Mark Moss argues that waiting for a major market crash could cost you. The Federal Reserve now prevents deep deleveraging by injecting liquidity and lowering rates, which means the crash window closes before investors expect it. By the time confidence returns, asset prices have already started rising.
They're thinking about the price of their assets and they're just waiting, right? They're hoping that those prices come back down. And again, based off of 2008 or 2000, that seems to make sense. In a full deleveraging, credit contracts, right? Forced sellers, they start to dump assets. Prices keep falling until the excess leverage is all cleared out. And then that creates the reset, right? Cash gains purchasing power because asset prices are coming down. They're getting cheaper. And so that opportunity window stays open for a while. But the problem today is that the Fed can't even afford a recession. They can't handle the deleveraging to fully run its course today, because once falling prices start breaking collateral, then margin calls start happening. They start spreading. Once treasury markets and banks and pension funds, funding markets, once they come under pressure, that's when the Fed has to step in. Not to save your portfolio. to stop the deleveraging from taking down the system. So what do they do? Of course, they inject liquidity. They inject liquidity to support the credit markets and to guarantee funding. They push the rates lower. We're already hearing about the Fed and lowering rates and pushing those rates lower. And they start forcing money back into the system, which— what does that do? Well, it interrupts the liquidation that you've been hoping for or waiting for or expecting, and prices start moving higher again. not lower. So then while millions of investors, they're sitting there waiting for the deep reset and they're sitting on the sidelines, they're waiting for, you know, houses to fall another 20, 30% or whatever, they want to see stocks get cut in half, they want to wait for Bitcoin to go even lower than it is. Well, underneath, the Fed's already pushing asset prices back away from them, right? This is why the window closes on them. It's not because the opportunity never appears. It can appear, but it appears very violently, right? The Fed doesn't allow the deleveraging to continue long enough to create the prolonged reset that people remember from 2008. I mean, just look at 2020, right? Uh, all the governments of the world shut down the markets, and of course everything crashed, right? Stock markets, home prices, everything crashed for like 3 months. It made new all-time highs. It caught people off guard. No one was prepared for 3 months. They thought 7 years. Next time, the window will be even shorter. And so by the time investors feel confident that the crisis has passed, well, then the right assets have already started running higher again.
