2022: The Beginning of the Fraud Cycle
10/03/2022
The topic du jure of high fínánce is obviously rising interest rates, which I believe will restore some semblance of rationality to asset valuations. People will do what they always do and sell at the bottom, which means that there will be opportunities to buy at bargain prices.
But before that can happen, there will be failures. Many money-losing growth stocks will go to zero. Some investors will lose their asses. Authorities will crack down on scammers.
What we’re witnessing is the start of the fraud cycle, which is what we discus this week. The fun is only just beginning.
Peace out.
Mike
Business Bites
Analysis, Reviews, and Weird Business News
The Coming Fraud Cycle
Market News
Noted value investor/permabear Michael Burry recently warned on Twitter that we won’t see the bottom for stocks until business start failing. But more than that, we will soon see frauds unravel (and in fact, we’re already seeing it).
Why Businesses Will Go Bust: Fed Chairman JPow has said that tighter monetary policy will remain in place for “some time,” meaning that companies that relied on ten years of free money are in deep doo doo if they can’t start generating profits.
Only when the tide goes out that do you discover who's been swimming naked.
-Warren Buffett
Fraud Cycle: As short seller Jim Chanos has said, the fraud cycle follows the business, but with a lag.
Authorities are now pursuing relatively minor cases such as the $100M deli fraudsters, but watch for even bigger frauds.
Mogul Moves
Tracking Big Investors and Business Leaders
Venture capitalist Bill Gurley thinks that “this might be as good a time as you’ve had in a decade” for starting a business. In a recent interview, the billionaire cited favorable (or zero) real estate costs for startups, as well as better access to talent in a remote work world (note to readers: if any of you have a billion-dollar idea, HMU 🤙)
Interpol issued a red notice for Do Kwon, the genius behind the $60B Terra Luna crypto crash, after South Korean authorities said that they are seeking his arrest for violating the country’s securities laws.
Epic Games CEO Tim Sweeney tweeted that “Apple must be stopped” after the fruit company AAPL 0.00%↑ moved to force the sale of NFTs through its own in-app payment system (see our previous discussion for more on Apple vs. the Metaverse).
Right on cue, Buff Daddy picked up another $350M in Occidental Petroleum OXY 0.00%↑ stock under $60 a share as oil prices slipped last week.
Memes and Sarcasm
Janet Yellen—take notes
RIP
Bezos personally flying the plane
Enable 3rd party cookies or use another browser
Last Week’s Issue
Contact
Email mike@tycoonist.co or reach out on social media.