🤑 Could This Signal A Buying Opportunity?

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What’s on the Menu 🍴

There’s a lot to juggle in 2023.

From crypto implosions to wars, it seems like all we hear from the media these days is bad news.

There are certainly reasons to be concerned…

But we’re always looking for ways to make money in the midst of madness.

Here’s what we’re serving up today:

• Lawsuit Adds Ice to This Crypto Winter 🥶

• Student Loan Payments Resuming Isn’t A Big Deal? 🤞

• Could This Signal A Buying Opportunity? 🤑

• Home Sales Fall To 13 Year Low 🏠

Today’s newsletter is a 4 minute read.

Lawsuit Adds Ice to This Crypto Winter 🥶

The New York Attorney General's recent lawsuit against major crypto companies Gemini, Genesis, and Digital Currency Group (DCG) has sent shockwaves through the industry.

The suit alleges these companies engaged in fraud, deceit, and illegal activity related to the Gemini Earn crypto lending product, which ultimately left investors unable to access over $1 billion in funds when Genesis froze withdrawals in November 2022.

The scale and gravity of the allegations raise major questions about precedent and fallout for the broader crypto sector.

What you need to know:

• The lawsuit specifically cites violations of New York securities laws

• If the AG succeeds, the judgment could pave the way for similar lawsuits against crypto firms for failing to register as dealers and for false advertising

• The AG is seeking to permanently ban the defendants from crypto investing and marketing in New York.

• More broadly, the case signals increased regulatory scrutiny and enforcement on the crypto industry.

• The collapse of large centralized lending platforms like Celsius, Voyager, and now Genesis underscore risks and gaps in consumer protections in crypto finance.

• Going forward, some decentralized finance protocols may benefit from challengers to CeFi.

But perceptions about industry stability and maturity could backslide. Rebuilding consumer trust will be difficult, especially with crypto asset prices still depressed.

How crypto executives address past failings and prevent repeats could determine if crypto lending ever flourishes again.

For now, the NY AG's lawsuit is a sobering reminder of how an industry mishap can snowball into a legal avalanche with lasting repercussions.

The crypto winter just got a lot colder.

Yet, Bitcoin continues to hang onto its yearly gains.

Student Loan Payments Resuming
Isn’t A Big Deal? 🤞

As many people know, student loan payments have been paused since 2020 (after multiple extended deadlines).

The waiting is over now and this month people have started coughing up the dough to repay the government.

There have been plenty of analysts speculating on how much these payments resuming will affect borrower’s finances.

Payments resuming means less money for essentials and discretionary spending… which increases recession risk.

But, maybe everyone is worried for nothing?

The New York Fed has come out with a survey stating that they expect an impact on consumer spending… but, not as much as feared!

It must be said that the survey represents only a very small sample size…

But here’s what they found:

1. They only expect a 0.1 percentage point reduction in aggregate spending from August levels.

2. Student loan delinquencies are likely to return to pre-pandemic levels (normalization).

3. 71% of the federal student loan borrowers surveyed had started making payments prior to October 1st.

4. A number of borrowers plan to take advantage of the new SAVE income driven repayment (IDR) plan. This will make low income borrowers payments very low or possibly $0.

While again, this was a small sample size, it does give us a few more clues to how repayments will look.

It’s one more signal to help investors navigate this muddy economic picture and the recession fears.

Perhaps it simply ends up not being as detrimental to the economy thanks to the new SAVE income driven payment plan.

Or perhaps many borrowers were more prepared than people give them credit for.

Could This Signal A Buying Opportunity? 🤑

Bond yields, inflation, federal deficits, the banking system, consumer credit, recession, war in Ukraine, turmoil in Israel, rising energy prices, real estate, student loans…

Holy moly is there a lot for investors to worry about right now!

And yet, we know from looking at data from past market cycles that buying opportunities often come when the investing herd becomes ultra bearish.

CNBC will run its “Markets in Turmoil” headline when financial markets turn volatile, yet since 2010 stocks have a PERFECT track record of being higher one year later!

We’ve also been tracking shorter term oversold indicators that could suggest we’re getting closer to a buyable dip in the stock market.

Even though major stock indices like the Nasdaq-100 and S&P 500 seem like they haven’t gone down much yet, many individual stocks actually have sold off hard this fall.

Here’s a chart showing the percentage of stocks in the market that are above their 100-day moving average:

The current percentage of stocks above their 100-day moving average is just 25%!

And looking back at the history of the chart you can see that when this percentage dipped below 20%, it ended up being a good short to medium term buying opportunity.

December 2018, March 2020, and June 2022 all ended up being short term bottoms in the market and they all coincided with a reading below 20% for this indicator.

So while the current dip in the market may not have fully run its course, it does appear likely that we’re getting tantalizingly close to a buy zone for some stocks.

We get it, it’s never easy to press the buy button when headlines are so negative.

But it’s quite common for stocks to “climb a wall of worry”.

And managing emotion is a key skill you must master on the path to creating massive wealth as an investor!

Delicious Bites 😋

• Federal Reserve’s Survey Of Consumer Finances

• Initial Jobless Claims Beats Expectations

• Home Sales Fall To 13 Year Low

• We’re At Peak AI Hype

• Netflix’s Stellar Earnings Get Mixed Reviews

Food For Thought 🧠

“If you fail to plan, you plan to fail”
- Benjamin Franklin

DISCLAIMER: We are not investment advisors, and this content is for educational purposes only. We don’t offer financial, legal, or tax advice. Nothing we say is a recommendation to buy or sell any assets. Trading and investing are extremely risky, so please be careful and do your own research.