Repeat Of 2008 Financial Crisis As Wave Of Foreclosures Coming | Chris Vermeulen

Summary

In this financial discussion, Christopher Mullen, Chief Market Strategist at TechnicalTraders.com, warns of an impending real estate market crash due to over-leveraged properties and skyrocketing mortgage rates. He identifies a potential opportunity in the market downturn, while cautioning against the pain it will bring to over-invested homeowners. Mullen also discusses the current tech bubble, suggesting that while sectors like AI show promise, a market correction seems inevitable. He shares his bullish stance on gold and the US dollar index as safe havens amidst market volatility.

Takeaways

• 📉 The guest warns of a significant downturn in the housing market, suggesting that overleveraged property owners may face severe consequences as share prices and bank valuations are hit hard.
• 🏠 The Canadian housing market is under stress, with many mortgages up for renewal at much higher rates, potentially leading to a surge in defaults and a significant impact on the market.
• 📈 Christopher Mullen, Chief Market Strategist at Technical Traders Ltd, sees opportunities in the market downturn but advises caution for those who have invested heavily in real estate at high prices.
• 📊 Mullen discusses the divergence in the US single-family housing construction starts, suggesting a potential market breakdown and a bounce that could precede a larger decline.
• 🏢 He highlights the skyrocketing multi-family construction starts as savvy investors look for profit in a challenging market, despite increased building costs.
• 📉 Mullen anticipates a major decline in real estate, drawing parallels to the 2006-2007 housing market situation, and warns of the potential for a significant drop in real estate ETF values.
• 💡 The interview discusses the potential for a banking crisis as a result of the housing market downturn, with banks setting aside large amounts for bad loans, indicating a brewing issue.
• 💼 The conversation points to the tech sector driving the market, with other sectors lagging behind, suggesting a potential bubble and a warning sign for a market correction.
• 🤖 Mullen expresses bullishness on gold and silver for the long term, expecting a multi-year rally despite potential short-term pullbacks as the market corrects.
• 💰 He also sees the US Dollar Index as a strong play during market chaos, expecting it to rise significantly during times of crisis.
• 🚀 Lastly, Mullen's investment strategy involves rotating assets based on market conditions, moving entirely into the asset class that meets specific criteria, such as low volatility and strong trends.

Q & A

What warning sign does the guest mention regarding the mass public's impact on the housing market?

The guest indicates that a big warning sign is when the mass public starts to panic and dump properties, leading to a precipitous fall in housing prices and affecting banks and share prices.

What is the potential impact on the housing system according to the guest's perspective?

The guest suggests that the housing system may be under a lot of stress, with banks possibly knowing something the public does not, which could negatively translate to the financial markets.

What is the guest's view on the current state of the Canadian housing market?

The guest believes that the Canadian housing market is experiencing a bubble, with many people facing the challenge of renewing their mortgages at significantly higher rates, potentially leading to a 'bloodbath' of defaults.

How does the guest analyze the real estate market trends using chart patterns?

The guest, being a chartist, uses chart patterns to analyze market trends, identifying signs of breakdowns and bounces, and uses historical data to predict potential future market movements.

What investment opportunities does the guest see in the current real estate market?

The guest sees opportunities in multifamily properties, as they believe this is the last spot where investors can squeeze some profits out given the current market conditions.

What does the guest predict for the banking sector in relation to the real estate market?

The guest predicts that the banking sector will be hit hard, with share prices falling and earnings collapsing, as they will be on the other end of the debt from real estate going into foreclosure.

How does the guest view the current situation of people buying houses at their upper limits?

The guest expresses concern that most people buy houses at their upper limits, which could lead to a significant number of people defaulting on their mortgages when rates skyrocket.

What is the guest's opinion on the potential collapse in real estate and its impact on investors?

The guest believes that there could be a significant collapse in real estate, which would be an opportunity for some but very painful for those who are overleveraged and bought properties at high prices.

What indicators does the guest suggest could signal the bursting of the real estate bubble?

The guest mentions personal anecdotes, market analysis, unemployment rates, and the behavior of other investors as indicators that could suggest the bubble is bursting.

How does the guest approach trading in a market dominated by a single sector?

The guest prefers trading indexes like the S&P 500 and NASDAQ due to their liquidity and trend consistency, even though the market may be driven by a single sector.

What is the guest's strategy for wealth preservation in the market?

The guest's strategy involves rotating 100% of the portfolio into the asset class that meets their criteria for low volatility and strong trends, and scaling out of positions as they hit targets.

Outlines

00:00

📉 Warning Signs of Economic Downturn

The speaker warns of an impending economic downturn as the public begins to panic sell, affecting banks and share prices. This is an opportunity for some but could be painful for those over-leveraged in the property market. Christopher Mullen, Chief Market Strategist at Technical Traders Ltd., discusses the stress on the housing system and how banks might be aware of issues not yet apparent to the public. He suggests that the real estate market is showing signs of strain similar to those seen before significant financial corrections.

05:00

🏠 Housing Market Vulnerabilities and Bank Exposure

The conversation centers on the Canadian and US housing markets, with a focus on the potential for a significant market correction due to rising mortgage rates and the expiration of fixed-rate terms. Banks are setting aside record amounts for bad loans, indicating a concern for upcoming defaults. The guest, Christopher Mullen, anticipates a severe impact on banks as earnings may collapse and share prices fall. He also discusses the potential opportunities that may arise from such a downturn for those prepared to invest.

10:02

📈 Tech Bubble and Market Divergence

The speaker and Christopher Mullen analyze the current state of the stock market, noting a divergence where most sectors are underperforming while the tech sector booms, particularly driven by AI and Nvidia's strong performance. They discuss the potential risks of a tech bubble, suggesting that when it bursts, it could lead to a significant market downturn. The conversation also touches on the potential for a shift in market trends and the importance of recognizing when the bubble may pop.

15:03

🤖 Impact of AI and Robotics on the Market

The discussion turns to the potential long-term impact of AI and robotics on the market, with references to Elon Musk's comments on the future of robotics. The speaker and Christopher Mullen consider the possibility that the tech sector, particularly AI and robotics, could continue to outperform the market even after a potential bubble burst, due to the transformative potential of these technologies.

20:06

💰 Wealth Preservation and Market Strategy

Christopher Mullen outlines his wealth preservation strategy, which involves rotating assets into the market leader at any given time, such as the S&P 500 or the NASDAQ. He explains that this approach, despite appearing risky to some, actually results in lower drawdowns compared to traditional diversified portfolios. The strategy focuses on capitalizing on upward trends while avoiding assets that are in decline.

25:08

📊 Market Analysis and Predictions

The speaker and Christopher Mullen delve into technical analysis, discussing chart patterns and market indicators that suggest potential future trends. They talk about the current state of various sectors, including utilities and technology, and the potential for a significant market correction. The conversation also includes predictions about the performance of gold and the US dollar index in the context of a turbulent market.

30:10

🚀 Long-Term Bullish Outlook on Gold and Silver

Christopher Mullen expresses a long-term bullish outlook on gold and silver, predicting potential price increases despite acknowledging a possible short-term pullback due to market corrections. He discusses the formation of bull flag patterns on gold charts and anticipates a significant rally in mining stocks, suggesting a multi-year uptrend for these commodities.

35:13

💡 Unique Trading Philosophy and Risk Management

The conversation concludes with Christopher Mullen explaining his unique trading philosophy, which involves going 'all in' on a single asset class at a time based on specific criteria. He emphasizes the importance of wealth preservation and the management of risk through low drawdowns, as opposed to traditional diversification strategies that may expose investors to greater volatility.

Keywords

💡Market Strategist

A market strategist is a professional who specializes in developing plans and strategies for trading in the financial markets. In the context of the video, Christopher Mullen, as the Chief Market Strategist at Technical Traders Ltd., provides insights into market trends and potential investment opportunities. His role is central to the discussion as he shares his expertise on the current state and future predictions of the housing and financial markets.

💡Real Estate Market

The real estate market refers to the sector of the economy that involves the买卖, rental, and development of land, buildings, or both. In the video, the real estate market is a focal point of discussion, with concerns raised about potential stress and the impact of rising interest rates on housing affordability. The script mentions the Canadian and US housing markets, indicating similarities and differences in their trajectories.

💡Overleverage

Overleverage occurs when an individual or entity borrows too much capital relative to their income or assets, making them vulnerable to financial risk. In the script, the concept is used to describe a situation where investors have bought properties at high prices, potentially leading to financial distress if they are unable to meet their debt obligations due to market downturns.

💡Mortgage Rates

Mortgage rates are the interest rates applied to home loans and are a critical factor in determining the cost of borrowing to purchase real estate. The video discusses how rising mortgage rates can affect homeowners, particularly those with adjustable-rate mortgages, by significantly increasing their monthly payments and potentially leading to defaults.

💡Housing Bubble

A housing bubble refers to a period of rapid increases in housing prices followed by a decline, often triggered by high demand, speculative buying, and easy credit. In the script, the term is used to describe a situation where there is a surge in property values that may not be sustainable, leading to concerns about a potential market correction and the impact on financial stability.

💡Financial Crisis

A financial crisis is a situation where financial markets experience a severe downturn, often characterized by a lack of liquidity, loss of confidence, and the collapse of asset values. The video script alludes to past financial crises, such as the one in 2007-2008, and suggests that the current market conditions may be signaling another potential crisis, particularly in the real estate and banking sectors.

💡ETF (Exchange-Traded Fund)

An ETF is a type of investment fund and exchange-traded product, traded on stock exchanges much like individual stocks. In the video, the real estate ETF is mentioned as a way to track the overall performance of the real estate market. The script discusses how the ETF can serve as an indicator of market sentiment and potential shifts in the real estate sector.

💡Asset Allocation

Asset allocation refers to the process of distributing investments across different asset classes, such as stocks, bonds, and real estate, to manage risk and maximize returns. The video script touches on alternative assets like art, suggesting that investors should consider a diverse range of options beyond traditional stocks and bonds to optimize their portfolios.

💡Interest Rates

Interest rates are the cost of borrowing money and a key monetary tool used by central banks to influence economic activity. In the script, the discussion revolves around how changes in interest rates, particularly rapid increases, can have profound effects on the housing market and the broader economy, including the potential for a downturn.

💡Wealth Preservation

Wealth preservation is the strategy of maintaining and protecting one's wealth from inflation, market volatility, and other financial risks. The video emphasizes the importance of wealth preservation, especially in the context of a potential market downturn. Strategies discussed include shifting investments to more stable assets and avoiding overleveraged positions in volatile markets.

💡Market Correction

A market correction refers to a decline of at least 10% from the recent peak of a stock market index or a significant drop in asset prices. The video script suggests that a market correction may be imminent, given the current economic indicators and trends in the real estate and financial markets. This concept is integral to the discussion of investment strategies and risk management.

💡Dividend Stocks

Dividend stocks are shares of a company that pay dividends to its shareholders, typically on a regular basis. The script mentions dividend stocks as a category of investment that is often considered safe and stable, but also highlights the risks associated with dividend stocks during market downturns, such as the significant losses experienced during the COVID-19 pandemic.

💡Sector-Driven Market

A sector-driven market is one where the performance of one or a few sectors significantly influences the overall market trend. In the video, the discussion points out that the current market is being driven primarily by the technology sector, which could be a warning sign of an over-concentration in a single area and potential vulnerability to a market correction.

💡Asset Reves

Asset Reves, or asset rotation, is a strategy of moving investments between different asset classes based on market conditions. The speaker in the video describes his approach to asset management, which involves rotating fully into the asset class that meets specific criteria for low volatility and strong trends, thus avoiding assets that are declining or not performing well.

💡Risk Management

Risk management in the context of investing involves the identification, evaluation, and prioritization of risks followed by coordinated efforts to minimize, monitor, and control the probability or impact of unfortunate events. The video script discusses the misconception of risk in asset rotation strategies, emphasizing that by focusing on assets with low volatility and strong trends, one can manage risk more effectively than through traditional diversification.

Highlights

Public panic selling in real estate can lead to a significant drop in bank share prices and a potential market collapse.

The housing market is showing signs of stress, with mortgage renewals at higher rates leading to potential defaults.

Christopher Mullen, Chief Market Strategist at Technical Traders Ltd, discusses the current state of the Canadian and US housing markets.

Mullen predicts a 'bloodbath' in the housing market due to skyrocketing mortgage rates, affecting those who have over-leveraged.

Construction starts for single-family homes have declined, indicating a potential downturn in the real estate market.

Multifamily construction starts have increased, suggesting savvy investors are moving into this segment of the market.

Real estate ETFs show a potential for a significant market downturn, similar to the 2006-2007 housing crisis.

Banks are setting aside billions for bad loans, indicating a possible upcoming financial crisis due to housing market issues.

Mullen suggests that the banking system will be hit hard, with share prices and earnings expected to fall.

Alternative asset allocation, such as investing in contemporary art through platforms like Masterworks, is presented as a way to diversify investments.

Canadian banks are particularly exposed to the real estate market, with significant loans at risk.

The US housing market may not be as affected by mortgage renewals due to longer fixed-rate terms, but economic downturns can still impact homeowners' ability to pay.

Mullen shares personal anecdotes about real estate investment opportunities during market downturns.

Overbuilding of condos and other properties in big cities is leading to an oversupply and difficulty in selling.

Mullen's strategy involves rotating assets to preserve wealth, moving entirely in or out of the market based on favorable conditions.

The current market shows divergence with most sectors underperforming while the tech sector drives the market higher, signaling potential risk.

Mullen is bullish on gold and silver for the long term, expecting a multi-year rally despite potential short-term pullbacks.

The US dollar Index is seen as a strong asset during times of market chaos, with potential for significant rallies.

Transcripts

to me it's a it's a big warning sign

when the mass public starts to dump

those and they start to panic it it

creates a a precipitous fall the banks

are going to get hit share prices are

going to get hit this is an opportunity

but for those who are over leverage and

just piled in and bought a lot of

properties at these what I believe lofty

pricing um it's going to be very painful

going to get ugly out there says our

next guest the housing system may be

under a lot of stress the banks know

something we don't how is going to

translate to the financial markets

Christopher Mullen joins us today he is

the chief Market strategist at the

technical traders.com link to below to

learn more about Chris's work welcome

back Chris hey thanks David always a

pleasure we're going to start with

something we don't usually talk about

every single time but something that

affects everybody whether or not you're

in the markets it's IR relevant housing

affects us all how you reading the

Canadian housing markets and and US of

course a lot of my viewers are based in

the US but I think there are

similarities playing out you're an

expert on real estate actually people

probably don't know that about you let's

get your take and then we'll get into

the details sure yeah there's there's a

lot going on in the real estate market

um I was talking to somebody uh this was

uh late last year and he was talking

about how he had to sell his house soon

because he in April this year his

mortgage was going to come up for a

renewal he was paying like a percent in

a quarter he had some crazy amazing rate

but he going to renew it like 5 and a

half percent and he's like I'm not going

to be able to afford my house and most

people always buy a house you know

stretching their upper limit and in

Canada spe more specifically most

mortgages are three or five years and

we're coming up to that from the covid

bubble this is year three and uh really

over the next two two more years from

now is going to be this bloodbath of

people having mortgage rates that are

going to Skyrocket quadruple in value

potentially and hit them with these

massive mortgage rates and they're going

to go into default and I think we're

going to see this slowly continue to

pick up we've got real estate pricing is

going to start to struggle more and more

and there's a chart here that shows some

us real estate uh um construction uh

permits here if we take a look at this

chart this is just one of of many but

this is single family housing

construction starts they it broke down

uh back in 2021 early 2022 and it's it

has kind of climbed its way back up now

I'm a chartist when I look at chart

patterns to me this is a sign that

things are really breaking down and this

is just a bounce there's kind of this

final push of typically what happens is

after there's been a really good

investment real estate has done well

stocks have done well when there is a

pullback especially a fairly decent one

we had about 18% pullback in in my area

in real estate value um people pile back

in they think it's you know it's reset

and they drive the markets up for a

final kind of Bounce uh but overall if

we look at um there's other charts in

this data which I don't have here but we

look at multifam construction starts

they they've skyrocketed and that is

because Savvy Real Estate Investors I'm

a I'm a big fan of multif family I have

multif Family Properties myself it's the

last spot right now you can squeeze a

little bit of profits out of these

buildings materials are up labors are up

uh you have you know economy a scale

when you build multif family and that's

why we're seeing them Skyrocket happened

back in7 we saw a huge rally in multif

family starting starts and that's

because investors are saying hey that's

the only spot we can get a little bit

out of this market and then we see the

the financial sector and real estate

pricing uh really fall apart and there's

a really good chart if we take a look at

the real estate uh ETF this this is a

pretty interesting value way to kind of

see what's going on in the market let's

just go way back here to um here we had

2006 2007 was the last time we saw very

similar housing starts for multif family

and single family dwellings and then of

course we had a big selloff well we had

we had the similar type of blowoff phase

we've seen real estate cool off and it's

put in this big pause and this is this

is again this is the 200 um

708 well we've done the same thing we've

pulled back we've got this pause right

now and people don't realize real estate

is is primed and ready for another major

leg down if we look how how much it

collapsed last time it was about 64 % in

owning a real estate ETF that's how much

could fall we could see another huge

collapse in in real estate itself and

now this is a bit different than holding

your house doesn't mean your house is

going to fall 50% in value this is more

so investors panicking out of real

estate companies who own a lot of real

estate and they'll they'll drive the

value down but this just is a really

good visual of um average Market

participants right now are thinking real

estate's a buy this is a complacent type

of move they think real estate's good

they're they're they're buying right now

because there's been a pullback but the

reality is I think we're going to see

this collapse and banks are going to be

as you said David on the other end of

this holding all this debt of real

estate going into foreclosure people

can't pay their mortgages and they're

going to have a ton of properties valued

much less than their mortgages and it'll

be kind of rinse and repeat from the

last more or less Financial uh kind of

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away I've got a few clips from the CBC

who's done um a very good job analyzing

or reporting on what's going on in the

Canadian housing markets take a listen

to this clip I'll play it for the

audience turns out Banks right now are

building a bomb shelter just this

quarter Canada's big six banks have set

$4.3 billion aside to cover bad loans

that's almost double what they set aside

in the first quarter of last year and

more than 11 times what they set aside

in the first quarter before that banks

are setting aside a larger amount of

money than they ever have before not

just now but in the previous quarter and

in the quarter before that and the

quarter before that the experts we spoke

to say a big issue has to do with home

ownership interest rates Rose uh fast

and by a large amount in a way that's

never been done in Canada's history so

that's kind of the issue you were

talking about foreclosures are probably

predicted by the Banks because people

are refinancing at higher rates so how's

this going to impact the banks in your

opinion oh they're they're going to get

hit real hard I think um they're they're

going to see the share prices fall down

earnings are going to collapse um and

then our interest rates will eventually

start getting cut from the FED as blood

hits the streets and they they need to

try and lower rates to to save people

save investors and um we're going to see

the banking system get hit very very

hard it's an opportunity uh you know

short term it's going to be painful for

a lot of people but it is an opportunity

my dad was huge into real estate he had

over about 1,500 units at one point and

he gave me a box of his his real estate

stuff and he literally had Banks uh this

was like 20 plus years ago send him and

call him packages saying here's a here's

an apartment building like give us an

offer and so him and his Partners would

go and buy apartment buildings out in

Edmonton and Calgary and all these

places for like 25 Grand uh a unit and

they'd buy multi hundred units and then

you know there would be a rebound and

they sell them for like 75 grand a unit

type thing the whole building so these

are opportunities but the banks are

going to get hit share prices are going

to get hit I believe uh most equities

are going to crash and a lot of assets

as well real estate and commodities you

know there's going to be a lot of

selling so um this is an opportunity but

for those who are overleveraged and just

piled in and bought a lot of properties

at these what I believe lofty pricing um

it's going to be very painful you know

they're gonna have to hold through it if

they wanna

and be able to service the debt uh when

when things get tough I'm just going to

read to you a few uh stats about how

exposed the banks are in Canada to real

estate so according to Bloomberg uh when

it comes to commercial real estate we're

not talking about commercial here but

just is an idea uh real estate loans a

question mark for Canadian Banks profits

commercial property lending accounts for

about 10% of the loan books on average

at Canada's five largest banks when it

comes to residential housing which is

what we're talking about according to

this Seeking Alpha article Royal Banks

exposure is roughly $367

billion uh which is a significant chunk

of their balance so it really depends on

the bank um real estate uh commercial

tends to be less exposed or there's less

exposed to commercial than housing so uh

yeah housing seems to be a problem in

Canada less so for the us though right

uh Chris I mean most people in the US

have fixed mortgages rates they're not

they're not up for Renewal anytime soon

and theyve do

yeah they you're you're right it's not

the same mortgage rates are they get

locked in for like 20 30 years in the

States but the the problem really isn't

so much the

reoccurring um or the change in mortgage

rates so much the problem is it people

their psychology they buy a house that's

beyond their their limits if things get

tough or if they lose their job they're

they're not going to be able to pay for

it uh and and that that's kind of one of

the problems like we're just starting to

see unemployment cross above the 24mon

moving average almost every time we have

one of these red lines these periods we

go into uh some type of financial crisis

and people just can't afford their

mortgages um everybody always buys a

house that has like oh like you know

it's a little outside of the range and

as soon as one of the homeowners one of

the couples or or somebody loses a job

it doesn't take long for people to burn

through their cash yeah I mean I think I

heard a stat just last week that 70 or

71% of um Americans um are living

paycheck to paycheck uh or have I can't

remember what it was something like that

it's it's it's a lot well personal

savings have been depleted for Americans

according to the St Louis fed data so

there yeah yeah you and I touched on

that in our last talk uh talk real EST

our um people's savings is now below

covid people are have burnt through all

their Capital um and so this is this is

going to be the problem is and this is

this is the thing even though the US

doesn't have uh you know mortgages

renewing in three or five years it's

like 30 years the problem is times get

tough people can't afford the mortgages

because they run out of money and a

perfect example is um a property that uh

we had looked at in Florida we go to

Florida every year we've got a place

there they wanted 550 grand for this

little tiny place by the water and after

the financial crisis 2008 uh my parents

ended up buying one for like

$178,000 and now it's valued at over a

million when was this this how many

years ago was this this was this was

2007 to like 200 and 12 window it went

from 550 to 178 and now it's back up

over a million dollars so almost 10x in

15 years that's pretty good it's it's

unbelievable and that's like I I don't

want this to sound bad but Americans are

very very leveraged I think Canadians

are probably equally leveraged but I

find I find American Real Estate is more

volatile it moves percentage wise I

think people panic more or there's just

more people when the wave happens

there's a lot of people selling I mean

it's got 10 11x the the the amount of

people we have in Canada so I think once

the Stampede starts it creates a bigger

Stampede of everybody saying I got to

sell my house I got to sell my house we

talk about wealth preservation you and I

a lot asset investing is a theme which

we'll discuss in B more detail today uh

but what what what's your take on just

holding real estate for a 20 30y year

period real estate can't go down forever

is the adage right at some point it has

to go up real estate is the only asset

that goes up forever borrowing a few

dips so they say true or false true I I

think real estate is great so every

piece of real estate that I buy um the

last few I built from scratch and I

built them to last like you know solid

40 years they're multif family um I

don't care you know they're worth a

fortune right now they might be worth

30% Less in a couple years I don't

really care I built them years ago and

you know I've

got they make a ton of money and that's

all that matters I bought them for the

long term I want passive income I want

to you know I want to make you know

thousands of dollars every month like

clockwork and have somebody manage those

properties and it's just a business and

income stream I think that's the key you

don't want to buy an old jalap put

lipstick on a pig and expect it to last

40 years you're going to have to

eventually probably do some serious

rental or get rid of it because it's

starting to break down the key is to buy

near cycle low in real estate's

difficult preserve your Capital so that

you can get approved for a mortgage

because mortgages get really tough when

there's blood in the streets um so you

do need to put more down initially

generally um buy buy something quality

that will last that's low maintenance

you can get a premium or a fair rent for

I'm a big fan of buying everything I

have is for high-end PE like higher net

worth individuals I don't want cheap

little apartments or little Bachelor

pads I want uh people who have strong

income or they're retired and they're

easier to work with they have the money

um and you know they just value your

property and your belongings a lot

better than younger cheaper people right

so i' I'd stay away from the the

lowincome uh pocket when it comes to

real estate and focus on having a

handful of of really nice properties

that are going to last a long time

buying right now and holding 40 years

you're probably fine but you're

definitely you know you're not going to

see a lot of equity value increase uh

for probably some time I think let me

share with you another clip from the CBC

now this one has to do with housing

Supply this is a pretty interesting clip

take a listen want to show you something

cute little condo in Toronto's Harbor

front neighborhood bustling part of the

city it goes on the market in the summer

of 2022 the sellers put it up for

$480,000 it didn't sell early 2023 it's

back on the market for

460k no luck later that year posted

again at 450k still nothing and a few

months ago the sellers tried again at

$430,000 no takers this condo was

sitting on the market for more than 400

days without a sale right now in

Canada's biggest cities there's a ton of

condos like this struggling to sell

condo sales in Toronto for example

haven't been this low since the

financial crisis in 2009 uh what's your

take on this issue the title of this

video is why are so many Big City condos

sitting empty do you have an answer to

that question because everybody just

built too many I mean it is I I drive

around here the amount of multif family

new subdivisions going in is scary um

our town had just had a record amount of

new starting builds they actually just

put a freeze on it last year that no new

permits can go in um everybody's just

piling in thinking there's there's easy

money in it and that's how we know we're

in a bubble um it's pretty scary it a

lot of people are going to get hurt one

of my good friends his dad is huge into

um subdivisions and a bunch of their

deals their investors literally dropped

their money and and walked away they

said I'd rather just take this loss and

move on he's like like they don't want

any part of it they've seen what happens

and unfortunately the momentum for Real

Estate has ended uh so there's just a

lot of a lot of properties up for sale

and getting built like you know so many

right now that um there's just an an

over overabundance of them and not

enough people at this point to to fill

them okay so bottom line then for Real

Estate are you uh staying away from the

um real estate ETFs are you well you

don't like shorting right so you're

staying out of them for now correct yeah

yeah okay when it comes to real estate

I'll wait for wait for the bubble to

burst and wait for uh lots of properties

to come up and then go on a shopping

spree how do we know when the bubbles

bursting I know that's kind of a in

hindsight always it's 2020 oh yeah I

went down 20% last year I guess it burst

but any signs of any coincident

indicators that we can see I'll give you

a personal anecdote so I was in New York

last weekend and I was talking to this

guy who is a manufacturer of of DEC

tiles and they ship a lot out to Canada

they're based out in the Midwest

and he said he's expecting a slow down

in Vancouver he just you know the

Market's slowing down he said and this

is this is like somebody who's working

on the ground he knows the field what's

your what's your read any other

indicators you're looking

at

um you know a lot a lot of it like I

take a lot of my stock market analysis

and and a lot of what's going on with

unemployment and I take a lot of stuff

and scrape it together to get a

highlevel view of feel a lot of it is

just gut of of being through these

cycles and watching them in the past and

uh um so there I don't think there's a

shining anything shining like right off

the Hop I know when the time comes it'll

be a lot of stars will align I'll start

to probably see um things start to firm

up or in different areas maybe

employment starts to pick up and uh

maybe rates might not be falling too

much more they might have kind closer to

where they could find a new bottom uh so

I'm not exactly sure but there is a gut

feeling involved of just experience of

being okay there's now so many homes on

the property they they they flow

positive like right now to to make to

buy an a single family house you got to

put a crap load of money down uh to

cover the mortgage payments and be able

to turn a tiny profit or break even when

when I can put five or 10% down on a

property um and it's cash flow positive

from the rent I know it's a great value

uh but I don't want to go put 20% 30%

down on an expensive property just so

that I can I don't have to you know pay

a part of the mortgage every month to me

it's just not feasible so when the

number numbers work that's when you're

like okay well if the numbers work and I

don't have to like you know Fork out a

ton of money because you want to buy

real estate with borrowed money and uh

you want to you want to leverage that

and have it working for you but you

don't want to go dumping in life savings

to make a piece of property work and

that's what people keep doing which um

they're just sucked into the bubble of

the hype thinking that they want to get

into real estate everybody else is doing

it but it's to me that's not the way to

do it I want to show you something let

so let me share my screen and then I'll

let you share yours and then we can talk

about some charts here for the markets

we're going to move on to now uh the um

this the charts that you're following so

here I have the S&P 500 uh and the

orange line is showing IW or I YF rather

iyf is the iar's financials ETF close

correlation throughout the year year to

date um Divergence ever since the middle

of may actually beginning of June now

this exercise can be repeated for pretty

pretty much the other nine sectors of

the S&P 500 just as an example let me

show you utilities um this is the S&P

500 utilities and well it's kind of it's

kind of a uh same same story yeah xlu

yeah XL let me yeah let me yeah let me

do xlu so this

is uh

XPS yeah it's uh year-to date uh close

correlation and then Divergence this is

I switched them that orange line is the

S&P anyway uh let's take a look at the

tech sector the NASDAQ Composite uh year

to date uh the S&P 500 here is the

Orange Line the NASDAQ is outperforming

the S&P 500 probably not probably the

only sector outperforming the S&P 500

one of the um comments I've heard from

people I've talked to is that the S&P is

now the tech and P credits to a

newsletter writer that I know so I I

want to just get your take on how to

trade create a very concentrated

Market yeah that yeah that brings up a

really good point so if we take a look

at um at my charts here if you take a

look on my my left hand side where my

cursor is we can see these are these are

the sectors more or less you were

talking about you can run through and

today for example every sector is green

except for technology it's down 1.4%

Nvidia a big part of that um but it just

goes to show how this one sector is

completely disconnected from everything

else um and as as you said like when we

look at technology uh it has just been

screaming to the upside while the sp500

has been struggling a little bit more

the technolog is definitely outpacing

things so this is telling me like we're

in this bubble phase and I I believe

we're in this like AI bubble this Tech

bubble I mean everybody's heard it a

million times uh if we if we take a look

at Nvidia uh nvidia's actually got a

really interesting chart pattern I mean

it has if we look at it typically from a

short-term Trader standpoint when you

have a very very strong run in price and

you'll have a really sharp pullback on

volume which uh I can I can pull up the

volume here um for example here we had a

run up of multi-day volume when you have

a sharp pullback to a key moving average

which this pink line is the 20day after

a very strong run the first pullback is

usually a bounce and and so we we we saw

that what's really interesting here is

if we fast forward to today we've had

another huge runup and we just had a

sharp pullback on increased volume to

the 20-day again and when I look at my

short-term analysis chart here of um of

Nvidia we've got this lime green and

this is telling us it's an oversold

condition people are panicking and uh it

should Bounce from here now it might not

make new Highs but it should have a a

bounce and it is starting to bounce from

uh early this morning when it when it

kicked in uh so it's going to be very

interesting that uh Nvidia could still

have quite a bit more upside the last

time we saw this type of scenario we

still saw a very big run in fact this

type of pullback can be the halfway

point you have the first half it pulls

back it puts in the second half so

Nvidia could still have this blowoff

phase we just saw the world like the

most inflow into technology um funds

ever and that means the masses are

piling in and while I feel like the

market is trying to top and is getting

close the biggest moves in most um

Trends happen right at the very end and

while us as in vors are or at least most

of us I think are getting very nervous

about the market topping and Nvidia

topping the problem is you have the the

herd of average investors who Pile in at

the last minute at the same time and

they can shoot Nvidia rocket higher for

like a crazy parabolic move from here so

we could still see Nvidia just based on

this chart we could see um I think we

could see it run to potentially

$200 um if this reverses and we have

that Final blowoff Phase uh in the

second half of this move and that's

going to keep the tech sector moving up

it's going to keep the major indexes

moving up um uh and again when we look

at the general sectors in general which

is to me more so the Russell 2000 I mean

we're in this complacency move the

Russell might work its way up but I

believe we're going to go off a cliff

here uh and sell off and this is kind of

I think what the financial sector uh the

financial sector will eventually do as

well uh financial sector is pushing up

near these Highs but I believe it might

be putting in more so of a major top I

think banks see the end coming and I

think we're gonna see something very

similar to this covid we got up we poked

to a nominal new high and we have a big

correction so I think the banking sector

uh is going to have a very big uh

correction just like in the the um the

financial crisis I mean I think we could

see much more than just this pullback I

think we could see back down to the

covid I think a lot of sectors and

indexes could get back to those covid

lows or lower it's a long ways from

where we are well generally speaking

Chris when you see most sectors

diverging from the S&P 500 trailing down

and only one sector outperforming the

rest what does that signal to you yeah

that I mean that's it it means we're

it's a sector-driven market one sector

is doing almost all the heavy lifting um

a lot of people are moving out of stocks

last week we saw distribution selling we

had one big high volume day everything

got dumped um I think we're seeing a lot

of money move away uh from more or less

small caps and risk risky stocks and

they're all moving into

technology um but to me it's a it's a

big warning sign when you have

Divergence of most stocks going down but

one sector is going up and it's dragging

the entire index higher with it yeah

when that one sector rolls over and dies

it's going to be a blood bath because

not only will the stocks that are

already going down pick up speed and

sell off even faster but now you got

these heavyweight techs that everybody

is in those are going to sell off and

when the mass public starts to dump

those and they start to panic it it

creates a a precipitous fall and this is

like one thing a lot of people uh don't

even realize with when it comes to

dividend stocks um I think it's spyd I

think is the dividend um stocks for the

SP 500 so David this is something a lot

of people don't

understand most investors our big uh

heavyweight investors in the market are

45 years plus they own majority of the

stock market well they get into dividend

stocks they're told to Dividend reinvest

all that stuff well the people who own

the dividend stocks they saw during

covid they saw their portfolio fall

47% for those who said you know their

advisers are saying hey move into

dividend stocks collect the dividend

they they're slow Big Blue Chips they'll

be safe well you lost 47% and that's why

we saw so much Panic during covid is

because all these people in retirement

are literally crapping themselves going

how the hell is my portfolio in freef

Fall um going down when we look at the

SP 500 for the same time frame you could

have been invested just in the um in the

SP 500 itself and you wouldn't have lost

nearly as much the SP 500 only fell like

34% so if everybody's in technology just

like every all retirees are in dividend

stock when that group of people starts

to panic those supposedly conservative

safe positions become way more risky

than owning the index itself and that's

the problem we are Tech heavy the whole

world is now ai and they're driving it

up and just wait till the bubble bursts

the momentum changes you know Nvidia

could wipe out a ton of value in their

share price and it'll bleed over into

everything else so um it's going to be

very very interesting lots of

opportunity but lots of blood in the

streets I think over the next 12 months

okay the mechanics of trading a market

like this Chris do you just trade the

S&P sorry do you just trade the NASDAQ

then or just the few stocks like Nvidia

driving the entire Market I mean what's

the point of buying or selling the broad

S&P 500 is if it's driven by one sector

well I mean I like I like the indexes

like the sp500 NASDAQ those are the two

that we focus on trading um there's lots

of liquidity um so we can move we can

move in huge money huge positions in a

blink of an eye and get in and out I

like them because they they Trend very

nicely for example obviously if we go

back in time here and we look at at the

markets we have these beautiful Trends

you have nice strong uptrends you have

Market Corrections and uptrends and

Corrections I find them very

straightforward to trade uh it's like

we're trading the the ocean tide which

you and I have talked about before uh

this is the weekly chart of the SP 500

we have analysis that tells us when

we're in when we're in a a rising tide

we have analysis that tells us when to

not be in stocks when we're in a falling

tide right now we're in a rising tide um

and and when you can understand these

things it allows us to just safely kind

of navigate these markets and move

around I mean 2022 was the year we

traded the US dollar Index ETF it went

up 18% while the stock market sold down

uh you know 24% at one point um so it's

all about understanding where to go and

I love the indexes because they even

though it is driven by one sector it

still is very to me um consistent it's

not random um I find it's much more

accurate to trade than everything else

and over the past couple of years since

2021 when we saw more or less um small

cap stocks and and growth stocks cap out

and put this big blowoff top in Phase

most sectors are just like the Russell

2000 um they are chopping around they're

in favor for a month and then they're

out of favor they're in favor they're

out of favor um I've got our hot list

that we follow and we track and just a

couple weeks ago the top sectors were

all commodity um driven it was like

marijuana it was uranium it was gold and

silver and copper and water and oil and

and now they're now it's pretty

scattered but a few days ago they were

all down near the bottom actually few of

them are still hail wood or not hail but

wood and copex so we're in a difficult

time to trade individual and sectors the

indexes I find are way easier to trade

through all stages of the market and

that's what I love about it is I can

focus on one or two open positions at a

time take advantage of the rising tide

falling tide uh and not worry about

stocks popping and dropping and rotating

in favor and then out of favor uh it's

very difficult um in this type of Market

condition that we're in which uh is like

a stage three topping phase it's just

really dangerous difficult for most

people yeah this reminds me of post 200

uh and one when the tech bubble bursted

uh the few remaining big tech companies

uh that survived ended up being

outperformers for the rest of the decade

alphabet formerly Google uh Microsoft to

some extent apple as you know I wonder

if the tech sector is just going to be

long-term outperforming the rest of the

uh markets uh this is more of a

fundamental question I like to get your

take I know your short-term bullish on

Nvidia for the technical reasons you've

just stated I'm just wondering if maybe

medium term it's not going to get into a

stage three that particular sector won't

get into a stage three um topping phase

and then and then crash maybe it'll just

lead um that's just one opinion what do

you think yeah let's take a look at the

the semiconductor space let's just zoom

way out let's take a big picture view

here see how far back we go uh looks

like that's as far as it loads I mean

there there's there's no doubt I would

say you know we're in this parabolic

move I don't follow like fundamentals I

don't even know what the PE Ratio is for

NVIDIA or the stock market in general

right now because it plays no part of of

my analysis but we're definitely

screaming to the upside um I do feel

like the AI space is like still in the

infancy space I don't know what the PE

Ratio or how overvalued uh Nvidia is if

it even is overvalued um and that's why

I really stay away from news and I stay

away from this kind of fundamental kind

of Outlook is because no one knows and

I'd rather just follow price yeah but I

do feel based on this price action I it

feels like the air is going to get let

out of this balloon at some point and

it's going to pop and we'll see some

sharp pullback in this you know the

semiconductor space could as you said

hold its value much better than the rest

of the market because this is a brand

new sector and the sector is really just

getting started and it has like

unbelievable potential long term um so

this could Buck the trend and outperform

stock market might fall 60%

semiconductors might fall 30% or 40%

they'll still fall but they just might

not fall as much um so that's the way I

see it and I think the one of the

biggest things I really open my eyes was

hearing uh Elon Musk talk about like

Tesla and yeah the robots and he's like

you know everybody's going to want one

if not two or three add them into

manufacturing there's going to be you

know billions of these robots that can

do all kinds of stuff not that this Taps

well it Taps into AI but I mean we're

really just starting this new process

and I think if if Tesla's going to do

robots I mean there's huge potential for

Tesla um I think they're it's gonna be

pretty exciting stuff maybe robots will

need housing too Chris and that'll uh

that'll push up housing demand hi kid

okay they're not gonna need housing

probably warehouses though that that

well that'll take up real estate space

we'll see robots will be definitely a

game changer for society let's talk

about something you're bullish on Chris

talk about things that you are you know

a little bit hesitant to get in what

about things you know or have a good

strong conviction by on um I mean I'm

not really that I mean on gold I'm I'm

I'm bullish on gold and silver uh longer

term I do think there's going to be a

bit of a rougher ride in them going

forward as we see the stock market and I

think a recession hit I think they'll

get pulled back a little bit but I still

really like gold and silver they've

built beautiful chart patterns when we

look at the chart of gold it's been you

know rally a pullback a rally a pullback

multiple bull flag patterns I I still

think we're going to see gold hit 2650

2750 uh 2750 in the next month or two um

so I like those I do think they're going

to pull back with the market correction

I don't know where they they might pull

back to I think you could probably buy

gold at the price it's at right now or

maybe actually a little bit lower you

know 6 8 12 months from now so um and

and when that opportunity comes around

we'll probably also start seeing mining

stocks really start to come to life and

that to me will be like okay now gold

will be off to the races for what I

think will be like a five six 10 year

rally a lot like um uh we saw let me go

way back here back going into you know

20112 I think we could see multi-year

run uh after this I believe kind of

where we are right now is uh we're

climbing this this little Spike here

people moving into gold uh as a a safe

kind of defensive play this was the 2008

financial crisis bare markets pull most

assets lower because of panic Force

selling people going broke needing to

raise capital I think we'll see gold

pull back and then I think when the

bottom comes in you know it'll be off to

3,000 5,000 whatever it'll start this

next massive run and um it'll be

interesting to see what cryptos do at

this time during this phase as well so I

really like gold short term I like it

longterm I like it uh intermediate term

over the next like 12 months it might be

a rough ride um so that's there's you

know those are the three time frames but

I really like this and um other than

that I I mean I like the US dollar Index

as well so I I think when the stock

market is selling down uh we'll see gold

sell off as well and during that time I

think we're going to see the US dollar

um scream to the upside the dollar to me

is in this very strong pattern and I

think it's going to go up to about 120

if not um even higher than that so uh I

think the dollar will be a very good

play while the world is falling apart

the US dollar Index tends to to do very

well it had a huge rally in 2020 uh 2008

it had a massive rally going into the

the financial Tech bubble it pushed up

and I believe we're going to have

another crisis and it's going to push

back up and and probably get up to these

lofty levels so the nice thing about the

dollar Index is is low vol ility I mean

it rallied like 18% in 2022 biggest

pullback was less than 4% along that

move so very slow moving nothing in

there should have scared the crap out of

you you just ride that Trend um and I

and I think we're going to see something

like that again uh so those are the two

assets that I like they're both going to

perform a bit different at different

times um the Dollar's still trading

sideways it might struggle for several

more months um while gold moves higher

and then eventually a chaos hits the

dollar will rocket the chaos will pull

gold down temporarily until the dollar

tops out and the chaos comes to an end

and then things will change gold rallies

dollar collapses uh so there's a lot of

things I think that could unfold let's

finish off we talking about you now

Chris you know I've known you for a

while I don't think you're a gambler per

se I think some some Traders take that

approach they lever up concentrated

positions uh you're more of a wealth

preservation kind of guy I'll let you

explain your strategy but it's also

interesting because your entails going

all in or staying all out 100% cash or

100% in I don't know if there are

certain points in time when you're like

20% cash 10% cash um and it's just very

interesting to me because most people

that I know are are Diversified because

they're not all in at a given time um

you you are at times at some points in

time and you're still not I would say

somebody who takes excessive Risk please

explain yeah so I think this huge

misconception of of risk in general so

people people see my strategy and and I

call it asset Reves or or Reves and more

or less we were in one asset at a time

and so if the stock market is favorable

we move 100% of our money into the SP

500 and the NASDAQ we split our

portfolio down the center half goes into

each because they both move differently

and um so it's a little bit of

diversification but the thing is people

are like well you're 100% into the stock

market yeah um that is super risky

you're in all your money's in one basket

in one position I'm like well the way I

see it is well you're Diversified

against a in a whole bunch of crap and

they're all much more volatile than what

we're holding and uh if you hold them

you're going to have much more

volatility than than we are um so just

it's because we move all of our money

into the stock market and we don't have

any bonds or anything else uh people get

nervous but the reality is we manage

those positions are are our biggest draw

down is less than 6% whereas a lot of

people with their portfolio can lose six

or eight% in a week um with a fully

Diversified holding bonds and things

like that um so what we do is I I

identify what asset class meets our

criteria of low of volatility of of

Trends and all these things and we move

our money into this sector now this is

an example of covid I should show one of

uh maybe next time on here of 2022 how

we navigated the falling market and

continue to pull money out of the market

um but more or less we exit the stock

market which is the Spy because it gives

us a sell signal red bars we moved into

bonds and 100% into bonds and bonds

rallied like 19% for nine days and it

hit all of our targets and then nothing

else met our criteria so we closed the

position and we move into bill which we

earned a monthly dividend and we sat in

cash until there is a new trade setup

and these are like the three assets we

trade the US dollar Index as well there

wasn't a uh a trade at this point so I

didn't add it in here um and then of

course once the markets firm up we'll

move back into the stock market so um

the key here is our draw Downs are very

low less than 6% the average portfolio

has about 35 to 50% draw Downs during

bare markets and Corrections we're like

you know an eighth of that we're we're

less than 6% so if you can look at it

from a risk point of view we risk a lot

less because we rotate into whatever

asset is going up we don't hold stuff

going down if stock market goes up 10%

and bonds go down 15% which is you know

it's possible bonds have fallen like 40%

uh you're gonna you're going to take a

big loss because you're Diversified and

you're holding something that's going

down so I'm just like hey something's

going up let's move in let's hold it and

we scale out of it as we hit targets and

as we scale out we move that money into

bill so that we're still earning daily

interest we get a monthly dividend check

um to so that our our side capital is

still protected and growing and and

that's just how we we rotate we rotate

through these uh various markets it is

very different people um from the

outside says it feels really extreme but

once they do it they're like why didn't

I wish I knew about this 15 years ago

because we can just dance through this

market and um yeah it's uh it's

something that most people don't do

great well uh click on the link down

below to learn more and uh Follow Chris

there thank you very much Chris we'll

speak again soon great updates today

yeah thanks David always a pleasure take

care pleasure is all mine and thank you

for watching don't forget to like And

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