Important Facts Overlooked in the Year’s Bear Market

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The verdict is in. 2022 is guilty on all counts of being a bear market.

Interest rates went higher then expected (surprise?), inflation wasn’t transitory (double surprise??) and almost every market sector declined in unison (yeah, THAT was a surprise).

But rather then rehash on what we all know now, or even attempt to forecast what will happen in 2023 (a fool’s errand), let’s look at some things that were overlooked last year. On purpose? Negligence? Ineptitude? All three?

Certainly the biggest headline grabber of the year has been the huge sell off in the crypto sector. Those headlines became even bigger with the collapse of FTX and the arrest of SBF (Sam Bankman-Fried…..FTX’s CEO). OMG! Investors lost money. There was alleged fraud. Calls for crypto regulation filled up the media. But wait. The bear market struck other sectors, too. Maybe focusing on the crypto sector has been a diversion.

The main focus is ALWAYS bitcoin. Bitcoin is down 65% for the year. Regulators are jumping up and down (well, not literally) to establish rules to protect investors from losing money. Hold on. Don’t look “over here.”

  • Tesla is down 72%
  • Amazon is down 51%
  • Ford Motor down 48%
  • But even more, Rivian Automotive (an EV manufacturer) is down 82%

There are several companies acquired by SPAC’s (regulated securities blessed by the SEC) which are now worthless. The point being, all those are fully regulated and overseen by the SEC.

Investing is NOT without risk, but apparently, if an investor loses money in a regulated product, it doesn’t count.

So SBF may have committed fraud and misled investors saying that all was well and FTX was in strong financial shape. Overlooked is the fact that if investors bought equities based upon government officials (Treasury, Fed, congress) comments that inflation was “transitory” and would subside, you lost money.

Is there any difference in these comments:

  • FTX is strong and well capitalized
  • The economy is strong and there is no recession in sight
  • Inflation is under control

Hmmmm!!  Misleading?  You be the judge.

With a few days to go in 2022, the 10 year treasury is down 16% YTD, the S&P 500 is down 20% and bitcoin down 65%. Yup, its all that evil bitcoin’s (crypto’s) fault.