- Is a market crash looming?
- We’re looking for a battery tech breakthrough…
- Investing in the future of robotic surgery…
Dear Reader,
Welcome to our weekly mailbag edition of The Bleeding Edge. All week, you submitted your questions about the biggest trends in technology.
Today, I’ll do my best to answer them.
If you have a question you’d like answered next week, be sure you submit it right here.
“I’m very fearful right now”…
Let’s begin with a question on the potential for a market crash:
Hey Jeff, I’m a Brownstone Unlimited member and have thoroughly enjoyed your honesty and investment advice. 2020 ended up being a great year for investing, and I’m glad I listened to your advice. This year, however, has been pretty darn tough so far.
If I’m being honest, Jeff… I’m VERY fearful right now and would love to hear your honest thoughts. As I’m sure you’ve seen, Michael Burry is calling for a massive correction in the stock market and in crypto.
We, of course, have seen a pretty significant correction in the stock market and crypto… For me personally, the amount of gains I’ve missed out on by not selling are devastating. I highly value your opinion and I’ve trusted you so far. But Jeff… I’m extremely worried.
In your honest opinion, is this looming Michael Burry market crash the “fracturing” of the market you’ve been talking about, or do you think he’s just wrong? Also… I’d be curious for your opinion on crypto and if you think this “bull run” is over? I’m sure you, like everyone else, are bullish on crypto long-term. But I’ve been making plans for this crypto bull market, and it has all crumbled to pieces at the moment. I’m frustrated and scared. Thanks for your time.
– Drew S.
Hi, Drew, and thanks for being an Unlimited member. I’m glad you wrote in with your concerns about the state of the market and crypto.
For unfamiliar readers, Michael Burry rose to fame after placing a massive short against the mortgage lending market when he anticipated that it was a house of cards.
He was early in his trade but remained patient because he understood how highly leveraged the entire system had become. He knew it would eventually fall over, and it led to the 2007–2008 housing crash and financial crisis.
The Academy Award-winning film The Big Short featured his story a few years later, increasing his notoriety. The book is a lot of fun, and the movie is worth watching as well.
Following that, Burry has made other noteworthy predictions, including his bullish position on GameStop (GME), which played into the short squeeze this past January that helped kick off the meme stock boom.
And earlier this month, he shared another prediction on Twitter:
All hype/speculation is doing is drawing in retail before the mother of all crashes. When crypto falls from trillions, or meme stocks fall from tens of billions, #MainStreet losses will approach the size of countries.
Drew, I actually share your concerns and also agree with Burry that there will be a large crash in the future. The only question is when? And this is where my thoughts probably differ from Burry’s.
The environment that we have today is quite different than that of 2007. We don’t have the kind of absurd levels of leverage throughout the banking system. We’re not sitting on a house of cards like we were back then.
What we are witnessing is completely irresponsible monetary policy and an administration that has committed to print and spent more than $15 trillion over the next few years. No country can do that without serious repercussions.
That said, with this much “free money” being injected into the system, conditions like we are experiencing now can continue for a long time before things get ugly.
And that’s what I believe is going to happen. We are going to see a continued rise in inflation. We will feel that in our daily spending. We’ll see that in asset prices like real estate, and we’ll be paying more for just about everything.
But that in itself won’t cause a market crash. And there is still a little more room to take interest rates a bit lower.
We’ll continue to see government stimulus and low interest rates, at least leading into the mid-term elections. This is bullish for the equity markets.
So I predict that we will see the stock markets continue to rise over the rest of this year and even into 2022. In fact, the Federal Reserve (Fed) has already made it clear it doesn’t plan to raise interest rates significantly until 2023, which is after the elections.
We’ll certainly see some volatility in the markets with relatively small pullbacks, but I just don’t see the crash that Burry is talking about in that time frame.
As a reminder, there are a lot of great things happening right now. In the U.S. and many other countries, the pandemic is over. Vaccines are widely available, and more than three billion shots have already been administered around the world.
We are experiencing a strong economic recovery post-pandemic. Everyone is getting back to work. I see the fall as a real turning point. That’s when stimulus checks will end, and the labor force will return in full back to pre-pandemic levels. This will increase consumption and spending.
And as I mentioned before, with the low interest rates and continued stimulus in the form of trillions of dollars, the economy will continue to move. And the equity markets will remain strong.
What we want to watch out for is whether or not we are seeing unhealthy levels of leverage in the banking system. We should keep an eye on the private markets as well.
I’ll be watching to see if the dry powder starts to dry up and the levels of venture capital investment fall off. If there is a severe drop-off, that would be a bad sign.
We’ll also keep an eye out for any signs of rapid inflation that would require the U.S. Treasury to start raising rates quickly. If that happens, money will move out of the equity markets and quickly into fixed income. It will compress equity valuations as well.
As for the cryptocurrency markets… We should expect higher levels of volatility than we do in the equity markets.
Yes, I remain extremely bullish in the long term. We’re in an interesting place right now with the most recent pullback in bitcoin. If bitcoin breaks through about $31,000, we’re likely in for a major drop.
There has been way too much speculation in the cryptocurrency markets over the last several months. This correction is natural. In fact, I’d be worried if it didn’t happen.
And if we see a further drop, I would look at that as a great buying opportunity. The industry is building the next generation of the internet and the next generation of the financial services industry.
These developments are radical and exciting. They will take years to unfold. We are still very early in this process, and there are so many more incredible investment opportunities to look forward to.
And I can tell you that the levels of investment in the blockchain industry continue to increase. This is bullish for the industry as a whole.
My commitment to my subscribers is that when I feel that things are about to get ugly, I’m going to let everyone know. I just don’t see it right now.
And one final point…
If we have a healthy diversification of assets, a balanced portfolio invested in great companies and projects, maintain rational position sizing, and only invest at a level of risk that we are comfortable with… We can maintain a sense of calm when it comes to our investments.
If we’re having a hard time sleeping at night, we probably haven’t achieved that.
Thanks again for writing in.
Are glass batteries real?
Next, a reader wants to know more about battery technology:
Good morning, Mr. Brown – I’ve been reading The Bleeding Edge now for a little over a year, and I’m impressed with your knowledge in tech. Little by little, I’ve learned a bit from you, and you have kept me informed about the up-and-coming technologies.
I’m a subscriber to The Near Future Report. I like your recommendations. I don’t have much money, so I have shares in a couple of your recommendations. The rest of my investments are in several mining penny stocks in the energy sector – mostly uranium and rare earth metals.
I trust your knowledge, so I have a question for you. What do you know of solid-state batteries, better known as electric glass batteries? Are they real? I’ve read an article on these batteries saying that they supply tremendous storage, charge super fast, and can be used in all industries. I’m just curious.
– Robert B.
Hi, Robert, and thanks for writing in. I’m glad you’ve been enjoying our research. And it’s good to have you along as a Near Future Report subscriber.
You’ve brought up a hot topic… Battery technology is an area driving a lot of excitement right now. That’s partly because this field has lagged behind many other technological advances. And many people are hungry for the next big breakthrough.
As for your question on glass batteries, I’ve written before about the “glass batteries” that Nobel Prize winner Dr. John Goodenough and fellow researcher Maria Helena Braga are developing. Goodenough, some may recall, is one of the scientists who invented lithium-ion batteries.
The team claims that its glass battery possesses “a charge/discharge cycle life of over 23,000 cycles,” and that it can charge in mere minutes instead of hours.
It manages this because the electrolyte – the material that lets a charge travel between the positive and negative electrodes – contains both glass and metals. Because of its materials, ions can move back and forth more readily between the electrodes. And as a solid-state electrolyte, it has the potential for higher energy density.
It can also withstand a wide range of temperatures – between -4° and 140° Fahrenheit.
Goodenough’s team had a patent approved back in April 2020, and the team is hard at work on a commercially viable battery.
In fact, Canadian electric utility company Hydro-Québec licensed this technology last year as well, and it’s currently developing its battery tech in partnership with Daimler (the owner of Mercedes-Benz). It may be ready for use in a couple of years.
And in the meantime, there are a handful of other interesting companies working on improvements to our current battery technology as well, like Sila Nanotechnologies and Quantumscape.
It’s going to be a few years before this next generation of battery technology is available for mass production and use. But I’m very bullish that we’re finally going to see some major breakthroughs in this space.
We’ll continue to keep an eye on these companies’ progress and any interesting investment opportunities going forward.
Calling all robotic surgeons…
Let’s conclude with a comment about our recent robotic-assisted surgery recommendation:
Tell Jeff that regarding the robotic machine article, he left one important factor out. The surgeons (worldwide) in the pipeline now and those coming into the pipeline, ALL grew up playing video games. They have developed the necessary eye-hand precision to operate robotic machinery in the surgical suite that the older surgeons lack.
– Marianna H.
Hi, Marianna – thanks for writing in. I’m very excited about the robotic surgery trend, which is why I have such high expectations for the recent addition to our Exponential Tech portfolio. [Paid-up subscribers can go right here for the details.]
To catch up other readers, the history of robotic surgery goes all the way back to the 1980s. The Defense Advanced Research Projects Agency (DARPA), various nonprofits, and startups have worked for decades to make this vision a reality.
Why? Because skilled surgeons can’t be present in every location around the world at all times.
But what if a surgeon in New York could operate on a patient halfway around the world via a remote-controlled robot? It’s easy to understand the benefits of this kind of tech.
And now we’re beginning to see the second generation of robotic-assisted surgery. This second-generation technology will improve upon the size, portability, cost, and ease of use.
And Marianna, you’re absolutely correct. The next generation of surgeons will likely be more adept at the use of these new technologies.
And not only will this technology save lives, but it will also present us with excellent investment opportunities… This is easily a $100 billion market.
Plus, because we’re getting in early, we truly have the chance to make generational wealth on this technology as long as we’re willing to be patient.
I can’t share the name of my recent recommendation here out of respect for my paid subscribers. But I will say this – it won’t take much for this company to move from a $400-million-a-year company to a $4-billion-a-year company.
If any readers would like to learn the full story behind this robotic surgery company – as well as the other exponential trends we invest in with my Exponential Tech service, like artificial intelligence, 5G, and precision medicine – then please go here for all the details.
That’s all we have time for this week. If you have a question for a future mailbag, you can send it to me right here.
Have a great Fourth of July weekend with as many friends and family as you like – mask-free!
Regards,
Jeff Brown
Editor, The Bleeding Edge
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