Mike Novogratz believes the worst is over as the investor psychology sentiment cycle emerges from a depression.
Unless you have been sleeping under a rock, you do not need us to tell you that the first half of 2022 has been the worst half for investors in four decades. For investors, it has been like taking a ride through the horror ghost train with the bursting of the bubble of everything, which saw more than nine trillion wiped off assets across the asset risk spectrum, and June’s uncontrollable spike in the 10-year treasury yields, which topped 3.8 in June.
Since June’s peak depression for investors, risk assets have staged a relief rally.
“the first half of 2022 has been the worst half for investors in four decades”
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Those of the opinion that there is no short-term bear market rally, particularly in the volatile crypto space, are in good company, as Mike Novogratz believes the worst is over
So Mike Novogratz believes the worst is over with the 2s 10s yield curve becoming less flat. A flattening curve means investors expect rate hikes near term and have lost confidence in the economy.
Mike Novogratz is reluctant to short equities because he would be worried about the wall of money that is coming, corporate buybacks, and the resilience of retail investors.
“As long as nominal GDP growth keeps growing and paychecks keep coming in it is hard to knock the equity market down,” he said.
“As long as nominal GDP growth keeps growing and paychecks keep coming in it is hard to knock the equity market down”
MIKE NOVOGRATZ
He has been short and long equities and shorts fixed income when it rallies.
But he has much less risk than normal. He is still on crypto.
“In the third quarter, Ethereum rallied 75%, and it is still down 50% on the year, so you go figure,” he said.
“We had a forced deleverage that happened because of a lot of imprudent credit in a lot of places,” he added. He believes that over-leveraged investors amplified the volatility to the downside.
“Steady march of adoption is continuing, it is not going away”
– Mike Novogratz
The crux of Mike Novogratz believes the worst is an over view is based on no forced deleveraging that is going to be happening
The market hit equilibrium and is waiting for a new narrative, we have that with Ethereum with the merger coming up when ethereum moves from proof of work to proof of stake. That is a big deal,” he said.
“That is why you are seeing Ethereum outperform,” he said. Bitcoin is about adoption, citing Black Rock’s recent announcement to set up a Bitcoin trust.
“Steady march of adoption is continuing, it is not going away,” he said.
He sees Bitcoin as a stable asset where the macro environment is uncertain.
“The monster resilience of retail, they get knocked down, but they get up again, you are seeing it with retail come back in meme stocks and cryptos,” he said.
Mike Novogratz believes the worst is over for Coinbase.
He believes Coinbase should not be discounted as a business, given their active accounts, but he also noted that Coinbase has a cost problem.
