Hi Again,
As I previously stated on this newsletter, for our “scorecard”, I purchased Costco (COST) on 12/22/25. By 2/28/26, it was up by 18.86% in 68days. I have been saying for the past few months that since Netflix announced that it wanted to purchase Warner Brothers (WBD), it was an excellent buy as it kept going down to compete with Paramount. All experts said that with or with WBD, Netflix will do very well in the future. With my unique strategy of buying a little at a time as it falls, I found the bottom for Netflix on 2/17/26 at $77. Since then, in about 15 days, it rose 25%! Now they are no longer interested in WBD, it is in a better position with no additional debt. On 3/6/26, Netflix was at $99 and analysts expect it to rise to $120. This is how you discover good stocks in a falling market!
There is a new Wall Street saying, “When missiles fly, start buying”. But be careful! Don’t catch a “falling knife”. There are several “dark clouds” posing a risk to this market. I agree with Jim Cramer that the emerging “Private Credit/Capital” crisis is more of a danger than the Iran war. As I have been stating here for years, the private Credit/Capital is a huge risk to the world economy. People who run those organizations will say that this is different from the 2007/2008 banking crisis but there are some similar red flags too. As in public markets, in private markets, you cannot do market to market pricing. A few years ago, World Bank/IMF warned the world that the next huge economic shock will be from the Private Credit/Capital bubble bursting. Every time I hear “de-regulation”, I cringe! All crashes took place due to no proper regulations. Currently our big banks are solid due to the increase in regulations we got after the 2007/2008 crisis. Watch the documentary movie “Big Short” to get a good idea of what happened in the 2007/2008 crisis. From my life, let me give you an example how I saw that coming. Prior to 2007 I had a friend in San Diego who was trying to get in to the real estate business. He told me that he did not need any money to buy a house and all he needed was a good credit score and he could even get money from being a first time buyer. There were millions of banks etc. involved in crooked deals at that time. On CNBC I saw that those deals are back with private credit. His crooked real estate broker told him that for example he could try to buy a house for $500,000 and the broker would work with the other party to put a bogus value of the house at $600,0000 and then split the excess $100,000 between the buyer and the seller. So people with no money and a good FICO score could buy a house for $500K house and also get another $100K as the banks did not do their due diligence! We need “regulations” and not “de-regulation”. Imagine millions of deals like that. Since I have been working in credit management for decades, I could not understand how the authorities would allow these transactions to occur. After the 1929 crash, we came up with solid rules and regulations and every time we started to tinker with de-regulations, led us to trouble. Humans never learn. Some do.
The private capital market has experienced rapid growth, more than doubling since 2012 to reach approximately $22 trillion in assets under management (AUM) by late 2025. This massive, fast-growing asset class—encompassing private equity, private credit, and real assets—is now so large it would rank as the world's second-largest economy. Till recently only the “rich” with “deep pockets” were able to tap in to this “dangerous” market. A few years ago when I heard that working class people can get in to these funds through IRA accounts I felt that it was a terrible idea. See below- on 3/6/26, the former CEO of Goldman Sachs agreed and said that when these private markets crash, due to these retail investors, politicians will start extensive probes (He called them “inquisitions”) in to these funds. Can you imagine Senator Elizabth Warren? Managers of Private Credit/Capital say that there are no problems but they keep limiting redemptions due to lack of liquidity! This is how the 2007/2008 crisis came to an end. Now everyone is in a hurry to get out and there will be nothing left for the few who flee at the end.
Goldman Sachs Group, Inc. is an American multinational investment bank and financial services company. Founded in 1869, Goldman Sachs is headquartered in New York City. Goldman Sachs is one of the largest investment banks in the world by revenue and is ranked 55th on the Fortune 500 list of the largest United States corporations by total revenue. The book, “Streetwise”: is the new memoir by former Goldman Sachs CEO Lloyd Blankfein, published in March 2026, detailing his journey from Brooklyn to the pinnacle of Wall Street, offering insights on leadership, risk management, and the firm's culture, particularly during the 2008 financial crisis. On the PBS show “Wall Street Week”, Mr. Blankfein gave an excellent interview. He stated that we have not had a crash or crisis in a long time and that is a bad thing as we tend to get complacent with regulations. I totally agree. He thought of himself as a risk manager. Redemptions at Blackstone used to be around 4% and now it is over 8%. An expert said “A reckoning is coming”. 50% of Private Credit has been given to the software industry and due to AI, those companies are struggling to survive. There is a fear that this might spill over to the public banking system. Fraud was even detected in the UK (as well as in the US). With Public Companies there is no transparency. As Jamie Dimon, CEO of Chase stated, “when you see one cockroach, you know that there are many more”.
At all times I have kept some long dated S&P 500 put options (currently that expire in 2027 and 2028) as a hedge against a market crash. These are way “out of the money” puts. For example, when the S&P 500 (SPY) was around 7000, I bought my puts with a “strike price” around 2000. So to “assign” these options, the market has to fall 70% but prior to that I can start making money. 99.9% of these hedges expire worthless as a tax loss. The S&P500 went down only to 67500 (from 6900) and yet on 3/6/26, my puts had a paper gain of 25%! That is the real fear factor in the market on 3/6/26. We could have a big market correction in 2026. Nothing to fear! As the former CEO of Goldman Sachs stated for the long term of health of the global economy we need periodic crashes and economic trauma. Crashes create immense opportunities. Per Baron Nathan Mayer Rothschild, who reportedly made a fortune during the chaos following the Battle of Waterloo, “Buy when there is blood on the street”. Adding to this mess, while expecting jobs created to rise to 55,00, the job report on 3/6/26, showed a net loss of 90,000. Ouch!
Now for the price of oil (WTI). Prior to the Iran War it fell for 1+ years and it was expected to go down to $40. When I heard that we attacked Iran on a Saturday, I thought the price of oil (WTI) will go up to $100+ on the following Monday but that did not happen. If it went up to $100, I would have bought put options on the ETF known as USO (US oil). People assume that the Iran war will end soon and things will go back to normal very soon. Iran is not Venezuela. On 3/6/26, Qatar stated that expect “oil” to go up to $150 very soon-tripling in 30 days!. When that happens, I will ‘short sell” oil by buying put options on USO. Natural Gas LNG tanks meant for Europe are getting diverted to Asia. After the Iran War, most countries, people and companies all over the world started hoarding oil and natural gas. Most countries like India has a stockpile to last them only 40 days. Only China has reserves to last 180 days. In December 2025, WTI hit a 5 year low of $57 but on 3/7/26 it was at $90! Qatar is the biggest exporter of LNG gas to the world but Iran wiped it out with their drones.
Now for AI! Jamie Dimon, most respected banker and CEO of JP Morgan stated that AI is going to disrupt the software industry much more than anyone could imagine. On one hand the CEO of Salesforce jokes that people have been watching too many SciFi movies and AI will not kill many jobs but on the other hand due to AI, he has laid off many employees. Gene Munster is one of the best tech analysts says that AI will kill 30% to 50% of white collar jobs. White collar jobs pay more than blue collar jobs -but that trend is changing. 70% of GDP (economic output) is due to consumer spending. If 30% to 50% of white collar jobs are eliminated, we could have an economic depression. At the same time AI data centers are increasing what we pay for energy and water. This is a recipe for stagflation (inflation + recession) as we had in the 1970s.
For the past year or so we were told that Gold is a hedge against all possibilities. As stated in these newsletters in the past, I disagreed. For more than a year price of gold went up in a straight line. Prior to 2025, most of the gold buyers were the world central bankers but in 2025, 70% of the buyers were hedge funds. As stated previously, Gold made a previous high in 1980 at $800 and then fell for decades till it dropped to $350. Last week when markets fell, gold did not go up. For the past year we were told that the US Dollar will not go up and US money managers diverted trillions of dollars from the US to foreign markets. Intuitively I knew that it was a bad idea. Foreign markets are risky. Japan has huge problems. Once it took the Japanese market 35 years to make a new high. Due to the Iran War and US market drop, what went up? The US Dollar! Japanese government had to intervene to stop selling Japanese Yen to buy the USD. South Korean stock market (mostly due to 2 stocks-i.e. Samsung) went up by about 150% in 2025 but dropped about 25% as the Iran War started.
It is easy to start wars but it is not easy to end them. We cannot predict what will happen in the future but we can welcome volatility and find opportunities.-as I did with Netflix. There is a spiritual saying, “Treasures could be found in the rubble”.
Have a great month!
Fernando