2022 has been an eventful year in the world of finance, there has been quite a mood change
over the the last twelve months.
It seems like no time at all since monkey JPG’s were viewed a status symbol, and the
finance experts on Social media were all on the search for the hottest new cryptocurrencies.
In order to fit in better in this new world of finance, I photoshopped my twitter profile
picture into a hexagon – so it would look like an NFT and get me some respect.
It wasn’t just me either trying to get respect in that space.
The British finance minister – and now prime minister Rishi Sunak asked The Royal Mint
to create NFT’s as part of its forward-looking approach towards cryptoassets.
So far, these NFT’s have not turned up and The Royal Mint have been a bit quiet on that
topic over the last few months.
Back in January people were willing to pay twitter a monthly fee to have an NFT profile
picture, today, Elon Musk could probably flip the site to profitability by charging people
to remove NFT’s and laser eyes from their profile pictures.
This could get more and more embarrassing as time goes by and people want to claim that
they never fell for that nonsense.
2022 has been a tough year for investors who were dubbed the next Warren Buffett too.
There was Cathie, Sam (Chamath who called himself the next Warren Buffett).
As time went by, we found out that Warren Buffett himself was actually the next Warren
Buffett.
There were many surprises too, I for one wasn’t expecting the year to wrap up with the richest
man in the world spending all of his time on Twitter asking people for $8, but that
is where we are right now.
We learned this year, thanks to Sam Bankman Fried that traditional Ponzi schemes are possibly
a better investment than crypto Ponzi schemes.
Many Madoff investors got 80% of the money they invested with him back, some even got
all of their money back.
It doesn’t look like things will go as well for FTX investors.
I guess the lesson is that if you want to invest in a Ponzi scheme, maybe find a local
Ponzi operator rather than going offshore.
So, let’s look at the big financial events of the year month by month and the lessons
that we learned.
January got off to a great start.
The S&P500 hit an all-time high on the first trading day of the year.
Apple became the first company to ever have a three trillion dollar market cap when it
briefly hit that level before dropping back under the mark shortly later that day.
By February things were not looking so good, especially in the world of tech.
At the start of the month Facebook (which had changed its name to Meta for some unknowable
reason) suffered the largest one-day wipeout in US corporate history after reporting terrible
earnings.
Its valuation fell by nearly $240 billion as its shares fell 26.4%.
The growth at Facebook's had disappeared and its daily active user base shrank for the
first time in its history.
The firm reported a $10 billion operating loss from its new metaverse business, which
no one was logging into as they were concerned that they might run into Mark Zuckerberg.
On the 24th of February Russia, who had been massing thousands of troops near the border
of Ukraine for almost a year began a full-scale invasion.
Analysts at the time expected Russia with its much larger army to win a quick victory,
but that is not how things worked out at all.
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The big news in March of 2022 was the sanctions that were about to be imposed by the west
on Russia.
People worried that banning Russia from Swift would cause financial chaos.
Many European countries had overly relied on Russia for Natural gas, and were now working
out ways to keep factories running and houses heated if they were to no longer deal with
Russia.
One of my biggest videos of the year was a look at what western countries buy from Russia,
and how they might deal with shortages in those items.
Inflation was already a problem by this point, and the Russian invasion of Ukraine added
fuel to that fire.
In mid-March, the US Federal reserve announced its first rate hike since 2018.
We saw a total of seven rate hikes over the year aimed at getting inflation under control.
Rates are expected to go even higher next year too.
If you are interested in how markets behave in a rising interest rate environment, I made
a video on that topic a few months ago.
We saw big covid lockdowns in Shanghai in May, all offices, shops and public transportation
in the city were closed and residents were required to stay inside their homes.
Some of the images of apartment building doors being welded shut shocked people around the
world as Xi Jinping pursued his zero covid policy.
We are only seeing that being unwound right now.
April saw the start of a difficult period for this channel, as Elon Musk announced his
stoner themed buyout of Twitter.
This was the first of two leveraged buyouts that he announced in 2022.
Longtime Musk fans like me are aware that one of his hobbies is to announce Mergers
and Acquisitions at prices that he finds funny.
I found myself making a number of videos on how M&A deals typically work, and the innovations
that Elon attempted to bring to the financial industry.
In May, Elon began his attempts to back out of his stoner themed twitter deal, technology
stocks had fallen a lot over the period and he no longer found the price he had agreed
to pay funny.
Unfortunately, he had signed a binding merger agreement, and it’s possible that he fully
understood this, and was only pretending to back out of the deal, in order to provide
entertaining content for my YouTube channel.
With markets falling, high inflation and a war raging in Ukraine, a bit more bad news
was needed and so we learned that there had been an outbreak of Monkeypox.
Of course, by May, when people heard the term monkeypox, they thought it was a new series
of NFT’s.
The World Health Organization consulted with experts and decided to rename the disease
“mpox” much to the delight of members of the Bored Ape Yacht Club who felt stigmatized
by the term Monkeypox.
They thought people were referring to their investment returns.
We saw the collapse of the Terra Luna crypto token pair that month too.
Luna collapsed from $120 to $0.02, a 99.9% correction.
This was a stablecoin, which led crypto investors to worry about the non stable coins and how
they might perform on a bad day.
In June people were really starting to voice their concerns about inflation around the
world, in particular energy price inflation.
The issue was most extreme in Europe due to the reliance on Russian Oil and Gas.
Gasoline prices hit an average of $5 per gallon in the United States, which caused some grumbling
from Americans and intense jealousy from the rest of the world.
If there was one thing that was helping to keep inflation under control, it was the ongoing
slowdown in China.
With Chinese real estate prices collapsing, a general economic slowdown and people staying
at home due to the covid policies, there was significantly less demand for commodities
from China – which helped the rest of the world.
In rap news, Jay Z and Jack Dorsey (an unlikely duo) announced a 12-week cryptocurrency educational
initiative to residents of Marcy Houses, the public housing complex where Jay Z famously
grew up.
Classes ranged from “Careers in Crypto,” to “Crypto Scams & A Security Mindset,”
Residents expressed annoyance and skepticism to the press “Every dime I get got to go
to rent, phone, TV and internet.
I don’t have money like that to be losing.
If I did, I would try to invest in something that’s more reliable, like betting on the
basketball game last night.
A resident told the Guardian.
Many of the residents found Jay Z and Jack Dorsey to be out of touch with their lives,
and prefer learning about finance on my YouTube channel.
(OK…
I made that up…)
Fortunately for the residents, most sold the crypto they had been gifted right away to
pay bills, as later in the month, we saw the collapse of the crypto hedge fund Three Arrows
Capital, which led to further contagion in the crypto markets which is ongoing today.
July didn’t bring much better news, The former Japanese prime minister Shinzo Abe
was assassinated.
Abe had been the longest serving prime minister in Japanese history.
Sri Lanka was in the news too as protestors stormed the presidential palace and torched
the prime minister’s mansion.
The country had collapsed into bankruptcy with severe food, medicine, and fuel shortages.
In August, tensions between the US and China hit an all-time high when the politician and
day trader Nancy Pelosi travelled to Taiwan on August 2.
The Chinese government was infuriated and conducted its largest ever military exercise
around Taiwan in response to the visit.
Elon Musk announced his second big buyout of the year on Twitter when much to the delight
of Manchester United fans he said that he was buying the football club.
He later explained that it had been a joke which is never a good sign of how well your
comedy material has landed.
Adam Neumann, who had managed to convince people that a coworking space with a beer
tap was a technology company got to fail upwards in August when the venture capital firm Andreessen
Horowitz wrote its biggest check to date — $350 million, valuing Neumann’s new company “Flow”
at $1 billion.
Flow is planning to disrupt residential real estate through technology.
The idea seems to be to rent out the 3,000 apartments that Neumann has already bought,
and the company will add community features and provide the opportunity to renters to
gain equity.
So yeah, technology…
The Inflation Reduction Act which contains $500 billion in new spending and tax breaks
was passed in the United States this August.
The act aims to boost clean energy, reduce healthcare costs, and increase tax revenues.
The Wharton School of Business and The Congressional Budget Office announced that the act would
in no way reduce inflation, but in the United States, the name of a law and its contents
are not required to have any real relationship.
In September a lot of focus was on the UK, as Liz Truss became the British Prime Minister.
She announced major tax cuts and a spending increase in an already bleak economic environment.
She then had to quickly reverse that strategy after its announcement tanked the pound.
At 45 days in office, Liz Truss holds the record for the shortest Prime Ministerial
term in British history.
The prior record holder, George Canning, lasted 119 days in office, his term ended in 1827
when he died of tuberculosis.
People are still debating whether Liz should include the job on her LinkedIn profile, or
not.
The Queen of England passed away in August too, being replaced by King Charles the Third.
In September employee motivation experts were sent into overdrive when a Tik Tok video on
‘Quiet Quitting’ went viral.
The French were of course unimpressed, having written the book about it, almost 20 years
ago.
Bonjour Paresse by Corinne Maier was a best-selling book in France back in 2004 where the author
put forth that it is in the reader's best interests to work as little as possible.
Of course, the greatest inventor of the modern age quickly came up with a solution to the
problem of quiet quitting with the unveiling of the Teslabot.
Apparently, it is much more profound than it at first seems.
In October the average U.S. 30-year mortgage rate surpassed 7% for the first time in twenty
years and Kanye West lost his billionaire status when Adidas dropped him following his
anti-Semitic remarks on social media.
Tuttle Capital Management filed a prospectus to launch the Inverse Cramer ETF that would
do the opposite of what Jim Cramer recommends on his television show, whether it’s buying
or selling a stock.
The U.S.-China tech competition heated up dramatically in October when the Biden administration
imposed wide-ranging semiconductor-related export controls on China.
The export controls were imposed to restrict China’s ability “to produce advanced military
systems.
Towards the end of the month, Elon Musk, following an ancient South African tradition walked
into Twitters headquarters with what appeared to be a porcelain bathroom sink in his hands.
While in the past people used to discuss other topics on twitter, now that Musk is in charge,
they only talk about Twitter on Twitter.
In November, the global population reached 8 billion people, and the big financial news
story was the FTX Bankruptcy, which I covered extensively on this channel.
Crypto investors learned the problems that can arise when you send your money for safekeeping
to some weird kids with an unregulated, opaque offshore entity.
While Kevin O’Leary – who plays a billionaire on television may not have lost his shirt
in the situation, it would appear that he did lose his pants.
In December, Blackstone began limiting withdrawals from its $125bn private real estate investment
fund, after a surge of redemption requests.
While this may not look great for Adam Neumann’s new company ‘Flow’, I don’t think there
is major need for concern, as it is after all a technology company.
Oh… hold on, tech stocks are doing even worse.
You know what, it’s just apartments he is renting out, it’s probably just a real estate
company.
That was quite a shrewd move by Marc Andreessen getting out of tech and into real estate.
Nicely done Marc.
The Federal Reserve hiked its policy rate by half a percentage point earlier this month
and signaled its intention to keep squeezing the US economy next year, as central banks
on both sides of the Atlantic enter a new phase in the battle against inflation.
2022 has not been an amazing year for investors, but of course markets do have to go down every
once in a while, hopefully 2023 will be a much better year.
If you haven’t watched it yet, you should watch my video where I look at the returns
of the different asset classes during inflationary times.
Don’t forget to check out Blinkist our video sponsor using the link in the description
below.
Have a great Christmas and see you again soon.
Bye.