The Watchdog on Wallstreet Weekly Recap for 3/13/2023

Understanding Duration Risk & why it’s relevant

Here we are again, facing another banking crisis. Despite the thousands of pages of regulations we have from Sarbanes-Oxley and Dodd-Frank, they didn’t prevent it. The truth is, you can’t really legislate or regulate stupidity. We have bankers who can’t even grasp simple concepts that first-year business school students understand, such as duration risk. Instead, they opt for free money and California startups that promise high yields without caring about the risks involved. To be honest, it’s hard to fathom just how foolish this entire situation is.

Tech VC’s know nothing about the Market

I can’t take it anymore. Every time I turn on a business network, there’s another tech venture capitalist startup guy with a goatee and way too much hair gel. It’s like we’re stuck in the dot-com era of the 1990s. And let’s be real, most of these guys are trying to sell us utter garbage at ridiculous valuations. It’s disappointing to see how these schemes have let our community down. Honestly, most of these startups are no different from the stuff Jordan Belfort was selling at Stratton Oakmont. It’s just a big pile of dog poop, really. Give me a break.

The TRUTH about SVB & bank bailouts

I can’t handle another startup CEO or executive praising the Biden administration on a business program for bailing out the rich. Let’s be real, that’s exactly what it was – a bailout for really, really wealthy people. The FDIC insured deposits up to $250,000, but 90% of the deposits at Silicon Valley Bank were over that amount. So don’t tell me it was about helping the little guys. It was just a bunch of lies. The bailout helped executives and democratic donors, not the average employee or small investor. It’s all just a bunch of horse manure.

Do not invest in banks right now

I see so many people getting excited about regional banks and wanting to invest in them. But hold on a second. Unless you’re just looking to speculate, you need to be prepared to lose your investment. These banks are struggling for a reason, and there is a lot of risky, long-term debt floating around that nobody knows about. We need to investigate each bank carefully to see which ones are truly safe. In my opinion, it’s better to play it safe and not take unnecessary risks. It’s better to earn moderate returns than to lose all your money. So let’s be cautious and make informed decisions.

To learn more about investing in fundamentally sound companies, contact us at Markowski Investments today and take advantage of a one-time free consultation!

Principles and a Solid Foundation is key to Investing!

When it comes to Credit Suisse and the possibility of contagion in the banking sector, I do believe that we will see more blow ups and issues. In the US alone, there are about $620 billion in assets that are currently underwater, and the Fed has set up a facility to deal with this. However, there are still too many irresponsible bankers out there. The situation in Europe is even worse, with many bonds trading at negative interest rates for a period of time. So how do we deal with all of this uncertainty? At Markowski Investments, we follow a simple strategy: we build our portfolio with high-quality companies that can weather these kinds of situations. We don’t rely on flimsy “straw” or “stick” investments – we stick with solid “bricks” that can withstand market turbulence.

Regulators can not solve our Banking Crisis!

Where are the regulators? Why didn’t the regulations prevent the Silicon Valley bank situation? The regulations exist, but the regulators lack power. Our podcasts, radio shows, and  Money Minutes have been serving as a watchdog on Wall Street for decades. We catch things and alert people before regulators do. We’re like Batman or vigilantes, but we don’t physically harm anyone. Despite our efforts, regulators are unable to handle the situation due to the cozy relationship between many regulated entities and politicians who help them escape from difficult situations.

Big Banks come in to save First Republic

Got banks coming in, Citigroup, JP Morgan, all hands on deck. Who’s going to step in and save the First Republic? Who will save this one and that one? I have no idea what phone calls were made behind the scenes. Again, some of these too-big-to-fail banks are in a relatively good position. Once again, regulatory capture is at work. Nothing bad will ever happen to them, as far as I’m concerned. They’re pretty much omnipotent. So, again, based on that status, the government basically forced its hand on certain things, much like they did to JP Morgan with Bear Stearns. Does this mean the seas are calm? No. Snap. There’s a lot of garbage paper floating around, and we have no idea who has it.

French president Emmanuel Macron raises retirement age!

Remember back in the day when, well, it was Jacques Chirac?  He was France’s Prime Minister, and he wasn’t keen on getting involved in Iraq, and he was right—he was right—but he was mercilessly skewered here in the United States. Do you remember Bill O’Reilly? I can’t eat French fries anymore. We’ll call them freedom fries. Just dumb. Anyway, I want to give kudos to the French President, Emmanuel Macron. He’s doing the right thing. He’s actually doing what he needs to do: bypassing parliament and raising the retirement age to keep the country from going bankrupt.

Bank Sell off continues amid the current banking crisis!

Unfortunately, the bank sell-off continues. Even with Joe Biden wearing his aviators, it couldn’t be stopped. Janet Yellen believes everything is fantastic, but the reality is quite different. There are numerous bodies floating around, and no one knows where they are. That is why everyone is selling. They’ll eventually appear, and this weekend will be hectic. I wouldn’t be surprised if some companies got married in haste. However, there is a lot of bad paper that needs to work its way through.

The Hyper is over: VC’s are forced to face reality

The hype cycle is over, and the music has stopped. We warned you that it would happen eventually. This is similar to the game of musical chairs, which is also mentioned in the film Margin Call when Jeremy Irons says, ‘I don’t hear the music anymore’ – that is the reality of the situation now. Venture capitalists are realizing that money isn’t free anymore, and they’re not getting as many investors as they used to. As a result, there will be a large number of bankruptcies and failures. If these companies had solid prospects, someone would fund them. Don’t feel bad; that’s just how capitalism works.