get aggressive, you got to pull back.

Frank Curzio: No, you can get aggressive, aggressive, aggressive. The Fed is always going to be there, easy money. But now, you have these kids believing they’re experts because the experts are getting outperformed, because they’re not going to buy stuff that’s trading at 30 times, 40 times sales, nevertheless, a 100 times, 200 times sales, which is some of these names. And then, you see like that arrogant period where these young investors start to create YouTube channels, teaching new people how to trade from their massive two years of experience of making money in the market, where every single thing’s going higher, especially the shittiest, shittiest names.

Frank Curzio: Telling to buy everything. What do they do? I don’t know what they do, but just buy it. It’s ESG, it’s great. In a super bull market you also see many projects get funded to the point where it’s easy to raise millions of dollars in capital. The only thing you need is a good idea and to the right growth market, and this idea could be written on a cocktail napkin, which is a white paper. And you’re able to raise over 10 million dollars. And you’re able to raise this money which nobody sees, “Hey, they just raised 10 million.”

Frank Curzio: Well, sometimes that’s giving dirt cheap stock away to Wall Street guys or a hedge fund that also includes warrants that they’re able to get out of almost immediately. So, they don’t care it’s no risk to them. They don’t care about the business model, they don’t care if they’re successful. They know it they’re going to get out at a massive 3, 4, 5X gain without taking on any risk. They’ll say that first they can sell their stocks, and we’ve seen that also in the crypto markets over the past two years. We see Bitcoin hitting new highs last year, pushing well past 60 grand.

Frank Curzio: A ton of crappy crypto projects saw a massive funding. And looking at 2021, more money was raising crypto that year than every year before it combined, to the tune of 38 billion dollars. Yes, I need to sip my coffee to get through the rest of this. So, in a super bull market, like we’ve had over the past two years post-COVID, everyone is making money. Everybody is high fiving and everyone is happy. And the worst investor you are, the less you know about stocks, the more money you’re going to make. Because when you have a super bull market, the crappiest stuff goes up much, much more than the really good names.

Frank Curzio: The industry leader, Starbucks, Walmart, United Health Group, Cigna. Try telling someone you’re buying Walmart two years ago, they laugh at you, “You’re buying Walmart really? Okay. You buy Walmart. I’m buying this ESG company. They just went 45% yesterday, and I’m in it already.” Can’t compete, is what happens to super bull markets. Where macro conditions, the macro conditions which I know a lot of people don’t want to pay attention to and macro is a boring word, but they are the best in our country’s history, interest rates near zero. The Fed massive punch bowl that everyone could drink from, here’s the money, here you go. No problem.

Frank Curzio: Now conditions have changed. The Fed in November said inflation is not going to be transitory, no freaking kidding. All of you knew this except for the Fed. Anyone who owns their own home, owns cars or is paying their bills, knew that inflation was out of control buying whatever. But the Fed didn’t know that. No, it’s going to go away like it always does. We are using a playbook that never happened before in our country’s history to try to dictate what’s going to happen in the future. So the Fed, when we hire the smartest economist in the world, totally got this wrong and is still getting it wrong.

Frank Curzio: So they say, we’re going to have to start raising rates aggressively to combat inflation. They’re also going to start tapering, which is lowering the amount of treasuries that they’re going to purchase each month to where it’s going to be zero probably over six month time period. Now, what does that mean? Because this is important for you to understand. That means that all the excess money, all the leverage that has come into the market post-COVID even before COVID, a lot of that, trillions has to come out of the market. And when you’re reduce leverage, you’re reducing debt.

Frank Curzio: It’s usually a really, really ugly process because it creates an environment where institutions, even individuals are forced, they’re being forced to sell their assets. It’s not that you’re buying a stock and you’re holding it, you bought it at whatever, 20, and it goes down to 10 you still own it. These are people that are our margin, using debt now as you get those margin calls. There’s a reason why you saw the Nickel Market shut off for three, four days. Now they got to try to reopen with price controls. We trade from 20,000, over a 100, 000, that’s leverage, that’s someone using massive amount of leverage that’s on the wrong side of the trade.

Frank Curzio: That’s what creates these major, major moves in and out. Not just the algorithms, but the fact there’s so much leverage in the market. And remember, we’re talking about hedge funds and money managers that don’t have a lot of exposure. So meaning, what’s their risk state. Some of these guys had their money in their funds, but hey, if I got like a $3 billion fund and it goes to zero, one, I made a fortune over it, but why not try to leverage the shit out of it and try to make it go to 10 billion to 20 billion. Because now I’m really, really going to be rich. And if I’m wrong, what happens? Nothing.

Frank Curzio: It goes under and I’m going to start a new fund and a lot of invest is going to invest in me again. That’s what happens. So, it almost promotes you to take on excess risk, which is easy to do in a low interest rate environment. It’s easy to borrow, it’s easy to get money, rates are low. Conditions are ripe, they are not ripe anymore. So, you’re seeing a lot of stocks and a lot of people being forced to sell their assets regardless of price. And that’s what we’re seeing today, which creates a true bear market. When I say a bull market is the opposite of a bear market, bear market the opposite of a bull market.

Frank Curzio: Where if you really look at it where you’re saying the bear market is opposite of a super bull market, it’s every stock regardless of fundamentals. If it’s an industry leader, small cap or whatever, in a super bull market, everything goes higher. It’s the opposite in a bear market. Again, people from the emails that I’m getting, this sounds obvious but it’s not because people are emailing me and talking to me. They say, “Frank, this company reported great earnings. This is a good name. How come it’s down 20%, 30%?” Same reason why some of these crazy names were up 300%, 400%. Freedom market where everything goes lower.

Frank Curzio: It’s not just the speculative assets that are getting wrecked which makes sense that nobody wants to speculate where the markets are crashing. We’re in the face of rising interest rates, high rate inflation and war. So, you see in speculative names, names that didn’t have the earnings potential behind those high growth names, down 60, 80% or more. But not only that and that’s expected, you’re even seeing the good names start to sell off as well like semiconductors. Industry leaders like Ford, Starbucks, Nike, Salesforce, JP Morgan, McDonald’s, 3M, Home Depot, these stocks are down 30% plus from their highs. 30% plus from their highs.

Frank Curzio: And you’re looking at many of those, get Ford out of there as I have been bearish on Ford. But a lot of these things reported solid earnings the last two quarters, it also raised guidance last quarter, but none of that matters. And I know it’s confusing to you, but none of it matters in a bear market, just like none of it matters in a bull market. It’s what you’re talking to the experts. The more you know in a bull market, the less money you’re probably going to make. Because it didn’t matter when GameStop surged to $304 a share or 20 billion valuation while losing over 200 million a year.

Frank Curzio: And the company is not expected to be profitable until 2025 or later, 20 billion valuation. Or AMC’s valuation last year surged at $23 billion. Meantime, it posted a 1.2 billion loss and also not expected to generate of earnings for guess it, throw a year out there and make sure it’s after 2025, because it’s probably not even going to be 2027, it’s going to be after that. It’s funny they’ve taken a stake in gold projects, they’re getting into NFTs. They have this cash. They know that they can’t have this valuation just being a theater company. So, they have to try to get into other markets because this valuation makes no sense.

Frank Curzio: But that’s what happens. You’re going crazy saying AMC should be at $3 and it goes 30, 40, whatever. GameStop should be 15, 20, $30 a share, it goes at $340 a share, you could be blowing people out of the water. That’s why you saw a lot of these hedge funds going. This is outrageous at 120, went to 340 and that’s why I put some of those hedge funds out of business, they had a reasonable capital. So, in a really bear market like we’re seeing today, even the best of names don’t work. And you can use fundamental analysis, you could use logic. Who had great cover that Qualcomm report a record earnings raised their guidance last quarter.

Frank Curzio: And it’s literally in every major growth trend you could think of. I mean, I went there to see that presentation. I get a media badge, it’s for the Consumer Electronics Show. So, it’s just open to the media, which is the day before the Consumer Electronics Show. Holy cow, they blew it away. They took a metaverse EVs, AI, data analytics, posted a lot of this stuff on TikTok and live videos and stuff, @FrankCurzio if you want to follow, same with Twitter. But this is a company that has steady revenue streaming licensing to technology.

Frank Curzio: Just licensing technology to the top mobile companies in the world. And even a name like this that checks off every single box and even pays a dividend is down 20% plus from its highs. But you have to realize in a bear market everything gets annihilated which we’re seeing today. And it’s tough, I get it, it’s tough. Now the question is, when does this end? Or how does it end? And we used to like quit bear markets and then the Fed’s like, all right, we got to reverse costs and lower rates again, or throw more money out of it. One thing that can help it end is if the Fed stops tightening, that’s going to help, but they haven’t even started to raise rates yet, think about that.

Frank Curzio: I mean, the major industries are all down 20% from their highs. This is a true bear market and the Fed hasn’t even started to tighten yet. I mean, never in its history have we had a tightening cycle, when we’re seeing stocks across the board trading below 200 a day, moving averages, all the major industries. We’ve never seen that the history, ever, that’s happening. They haven’t even started, again, started raising rates yet. We could bottom one inflation eases, and as you know it’s not going to happen. It’s not going to happen fast.

Frank Curzio: Inventories and commodities are at 30 year lows, we have massive supply chain issues, nothing get built or delivered in a reasonable amount of time. The war at Russia and Ukraine, where oil price hitting some of the highest levels ever. We like to see that end, but we’re seeing oil prices surging. Yes, they came down 100, but oil is a direct cost, it’s a component for almost every single company. I mean, let’s just talk about Ubers, Lyfts, who are raising their prices and having fuel surge charges. Or UPS, FedEx, companies like that or airlines.

Frank Curzio: But you look at the Walmarts, the Targets, the supermarkets, who have massive trucking fleets. And these guys are going to pass that inflation down to who? You, me, the consumer. But even with the Russia-Ukraine war, if we could have some kind of end, which they must have said pretty much over the last three weeks, at least 10 days that, hey, we’re talking, peace talks are possible. The markets are up. How many times they said the markets are up because tensions are easing? They’ve never eased. Russia said, we’re talking to you, but we’re taking you over, we’re blowing you out of the water.

Frank Curzio: I mean, it’s sad what’s going on. But when will it end? What’s Putin going to do after he takes over the capital Ukraine? Does things continue to escalate? Will they cut off all supply to Europe, which will devastate Europe, and sell oil to China. They make up the difference where they partner with China to create a global superpower that rivals the US. That’s pretty scary. Will China take over Taiwan? The epicenter for semiconductors, which go into every single product in the world that requires a battery or plug.

Frank Curzio: So, when we’re looking for a bottom or trying to figure out a bottom, we want something that we can to look at with certainty. And we have more uncertainty than we’ve seen since the credit crisis. When Kohler was uncertain, we closed. It was kind of easy. Okay, now we are injecting money in to the system we saw. I mean, with the credit crisis, we didn’t know to the full extent how crazy it was. The Fed didn’t know, the Fed didn’t know AIG was insuring all this. If AIG crashes the whole entire market credit crashes, they had no idea. I mean, it took them like mid-2008 to figure that out. I mean, they let Lehman fail.

Frank Curzio: They really knew what was going on. They would have never let that happen because that’s what really put a wrench in everything, haul to the markets, the credit markets. And that’s massive uncertainty. You don’t know where the bottom is. Finally, let’s inject money or cash into the banks. Again, whether you agree with or not, at least you’re securing up the banks, which they didn’t really have to lend out that money different to when the Fed is doing right now and just printing money like crazy. But during the credit crisis, at least the Fed had the option to print its way out of that mess.

Frank Curzio: This is different. This is different times, guys. You can’t print more money because it is going to cost more inflation and you have to raise rates aggressively, which the Fed does not want to do. They don’t want to do… They don’t want to disrupt the markets. You have to raise rates. You have to raise rates. Inflation is out of control. It’s not slowing. Inflation is just through the roof. It’s at all-time highs, inflation. If we use the same metrics that we calculated the CPI back in the 80s, we’re at all-time highs, inflation has never been this bad in our history.

Frank Curzio: Which CPI and the method that goes into that, I think it was revised more than 30 times since the 80s, to always find a way to account that we don’t have a lot of inflation. Even though we knew we had inflation over the past 10 years, regardless of the CPI under 2%, we’re all seeing it, we’re all paying more for our bills, but they manipulate that to make it that it almost always never shows inflation. Which is kind of amazing because now it’s at 7%. It’s supposed to be at 2%, it’s at 7%. So now, what are we seeing with the market? We’ve seeing the 10-year move higher, which hurts gold and metals.

Frank Curzio: Start seeing demand come out of the market as people start adjusting for those price increases that we’re seeing or inflation, or can no longer afford to buy the numerous amount of things they were able to buy last year or the year before or prior years. So, the result is less demand, which is why oil price is starting to come down now, especially with China locking down again because of COVID. And Shenzhen and the Apple plant, I mean, that’s holy cow. You want to talk about even more supply chain issues, there you have it. But these are the things that happen in a bear market.

Frank Curzio: So, when I was saying that it’s the opposite of a super bull market, I think you need to put it in perspective. Because on the surface you’re like, no kidding, that makes sense, it’s the opposite. But when you really put into details like this, where you saw on a supermarket every single thing went higher no matter what, it didn’t matter what you bought, it didn’t matter fundamentals, going higher and higher and higher. In a bear market, everything goes lower and it doesn’t make sense. It’s like this company just reported great earnings, why is it down? Because people are forced to liquidate. They’re getting margin calls.

Frank Curzio: So, if you’re seeing something go higher, they’re using it to sell. That’s why almost everything that’s going higher outside of oil, which has been going steady high over the past four or five months. And the war obviously, gave it another leg up, but we are all going to see less demand. Seen it across the board even with EVs trying to be launched, but supply chain issues all this stuff. You throw that in where the Fed is now tightening, going to stop buying bonds and inflation is out of control, holy cow. In a bear market, everything goes lower just like everything goes higher in a super bull market.

Frank Curzio: And everything goes where the secular crap is going to get hit the worst, just like it outperforms the most during great times. But you’re also going to see good names with strong earnings that are cheap now. Big boats, strong growth potential, they’re going to get nailed. They’re going to get nailed, and they are getting nailed. I’m getting emails on, Frank, how do you protect yourself? Because I have three newsletters, and all three of them are long. And three years ago, I created Moneyflow Trader. And Moneyflow Trader buys long dated puts. And this was a type of market that I thought we’d see over the last three years.

Frank Curzio: But then we had Trump tax cuts, we had more money being injected to the system. And then we started seeing the slowdown in 2019, 2020 where JEP was going lower. We’re seeing it’s slower earnings growth. And then COVID hit, it wrenched a system and then a big downturn. And then what do we see, a big upturn. But it took a while to get here. But if you look at the conditions of past 10 years and even the last three years, where S&P 500 went up 31%, 19% and 26% around those levels. Off the top of my head, but it’s pretty close to those levels. The S&P 500 usually goes up 8% on average. So what’s going to happen?

Frank Curzio: Just like when home prices go up 20% a year for the five years preceding the credit crisis into 2007, what did you think is going to happen at home prices? So, how do you protect yourself? You can use inverse ETFs. You can have commodity exposure to reduce inflation risk. Again, that’s not easy because most commodities trade on multiyear highs now, very, very expensive. It goes to buy Bitcoin which is a store of value. Looks more attractive than everyone and governments around the world are printing money like crazy.

Frank Curzio: And also, the war helps that effort too, where you could see if you need really need to move your money, this is the way to do it, and a fixed supply. But the biggest thing you could do for your portfolio right now is, buy puts. I’ve been saying this for months. We have Moneyflow Trader, it’s run by Genia Turanova, one of the smartest analysts I know. I brought the price down twice over the past two and a half months. Because this wasn’t a way to just hedge yourself during these insane times, but you can make an absolute fortune if just one of these names or one of these sectors falls 20% or more over the course of a year. Think about that.

Frank Curzio: Because this was every single stock in the market right now, more than 90%, the major industries are down. All of them across the board down more than 20%. And maybe I was selling it wrong or selling the idea wrong and telling you even if you’re not going to buy the newsletter, and this isn’t a sales pitch here, but learn about buying puts and protect yourself. That’s what you need to do. And I was using the word hedge, which hedge is the worst word in the world when you want to sell something. Because it’s not exciting, it’s a neutral word, you’re hedging yourself. But it’s more than hedging, you can make an absolute fortune if these things crash.

Frank Curzio: It’s almost like if you’re selling some kind of product that said that an anti-aging product, or something’s going to make you more healthy. Nobody wants to buy a product like that, vitamins or whatever. But you want the product when you’re sick and you have cancer, this is something that targets your cancer that can cure you. You’re going to buy it freaking immediately. You say, oh, if you take this, you’re going to be healthy over the next 25 years. Nobody really cares, it’s not good sales pitch. So, I don’t know if the pitch was wrong on this, but people that took me up on this are doing very, very well.

Frank Curzio: They protect themselves, their own commodities. But on alongside, listen, I’m getting murdered. The top people I know across all these industries are getting nailed, you guys are getting nailed, that’s a bear market. It’s very, very difficult to buy things here and I’m not talking my book here, because the markets always do better even for us and people buy more newsletters when stocks are going higher. And when they’re going lower, people get nervous they don’t want to buy as much. So, I can’t be more open than this because it’s not even talking my book for courtesy or research here. I’m just being dead honest with you.

Frank Curzio: But Moneyflow Trader, if you’re interested, send me the email. Trust me, it’ll be worth it. I’m not looking to sell something to you and just be like, okay, that’s it and the relationship ends. If I’m helping you save your money, if I’m helping you during these crazy times, you’re going to be with me for the next 10, 20 years. So, I’ve been doing this for 30 years. So, a lot of people have been following me for long in 10, 15, 20 years. Because there’s times to be aggressive there’s times to not be aggressive. Right now, still at these levels is not a time to be aggressive.

Frank Curzio: Why? Because I can’t think of a catalyst, that’s a solid catalyst that’s going to send stocks higher or find a bottom to this market. You can say, well, if the war ends or if they have peaceful negotiations. Still, you still have uncertainty with inflation, you still have the Fed. The Fed has no clue what it’s doing. Just raise rates, raise rates, we’ll go into a recession we’ll have 12 bad months. Right now, you’re putting us on pace to have 36 bad, three years of all shit because there’s so much uncertainty. You know you have to raise, but I will only get raise by 25 basis points.

Frank Curzio: You have to raise. I mean, we’re at zero, pretty close to zero here. You have to raise, you have to stop buying bonds. And we’re seeing that. I mean, the market is trying to factor that in. Look at a two year, jumping above 2%. What is it now? 1.5 not long ago, all the craziness in Russia. But we need some kind of certainty, and right now, we don’t have it, we don’t have it. I mean, how do we see inflation pulled back when oil prices are still higher than ever? Again, the direct component to almost every single company. How do we see it? When is this going to happen?

Frank Curzio: Supply chain issues. We’re like, oh, well hopefully they’ll ease. I remember Ford, GM told us they were going to ease nine months ago, I told you they were full of shit because I’m getting the data. Right now, Toyota closed 20% of their plants or lower capacity by 20%, foreclosing another plant. So now, you have all the supplying issues. Now, throw on China and the lockdowns. What do you think that’s going to do? That’s going to create even more inflation. Also oil prices, more inflation. So, how do we stop this? You have to raise rates.

Frank Curzio: You have to take more leverage out of this market, that had to happen. But how do you protect yourself? Buy puts. Man, you’re having fun, you’re on the golf course. You are just joking and everything. Everyone is like, holy shit, I’m down 40%, 50% because some of these puts are up 100 too, 3X, 5X, 7X. You have to learn, this strategy is very, very easy to learn. It’s not a perfect strategy, but it works during these times. And for three years, I saw people lose money. And I said, listen, if you’re putting, if you’re hedging 5% of your portfolio and whatever the amount, put whatever amount of your hedging 5%, you’re only going to lose the money you’re putting, you’re not shorting the market.

Frank Curzio: So if you’re losing, and I had Genia on a couple weeks ago to explain this. So, if it doesn’t work out, you’ll lose 5% of your portfolio. But the rest of these names are probably doing better because it’s a bull market and you’re long, right? So for three years, you’re losing, losing, losing, losing, losing. There’s a lot of losses and I get it, because it’s a screaming bull market. But now, holy cow, you want to look at a product that makes sense where not only are you hedging yourself, you’re making money, your portfolio is up.

Frank Curzio: Your full portfolio is up and you are now looking at a market with some of the greatest names are down 25, 30, 40%. And you’re happy. You’re waking up like, what am I buying? Man, I’m going to start picking away at stuff. You’re not like, holy shit, I cannot believe that Facebook is down 30% from its highs, and it keeps going lower. Holy sit, I can’t believe that I bought GameStop at 240, and I’m holding forever and it’s 80, and it should be trading at 20. And you look at your SPACs that you bought at 30, some of the good ones, 20, 30 that are trading at 5, $6. You’re like hoping they are going to come back. Man, that hope is not a good strategy.

Frank Curzio: So, find a way to protect yourself. I mean, I know everyone was so happy because the market was going high, or you didn’t even need to listen to anyone, it was great. Again, everyone high fiving each other. Then, we got this super bull market where even the younger generation and amateur investors are telling pros what to do and how do you make money, and I’m up a fortune. And I bought whatever token at 20 cents and it’s all the way up. I get it, but these are different conditions. This is real life shit.

Frank Curzio: This usually happens every few years where we see a bear mark like this. But since we saw such a great bull market for such a long time, remember, the pendulum swings much, much further than every buddy believes. And then it’s going to swing the other way much more than everyone believes. So, if you think that we’ll come into an end here, we’re not. It’s difficult market conditions. And I felt this, even in my newsletters, I recommended some great names and I’m like, wow, these things are down 60, 70% from their highs, the insiders are buying, great technology, reported great earnings, raised guidance. And some of those names we stopped that on.

Frank Curzio: So, I’m not preaching here and telling you, hey, you are in it, no, this is me too losing money. However, I do have a big commodities portfolio. Knowing how to buy puts which you’re protecting yourself and a small portion of your portfolio. And you should be okay, that’s going to pick up the difference and you might even be up on your portfolio. That’s what you need to do. That’s what great investors do. The great investors right now that are doing that are looking for tons of ideas to fund new great projects because they know everyone’s getting crushed and they’re going to be giving away when they get crushed.

Frank Curzio: They’re giving stuff away. And I know because I’m in the process of trying to acquire several companies. And a year ago, it wasn’t as easy and now these guys are calling me every day, because conditions are much, much better. And if you’re in a position of strength, you get to buy assets dirt cheap when you have times like this. So again, if you’re interested in Moneyflow Trader or anything, again, I’ll give you the best price possible. Send me an email. I’m not going to tell you a link or whatever. Just send me an email, frank@curzioresearch.com. It’s something to think about.

Frank Curzio: I’ll give you a money-back guarantee, this way you can look at it. And if you don’t like it again, this is for you. This is something that if you’re able to use these strategies and protect yourself, you’re going to be like, you know what? That Curzio guy, he helped me when the markets were getting freaking crushed, when nobody was emailing me or sending out alerts or doing anything which we see in a lot of bear markets, right? Like people are canceling their podcasts and not doing their YouTube channels anymore. You see that’s not happening here. That’s the goal. And to do that, sometimes you have to protect yourself.

Frank Curzio: You can’t be balls to the wall all the time. You could do that the last 10 years, but now looking forward, lots of uncertainty and still from someone who follows the market as a good macro perspective. I don’t know, I just don’t see what’s going to help this market bottom. I see it popping up its trades, right? They’re all leaning on one side and everybody is really short here and you’ll see short covering and the market might go up 2, 3, 4, 5%, but you need the catalyst. You need a fundamentally to happen where okay, the Fed’s done raising rates which they’re not going to be.

Frank Curzio: Inflation finally easing, that’s good news. The war ending, that’s good news. Oil prices coming down, that’s good news. But all these uncertainties at the same time is very, very difficult to predict right now, and that’s why you’re going to continue to see massive volatility, which is great. Great for people who are buying puts. Okay guys, I’m going to end in a positive note with the NCAA. So, going to break down my brackets tomorrow which would be a lot of fun. And again, it’s one of my best times of the year, and I really like it.

Frank Curzio: And again, everyone should take a step back even on a Thursday when it starts and 32 games on Thursday, 32 games on Friday. Have fun, watch it a little bit and enjoy it. Again, a lot of us are getting crushed in this market, but you want to be in good spirits. There are some ideas that I think are coming in that are going to work and insiders of buying and buybacks and stuff like that. But again, I’d like to see catalyst. And when we do, we’ll be able to jump on a lot, a lot of good names and a lot of good opportunities that shouldn’t be down 20, 30% like the rest of the market.

Frank Curzio: So for me, questions and comments, free to email at frank@curzioresearch.com. You can find me on Twitter @FrankCurzio or my TikTok. I have lots of videos and little snippets of this podcast. You can go to YouTube channel to watch my beautiful face if you like which we tape everything. But guys have a great day, and I’ll see you tomorrow break at NCAA tournament and also analyzing the markets with my buddy, Daniel Creech. I’ll see then. Take care.

Announcer: Wall Street Unplugged is produced by Curzio Research, one of the most respected financial media companies in the industry. The information presented on Wall Street Unplugged is the opinion of its host and guests. You should not base your investment decision solely on this broadcast. Remember, it’s and your money and your responsibility.

Frank Curzio
Frank Curzio, founder and CEO of Curzio Research, is one of America’s most respected stock experts. His research is regularly featured on media outlets like CNBC’s Kudlow Report, The Call, CNN Radio, ABC News, and Fox Business News. His Wall Street Unplugged podcast—ranked the No. 1 “most listened-to” financial podcast on iTunes—has been downloaded over 12 million times.

Editor’s note:

In this month’s Moneyflow Trader—out later today—members have the chance to lock in 50% gains on one position… and 110% gains on another—in just one month.

And Genia reveals her latest strategy to make a fortune from declines.

Get this issue as soon as it’s published by joining Moneyflow Trader now!

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