đĽIMPORTANTđĽ
EVERY MAJOR MACROECONOMIC SHOCK HAS HAD A WINNER. THE QUESTION IS NOT IF IT WILL HAPPEN. IT'S WHO WINS THIS TIME?
đ˘There's a pattern that repeats itself time and again in financial history.
đ˘Every time the world experiences a shock large enough, the market is NEVER the same again.
đ˘The assets that led BEFORE the shock are NEVER exactly the same ones that lead AFTER.
đŻBANK OF AMERICA'S TIMELINE:
âŞď¸1971: End of Bretton Woods (Nixon decouples the dollar from gold) â GOLD skyrocketed from $35 to $850 in a decade. The dollar lost its anchor.
âŞď¸1981: Volcker Crisis (the Fed raised rates to 20% to suppress inflation) â Once inflation was under control, a 40-year bond bull market began.
âŞď¸1989: Fall of the Berlin Wall â global markets opened up. The era of US stock dominance and globalization began.
âŞď¸2001: September 11 â capital fled the US and flowed to emerging markets. The BRICS bull market (Brazil, Russia, India, China) began. China's economy grew tenfold.
âŞď¸2008: Global financial crisis â banks became regulated. Private equity (venture capital) filled the void. The era of private equity was born.
âŞď¸2008: Global financial crisis â banks were regulated. Private capital (private equity, venture capital) filled the void. The era of private equity was born. âŞď¸2020: COVID â TRILLIONS were printed. Bonds stopped yielding. China shut down. The winners were GOLD and the Magnificent 7 (Apple, Microsoft, Nvidia, Amazon, Meta, Alphabet, Tesla).
đDo you see the pattern? Each shock DESTROYS the logic of the previous cycle and CREATES a new one. Investors who keep playing the old game lose. Those who understand the regime change win.
AND WITH THE SHOCK WE ARE EXPERIENCING NOW, WHAT WILL HAPPEN?
đAccording to Bank of America's logic, this shock is big enough to change the winners. And who could lose?
âŞď¸The Magnificent 7, which led since 2020, are already under pressure.
âŞď¸Treasury bonds DO NOT work as a safe haven (yields rise during wartime).
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