Investing in big tech is a poor decision due to forecasts of a recession in the next 12 months due to Covid 19, the war in Ukraine, and other factors like government bailouts preventing bad companies from failing.
Patrick Bet-David started his financial services career with Morgan Stanley and the Transamerica Corporation. He founded PHP Agency in 2009, a financial services marketing organization offering insurance products, including annuities, health insurance, and 401k roll-overs.
Patrick Bet-David has argued on his PBD podcast that for market growth every 10 years, there needs to be a big recession to kill off bad companies with bad management, bad institutions, or a flawed business model.
Mr. David uses the example of a forest fire; the old trees are destroyed once the fire has burned out. This provides an opportunity for new trees to grow.
This analogy can be used when talking about the stock market and companies.
For new growth, the stock crashes need to disappear so companies can fundamentally change or be destroyed.
This happened when Steve Jobs returned to Apple in the 1990s after the company failed due to the culture and not focusing on the user experience.
Why is it a bad idea to invest?
Investing in technology companies being the big 4, Google, Apple, META, and Amazon, could be a massive mistake due to the surging stock prices of 78% surge in its share price this year.
Apple (AAPL.O) is worth more than all the FTSE 100 stocks combined.
The California-based provider of iPhones and iPads is worth nearly $2.3tn or £1.73tn, while the UK blue-chip index is worth just £1.49tn after a 21% fall in the coronavirus pandemic in 2020.
Using the example of Apple, similar technology companies like Amazon and META are experiencing though META’s stock price has fallen from $384-$200 even though it continues to grow its profits. These examples of technology firms are essential to highlight why it is the wrong time to invest.
The objective of an investor is to buy low and sell high the advice of Patrick bet David is to wait for the forest fire; in this case, investors will be panicking when the crash finally comes.
Why is a financial crash great for investors?
The world is facing a tsunami of financial crashes in the next 12 months; for the intelligent and business savvy investors, they could be going from £100,000 to £200,000 or 1 million to 2 million in the next 24 months.
This is because cash value is decreasing due to the rising living costs due to inflation.
This, in turn, means that stock and other assets like gold or property terms of value will skyrocket. What this means for an investor that knows the storm is coming is that when people start to panic, fortunes will be lost or made due to people selling off their assets.
With the stock market set to collapse due to panicking, investors provide the opportunity for an investor to buy shares in companies at a lower price, and that stock will rebound during the bull market.
The financial storm is coming, and there will be winners and losers who have expanded their wealth and those who have failed, so good luck during the next 24 months.