Gary Shilling, the well-known Wall Street prophet, fore-warned of the collapse of the crypto market, especially Bitcoin. So a different generation of people asked who Gary Shilling is? And why is he known as the prophet?
Gary Shilling: 5 Facts About The Wall Street Prophet
The last twelve months have not been a good period for commodities. Copper has lost 27.16% of its value in the period, while WTI another 49.76%. For Gary Shilling, president of A. Gary Shilling & Co. and commodities columnist for Bloomberg and Forbes Magazine, the scenario is increasingly less optimistic, especially for those countries that have a budget dependent on these sales.
1. Who is Gary Shilling?
- Gary Shilling is a financial analyst who usually writes for Forbes, The New York Times, and The Wall Street Journal,
- He is also the president of A. Gary Shilling & Co., Inc.,
- He is also the editor of A. Gary Shilling’s Insight,
- He is also a member of The Nihon Keizai Shimbun Board of Economists.
And the reason he’s named after the Wall Street prophet is because, in 1969, he was one of the few analysts who got the recession right at the end of the year. And Shilling was almost a lone voice in 1973, when he predicted the global recession the world was about to face; this was a consequence of the massive accumulations of inventories at the international level.
2. Warning about a painful end for those who invest in cryptocurrency:
As a Financial analyst, Gary Shilling predicted a painful end for the investors involved and as a well-respected Wall Street columnist, he warned of rampant speculation in stocks and cryptocurrencies instead of keeping quiet.
The president of A. Gary Shilling & Co, who has been treated as a “prophet” for his past predictions of financial crises that hit the market, argued that the expansionary policies of the Federal Reserve and the United States Treasury inflated prices of financial assets in general, he said that fears of a rebound in inflation are however exaggerated and urged investors to stay out of the buying frenzy in the face of what he estimates will be the bursting of a new bubble.
3. A bubble that covers the crypto market and Wall Street:
Gary Shilling assured that the expansive policies of the Federal Reserve and the United States Treasury have caused upward pressure on financial assets in general, including Bitcoin and the crypto market.
But the real problem Shilling highlights is that fears of a spike in inflation are being overblown. Therefore, he suggests to investors to stay on the sidelines in the face of the buying frenzy as the bubble is about to burst.
4. He compared crypto to the tulip crisis in Holland in 1600:
Gary Shilling, a financial analyst who knew how to warn of previous market collapses, believes that both global stocks and cryptocurrencies are experiencing a present comparable to the tulip crisis in Holland in 1600.
5. Key quotes from the Wall Street prophet:
Business Insider has summarized Gary Shilling’s 11 key takeaways (presented as quotes) on the crypto market and Wall Street in the following ways. Here are the most important ones:
- “There is too much money floating around, and people don’t know what else to do with it. The Federal Reserve cannot be oblivious to what it is doing. I know they are very honest public servants, but you could almost think that these guys have a vested interest in raising stocks and encouraging speculation. At some point, you would think they have to be more cautious. “
- “We went back to the Tulip Rush in Holland in 1600, to the South Sea Bubble in England in 1700 – they got to the point where there was a little trigger and wham, it all fell apart.”
- I’m not making any firm predictions about when this is going to collapse. The speculations exceed any logic and that is what is probably going to happen with this. But at some point, the blood will flow, “said Shilling.
- “The general opinion is that the economy is going to open very quickly, inflation is going to roar again and interest rates are going to go through the roof. That is exaggerated. We are in a time of low inflation, if not deflation”,he said, noting that China and other countries produce more than they consume, fueling a global excess supply that depresses prices.
- “The money pumped by the Fed and all the fiscal stimulus did not go to spending, but to savings and asset inflation. The Fed is really responsible for things like Dogecoin and Bitcoin and other cryptocurrencies, and all this speculation. Now that doesn’t mean that I want to go short on stocks right now, because with speculation, you never know how far they will go”, Shilling once explained about the crypto market saying: “They come out of the scope of any foundation, they are in outer space ”.
- “Until someone gives a wake-up call, and that’s usually the Fed, there is no real end to this speculative climate. It just gets more and more extreme. It’s like the puppet thing we saw in the dot-com era. It has absolutely no logic, but everyone has a great time while it lasts. “
- “If things start to play out as we expect, and we have a big equity sell-off that takes away a lot of this speculation, we have a chance to make a lot of money.”
- “When we got to the point where the only things people wanted were cameras (Polaroid), motorhomes (Winnebago), and amusement parks (Disney), those are the outer frills, not the guts of the economy. People rejected basic economics, saying that there was something wrong, or that it was engaged in speculation. There are many similarities between then and now, “he said, comparing the current excitement around stocks to the furor that surrounded” Nifty Fifty “stocks in the 1960s and ’70s.
- “How could this end? One possibility is that tomorrow we wake up to find that some large financial institution has bitten the dust. We have had it recently with Archegos, but we can have something like that on a larger scale that ends the collapse. We go back to the Tulip Rush in Holland in 1600, to the South Sea Bubble in England in 1700: they got to the point where there was a little trigger and whoosh, it all fell apart. “
- “Back in the day, we all wore suits. I bought two or three new suits a year, not because they went out of style, but because I was wearing them. If that is what the daily commute does to the suit, what has that commute done to the man in the suit? ”He said, predicting that the pandemic will permanently alter work habits because many people have realized that they do not like commuting.
- “We have had a wake-up call with the pandemic. Now is the time to save, to be cautious and, of course, when it comes to investing, to avoid speculation. It’s very difficult when everyone is making money and you feel, ‘Oh, am I missing something? There is a garage mechanic who no longer fixes cars because he is making a lot of money at GameStop. I’m a stupid idiot, why am I not involved? “Well, there are times when you have to steel yourself and say, ‘No, I don’t want to participate,'” he concluded.
So after reading this article, do you agree with the views of Wall Street prophet Gary Shilling, do you predict that the big bubble will burst?