It’s an understatement to say the past year has been demoralizing. The 3x tech ETFs have gotten killed. Inflation and interest rate expectations have surged. The S&P 500 is down 25% this year. Nasdaq down 30%.
But the Nasdaq is up 3% today. If and when the stock market recovers, which I predict will be soon, it will be faster and more sudden than expected, similar to the 2020 Covid recovery, in which the S&P 500 surged from 2500 to 4800 in 1.5 years. People underestimate how fast stocks can recover.
Multinationals are still generating record earnings and profits. This doesn’t change just because inflation is high. EPS (earnings per share) for S&P 500 at record highs:
Disney and Nike make so much money from consumerism. Google gets so many clicks on its ads. Amazon delivery trucks are everywhere. People eating at McDonald’s more than ever despite more public awareness than ever of obesity.
What about the fed propping up the market? Yes, that helped, but stocks surged in the ’80s and ’90s despite no QE and high interest rates (5-10%).
If the Nasdaq rises 30% in 2023, 3x ETFs should gain 100%. If the Nasdaq recovers to its old highs (approximately a 45% increase from its current price), this would be a 200% gain for the 3x funds. Bitcoin will continue lag on the upside, and not participate on the resumption of the bull market: I’m certain of this. I was right about the crypto bubble bursting, and avoided all the hype in 2020-2022 about crypto, knowing it was not sustainable. I correctly predicted that MicroStrategy stock would crash. But the 2022 bear market has pushed all my forecasts from 2021 back by 3 years. I expected the 3x funds to gain 40x over the next decade, now forget about it.
“If and when the stock market recovers, which I predict will be soon, it will be faster and more sudden than expected, similar to the 2020 Covid recovery, in which the S&P 500 surged from 2500 to 4800 in 1.5 years.”
There is still lots of Quantitative Easing cash sloshing around. Still needs to be drained so we can get a better picture. If there is no more cash from QE then its more reflective of the real economy.
Of course with a full reserve currency its going to be better and less fraudulent.