The Bull Market And Why They Hate Ocasio-Cortez And Gabbard | Episode 41

00:00 - 00:00

Jamarlin Martin discusses the nasty stock market decline and why there's trouble ahead for the global economy. He also discusses Alexandria Ocasio-Cortez's proposal for a 70-percent tax rate on the wealthiest Americans, and why the military industrial complex and regime-change hawks hate 2020 candidate Tulsi Gabbard.

This is a full transcript of the conversation which has been lightly edited for clarity.

Jamarlin Martin: You're listening to GHOGH with Jamarlin Martin. We have a go hard or go home approach as we talk to the leading tech leaders, politicians and influencers. Let's GHOGH! Hope everyone's New Year's off to a good start. This year on the GHOGH show, we're going to have episodes where we don't have a guest. There's going to be episodes where I have so much to say, so much stuff to cover, we won't have a guest on the show.

So hopefully you like the remixed format for this season where sometimes we'll have guests and other times it's just going to be me. Let's dive right into some of the stuff that I wanted to cover. So the first thing is financial markets and trying to understand what's going on because whether you're an investor or not, I think ultimately it's going to impact most of us in terms of what's about to play out here in the United States and globally.

I wrote an article on Moguldom.com called "The 10-Year, 300-Percent Bull Market Is Over". Essentially what I'm saying is that, after the financial crisis, the Fed slammed rates down close to zero. The Fed started printing money in what they call quantitative easing, or QE. When you hear this term, the only thing you need to know is that the Fed is creating money and pushing liquidity into the system. It's giving money to banks at super cheap rates where the Fed injects the money into the bank. The bank has to pay it back at super cheap rates. The money is created electronically and now the banks, the financial institutions can go out there and start buying stuff. So you get the money at pretty much no cost. And I can go buy real estate, I can go buy stocks, I can go buy bonds. I can go buy all different flavors of financial assets, venture capital. And so money has been really cheap from low rates and QE or money printing.

Okay. However, 10 years into the bull market, now we have rates going up and we have what's called QT, quantitative tightening. It's the reverse of QE. So if QE helps you on the way up, the money printing helps you on the way up, the Federal Reserve is now doing this in reverse and the market is starting to feel the Federal Reserve taking back support for financial assets. And the market, to me, is screaming to people that this bull market is 10 years in, it's tired. This bull market is fake. This bull market is going to have a day of reckoning, where the idea that the economy is strong, but the market will trade down if you normalize rates and if you keep QT going, in terms of removing liquidity out the system, essentially the market is screaming to you that it needs the Federal Reserve to support itself.

And that's not a healthy, strong economy. I hear folks quoting Warren Buffet and saying, "Hey, you got to invest for the long term." Parts of that may be true. However, this stock market is dominated by failing stocks. It's dominated by high relatively high P/E, risky stocks. Most of them are not part of the Warren Buffett thesis. If that's what you're thinking, like, hey, I need to invest long term and I'm not going to try to time the market. But the issue is that the market is dominated by fame and the fame stocks, Facebook, Amazon, Apple, Netflix, Alphabet. They have led the market up and they have led the market down essentially. In Q4, the market went down so fast, 20 percent, that market participants have not seen this speed of decline since the Great Depression.

So the market is trading down fast because, I believe, smart money is realizing that my risk/reward ratios are off. Essentially 10 years in after being up 300 percent, there's not a lot left to gain. So maybe I can gain a couple of percentage points on the upside over the next couple of years with these valuations. However, because the market is so fatigued and tired after 10 years, there's very little you can get on the upside. Okay? So maybe you forecast, hey, maybe I can squeeze an extra five percent out of this bull market 10 years in, but you could lose.

If this bubble, if this economic cycle is going to end like 2008 and 2000, where market's traded down 50 percent, then I'm taking 50 percent or more risk, for possibly five or 10 percent if I'm looking at the big picture. And so for long-term investors, it doesn't mean you have to sell everything. Essentially, your investments could go into different gears. So in an environment where assets look like they're going to trade down and market valuations are high, P/E ratios are high, people have stopped respecting cash flow and profits, and they don't care about this stuff at the end of economic cycles.

So if you're in that environment, then maybe you change gears in your portfolio and you have a bigger allocation of bonds and gold and cash, and impossibly hard real estate. I'm not saying that, hey, it's time to sell everything, but it's time in terms of where America is going, where the global economy is going. This thing is going to collapse. You're going to see this thing most likely trade down very, very fast. If you have a lot of risks on the table then most likely you're going to get cracked 30, possibly 50 percent over the next few years as the new financial crisis begins.

Some people will say, hey, because the market traded down at the end of 2000, I would be very diligent in thinking about what environment we're in and how can I downgrade my risk at this stage in the economic cycle. And so, in the article on moguldom.com, "The 10-Year, 300-Percent Bull Market Is Over", I talk about looking at gold as an investment where in times of crisis and times of risk off, where folks are taking risks off the table, at least smart money is taking risk off the table, that gold, I think, is going to be a very attractive investment. It's not correlated with stocks. And I think most people should have a piece of gold as an investment. You can invest in hard gold bars or you can invest into the GLD ETF which holds gold investments. That's GLD and you can start investing for about $150.

The bull market is over and this thing is going to continue to crash down. You saw markets trade down fast and then it traded up real fast. Does that mean that things are gonna go right back? No. Market professionals who have been through boom and bust cycles understand that what's going on right now is a bear market rally. Essentially, a lot of people get short, markets go to the extreme on the downside. They overshoot and the bear market rally goes up really fast. That doesn't mean everything is going to go back, and things are gonna go up another 30 or 40 percent.

Long story short, the bull market is over, China is rapidly slowing. Europe is rapidly slowing and what you're going to see in Q1, the United States is going to start to rapidly slow and it's going to surprise people and everyone and their uncle who are investors, they are famed up, leveraged long and so when people start running for the exits and they start to try to get out of this market, you're going to see what we saw in Q4, that trade down 20 percent, you're going to see more of that. And of course, Donald Trump with trade war, the government shut-down, he has all this stuff going on at the wrong time.

There's too much risk in the market at the same time. So no one thing will crash the market, but everything added up, it's a big risk bomb. So right now, I don't think it's time to get famed up. I don't think it's time to put a lot of risks on the table. I would be strongly looking at gold as an investment, for the long term.

The next thing I want to touch on is Alexandria Ocasio-Cortez. She made a lot of press over the last couple of weeks by coming out and saying she advocates for a marginal tax rate of up to 70 percent, and the right wing media, who hate her, right away, they're going to hate a young woman and they're definitely going to hate a young vocal Brown woman. A lot of them just by default, before you even get started into the socialism, there's going to be a high probability of bias against someone banging so hard, going as hard as she goes, being so vocal. Her starting point is she's a young Brown woman and she's not scared of them, that she bangs harder than a lot of these other Democrats against them. And that shakes up the political establishment and you're seeing this, and you're gonna see her most likely become a bigger star on the left.

She's not shy about the fact that she's a democratic socialist, and so what got a lot of folks attention is that she's saying let's consider taking marginal tax rates up to 70 percent. The right wing media, they try to mischaracterize it, put out some misleading stuff. But what she was talking about was after the first $10 million of income, the income after that $10 million would be taxed up to 70 percent. So that's important. It's not just a blanket 70 percent, but after the first $10 million of income, the tax rate could go up to 70 percent. It is essentially a tax the wealthy play.

And I believe we need higher taxes, personally I believe that. But I have a problem with this. Here the situation is, America has record debt, trillions and trillions of dollars of debt. America is bankrupt, it doesn't have money. It's a credit economy. The country is living way beyond its means and has been for a long time, and the country has been printing money, and the Ponzi scheme has worked. Essentially, we'll print money, and we'll be fine until it's not fine. The problem I have with this idea is that if you were to tax Jay-Z or Oprah for an example, at 70 percent on the federal level, they still are going to have to pay taxes most likely at the state and city level. And so the thinking among the socialists is that, when they run their spreadsheets and say, hey, we need more money, we're just going to take it from the wealthy and take more of their income, 70 percent and they can worry about state tax.

Maybe in California, once the state and city tax goes up to 80, 85 percent on their income, and the belief or the assumption is it's an easy fix and you just take the money from here. You just take it from Jay-Z, Oprah, Robert Smith, the black billionaire private equity investor, you just take it from them, so we'll just get the money from them. So the assumption on the spreadsheet is that once you change the tax policy, all the money, everything stays mostly the same. But the problem is that your Oprah, your Jay-Z, your Robert Smith, they would adjust. And so they're not going to be doing everything the same. If their income is taxed federal, state and city up to 80, 90 percent, if I have to go to work and the U.S. government is taking 80, 70, 80, 90 percent in terms of state and city taxes, those people are so sophisticated, they're not going to stay there, they're not going to keep on doing the same things.

There's also a risk where if somebody is able to create something extraordinary and they're able to generate a lot of income, they don't want to work for the government, essentially. So if I'm able to bust my ass and really make a lot of sacrifices and get lucky, and I'm able to generate a lot of income, if I have to give away 80, 90 percent in federal, state, city taxes, are these people, these entrepreneurs, are these people going to stay in the same place? Are they going to keep working at the same rate? Are they going to be just as productive once you start taking $8 to $9 out of $10 out of their paycheck? So I think it's unrealistic in terms of the economics of this. So I did not support the Trump tax cut, particularly with allowing Google and Apple and Microsoft to bring hundreds of billions of dollars cash to the United States tax free.

I do believe that higher taxes are needed in the United States, but going up to 70 percent even on a marginal basis is extreme. And I think, impractical, meaning that some of these policies you see politicians talk about, they sound good, they're easy. Hey, let's just take 80, 90 percent of the income over here and we'll fix these holes. And our calculation is, the foundation is going to stay the same when we start taking 70 and 90 percent of the income once you factor in other taxes. That doesn't make sense to me. It's on the extreme side. But when I look at talented political leaders like Ocasio-Cortez, that's one issue I don't agree with, but I'm looking at the political leader in aggregate. So she has a lot of other stuff such as, she doesn't want the lobbyist money. That's another thing that scares the establishment. She won't take the foreign interest and lobbyist money. When she speaks, no one owns her. She is an authentic politician where the corporate interest and special interest groups do not control her. She owns her platform. When you look at the other corporate democrats, they can't say that. They're owned by lobbyists. The big money that backs them, they got to take care of those people.

And another thing that came up relevant to Ocasio-Cortez's tax policy... Tulsi Gabbard, out of Hawaii, a congresswoman out of Hawaii who's Hindu, the corporate democrats, the usual suspects on the corporate democrat side, they started to attack her yesterday. As soon as she announced she was running for president, they're ganging up, attacking her, the corporate wing of the Democratic Party. And let me tell you why they're attacking her. One, she is a war veteran. She fought in the Iraq war. She was about that life. She actually had to see and fight in a war, and so she doesn't support the hawks in Washington and their lobbyist friends. She doesn't support looking at all these countries around the world and looking at what leaders do you want to remove, like a chessboard. She is not for going into Syria and taking out a side and let's gamble and see what happens next.

Okay. Another thing they don't like is that, there was a report that Assad used chemical weapons. She said, wait, we know what happened with Iraq with Hillary Clinton voting to go in and start murdering a lot of Iraqis and putting a lot of Black and Brown troops at risk that a lot of these corporate democrats, when you start talking about war and, hey, somebody's doing this over there, let's go, let's go. They're very easy to pull that trigger on war. The regime change wars. She's not with that stuff. And so she was looking at, in my understanding, is that, hey, let's wait and not try to overthrow another leader in the Middle East, where if you get this wrong, you're going to be looking at another Iraq situation, another Afghanistan situation.

And the attacks on Tulsi Gabbard relates to, I believe though, Ocasio-Cortez's tax policy, because on one hand, if the socialists are talking about, we want free healthcare, free education, we want to reduce the military budget in the United States. But we also want regime-change wars every couple of years. A third grader can understand that the math does not work on that. So the Corporate Democrats, they love going into wars. Something looks bad over there. Let's get the troops ready and let's go into unlimited wars forever. But the problem is they also want more and more free stuff. Free Healthcare, free education, regime-change wars. The message is we can have all of it at the same time and even a cut the military budget. And so one of the things they don't like, of course, is Tulsi Gabbard, who has fought in a war, is against regime-change wars.

Another thing they don't like is in 2004, she made some insensitive comments relating to gay marriage. She made these comments in 2004. So they're going to attack her and bring those issues back up. They haven't done it yet, but you can expect that. They're going to go back in 2004, the corporate democrats and their lobbyist friends. They're going to try to dig up as much dirt as they can and use that against her. So when they try to undercut her and her running for president, which I think is good, I think it's healthy for America. It's good for America to see more women step up and run for president. But the next thing they're going to attack her on these comments relating to same sex marriage. So when they attack her, keep in mind, Barack Obama was against same sex marriage, particularly in 2004. He was allowed to evolve in terms of his relationship with the LGBT community. He was allowed to evolve.

When they bring these comments back up from 2004, keep that in mind. How can you guys embrace Obama, who was against same sex marriage and was fundamentally against it? He evolved on that issue. You embrace him, but you want to go attack everyone else who at the same period was against same sex marriage as well. So that's one of the issues they're going to try to attack her on. So another one is the prime minister of India, Modi. He's considered by many to be far right. He's a Hindu and they take him to task and his political party in terms of their relationship with Muslims in India, 20 percent of India is Muslim. Tulsi Gabbard is a Hindu. And so she's been friendly with the prime minister of India and so, the corporate democrats, they say, "Hey, why are you so friendly with Modi", who we perceive as kind of the Republican, far right guy in India. They have a problem with that.

Evaluating this issue, the first thing that I think about is, why are you giving Tulsi Gabbard a hard time for being friendly with the leader of India, who's also Hindu, her faith? Why are you giving her such a hard time? You may have valid criticisms, but at this day and hour, people want to see consistency. And so it doesn't make sense to attack her on being friendly with Modi and his political party in India, but you won't attack U.S. politicians who are crip walking for Netanyahu in Israel, who a lot of people would consider the Donald Trump of Israel, the MAGA of Israel, that Netanyahu is far right. Yahoo can be counted on banging against the Palestinians, like Donald Trump is banging against Brown people, here in the United States. The corporate democrats will say that it's okay for all of our politicians to be very friendly with Netanyahu and praise Netanyahu and the far right in Israel. But we don't want Tulsi Gabbard to be friendly as a Hindu with the Modi political party in India, and show you see this hypocrisy where the Corporate Democrats lack consistency. You will see them.

It's politically popular to talk all day about Donald Trump and attack Donald Trump. It's really popular to do that. It's safe to do that within the Democratic Party establishment. So they're going to keep on doing it in the frequency, and they should. But the problem is, if you're really about that life, that anti-MAGA life based on your values and principles, it shouldn't matter where you see these types of things. So whether it's in the United States or whether it's an Israel or whether it's in Zimbabwe, if you see themes, patterns and things that look similar, you should be against it all, you should be consistent.

So the problem I have with corporate democrats, lobbyist-friendly democrats, is they're against MAGA and Donald Trump here where it's politically safe, you're not going to lose your support for banging against Donald Trump, you're going to gain on that front. But when they see Donald Trump-type of white supremacy or racism in Palestine, against the people of Palestine, you're not going to hear them speaking out against Netanyahu. You will not hear that from a corporate democrat, that the only MAGA they're allowed to be against is here in the United States. And I think in this day and time people want to see consistency.

Thanks everybody for listening to GHOGH. You can check me out @JamarlinMartin on Twitter, and also come check us out at https://moguldom.com. That's M O G U L D O M.com. Be sure to subscribe to our daily newsletter. You can get the latest information on crypto, tech, economic empowerment and politics. Let's GHOGH!