Kyle Bass: Another 30 - 40% Drop in 2022 Likely

Kyle Bass was interviewed by Becky Quick and says we may see another 30 to 40% drop in equity valuations this year. My personal issue watching his video is it is confirmation bias city for my burdened mind as I was already in the crowd that feels the market is a long way from bottom.

The end of the interview gives insight as to maybe why Warren loaded up the truck with Occidental (OXY). Kyle says carbon energy will be a long term play for the next 15 years. Additionally, he says we have a big problem with adequate supply of the minerals needed for the green energy transformation and it is a problem for the next 10 to 20 years.

https://www.youtube.com/watch?v=rl-uOaoDOJc

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One thing to remember…
Even if this view is prescient, 30 to 40% drop in what?

Some things are considerably cheaper than others.
For a sense of scale, I figure Berkshire was this cheap only ~70 days during the entire credit crunch and its bear market.

The valuation and direction of the broad US market only matters to the extent that you own something which resembles the broad US market.

Sure, prices might get lower for everything, but that’s a serious risk for overvalued things while merely a transient headline for things that aren’t.

Jim

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Kyle Bass has been so wrong for so long about multiple investing decisions it’s amazing anyone would listen to him.

‚ÄėBass launched Hayman Capital Management in late 2005 in Dallas and in 2007 the fund gained 200% on bets against the subprime market. By the end of 2020, Hayman‚Äôs assets had dwindled to roughly $300 million and Bass decided to return the bulk of the money to investors in 2021‚Ķ‚Äô reuters.com

Dude got one bet right, only made 200% on it where superior investors made multiples of that profit-wise, and after lost a ton of money shorting european and JGB debt.

13 Likes

One thing to remember…
Even if this view is prescient, 30 to 40% drop in what?

Some things are considerably cheaper than others.

IIRC, Berkshire did quite well if you purchased it in the spring of 2000. While ‚Äúthe market‚ÄĚ was down about 50%, Berkshire was up about 30% over the following two years.

That being said, it does seem like the market crashes since then have been more of a ‚Äúsell everything‚ÄĚ phenomenon‚Ķat least short term.