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https://www.youtube.com/watch?v=aARTSSD_-OY
Michael Brey is very well known for
making stock market predictions some of
which are so impressive that they've
bridged the gap between nerdy financial
analysis and popular culture but how
often is he actually right or maybe a
better question is does he make a ton of
incorrect predictions that we've just
forgotten about well I've been following
And archiving every single prediction
that Michael Buy has made on Twitter
over the past couple of years to answer
that exact question including a
prediction that has so far come
completely true and will likely reach a
conclusion sometime in 2024 on the 13th
of June 2022 buy wrote in a tweet the
theater took more than a decade to over
stuff not likely everyone gets out in
less than a year buy of course here is
referring to the classic analogy of
someone shouting fire in a crowded
theater when Panic spreads in financial
markets it can sometimes result in very
rapid declines in this case however buy
is predicting a long drawn out crash
that will unwind over multiple years at
the time of this prediction inflation in
the US was about 9% and the Federal
Reserve had just begun raising the
federal funds interest rate from. 1% to
1.2% and the stock market had fallen by
about 15% in just 6 months so his tweet
could be interpreted to mean that
investors should expect that recent
decline to continue for some time well
that hasn't happened since that tweet in
June 2022 the market did keep falling
another 8% but since then it has rallied
29% putting the stock market about 18%
higher than it was at the time of his
prediction now of course you could
definitely argue that 18 months isn't
enough time to know if this prediction
will come true or not and I will cover
that specific uh case and argument a
little bit later in this video but for
now it did seem like bre was expecting
things to continue worsening in 2022
because of another tweet that he made
the exact same day getting one thing
right is hard 1999 Tech bubble 01 to 05
value Revival 2005 housing bubble 2009
Armond Farms 2020 Co bottom 2020
lockdown Horrors 2021 meme stocks 2021
crypto leverage 2021 inflation 2022 not
done yet late 2022 question mark these
are all events that Bor is claiming to
have predicted or at least was able to
invest successfully through because of
his portfolio strategy a really good
example of this is the 1999 Tech bubble
and the subsequent Revival of value
stocks after the crash in a year 2000
investor letter buy indicates that he
didn't predict the exact popping of the
speculative Tech bubble but that his
approach to picking stocks protected him
from it the main accomplishment of the
fund in my opinion was not grossing
8.24% in 2 months but rather avoiding
such a debilitating devaluations as
affected the indices and many widely
held stocks during the month I can with
some confidence assert that my strategy
is entirely designed to avoid and
otherwise minimize the price risk in
individual Securities his fund only
started with 2 months remaining in 2000
but he delivered an
8.25% return compared to the NASDAQ
which was - 22.9 he also began buying up
small cap value stocks in 2001
predicting that while the internet
bubble had burst that the broader Market
of larger companies would also suffer in
some sort of Aftershock which it did
falling over 40% in a 2-year bare Market
that only ended in 2002 and bu's list of
predictions are almost unanimously large
Financial events so the last few words
pretty clearly indicate that he's
expecting something big to happen by the
end of 2022 which again at least for the
broader Market did didn't happen of
course there was something big
financially that happened in late 2022
FTX collapsed and Sam bankman freed was
arrested and later found guilty of one
of the biggest Financial frauds in
history but again with the context of
all the other tweets he made in June
2022 it would be kind of silly to give
Buy credit for predicting that one
specifically just before we get to the
next prediction which in my opinion is
the most interesting because there's an
ongoing element that is relevant to us
today I want to quickly talk about the
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premium today a few days after posting
those first tweets he wrote this
adjusted for inflation 2022 first half
S&P 500 down 25 to 26% and NASDAQ down
34 to 35% Bitcoin down 64 to 65% that

was multiple compression next up
earnings compression so maybe halfway
there one way that we can think about
how a stock or even an entire Market
gets its price or its value is as a
factor of two things the earnings of of
the companies in the market or the
individual stock if you're looking at an
individual company and then some kind of
earnings multiple that's attached to
that earnings for example 12 months
before this tweet in June 2021 the S&P
500 had earnings of about
$159 per share and it also had an
earnings multiple known as a price to
earnings ratio of $27 so $159 multiplied
by 27 gives you $4,200 193 points or the

value or price of the S&P index in June
2021 it's really important to understand
both of these factors because it
essentially means that even if corporate
earnings on average stay flat over a
12-month period or even go up the stock
market can still go down if the earnings
multiple contracts and what influences
the contraction or the expansion of an
earnings multiple well one of the
biggest factors is changes in interest
rates which we saw play out exactly in
that way from mid 2021 to Mid 2022 the
FED started raising rates to combat
inflation and those higher rates pushed
the earnings multiple down so even
though corporate profits Rose from $159
per share
to12 a staggering 21% growth rate the
price to earnings ratio of the market
declined from 27 to 20 so the market
ended up declining by 12% this is what
buy was referring to in his tweet where
he says that was multiple compression he
then says next up earnings compression
so maybe halfway there so B's prediction
in mid 2022 was that earnings of
Corporations would contract
significantly and he was right S&P
earnings fell from $192 per share to
$181 per share as per the latest quarter
representing a 6% decline so then why is
the stock market it up and not down well
you know how earnings multiples
contracted from 27 to 20 well it's back
up to almost 26 If instead that earnings
multiple hadn't gone back up it had
stayed at 20 then since Buy's prediction
the market would actually be down 4.5%
instead of being up considerably okay
that was a lot of numbers that I just
threw at you so let me just summarize it
for those who maybe weren't keeping up
we all observed the earnings multiple of
the S&P 500 contract and buy was
predicting that it would be followed by
a contraction in corporate earnings and
he was right corporate earnings did
contract but what he was wrong about was
the ultimate direction of the stock
market because the earnings multiple
expanded again but then on the flip side
maybe he wasn't wrong I mean we could
just be seeing a temporary expansion of
the multiple maybe it will go back down
over time and then buy would be
completely right and that actually seems
to be Buy's ultimate prediction as
indicated in a tweet from August 2022
the New York Times front page the day
after the Dow bottomed on the 12th of
the 6th
1974 doesn't mention stocks which were
down 45% since January 1973 Peak
mentioned was the FED cutting rates to
7.75% signaling a credit ease stocks
ried 53% in 6 months making a lasting
top on that killer mistake in this tweet
he's referring to the huge mistake made
by the Federal Reserve during the' 70s
inflation crisis I have a whole video on
this so I won't go into too much detail
but essentially the Federal Reserve made
a mistake of dropping interest rates too
early which made the stock market very
happy in the short term But ultimately
led to a second inflation Spike the need
for further rate Rises and a stock
market that declined for over a decade
and today the market is experiencing an
eerily similar situation ation we had a
massive inflation surge the Federal
Reserve raised interest rates and the
stock market then collapsed but now as
inflation has eased almost back to
normal levels the market is now
expecting the FED to cut rates in 2024
we know this because the oneyear
government bond rate is lower than the
one Monon Government Bond rate the
market is expecting interest rates to be
lower in 12 months than they are today
and this is also partly why the earnings
multiple has expanded recently so we
could really summarize all of Buy's
predictions in 2022 into one large
prediction that we are sitting in a
temporary Rising stock market that could
turn ugly if another inflation surge is
on the horizon in some respects buy
hasn't been all that wrong but there are
major parts of his predictions that
we'll have to wait to see if they
materialize Buy's most recent prediction
Echoes this sentiment in early 2023 he
wrote maybe accompanied by a chart of
the stock market Market from 2000 to
2003 which shows an initial 31% decline
that began in 2000 followed by a 10%
rally which lasted about 6 months before
the remainder of the crash occurred
another 29% decline over 6 months this
prediction is pretty self-explanatory at
the beginning of 2023 the market had
risen somewhat after a big decline
through the majority of 2022 so he
thought maybe there would be a further
decline in 202 3 and he backed this up
with a bet against the S&P 500 and
NASDAQ index which he placed some time
during the second quarter of 2023
unfortunately we don't know the details
of this bet but from the context of his
tweets it's very likely that he placed a
very very small bet on a large decline
in the stock market maybe he was right
maybe he wasn't we actually don't know
if he made money from this trade unless
he decides to tell us about it what we
do know is is that the stock market did
not go down in 2023 it's up 21% so far
making it one of the best years for the
market in its history especially if you
owned a lot of tech he also tweeted
inflation peaked but it's not the last
peak of this cycle we are likely to see
CPI lower possibly negative in the
second half of 2023 and the US in
recession by any definition fed will cut
and the government will stimulate and we
will have another inflation Spike it's
not hard which we can firmly say that he
was also wrong about the CPI the
Consumer Price Index has not gone
negative in the second half of 2023 and
the US is nowhere near recession US GDP
actually grew incredibly fast last
quarter at 5.2% annualized rate after
inflation I have to give some points to
buy for his predictions because he has
been right about a lot of stuff that
he's said publicly whenever he's been
wrong which is a few times times it's
because he's placed a timeline on a
particular economic event occurring and
that right there I think is the most
important lesson here I love listening
to bu's commentary on the economy
because he is very well researched and
he understands Market mechanics better
than almost anyone but timing these
economic predictions is extremely
difficult even for the brightest Minds
which is why many investors don't
consider these big macroeconomic shifts
in their investing strategy instead pick
Investments that allow you to ride the
waves of the economy not one that relies
on you knowing whether a recession is
coming or not or whether there's another
surge of
inflation