Stocks Down, Crypto Up?

Let's not sugar coat it right now the markets are bleeding more then ever. In fact 2022 has not only been a bad year for crypto but the stock market is now following in what was attempted to be propped up by many means. Well those means have run dry and the markets are about to be be destroyed. The performance of the stock market this year is the worst it's been in 50 years in fact it's worse then the great depression!

The bad news... It's expect to get worse.

Interest Rates

For this article it's critical to understand interest rates and how they all work at least in the governments perspective. The ultimate goal of the FED and government is to keep rates stable and inflation at around 2% which was softly agreed upon about a few other countries. It's important to note this agreement is a simple hand shake but for the most part countries try to stay within those rates because out of them things start to get very lop sided as we are starting to see now.

It's also important to note here that the FED does one thing when inflation starts to run wild. They shut off the money printers, raise rates and honestly just hope for the best. It's a spray and pray type system they run on and it's based on a tract record throughout history. The issue, this time around it's nothing like the last times and these rate hikes could very well slip us into a worldwide depression and a war that continues to spiral out of control in Ukraine. Make not mistake about it the war in Ukraine is a world war and has very real implications of limiting nuclear war and more and more boots on the ground.

All in all take this section as the FED will most likely be increasing interest rates for the rest of this year at a rather aggressive rate.

FED Trims Balance Sheets

What's not talked about much is the fact that the FED is not only increasing interest rates but they are also cutting back on mortgage backed securities, corporate debt and other investments which they are now starting to sell off. This creates another negative pressure on the stock market. During 2020 with covid lock downs the FED bought up a bunch of these in order to stop the collapse of the economy. Well... At some point you gotta pay the price and we are paying that price now. You see all of this that was done in 2020 to stock the total crash of the markets because of covid lock downs has now caught up with is. What we should have been feeling during the lock downs in our bank accounts etc is now happening today it was simply delayed.

Now one could argue that what they did was a good thing. The reason for that is because the economy is better than it was then and people now have jobs and are better able to weather the storm compared to when everything was shut down.

Dollar Cost Averaging Is Your Friend

When you look at the stock market in terms of peoples lifetime and not 100 years it paints a better picture. Buying in all at once is a risk you could make it big or you could make nearly nothing over the long term. Instead what is used is called dollar cost averaging where every month or day you add in funds into stocks you believe in. This has proven to out perform the massive buys and holds and instead dollar cost averaging and holding has out performed many other alternative investments. This is because you simply can't time the market as much as people try and predict they can with graphs and all that other junk. Include dividends into the mix and you're looking pretty good over the long run!

So does all of this actully make Crypto a better investment for the next few years?

Posted Using LeoFinance ^Beta