\n<\/p>\n
https:\/\/www.youtube.com\/watch?v=\/bSH4pueyL6g<\/a><\/p>\n
As the Federal Reserve continues to hike interest rates, investors should expect markets to \u201cbreak,\u201d said Clem Chambers, CEO of Online Blockchain.<\/p>\n
\u201cIf [The Fed] really does want to drive out inflation, something has got to break,\u201d he said. \u201cIf they really mean it, there will be an almighty crash.\u201d<\/p>\n
Chambers claimed that stocks and crypto, assets which have experience significant declines in 2022, are in the midst of an \u201concoming storm,\u201d prior to a major crash.<\/p>\n
\u201cEveryone remembers the big drop in 2008, but there was a bear market in 2007, which was an oncoming storm,\u201d he said. \u201cI think what we\u2019re in now is potentially an oncoming storm.\u201d<\/p>\n
Chambers spoke with David Lin, Anchor and Producer at Kitco News.<\/p>\n
Investing in Bear Markets<\/strong><\/p>\n
Some analysts have suggested that stocks and crypto are experiencing a bear market. Chambers claimed that, as a hedge, he had taken a heavy position in cash, despite his assets being \u201ceaten away by the moths of inflation.\u201d<\/p>\n
\u201cI\u2019d prefer to have my money in Benjamins than in Facebooks,\u201d he said, implying that cash would lose less in purchasing power than equities.<\/p>\n
He said that his strategy was to wait for the markets to reach a bottom, and then \u201cpile in,\u201d using cash reserves to buy bargain assets.<\/p>\n
\u201cRather than try to surf this downhill slope, just let it base,\u201d he said. \u201cSave cash, let it base, and then pile in at the bottom.\u201d<\/p>\n
However, he suggested that if investors want to go long in certain assets, that they invest in \u201chigh-risk\u201d companies.<\/p>\n
\u201cSnap a little bit of money off your pile and put it to one side and [invest in] high-risk stuff,\u201d he explained. \u201cYou\u2019ve got to look for special opportunities.\u201d<\/p>\n
Inflation and Equities<\/strong><\/p>\n
Inflation peaked in 2022 at 9.1 percent in June, before coming down to 7.7 percent in October. Chambers said that inflation is fundamentally due to excess money.<\/p>\n
\u201cInflation is being driven by money supply,\u201d he said. \u201cIf you keep printing more money because you\u2019ve got a fiscal deficit of a giant size, you\u2019ve got feed that deficit\u2026 If you\u2019re printing an extra $1 trillion every year to fill up your government deficit, you\u2019re going to get underlying, medium-scale inflation of 4, 5, or 6 percent.\u201d<\/p>\n
Although loose monetary policy can lead to asset bubbles, this is not always the case, said Chambers.<\/p>\n
\u201cSome people will say, it\u2019s inflation, so a Microsoft share is going to be worth 11 percent more if you\u2019ve got 11 percent inflation,\u201d he explained. \u201cThat didn\u2019t work in the 1970s, the last time we had high inflation. The equity market really suffered because everybody [thought] it was a scary environment.\u201d<\/p>\n
To find out Chambers\u2019s \u2018secret investment tip,\u2019 watch the video above<\/strong><\/p>\n
Follow David Lin on Twitter: @davidlin_TV<\/a><\/strong><\/p>\n
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