Get Ready For A Downturn Unlike Any We've Seen Before | Michael Oliver

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**Michael Oliver** (0:56)
This is where you get ambushed. When these bear markets occur, quite often it's events that come out of nowhere, seemingly. I think we're headed for a different situation than any other downturn we've had in the market.

**Adam Taggart** (1:15)
Welcome to Thoughtful Money. I'm its founder and your host, Adam Taggart. After the tariff tizzy that sent stocks falling earlier this year, the markets are back at all-time highs and seemingly nothing. Not US involvement in the Middle East war, nor growing pushback to Trump's big, beautiful bill, nor a weakening consumer can cool Wall Street's red-hot optimism right now. So, is this bull rally justified? Have we put the uncertainty and volatility that defined the first half of this year safely behind us now? Or are investors too confident? For a market veteran's perspective, we're fortunate to be joined by technical analyst and author Michael Oliver, founder of market research firm Momentum Structural Analysis. Michael, thanks so much for joining us today.

**Michael Oliver** (2:02)
Good to be here, Adam. Thank you.

**Adam Taggart** (2:04)
Well, it's a pleasure to have you on, Michael. This is the first time you're coming on the program, so it's nice to meet you here and welcome. I am known for asking this intro question. I haven't asked it much of late, but because you're brand new to the program, let me ask it of you. What's your current assessment of the economy and financial markets?

**Michael Oliver** (2:23)
I think that everybody's focused on this new story, then suddenly that new story, then this one. Nobody's focused on what has happened. In other words, markets, if you go back and look at bull market tops and in the subsequent bear markets, you'll find out it's not because of what happens in the future. It's because usually what has already happened. If what has happened before is built on error or overpricing and things of that nature, then the correction or the bear market is going to occur anyway. The fact that there's a headline or not a headline to give an excuse to why it's going down, which we had the tariff issue in the first few months. Now, then it's suddenly a new war situation. We had one Ukraine-Russia thing in March of 2022 to the 2024 high. 2009 to 2024, the NASDAQ 100 went up 19-fold over 15 years. You go back in history, in any bull market in US history, none has matched one the duration or the dimension of that move. S&P went up about nine-fold. Same story there.
And you say, well, the economy was good. Okay. Well, Trump said it wasn't because Biden was in charge and Obama, etc. So but anyway, forgetting that, you look at an M2 chart and you can see one of the reasons why the dollar valuation of the S&P 500 went up because the dollars true value went down, because the money supply basically doubled every single decade. And particularly in that 15-year period, we had some new things that the central bank used like QEs to really help goose it. So they printed money. And then when they adjusted rates in a fixed-rate-type environment that we live in, in other words, rather than a free market pricing of the cost of money, we have a central bank that tells us what the price of money is and the quantity. And they priced it at free for 10 of those 15 years. Money was free, okay? Not only was it abundant, it was free. So, I mean, this is Cheech and Chong time. You know, hallucinations, bid for what you want, everything goes up, it's glory, you know, we've had 15 years of that. And the technicals that we look at, not those fundamentals, but that's what we're aware of. The macro technicals that we use are momentum based. We look at price, but it's secondary to us because we know it's distorted by the underlying money units, whether you're measuring in yen or euros or dollars. As those money units ongoingly decay in real value, the price of things goes up. For example, we had a chart recently that was so laughable, I hope it made its point, the Venezuelan stock market. You've never seen such a vertical beast. It's lovely, we should invest in Venezuela, right? No, it's because the degradation of the money unit, silly. The only issue here is, well, it's less so, okay? But it's still an ongoing degradation of the money unit, therefore, the number of dollars, etc. Okay. Once error is built into a market, let's say you make a decision whether you're buying stock or whether you're building a company or hiring new employees or your state government going to spend it on roads, the cost of money is a major factor. The price of money, and if money is free, then you spend, spend, spend, and it doesn't seem to have a negative impact. Ultimately, you have to pay the bill. Now, suddenly, that's an issue, and it may not be an issue in most investors' mind, but in ours, we can see it. We're watching sectors that most people aren't. Most people are looking at the MAG-7, which, by the way, aren't MAGs anymore. There's about two MAG-7s left. The others don't look anything like a MAG-7 stock in terms of where are they on the map. But sectors like commercial real estate, few people even talk about it. We used to know about the mortgage market back in 2005, 2007, finally, the error hit in 2008 It exposed itself. This time around, look at commercial real estate. It's not a topic, but even yesterday was a good example. Commercial real estate got whacked about 2% while the market was up, make it push them toward new highs, you know. Look at where commercial real estate is, the price charts even, go back, you know, 10 years. Look what happened in 2022 when the market made a high so the commercial real estate, then the market exceeded that high. Commercial real estate didn't, went lateral.