WEBVTT - Managing Your Emotions in a Bear Market 0:00:01.800 --> 0:00:04.440 This is Bloomberg Business Week. I'm Carol Masser and I'm 0:00:04.440 --> 0:00:07.280 Bloomberg Quick Takes Tim Stanovk. We're here every day bringing 0:00:07.280 --> 0:00:09.799 you the latest news from the world of business and finance, 0:00:09.840 --> 0:00:13.640 plus technology, politics, economics, all partnising the power of Business 0:00:13.640 --> 0:00:17.119 Week reporters and editors, not to mention our journalists and 0:00:17.160 --> 0:00:19.640 analyst in more than one and twenty countries. You can 0:00:19.640 --> 0:00:23.239 download Bloomberg Business Week and iTunes, SoundCloud, or Bloomberg dot Com. 0:00:23.400 --> 0:00:25.160 You can also listen to our radio show at two 0:00:25.160 --> 0:00:27.840 pm Eastern Time on Bloomberg Radio, or watch us on 0:00:27.880 --> 0:00:32.000 YouTube search Bloomberg Global News. We'll get a perspective on 0:00:32.040 --> 0:00:34.680 the economy and certainly an update on monetary policy, because 0:00:34.720 --> 0:00:36.640 tomorrow this time we will have had the fourth f 0:00:36.680 --> 0:00:39.440 o MC decision of the year, the student meetings. Some 0:00:39.560 --> 0:00:41.920 have likened it that it could be fed Chief J. 0:00:42.000 --> 0:00:45.440 Powell's Vulcar moment, So let's get more on that. Francis 0:00:45.440 --> 0:00:48.800 Donald is an economist and strategist for Manual Life Investment Management. 0:00:48.880 --> 0:00:51.560 Francis joins us on the phone from Montreal this afternoon. Francis, 0:00:51.600 --> 0:00:57.600 how are you, I mean, I'm busy. Yeah. Taken in 0:00:57.640 --> 0:01:00.360 a lot of data. Well, thank you for taking the 0:01:00.400 --> 0:01:03.080 time to join us. Yeah, and it's only Tuesday, but 0:01:03.080 --> 0:01:05.240 I'm also really excited for this FED meeting. I think 0:01:05.240 --> 0:01:07.559 it's it's going to be one obviously one to watch. 0:01:07.600 --> 0:01:13.240 So here's my first question to Francis fifty. You know 0:01:13.400 --> 0:01:16.640 I'm not going to fight it. Uh, the said has 0:01:16.720 --> 0:01:20.480 somehow I've never seen this in my career, engineered in 0:01:20.560 --> 0:01:25.480 monetary policy shocks during a blackout via news channels. Uh, 0:01:25.520 --> 0:01:27.240 sometimes you just have to go with the flow and 0:01:27.280 --> 0:01:29.960 these things. Seventy five basis points looks like it's priced in, 0:01:30.319 --> 0:01:33.000 but that's not what I'm watching for tomorrow. What I 0:01:33.080 --> 0:01:35.880 want to see is one of the things either uh, 0:01:36.080 --> 0:01:39.679 any information about just how high we're gonna go this 0:01:40.000 --> 0:01:43.319 year and whether we're simply bringing in front loading all 0:01:43.360 --> 0:01:46.759 those hikes in uh. And then also any sort of 0:01:47.040 --> 0:01:50.440 notions from said chirp Howell about whether he's concerned about 0:01:50.480 --> 0:01:53.680 recession risk. We've seen this from some other central bankers. 0:01:53.720 --> 0:01:56.600 What does the unemployment rate look on those summary of 0:01:56.640 --> 0:02:00.160 economic projection? Because it is possible we get seventy five 0:02:00.200 --> 0:02:03.040 basis points, but there's a nod to downside risks which 0:02:03.080 --> 0:02:05.360 we haven't seen yet for a while, and I think 0:02:05.400 --> 0:02:07.400 those are going to be more relevant for a lot 0:02:07.440 --> 0:02:10.919 of this market than the twenty five basis point variation 0:02:11.000 --> 0:02:13.280 we could see. All right, so Francis, I still love 0:02:13.320 --> 0:02:16.079 talking with you. Um, what I wanted to say is 0:02:16.520 --> 0:02:19.720 on the Bloomberg terminal on this flag day is also 0:02:19.760 --> 0:02:21.800 a story that traders are betting the FED will cut 0:02:21.880 --> 0:02:25.760 rates after Steve hikes. Uh. You know, I do feel 0:02:25.840 --> 0:02:29.840 right that there is. It's not too soon to be 0:02:29.960 --> 0:02:33.880 talking about the FED cutting rates, No, of course not. 0:02:33.919 --> 0:02:36.400 I mean the average time between the last hike and 0:02:36.400 --> 0:02:39.440 the first historically has been eight months. We're in a 0:02:39.520 --> 0:02:43.919 compressed cycle. So that's what my team did today. We saw, okay, well, 0:02:43.960 --> 0:02:46.440 we had a more steady rate hikes cycle that had 0:02:46.840 --> 0:02:50.400 a curse steepiter in it. Were reassessing that and thinking, 0:02:50.440 --> 0:02:52.320 you know what, maybe this is a said that is 0:02:52.440 --> 0:02:56.639 more comfortable front loading a significant amount of hips into two. 0:02:56.680 --> 0:02:58.800 But I'm only going to add that into my forecast. 0:02:59.320 --> 0:03:04.320 Is it comes with uh coupour. And I gotta tell you, 0:03:04.360 --> 0:03:06.399 I've been on the road with us some long term 0:03:06.400 --> 0:03:09.359 investor clients over the past couple of weeks, and you'd 0:03:09.400 --> 0:03:11.400 be surprised how many of them are asking me about 0:03:11.520 --> 0:03:15.160 what the next easing cycle looks like. And that's not 0:03:15.960 --> 0:03:19.920 for me that we are now Almost every model that 0:03:19.960 --> 0:03:21.720 you look at is going to tell you growth is 0:03:21.800 --> 0:03:26.600 real darn low in recession or not. We gotta start 0:03:26.680 --> 0:03:30.200 talking about what the implications are for the next three years. 0:03:30.280 --> 0:03:32.799 And the bond market is thinking about that now. I 0:03:32.840 --> 0:03:34.760 wonder if you're opening act with Jim Bullard as you 0:03:34.800 --> 0:03:36.520 were on the road, because Jim Bullard is at this 0:03:36.520 --> 0:03:38.840 point I gotta be saying, I got this right. I've 0:03:38.840 --> 0:03:42.840 been talking about this for a long time. Um. Interesting, 0:03:43.080 --> 0:03:45.560 So can the markets deal with We've had a lot 0:03:45.560 --> 0:03:49.880 of whiplash already, you know, put pandemic, everything falls off 0:03:49.880 --> 0:03:52.880 a cliff, lots of stimulus, everything bounces back in a 0:03:52.920 --> 0:03:56.280 big way. You know, we're seeing another drop off a cliff, 0:03:56.560 --> 0:03:59.600 high rates. I mean, is this just what we need 0:03:59.680 --> 0:04:02.200 to get through until we get to some sort of 0:04:02.320 --> 0:04:06.880 normalcy again? Will things start to then settle down? Because 0:04:07.000 --> 0:04:10.320 because the supply chain in inflation, that stuff the FED 0:04:10.360 --> 0:04:12.760 can't fix. They can certainly reduce demand, but they can't 0:04:12.800 --> 0:04:16.160 fix that stuff overnight. The issue is that you know, 0:04:16.200 --> 0:04:18.520 at the beginning of the year, I certainly felt like 0:04:18.600 --> 0:04:20.640 the SAID tug of war was going to be between 0:04:20.640 --> 0:04:23.719 inflation and jobs. And we're running all thet charts that 0:04:23.760 --> 0:04:25.880 we have now on unemployment and looks like you're going 0:04:25.920 --> 0:04:28.200 to see a rise and unemployment, but the magnitude of 0:04:28.200 --> 0:04:30.720 which we're not sure of. So the initial call that 0:04:30.760 --> 0:04:32.240 I had at the beginning of the year was that 0:04:32.279 --> 0:04:33.920 the SAID is going to have to focus on the 0:04:33.960 --> 0:04:36.760 second part of their mandate. And yet what's occurring right 0:04:36.800 --> 0:04:38.920 now is not a SAID that's concerned about a rise 0:04:38.920 --> 0:04:42.000 and unemployment. In fact, it looks like they're intentionally engineering one. 0:04:42.480 --> 0:04:46.080 But avoiding a financial accident is going to become very 0:04:46.120 --> 0:04:48.279 relevant here. I look at credit. I mean, we have 0:04:48.400 --> 0:04:51.120 I do ets that are at the same levels they 0:04:51.160 --> 0:04:54.840 were in when we had massive SAID action. Now it's 0:04:54.880 --> 0:04:58.719 more orderly, and that's an important distinction here. But we're 0:04:58.760 --> 0:05:01.479 looking at a spect that the tug awar the SAID 0:05:01.520 --> 0:05:04.839 fields right now. It's not inflation versus employment, but actually 0:05:05.160 --> 0:05:09.160 inflation versus making sure they're sufficient liquidity and no financial 0:05:09.200 --> 0:05:14.400 accident ahead. What would that financial accident look like? Oh, 0:05:14.520 --> 0:05:16.479 at this point, you know, it's never what hits you 0:05:16.520 --> 0:05:18.240 between your eyes. It's what hits you in the back 0:05:18.279 --> 0:05:19.720 of your head. But we do need to watch some 0:05:19.880 --> 0:05:22.320 liquidity and the bond market. We do need to watch for, 0:05:22.560 --> 0:05:26.840 you know, disorderly type of moves that happen across asset classes. 0:05:26.880 --> 0:05:29.000 These are all things that need to be monitoring. And 0:05:29.279 --> 0:05:31.279 some of the tools that the SAID has at its 0:05:31.279 --> 0:05:33.920 disposal are things that we've been discussing in the last 0:05:33.920 --> 0:05:36.360 few days that we may see some sort of need 0:05:36.440 --> 0:05:39.440 to protect certain areas of the market ahead. And this 0:05:39.520 --> 0:05:41.920 is really the SAID. The challenge is how do they 0:05:42.040 --> 0:05:45.440 tighten financial conditions and an orderly fashion. I don't have 0:05:45.640 --> 0:05:48.760 particularly high hopes. Um does it bother you that about 0:05:48.800 --> 0:05:52.520 the bond and stock market are trading in cahoots if 0:05:52.520 --> 0:05:56.000 you will, and just got about thirty seconds the correlations 0:05:56.040 --> 0:05:58.920 are positive, is of course very challenging in the outset 0:05:58.960 --> 0:06:03.200 allocations space, so you to extend your investment horizon. But 0:06:03.279 --> 0:06:05.920 I do believe that the equity market has priced in 0:06:06.040 --> 0:06:08.799 a good amount of the growth slowdown we're heading into. 0:06:09.160 --> 0:06:11.680 What hasn't is the bond market. And every time the 0:06:11.760 --> 0:06:15.760 seat is hyped into a more difficult economic environment, we've 0:06:15.800 --> 0:06:19.440 seen raids. Ultimately declined, So do expect the stock bond 0:06:19.440 --> 0:06:23.279 correlation to turn negative again sometime in the next few months, 0:06:23.680 --> 0:06:25.920 maybe not tomorrow. Don't tell the rest of my guests, 0:06:25.960 --> 0:06:28.120 but you really were my favorite interview already for the 0:06:28.200 --> 0:06:30.600 day because I think so important, so much, you had 0:06:30.640 --> 0:06:34.040 to help. Nobody else is listening, Sorry, everybody. Francis Donald, 0:06:34.080 --> 0:06:37.120 she's economist strategist at Manual Life Investment Management. On the 0:06:37.120 --> 0:06:41.480 phone from Montreal. This is Bloomberg Business Week with Carol 0:06:41.520 --> 0:06:46.000 Masser and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. 0:06:46.400 --> 0:06:48.400 She has the key to surviving a bear market, so 0:06:48.560 --> 0:06:51.240 just stop what you're doing. We've got the answers. This 0:06:51.320 --> 0:06:53.920 story from our Bloomberg Business Week team found online EP, 0:06:53.920 --> 0:06:56.240 Bloomberg dot com, slash Business Weekend on the Bloomberg We're 0:06:56.240 --> 0:06:59.719 talking about Susan Suzanne Wholly, personal finance reporter for Bloomberg 0:06:59.720 --> 0:07:01.039 near She is with us right now in the Bloomberg 0:07:01.080 --> 0:07:04.560 Interactive Brokers Studio. Follow her on Twitter at wealth Watch. 0:07:04.800 --> 0:07:10.240 All right, Susanne, the key deep breaths right class that 0:07:10.280 --> 0:07:13.320 we should all do. Yes, it's financial yoga, but it's 0:07:13.360 --> 0:07:17.120 also about assessing your risk. It is I mean, it's 0:07:17.280 --> 0:07:19.400 now is a good time to just like you said, 0:07:19.440 --> 0:07:25.760 take a deep breath, look at your portfolio that I'm 0:07:25.800 --> 0:07:28.680 supposed to It's not true like inertia is sometimes really 0:07:28.720 --> 0:07:32.080 helpful and investing because from doing anything too crazy. So 0:07:32.120 --> 0:07:34.080 we're supposed to look at it. We're supposed to open 0:07:34.080 --> 0:07:36.560 it up, look at it after market hours. Okay, look 0:07:36.600 --> 0:07:40.000 at it after market hours. Wipe away the tears and 0:07:40.040 --> 0:07:45.680 then what I have a few quiet sobs and then 0:07:45.960 --> 0:07:48.800 you know, just take a hard look and think, see 0:07:48.880 --> 0:07:50.960 where you are. You know, do you have It's so 0:07:51.040 --> 0:07:55.040 easy to have gotten overexposed to text stocks obviously, because 0:07:55.080 --> 0:07:57.679 that's what's driven the market. It's been momentum driven market 0:07:57.760 --> 0:08:01.160 and you know, like five big text docks. So you 0:08:01.200 --> 0:08:04.000 want to sort of think about whether that's how you 0:08:04.000 --> 0:08:08.680 want your portfolio to be. So here's the deal, Like 0:08:08.720 --> 0:08:11.320 we all said, index fun right, spread your risk. We 0:08:11.400 --> 0:08:14.240 all like piled in for years because we thought this 0:08:14.280 --> 0:08:16.040 is where everything was going. As it turned out, there 0:08:16.040 --> 0:08:18.200 was a lot of you know, kind of overweight right 0:08:18.240 --> 0:08:20.640 in terms of certain members. But that was supposed to 0:08:20.680 --> 0:08:23.840 protect us to the down side, and it didn't happen. 0:08:23.920 --> 0:08:26.080 It didn't happen in the short term, and the short 0:08:26.160 --> 0:08:29.240 term in the market is very emotional and psychological. In 0:08:29.280 --> 0:08:32.040 the long term, I think that logic of diversification works. 0:08:32.440 --> 0:08:35.480 But right now, you know, even after this big drop, 0:08:36.080 --> 0:08:40.400 the big five, you know, the Apple, Microsoft, Amazon, people, um, 0:08:40.679 --> 0:08:43.840 they still make up about I think over of the 0:08:43.960 --> 0:08:47.680 SMP because it's market kath waited. So your five stocks 0:08:47.679 --> 0:08:51.079 were really more like five stocks, you know, or ten stocks, 0:08:51.120 --> 0:08:53.600 and you didn't have that diversification, which we at Bloomberg 0:08:53.640 --> 0:08:55.439 would tell people over and over and over again. And 0:08:55.480 --> 0:08:57.520 yet we all still kept going there, Yes, we all 0:08:57.520 --> 0:09:00.400 of us. Well, it's true because it's sort of it's 0:09:00.920 --> 0:09:03.320 there's the fomo, you know, fear of missing out, and 0:09:03.320 --> 0:09:05.839 the fact is that we had been in this. I'm 0:09:05.880 --> 0:09:08.720 just just going to ignore the bear market of twenty 0:09:08.800 --> 0:09:10.880 because that doesn't really count. It was such a quick one. 0:09:11.240 --> 0:09:13.920 We've been in such a long bowl market. A lot 0:09:13.920 --> 0:09:17.000 of people only know a bowl market, so it's very 0:09:17.040 --> 0:09:19.359 easy to think that this is just going to continue. 0:09:19.520 --> 0:09:24.200 This is how it is painful. Down drafts don't really happen, 0:09:24.400 --> 0:09:27.120 or they're not gonna happen to me. Should we beat 0:09:27.120 --> 0:09:33.520 ourselves up? Okay, as somebody who you know is very 0:09:33.559 --> 0:09:36.360 good at doing that. I don't think you should. I mean, 0:09:36.400 --> 0:09:39.040 I think if you have a good long term plan, 0:09:39.840 --> 0:09:43.679 you've sort of you have a smart you know, portfolio 0:09:43.760 --> 0:09:46.840 that it fits your goals and your life and your 0:09:46.920 --> 0:09:50.360 age and all that, you should not feel bad. You know, 0:09:50.600 --> 0:09:54.640 these down drafts. Bear markets happen and we live through them. 0:09:54.760 --> 0:09:57.240 Right now. This is really ugly because the tech stocks 0:09:57.280 --> 0:10:00.440 were so high and they've fallen so far. But the 0:10:00.480 --> 0:10:02.920 main thing to do is this is so trite, but 0:10:03.080 --> 0:10:06.040 not to panic and not to make any rash moves. 0:10:06.160 --> 0:10:07.800 One of the things we just talked about with Francis 0:10:07.840 --> 0:10:11.320 Donald of Manual Life is this correlation and this trade 0:10:11.320 --> 0:10:13.280 that's going hand in hand between bonds and stocks right 0:10:13.320 --> 0:10:16.280 both going down, which is not normal. So that whole 0:10:16.280 --> 0:10:20.840 idea of being diversified equity, you know, fixed income to 0:10:20.920 --> 0:10:24.000 kind of protect you on the downside, it any working. Yeah, 0:10:24.080 --> 0:10:26.600 it's not working right now, but you know over the 0:10:26.640 --> 0:10:29.400 long term it may work. I mean, Rob are Not 0:10:29.640 --> 0:10:32.400 of Research Affiliates that I spoke with them for the story. 0:10:32.440 --> 0:10:34.560 He made a really good point, which is that in 0:10:34.600 --> 0:10:37.640 the beginning of bearer markets, like everything seems to go 0:10:37.720 --> 0:10:41.160 to hell in a hand basket and the diversifiers don't work. 0:10:41.360 --> 0:10:43.520 But as you get further into a bear market, then 0:10:43.559 --> 0:10:46.199 the diversifiers really start to pay off. And I think 0:10:46.280 --> 0:10:49.000 right now we are seeing rates rise, so yields on 0:10:49.040 --> 0:10:51.520 bonds are gonna in chup a bit, and that will 0:10:51.840 --> 0:10:53.800 you know, that is an argument that they may play 0:10:53.800 --> 0:10:56.920 a much better role as a diversifier than they certainly 0:10:56.920 --> 0:11:01.960 have this year. So we've taken the deep breaths, We've 0:11:02.000 --> 0:11:06.160 looked at the portfolio, We've reassessed our risk. We haven't 0:11:06.240 --> 0:11:08.800 had any rash decisions. What else do we need to do? 0:11:09.679 --> 0:11:12.800 If you sold and are looking for if you have 0:11:12.880 --> 0:11:16.640 money in cash, um, you may want to look at 0:11:16.679 --> 0:11:21.720 Hill savings accounts because as interest rates, interest rate has 0:11:21.760 --> 0:11:24.120 been raised on your cash account. It's lovely, isn't it. 0:11:24.200 --> 0:11:27.440 I mean it's still you know, Goldman still looks low. 0:11:27.720 --> 0:11:32.320 It is it's Goldman's Marcus Bank. You know. I think 0:11:32.320 --> 0:11:34.880 that they just bumped it recently up to like point 0:11:34.920 --> 0:11:39.560 eight five. It's like it's hard to get too excited 0:11:39.640 --> 0:11:42.480 over like less than one percent. But I sort of 0:11:42.480 --> 0:11:45.040 feel like if you have money in like a sweep 0:11:45.040 --> 0:11:47.400 account in your brokerage account that you're getting nothing. So 0:11:47.440 --> 0:11:48.880 I feel like we should at least if you have 0:11:48.920 --> 0:11:51.600 money in cash, try to, you know, get something on 0:11:51.640 --> 0:11:53.800 that money. I mean, is it smart to kind of 0:11:54.559 --> 0:11:56.200 if you have stuff in cash, hold it or maybe 0:11:56.240 --> 0:11:58.280 add to it. Is it? Is it at this point 0:11:58.600 --> 0:12:01.400 not a smart idea to move anything to cash because 0:12:01.400 --> 0:12:03.560 it's because of the selling that we've seen, certainly so 0:12:03.640 --> 0:12:05.679 much in equity. I mean, we could most think we're 0:12:05.679 --> 0:12:08.120 going to go down even more at this point, and 0:12:08.400 --> 0:12:10.079 you know, is there a role for crypto and all, 0:12:10.720 --> 0:12:15.920 oh my god question we can't even I just feel 0:12:15.920 --> 0:12:19.560 so the crypto question. I mean, if you are nearing retirement, 0:12:19.679 --> 0:12:22.600 then you need to really think about how much cash 0:12:22.640 --> 0:12:25.440 you need on hand. What's nearing retirement five years, ten years, 0:12:25.480 --> 0:12:29.320 I'm saying five. I'm saying five years because you can't 0:12:29.360 --> 0:12:32.960 afford you do not The worst thing is to have 0:12:33.000 --> 0:12:35.280 to sell into a down market, obviously right when you're 0:12:35.280 --> 0:12:39.240 around retirement age, because you don't have that many sadly, 0:12:39.360 --> 0:12:41.280 maybe you don't have that many years sort of in 0:12:41.320 --> 0:12:44.240 the job market left for you. Um So if you 0:12:44.360 --> 0:12:46.680 take a big hit, you can't really earn it back 0:12:46.760 --> 0:12:49.160 like a young person. Young person takes a big hit. 0:12:49.200 --> 0:12:52.160 They have tons of years of earnings potential ahead of them. 0:12:52.200 --> 0:12:54.440 But if you're heading into retirement and you need to 0:12:54.679 --> 0:12:57.120 that's a if you have to sell into a downmarket, 0:12:57.160 --> 0:13:01.800 you can permanently hobble your nest egg. So I will 0:13:01.840 --> 0:13:03.640 say in your story you talk one time, a fixed 0:13:03.640 --> 0:13:06.120 income in investment that offers a particularly strong hedge against 0:13:06.120 --> 0:13:08.920 inflation is a Series one savings bond from the U. S. Treasury. 0:13:09.080 --> 0:13:11.839 My friends will not stop talking about these. Seriously, sounds 0:13:11.840 --> 0:13:14.439 playing vanilla, but right yes, they think they're the smartest 0:13:14.440 --> 0:13:16.880 people in the world because they discovered these. I'm like, 0:13:16.920 --> 0:13:20.920 you did not discover this. You don't imagine that conversation. 0:13:21.600 --> 0:13:24.520 But I mean, you know, the sad thing is you 0:13:24.520 --> 0:13:27.640 can only invest ten thousand in them per calendar year, 0:13:28.240 --> 0:13:30.720 you know, but they're paying what are they paying? Like, 0:13:30.840 --> 0:13:35.080 I think it's like nine points. That's amazing. You can't 0:13:35.120 --> 0:13:38.319 get that anywhere right now. So that is really a 0:13:38.400 --> 0:13:40.400 great to hold them. Otherwise you have to hold them. 0:13:40.600 --> 0:13:42.120 You have to hold them for a year, and then 0:13:42.160 --> 0:13:44.280 if you sell before five years, you give up three 0:13:44.280 --> 0:13:48.040 months of interest. But there are very there are semi 0:13:48.160 --> 0:13:50.320 cash like move and you can't get that kind of 0:13:50.360 --> 0:13:54.560 yield anywhere else. Go ahead quickly reads to just about 0:13:54.600 --> 0:13:58.120 thirty seconds. Also an option reads in your story possibly, 0:13:58.200 --> 0:14:00.640 but reads will reads. You know if they have been 0:14:00.679 --> 0:14:04.600 traditionally been diversifiers, but they're not doing very well lately. 0:14:04.679 --> 0:14:07.400 They're not they're doing the old they're joining bonds in 0:14:07.520 --> 0:14:11.200 sort of the parade down. So in the short term 0:14:11.280 --> 0:14:17.480 they're not looking so great. Those coin cats, gender mattress. 0:14:17.480 --> 0:14:20.000 That was the other option, digging a hole and putting 0:14:20.040 --> 0:14:22.480 some gold bars in the ground in your backyard. All 0:14:22.520 --> 0:14:24.480 I will say ten years ago, the market was a 0:14:24.520 --> 0:14:28.880 lot lower. Right years ago, So just remember what goes 0:14:29.000 --> 0:14:31.040 down goes up, what goes up goes down. Look back 0:14:31.040 --> 0:14:33.120 five years and you're still way ahead of where you 0:14:33.920 --> 0:14:35.480 We're not telling you what to do for just a 0:14:35.480 --> 0:14:41.880 little perspective, Susan Willie, Thank you. You're listening to Bloomberg 0:14:41.920 --> 0:14:45.600 Business Week with Carol Messer and Bloomberg Quick Takes Tim 0:14:45.640 --> 0:14:49.720 Stinovich on Bloomberg Radio among our most read on the Bloomberg. 0:14:49.720 --> 0:14:51.080 And yes, this may be a moment to get out 0:14:51.120 --> 0:14:54.280 your tiniest violin, and yet it's significant pertains to a 0:14:54.280 --> 0:14:55.840 big market story of our time. It has to do 0:14:55.880 --> 0:14:58.520 with cryptotim Yeah. Tom Maloney is utter at Bloomberg News. 0:14:58.560 --> 0:15:00.040 He's with us right now. In the Bloomberg Interact to 0:15:00.160 --> 0:15:03.240 Broker Studios, he writes today all about the crypto billionaire 0:15:03.280 --> 0:15:06.840 fortunes that have vanished just as quickly as they were made. Tom, 0:15:06.840 --> 0:15:09.200 good to have you with us. Is that your tiny violin? Yes? 0:15:09.440 --> 0:15:11.760 All right, well it's still tiny because you know, all 0:15:11.760 --> 0:15:14.200 the people on this list are still billionaires right now, 0:15:14.280 --> 0:15:18.240 but they are less billionaires. I was so worried. Yeah, okay, 0:15:18.240 --> 0:15:20.440 well we should name some of these names, Okay, c 0:15:20.640 --> 0:15:24.280 Z over at Binance, people known as c Z Chang 0:15:24.280 --> 0:15:27.760 pang Yao, uh SPF, Sam Bakman, Freed. They all have initials. 0:15:27.840 --> 0:15:30.720 That's they're like, they're like Madonna, right, They're all known 0:15:30.840 --> 0:15:32.720 known by these things. That's I don't forget the winkle 0:15:32.800 --> 0:15:36.880 voe say there it is so um take us through 0:15:37.000 --> 0:15:38.920 the fortunes that have been lost here, because there are 0:15:38.920 --> 0:15:42.000 different types of cryptos in different types of companies too. Yeah. Well, 0:15:42.000 --> 0:15:43.680 most of the folks that we track on the Bloomberg 0:15:43.680 --> 0:15:47.320 Billionaires Index are associated with crypto exchanges. So people like 0:15:47.400 --> 0:15:50.440 c z as you mentioned, founder of Binance and bike, Winfreed, 0:15:51.120 --> 0:15:54.120 founder of f t X buying Armstrong, coin base, Um, 0:15:54.160 --> 0:15:57.320 the Winklevoye with Gemini and those businesses have really gone 0:15:57.400 --> 0:16:00.840 from um, you know law last year when there are 0:16:01.120 --> 0:16:03.560 kind of sky high evaluations and a lot of optimism 0:16:03.600 --> 0:16:06.800 about the future of that industry, to the total opposite now, 0:16:06.840 --> 0:16:10.600 you know, real pessimism, job cuts at those companies, and 0:16:10.720 --> 0:16:13.320 that's obviously had a massive impact on the fortunes of 0:16:13.400 --> 0:16:17.400 these folks. Last year in November, when crypto prices were 0:16:17.400 --> 0:16:20.080 at their peak, these guys collectively had a fortune of 0:16:20.080 --> 0:16:23.920 about a hundred forty five billion um. They've lost billion 0:16:24.000 --> 0:16:27.520 of that doubt now, so there are so how do 0:16:27.600 --> 0:16:29.760 we think about this, Like is this akin to a 0:16:29.800 --> 0:16:32.120 lot of the Internet billionaires or a millionaires you know, 0:16:32.240 --> 0:16:35.920 back in the day of two thousand, like similar haircuts 0:16:35.920 --> 0:16:38.080 of just you know, companies that people who seem to 0:16:38.120 --> 0:16:41.040 be wealthy and paper and then just we're not. Yeah, look, 0:16:41.080 --> 0:16:44.240 I think there are massive parallels with that era. You know, 0:16:44.320 --> 0:16:46.040 the crash that was saying in crypto A lot of 0:16:46.040 --> 0:16:49.400 people are comparing it to the dot com crash. Obviously, 0:16:49.440 --> 0:16:53.360 a lot of fortunes ended up still being made from 0:16:53.440 --> 0:16:55.400 the internet. We might see the same thing with Crypto. 0:16:55.440 --> 0:16:58.200 I think it's too early to say. Um, these guys 0:16:58.200 --> 0:17:02.320 are still billionaires, are still massively well, but a massive 0:17:02.360 --> 0:17:04.320 colm down from last year. Well, we can't forget the 0:17:04.320 --> 0:17:08.600 Winkle Loss. Twins are touring as part of their band 0:17:08.680 --> 0:17:11.040 right now. People were tweeting about this earlier this week 0:17:11.119 --> 0:17:14.159 with all the news about Gemini McDonald is the opening 0:17:14.200 --> 0:17:18.120 act for I did not know that she talked about Tory. 0:17:18.320 --> 0:17:21.040 That's great, so she so the wink Yeah, the winkled 0:17:21.119 --> 0:17:23.960 Um their uh their band is called Mars Junction. By 0:17:24.000 --> 0:17:27.040 the way, Brooklyn bawl last weekend and could have gone 0:17:27.040 --> 0:17:28.840 down and say them. I didn't find out until I 0:17:28.840 --> 0:17:30.520 wrote this story. Next time we'll have to do that. 0:17:31.359 --> 0:17:34.119 I did see some pictures circulating on Twitter. An interesting 0:17:34.200 --> 0:17:37.720 name on here, Mike Novograts, because that's not necessarily an exchange, 0:17:37.720 --> 0:17:40.080 and this is also a guy who's um made and 0:17:40.160 --> 0:17:44.960 lost fortunes before. That's right. Um Novigrats was a hedge 0:17:45.000 --> 0:17:48.119 fund manager bicycly at Fortress. He it was a macro 0:17:48.200 --> 0:17:52.560 fund that ended up being wound up back in I think, um, 0:17:52.600 --> 0:17:55.520 you know, he's kind of remade himself as a crypto evangelist. 0:17:56.119 --> 0:17:58.880 Last year, in November, when crypto processes were at the peak, 0:17:59.040 --> 0:18:00.879 he had a fortune about eight and a half billion, 0:18:01.240 --> 0:18:03.840 and now he's at two point one billion. He's also 0:18:03.960 --> 0:18:08.679 been kind of closely linked to one of the you know, 0:18:08.680 --> 0:18:11.040 crypto scandals. I suppose that sort of kicked off the 0:18:11.080 --> 0:18:14.720 crashing crypto process, which was Terra and its sister coin 0:18:14.840 --> 0:18:18.240 Luna that collapsed last month. Um, he was a big 0:18:18.640 --> 0:18:21.280 proponent of that coin, you know, going so far as 0:18:21.280 --> 0:18:26.200 to get the Lunar tattoo infamously on his on his 0:18:26.440 --> 0:18:30.080 arm last December or in January. Rather, tattoos are permanent 0:18:30.119 --> 0:18:33.439 crypto fortunes, not so much that's to get a Bloomberg tattoo. 0:18:33.440 --> 0:18:35.800 As much as I love this company still, yeah, I 0:18:35.800 --> 0:18:37.239 do have a few more years. Hey. You know, one 0:18:37.240 --> 0:18:39.280 thing I do wonder is when there's somebody who's so 0:18:39.400 --> 0:18:43.240 entrenched in an industry, you know, anybody who's saying I'm out, 0:18:43.520 --> 0:18:45.040 I'm out at this point. I know some of them 0:18:45.040 --> 0:18:49.520 probably can't because they're still involved and there's financial, uh 0:18:49.840 --> 0:18:51.720 positions at stake, But I do wonder if there anybody 0:18:51.800 --> 0:18:54.200 has just been like I'm out of this and I've 0:18:54.280 --> 0:18:57.359 changed by tune a little bit. Well, none of the 0:18:57.400 --> 0:18:59.720 folks on this list for sure. I mean these are 0:19:00.200 --> 0:19:03.840 who you know, their fortunes are still entrenched in these 0:19:03.840 --> 0:19:06.199 companies that most of them, you know, these guys are 0:19:06.240 --> 0:19:09.119 all founders of crypto focused company, so they're not going 0:19:09.119 --> 0:19:11.160 to be getting out anytime soon. And I think that 0:19:11.200 --> 0:19:14.080 the all of their statements that been as committed to 0:19:14.119 --> 0:19:18.280 crypto as ever. Michael Sailer keeping the faith, that's right. 0:19:18.320 --> 0:19:21.400 Michael Saylor of micro Strategy. We haven't mentioned him yet. 0:19:21.480 --> 0:19:24.200 We've talked to him a fair amount of times, right, Yeah, 0:19:24.240 --> 0:19:27.639 so we haven't tracked his fortune, but the steak in 0:19:27.800 --> 0:19:31.199 micro Strategy that he holds now, I mean that that 0:19:31.440 --> 0:19:34.520 the share price of micro Strategy is down around from 0:19:34.560 --> 0:19:38.600 its peak and his company has racked up about a 0:19:38.640 --> 0:19:41.800 billion in paper losses on its bigcoin investment. Before we 0:19:41.880 --> 0:19:44.479 let you go, Tom, I want to talk about El 0:19:44.520 --> 0:19:47.440 Salvador's president. I went to his Twitter feed yesterday because 0:19:47.440 --> 0:19:49.280 I was wondering if he's tweeted, and he hadn't as 0:19:49.280 --> 0:19:52.960 of yesterday. Um, because this is a country that made 0:19:52.960 --> 0:19:55.240 it legal tender just in the last twenty seconds that 0:19:55.280 --> 0:19:58.600 we have. How should we think about that? Well, look, 0:19:58.600 --> 0:20:01.640 I don't think it's great for El Salvador finances. Obviously. 0:20:01.680 --> 0:20:03.560 You know they've been buying bitcoin, I think at an 0:20:03.560 --> 0:20:06.560 average price of thirty six thousand. It's now just above 0:20:06.600 --> 0:20:10.080 twenty two thousand, so you know they they've they've got 0:20:10.160 --> 0:20:13.080 some serious losses on their hands. I was looking at 0:20:13.080 --> 0:20:14.840 his Twitter feet as well. He still has the laser 0:20:14.880 --> 0:20:17.240 eyes on his profile photos, so I guess he's as 0:20:17.240 --> 0:20:19.399 committed as ever. I do wonder if, like you know, 0:20:19.480 --> 0:20:21.399 we look back I don't know, twenty years from now 0:20:21.400 --> 0:20:24.440 and we say, okay, bitcoin had some problems, but it 0:20:24.560 --> 0:20:26.760 becomes something much bigger and is really a part of 0:20:26.760 --> 0:20:31.440 our exactly we will be Tom Maloney, thank you so much, 0:20:31.560 --> 0:20:36.640 editor Bloomberg News. Here in our interactive broker studio. I'm 0:20:40.119 --> 0:20:43.679