The Market Bubble WILL Crash | Billionaire Frank Giustra

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here's the problem and it's trying to

determine where to put your money right

now which is

virtually impossible because everything

you

might choose to protect against one

thing may be

affected by another and so let me give

you an example so in

in in typically nor in a normal

environment

when you're nervous about markets you go

into bonds okay so if you don't like

equities you buy bonds

um why would you buy bonds today i mean

you know they're yielding nothing

in a zero rate environment where money

is being printed like crazy

which is destroying the value of the

nominal value of that bond

so what you know in currencies where the

you know that where the central banks

are printing loads of new money so

buying bonds doesn't make sense you want

to be in cash gonna be destroyed

by inflation so you buy equities yes you

can buy equities and you'll

not lose all your money but you probably

might be buying at the wrong time

at the top of a very very frothy market

incredibly frothy market

that is due for some sort of a

correction which will be caused by some

event

yet unknown you know if we had covered

last year and

who knows what the next catalyst is

going to be for the next

market downturn it needs an excuse to

correct and it will

and you know the next one could be a you

know very similar to the coveted one it

could be some

unknown event having to do that might

trigger financial crisis or some sort of

other

uh uh other move so i just you know

it's hard to choose investment

categories right now

and that's why you know i've i'm

taking a general macro view that we're

in a

hard asset environment so

the best protection you're going to get

it's going to not going to give you 100

protection because anything can happen

um but the with the

money printing and the amount of debt

that's being uh

being issued i would be skewed towards

hard assets

and hard assets are obviously include

gold real estate

art and some people believe bitcoin i

i'm not sure that i believe that yet and

i can

certainly explain my reasons why but

some people seem to believe that that's

a

similar hard asset that's you know

similar to gold

if this money is manifesting this this

money that was created is manifesting

itself

in the form of higher asset prices

what's to say

like what stops those higher asset

prices for example

kathy woods suggests hey well usually we

value the s p

at uh you know 20 maybe maybe 18 times

earnings

uh who's to say smp shouldn't be valued

at

40 times earnings maybe people need to

have lower expectations and they should

expect a three percent return on their

money

instead of a five or six percent return

on their money valuations go up

return expectations go down no necessary

bubble what's your response to that

yeah my response is you can play that

game for a while but eventually

you come back to reality i mean you know

when you buy equities you're buying you

know

the discounted future cash flows of that

business uh and then you apply a

multiple to it and that's that's how you

establish market

um right if if you're pushing out that

you know

that that uh discounted cash flow

forever and

and it's like where's the value in that

business i mean at the end of the day

what do you but what is that equity

worth when you've already discounted all

its cash flow

sure now your rates are at zero you know

you have no further

way to go down to to create a higher

higher valuation i just don't buy that

and and i don't buy that this time it's

different

and that makes me insane i remember the

1999.com bubble

and i remember reading research reports

by analysts

that were making these crazy projections

about these worthless stocks

and they had to come up with even more

and more or outrageous

reasons why these stocks were valued at

you know ridiculous prices

and they kept i remember being at a

dinner party

with some dot uh dot comers that were

invested in dot com marketing and i just

made a question i said i don't i can't

get my head around these valuations i

don't know how it works

man they they came all over it was like

i was a dinosaur i didn't understand

this time was different the world was

changing whatever it never changes

bubbles or bubbles they burst they need

an excuse to burst

and then all of that debt

that is used to create that bubble comes

cascading down and wipes everybody out

and then start over again

so that's where i think we're headed um

i don't

i can't give you time you know this

market could go a lot harder now these

equity

we broke all records you know s p at

four 000. i mean

sure it could go higher but remember the

higher it goes when it does

crash it's going to really really be

significant

because the higher score goes and so

i and again i don't know what the answer

is i'm not sure i'm having trouble

myself trying to just

determine where to put my money um but

it's

this is definitely bubble territory and

it's going to end

somehow sometime it just needs a

catalyst

to make it happen ray dalio if you don't

mind

ray dalio believes that we might enter a

period of of the great de-leveraging

uh something that i've noticed over the

past i don't want to ask you about that

but something i've noticed over the past

few months

is a slowing down in the growth

of uh brokerage margin people are taking

less margin on over the last few months

than they had been

uh you know during during the uh six

months prior

do you think it's possible that we could

go into a period of

hedge funds saying you know what let's

borrow less especially after the

archaegos fallout

let's maybe individuals start saying

maybe i don't want margin maybe it is

time to deleverage

and then maybe ray dalio's predictions

come true that we do go through a great

deleveraging what's your take on that

i think we already do and i love uh

listening to ray dalio um

you know he i think he's got his head

screwed on right in terms of

looking at it from a historical

perspective and

uh it's the same thing i've been doing

for

20 years he's much more famous than i am

but i've been writing about

the same things that that rey is talking

about i've been writing about for

for a long time you know he he talks

about several things you know and the

long

term debt cycle is one of the most

important features that no one

understands

because they'll you know they happen

every 70 years or so

so our generation didn't go through the

1930s depression in the stock market

crashes and all of

what came with it um so we forget that

those things do happen

so you have these long-term debt cycles

that grow exponentially near the end

because people think well

this is great and nothing can go wrong

right

you know it's it this time it's

different and uh

it's worked the last 10 years and i've

only been doing this for 10 years or 20

years

so if it's worth the last 20 years it's

going to work forever and what ray

rightly points out is that you know

we're about to experience one of these

paradigm shifts

where you know you get accustomed to

certain type of performance

you get very confident things get very

popular everybody starts to borrow money

and prices go higher and higher and

every 10 years or so you get one of

these paradigm shifts and we're

really due for the next one now i mean

again

it lasts a few more years or whatever

but we're due for the shift where

everything's

too easy it's so easy to make money

right i mean it's like you can buy

you know you have all these robinhood

traders you know buying gateway

everybody's having a ball and

everything seems easy and when it ends

everybody's levered up to the hill and

every a lot of people are going to get

hurt

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