The Capitalist Investor - Episode 126

Wall Street believes there’s only a 50 percent chance of a recession. And if that recession takes place, it would be in 2023, a short and shallow one. We completely disagree. In Episode #126 of “The Capitalist Investor,” Mark, Derek, and Tony don’t question the odds of a recession but what the bubble will be that bursts and unwinds it. This week’s episode begs the question: what looks weird right now? In 2000 it was the tech stocks, in 2008 it was the housing market. What will it be this time around? The guys have ideas and want to hear yours.

Outline of this Episode:

  • [2:00] The history of economic bubbles 
  • [4:50] Will the job market be the first to burst? 
  • [8:30] What do other people think looks ‘weird?’  
  • [19:35] When will the bubble burst? 

With every single economic boom –– there’s a bubble that bursts 

It’s quite possible that a recession will happen this year. With inflation, labor shortages, and slowing economic growth, all it takes is one economic burst to unwind the pain that sets a recession in motion. 

If history repeats itself and we’re on the path for another 2000 or 2008, then what will be the burst we experience this time around? Will it be tech stocks or crypto? Another housing market collapse? What about the job market? 

In order to prepare for what we can expect in an upcoming recession –– we have to be able to identify what the next bubble will be and how to protect your capital against it. 

What looks ‘weird’ right now?

We currently think the job market is in need of a recalibration. And when it eventually recalibrates, it’s going to be a painful course for many. 

Workplace demands are leaving employers defeated; businesses need to hire more people to keep up with artificial demand. But today, people want higher wages and companies are left to pay 20 to 40 percent higher, often for the same level of productivity. 

Currently, worker productivity is down 7.5 percent quarter over quarter –– when productivity remains low but wages remain high, it becomes unsustainable for businesses. They’re not going to renegotiate wages, no employee would be willing to take a cut. 

There’s going to be mass firings and lay-offs until the wage market recalibrates. But before we see anyone getting fired, employers are going to remove those job postings online. When 11.5 million job openings decrease by 50 percent… that’s when the recession doors will open. 

It’s quite possible that the next bubble could be one within the job market. Or it could be the housing market, maybe even crypto. 

What stands out as “weird” to you? Maybe you’ve already identified what the next bubble to burst will be. Always ask yourself what looks weird, always prepare. 

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Episode 63:
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Episode 79:
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Episode 95:
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Episode 111:
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Episode 127:
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