In July 2021, I wrote a post about how the current bull market was about to come to an end.
In Jan 2022, I shared my opinion on an upcoming recession.
Now, we are half way through 2022. I personally think we are already in a recession. Now to understsand where the US economy is headed to, I think understanding tech employees’ consumer behavior will be the most useful indicator.
It had been a norm for tech employees’ total compensations to only go up with their RSU values appreciating. However, this year is probably the first time in over a decade where they are making less than what they had signed up for. This is psychologically making them to become more conservative with spending. So, I do think that inflation will platuea and start to come down this year. Housing price will eventually also come down and I am already seeing the aftermath. When it becomes obvious that inflation has peaked and will gradually come down, the market sentiment will change and we will probably enter another bull market. I do think inflation will peak before Q4 with my most likely estimate to be between August — October 2022. However, it will only become obvious probably near the end of this year or the beginning of next year.
I think this recession will be a period where power shift happens between the big techs and startups. Those known as FAANG will probably come down from its peak and startups will once again eclipse them. I have a high conviction that FAANG will become the next Intel/IBM/Cisco/Qualcom etc, and the new companies will emerge to become the next tech giants.
If you want to invest in crypto, I do think one should start place bidding, especially for BTC and ETH. While I do think 18K USD BTC is possible, I think current BTC price actually looks completely fine and safe for me to invest in.
Short term wise, I think blockchain has way more potential than deep learning.
The transition from the radio/telecommunication to the internet was extremely smooth. I think the same will happen for the current payment infrastructure to blockchain based infrastructure. Internet was overlooked while smart people went into electrical/mechanical engineering or hardcore software engineering that dealt with OS and system architecture. Other half headed to either law firms or wall street doing banking and consulting jobs.
There have been a couple of major tech shifts during the past 100 years. Manufacturing, telecommunication, the PC revolution and the Web. I think we are about to enter another tech shift and my top 2 picks are deep learning and blockchain. Historically, the nonobvious ones turned out to be the winners, thus I am betting that blockchain will evolve to become a larger market from a short term perspective.
With this mindset I am bearish on Wells Fargo, Bank of America, Visa, Paypal and any other legacy banking and payments infrastructure. They just won’t be able to catch up with this new playing field. Best Buy, Nordstrom, JC Penny, Barnes and Noble and countless of others got destroyed by Amazon. Youtube has destroyed Viacom. Tesla is in the process of destroying legacy ICE carmakers. Apple cracked Microsoft’ monopoly on OS and is forcing Microsoft to become an enterprise company from a consumer company. I think legacy banking and payments infrastructure companies will pretty much face the same dismal fate.
