Okay folks, violence. We need to talk about what the Fed just did. The definition of insanity is doing the same thing over and over again and expecting a different result. The Fed has once again committed themselves to being behind the curve on inflation, not ahead of it.

They did likely make a bit more of an effort to get closer to the curve, but unfortunately it seems to me that they're still in La La land and I'm going to show you my evidence for that and then for the main entree. I want to discuss whether or not it makes sense to sell everything and my take on that. Obviously, a lot of our focus on this channel is on short to medium term plays, but we also have a big long-term conviction play focus as well, regardless of whether or not you're more of a trader or an investor. Odds are strong that you have a decent amount of long-term holds, right stocks that you believe in fud or favor that you think are going to grow hugely over the long run if you've been following the rapidly deteriorating financial conditions, if you've been watching the Fed's continued declaration of war on asset prices, If you felt any sort of pain in the last six to nine months and you don't want that pain to continue, you may be asking yourself, Well, is now the time to sell.

Everything is now the time to say I'm gonna tap out. It's enough. I've had enough. If you think we're on the verge of the Fed rug pulling us or pushing us off the cliff without a parachute, well, you may be asking yourself, okay, it's been bad so far, but do I really want to hang on for it to get much, much worse? So I'm going to give you my answer to the sell everything question and how I'm handling this.

Hopefully that can give you some ideas so that you can go out and formulate your own opinions and all I ask in return is that you hit that subscribe button if you'd like to stay informed throughout this crisis. So yesterday I was complaining that the Fed has basically been making the same mistake over and over and over again, letting inflation drive the Fed instead of the Fed driving inflation. Yes, the Fed decided to hike 75 basis points, which is the biggest increase since 1994.. Yes, 100 this was needed.

They needed to do this. But no, this was not enough. This was continuing to follow the same trend of policy making from the Fed that we've seen meeting after meeting. You know it's cute when you make a mistake a few times, but after a while it's no longer cute.

This is what I wrote on Twitter cough Follow me at Sip Charlie, but I wrote it. Feels like these meetings are Deja Vu. First, the data comes out, the inflation error data comes out, and it looks bad. Second, markets take expecting the Fed to have to be more aggressive because of this data, and then third, the Fed is forced to be slightly, ever so slightly more aggressive, but says the next meetings likely won't have to be as aggressive because we think that inflation is peaking or for some reason, the data suggests that inflation is starting to go down a bit.

They say that this is just a short-term uptake in aggression because of recent data, but that's just a temporary uptick, right? So Fourth Markets rally. They have those little bear market rallies that can be very, very aggressive and feel like you're going back up to new all-time highs. But then eventually you get down to the next set, the next round of data comes out, and the market is now forced to look at data instead of fed Disneyland promises. And the data looks bad.

So then you have to go back through this process again. Now, look, the Fed does need to respond to increasing inflation. It does, but it needs to do a lot more than just that. If you're only hiking in reaction to inflation, you're never going to be preempting it.

You're still waiting for inflation to solve itself on its own. Today, Jerome Powell decided to do a 75 basis point hike. A month ago, Jerome Powell said we're going to do a 50 basis point hike for the next couple meetings, and we're not even actively considering a 75 basis point hike. Before that, they said, oh, we only have to do 25 basis point hikes Before that, they said, we don't have to do any hiki hiki at all.

Each time, the market reacted by rallying and sign relief and then afterwards, All of a sudden the Fed had a reverse course. Again, we are in this constant cycle where the Fed is waiting for inflation to force its hand. And then it does the bare minimum. The bare minimum to prevent people from coming to the Fed headquarters with a damn pitchfork and burning the place down.

Now I will give them credit, they were a little bit more aggressive than I would have thought they would be. They did explain that in the next meeting in July you could see a 75 basis point hike. Again, I don't think it's a good. I think it's a 100 will if not higher.

But at least they weren't saying oh, this is just a temporary 75 basis point hike they're acknowledging. Okay, well this changes everything. The new data. It changes everything.

But still, they're not doing enough. And by the time you get to the July meeting, all of a sudden we're going to start talking about what 100 basis point hikes. I am glad that the Fed is getting more aggressive. It needs to be done, but they still are not being proactive enough is what I'm saying.

By the time public pressure is on you to do a knee-jerk reaction to 75 basis points on a few days notice, you're already about two, three, or four meetings too late to the game. We are at a stage where you can't just react to current inflation, you have to preempt further inflation. And that's why I'm so frustrated with this. Because inflation right now is like a snowball as it's going down a snowy hill.

It just keeps getting bigger and bigger and bigger. You want to stop it Now when the economy is still very strong and has only started contracting, You need to kick inflation in the rear end if you don't want this to drag on forever. And it's much, much better to kick it in the rear end when the economy is still hot and the labor market is still tight and people still have some money left. But if you wait until people are losing their jobs, their purchasing power has been eroded and their consumer behavior has changed quite a lot.

And tons and tons of companies are like, okay, well, we don't have any money left, We're going to start going and laying off more and more and more workers and you get a downward spiral. That's a whole other problem. That means that you're nuking an economy that's already on its hands and knees right now. The economy has a better chance of taking interest rate hikes without insane damage if you do this six months from now.

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you've diversified your portfolio. Thank you Masterworks for sponsoring this video. Now back to the content. Okay, so the sell everything question: Is it time to cash out your stocks and delete your brokerage apps? Well, if you're using Robinhood, Yes.

But seriously, on one hand, historically dips tend to be the best time to buy. On the other, if a dip keeps dipping for years and you think it atom bomb is about to drop on the market, well, you may be rethinking that, right. Can you save yourself from even more capital loss by selling out beforehand? If you're looking at long-term holds that you bought either before the crisis you followed into or you bought during the different dips that we've had over the last six to nine months, Is there a point at which it makes sense to say you know what? Screw this. I'm going to sell out and buy back in when things have gotten lower.

Well, only you can make that decision based on your own personal situation. but I would be very careful and very thoughtful. So hypothetically, let's say that you have a crystal ball and the crystal ball tells you 100 we're heading for a crash. Crystal Ball presents you with two different scenarios that the future could look like.

It doesn't tell you how far along you are on the trend or how far down these scenarios went, but it does show you the overall trend. The first one that it shows is a crash that looks like the dot-com bust or a crash that looks like the 2020 covet bust. One was long and protracted on the downside and then long and protracted in terms of recovery. The other was very very quick down and then very very quick up.

You don't know which it's going to be, but you know that one of these is going to happen. So with knowing absolutely nothing else or even where we are on this trend, you have to make a decision and what decision would you make? Well, you look at these and you'd say shite. Both are pretty damn big drops. You'd probably want to go and take any money out of the market that you're going to need for the next 6 to 12 months minimum.

More than that, if you're being safe, probably want to take out your less high conviction plays and store cash on the sidelines in order to take advantage of new opportunities as this thing plays out. Then you probably want to let go of anything that you don't believe is going to survive a deep recession that includes any company that does not have enough cash saved to meet their expenses or has debt that is downright predatory that it's not going to be able to pay the maintenance costs on. Probably want to get rid of anything that is operating at a huge loss that can't survive through the other end. You'd also want to get rid of anything that you're just simply bag holding that you don't have actual conviction in and you just kind of foam it in at a bad time.

Or you don't know why you're in the position, but you're just in it and you're down. So you don't want to sell or you're in it and you're up. and you just don't know when to take profits. Well, if you don't have conviction in those, it's time to sell.

The first stocks to capitulate on are the ones that you have no conviction in or no reason to be in. so you might as well sell now before they start going down further. But outside of these defensive measures, you'd probably start also wanting to figure out how to take advantage of the opportunity at hand as it develops. You can't know for certain how far something's going to go down.

You don't know how far on this trend we're already at. So while you're moving capital out of your lower conviction plays, and while you're saving up cash, you want to strategically and slowly deploy it into your highest conviction plays. Dollar cost averaging in very, very slowly on red days, not knowing exactly where the bottom is, but knowing that they will bottom if you did your due diligence right, and that you'll end up getting a much better price than anybody else that waited for the entire market to show obvious signs that it was coming back. Those are all common sense measures that make sense whether or not we have a fast drop that ends in a fast recovery or a slow and prolonged drop in slow and prolonged recovery.

Obviously that's easier said than done though, and the people that made tons of money buying the dips in 2020 didn't really know how fast it would come back. They just knew, hey, this is down. It looks like a good deal. I believe the American economy is going to come back eventually, so I'm going to buy it.

But basically the way that I look at this is that if you're feeling a lot of anxiety about buying and deploying capital as the market keeps getting cheaper and cheaper, it's probably mostly because you just don't have conviction. Stocks that you really, really have a passion for and that is 100 fine. Wait until you find stocks that you really do have conviction for, Because let me tell you, there's a lot of them out there that deserve some conviction. Go ahead and look through them and watch them as they go down.

Maybe you don't think they're a good deal now, even, but as they keep going lower and lower, you're gonna start thinking yourself, okay, wait, this is a no Bs buy. But let yourself build conviction and buy the dip on them slowly strategically and let things play out, accepting that you don't know how far it's going to go, but also accepting that if you're right, they'll go back up eventually. And then there comes the inevitable next question, which is okay. Well, what if I have a lot of companies that I have a strong belief in, but I also believe they're going to go down in the short term to the medium term, Why not just sell everything now blanketly and then rebuy back in at lower values? Even I've been saying I think the Fed's going to have to actually nuke all asset prices to a much higher degree.

So, doesn't it make sense to go more cash? Well, I do agree. I think it makes sense. It makes a lot of sense to go a lot more cash than you usually do, but I don't think it makes sense to sell out of all of your long-term conviction plays. And the reason is because when you're going all out and you're going all out into cash, you're taking a full faith position in the Us dollar.

The value behind the Usd is really the whole problem behind everything. It's losing value at paces that we haven't seen in four decades. It only looks and feels safer when compared to something like the stock market because the stock market's losing value faster. Don't get me started on the crypto market.

Crypto right now is the number one hedge against having any money. But if you're putting all your eggs in one basket and going all in Usd, you're essentially pinning your capital on whether or not the Fed is going to let inflation continue to run away, which is an open question mark. It could easily take another six months to a year or even more of insane inflationary data before the Fed actually decides. Okay, you know what, it's time to nuke.

So my take is take a bit more of a diversified approach. Keep a lot of extra cash so that you can deploy it at Dips, especially as the Dips get even dippier. Sell the hell out of low conviction stocks that aren't going to make it through a recession. Hold on dearly to anything that you have high conviction on over the long run and allow things to work themselves out and allow time to pass.

I think that's going to age the best. Keep in mind there's going to be three different types of people in this crisis. There's going to be the people who lose everything. There's going to be the people who maintain what they have.

And then there's going to be the people that make tons and tons of money on the other side here, and the people who make tons of money are going to be the ones that have added capital to the best opportunities when they've been discounted. The must and the best times to buy will be when nobody thinks it's a good time to buy and when your soul tells you it's not a good time to buy. I don't think that time is quite yet, but a lot of things are down deep and I think that if you're looking at these prices in three, four, five, six years, you're going to be like, geez, those prices were low so I don't know folks. if you have pretty low expectations for what your short to medium term returns are going to be like, you may find yourself in a couple months with opportunities that are just too hard to pass.

Anyways, that caps off the video. If you have any questions, feel free to reach out to us below. Make sure to comment below and let us know what you think about this market and what you're doing. If you're looking to learn how to trade with our step-by-step lessons, private chat, daily morning briefings as well as our full price target list, I'll put a link to Zip trader you below coupon code Charlie Fever Thanks again Masterworks for sponsoring us today.

I'll put a link to them down below. If you want to learn more about investing in art, have a good one folks and I'll see you in the next video.