Inevitably the bubble will burst. The party will end and there won’t be an after party at Mike’s bachelor pad. This severe market crash has been predicted for many years as the real world economy has been contracting since 2008. While markets have been manipulated to the upside by central banks, the everyday citizen has been losing purchasing power.

All of these asset bubbles are propped up by the global debt market where the US Federal Reserve is the main issuer as well as the buyer. The creation of more debt increases the size and scale of central banks as they collect interest on money printed out of thin air and then use those real funds to buy assets. When an entity with unlimited resources engages in a market, the price of assets within that market become grossly over valued. As currency is devalued and many assets become out of reach to the average person, poverty becomes the norm. The individuals who have not participated in the decade long bull run are hit the worst as their wages struggle to keep up with the rate of inflation. The gap between the rich and poor is continually expanding as the middle class slowly ceases to exist.

When looking for a crash you cannot expect to see signs within the stock market or greater economy. Value in markets have been derived from debt since the last financial crisis. That’s why with every piece of poor economic news (unemployment, productivity, debt/GDP, etc.) the stock market continues higher. The 10-year treasury yield is a far better indicator for the final crash because it determines the viability of the debt market. If the annual yield of the T-bills does not meet the expected long-term rate of inflation then purchasing one would guarantee a loss. At some point US Treasury Bills will be so undesirable that there will be no governments or corporations to sell them to. This would cause an uncontrollable spike in the 10-year yield which would make most forms of debt unaffordable bringing assets down with it.

This is seriously going to suck ass when it happens but it will honestly be the best thing that could happen for the younger generations. The crash is required for the well-being of future society. The central banks and governments of the world have stolen money from the future to pay for the wars and power trips of today. If this continues future generations will have no chance of building wealth or staying above the poverty line. The business cycle is designed to reset itself so that it sustains itself over a perpetual period of time. Central banks have broken this cycle with endless quantitative easing that prevents a natural and much needed recession. Downturns in the economy are a good thing! They allow prices to come down and give people a chance to catch up financially. Without these reversals the wealth gap will grow and global productivity will never recover.

Now the idea here is to profit from this inevitable crash. It is hard to say when this will happen and even harder to say what will happen in every market. Commodities could do well, real estate could hold itself up with rising demand, even cryptocurrencies could be a decent hedge. Or perhaps everything dumps like a rock and no where is safe, not even cash. In this scenario the only thing to is bet against the markets and short everything. This is obviously risky considering every powerful entity is doing everything it can inhibit a crash and continue to prop up markets. Usually it is unwise to be against the house. Holding short positions can kill your investment during years like 2021. That is why the following portfolio is the last ditch effort. When everything is falling apart, we will profit on the capitulation of every market. Aptly named the Soros portfolio after the malicious investor who short sold the Bank of England and made a fortune, we shall attempt the same. These are not buy and holds, we will wait for a melt up in stocks to the point where the bears are all but dead and we will load up with profits from other markets. If we time it right we can ride the market to the bottom without losing everything. My hope is that I won’t have to uses this portfolio but I’d be lying if I said we won’t need it when the time comes.

Warning: These indices are inverse and leveraged. Not for the inexperienced especially if you are trading options.

Current Outlook: Many believe that the crash is inevitable. The probability of a major correction in stocks is greater as the Fed cuts rates. Historically they do this months prior to a big crash. However, I believe this is too soon to short this market. Elections require better market sentiment. The Fed will not allow markets to crater while their friends are still trading. Remember the real crash is in the debt market. People may be selling now out of fear but institutions are still in a position to prop up this market. I am still expect higher highs in the major indices. I will not take profit from other portfolios or roll any cash into the Soros until these short tickers are at their 52 week low. THIS PORTFOLIO IS A HEDGE. These tickers get crushed by the Fed to protect market strength. When these ETFs hit major lows expect a big correction in stocks and they will fly.

Long-Term Outlook: It could seriously take years for the real crash to happen, every year I see more calls for crashes and they’re wrong every time. It is in the best interest of the central banks to continue to inflate. Currently the Fed is pretending to “handle inflation” by raising rates but this could make debt severely unaffordable, particularly for the US government. They are in a tough spot that will inevitably become out of their control. The only way to perpetuate this system of debt and inflation is to come up with more crisis’s. War is a good excuse, pandemic did the job, maybe a cyber attack is in the works. Whatever it is, it will end the monetary tightening, markets will soar and bubble will continue. The Soros is on retainer until the 10-Year yield spikes uncontrollably. At that moment money will begin moving out of markets and into safe haven assets. There is no easy to do this, being too early could cut your investment in half, being too late could make you miss the train entirely. Pay attention to the drivers of the market and do not allow the media to fool you. Be attentive and keep a cash position ready and willing. God save us all.

Update (October 2022): I have included a long-term hedge of government bonds in the Soros Portfolio. ZROZ and TLT are ETF/Index funds that hold 20+ year US Treasuries. Yes I know, very exciting. In the event of a major stock market crash the smart money typically moves to long term government bonds as a safe haven. Higher rates have made these far bonds far more desirable and assuming the US government is solvent enough to pay annual coupons *ahem than these we be a decent hedge for a deep recession. I haven’t bought a bond since I was 19 (Tempe Municiple Bond haha) and I don’t care for them now. These two tickers should give you plenty of exposure in US government bonds, the stocks are at 12-year lows so definitely not a bad buy.