MARKET BOTTOMING PROCESS

Some things make 2023 a good buying opportunity, the markets are not unpredictable as you actually think and you don't actually need to focus on time the exact bottom. Right now, we are in the middle of a bottoming process potentially for the market. Every asset class is downright down dramatically from their all-time highs. Stocks are down, Bitcoin is down, the altcoin is down, real estate is down, cars are down, and so on. It is worth taking some time to kind about what is actually going on in the markets here and to learn they are heading.

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This means we investors respond according to and try to make smarter investment decisions based on the information. Right now, central banks are rather predictable in what they are doing. Center banks have tools that they can use to try to control the economy and to control financial markets through monetary and fiscal policy. These banks tend to over-stimulate an economy in a bull market and on the way down, they tend to over-tighten the economy in a bear market. This is usually due to an overreliance on Rock bottom interest rates and quantitative easing. With over a decade for quantitative easing and a year blow off the pandemic top from all the stimulus, the market needed a bit of a reset and we are in the middle of the reset.

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There is an obvious correlation that we are seeing here between the interest rates as well as making money out of the supply. The falling prices have been going on for about last year. Using this time to build your investment portfolio could end up being a smart move if you fast-forward to 5 years. With every reset, central banks tend to over-tighten by increasing interest rates too hard and that can end up leading to recession. We don't know how much more pain is yet to come for the market but we do know there will come a time when the federal reserve says enough is enough and they will have to change the course that a pivot is going to happen.

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The first stage of a pivot is to slow down the pace of the interest rate increase. This means that more rate hikes are going to come but smaller increases happen each time. You should know that this has been the fastest rate cycle of interest rate hikes in 30 years. We saw the federal reserve start to slow down interest rate hikes back in December 2022, then FES chose 0.5% rather than the previous 0.75%. Then again, this week we saw the FED slowing those interest rate hikes once again, only raising by 0.25. This means that we are getting closer to the terminal rate. The rate holes are slowing down, the faster they slow the rate hike the fast they end up moving on to stage two. We hopefully expect the last rate hikes in March or April of this year. If that's what happens, the markets are going to like that but we need to see inflation continue to trend down for that to happen.