The End of "Buy the Dip": Felder's Bear Market Warning

The End of "Buy the Dip"? With Jesse Felder (YouTube link)

The discussion between Maggie Lake and Jesse Felder, founder of the Felder Report, aired on April 15, 2025, explores why the “buy the dip” strategy is failing and signals a bear market. 

Key points:

• “Buy the Dip” Dead: Felder cites a Wall Street Journal stat showing 2025 as the worst year for “buy the dip” in a century, with last week’s strong rally resembling bear market bounces, not reversals.
• Bear Market Signals: Massive insider selling in 2024 (e.g., Bezos, Huang) at high valuations (Magnificent Seven at 50x free cash flow) predicted a slowdown. Insiders remain cautious, with no significant buying.
• Economic Outlook: Corporate leaders anticipate a recession, with earnings revisions driving stock declines. Felder sees a slow, painful grind down, akin to the dot-com bust, not a sharp 2008-style crash.
• Tariff Uncertainty: Trump’s tariffs (e.g., 145% on China) add unpredictability, but insiders’ bearishness predates them, reflecting broader slowdown fears.
• Capital Flight: Money is flowing out of U.S. assets (stocks, bonds, dollar), with gold surging as a safe haven, signaling potential dollar devaluation, reminiscent of 1971’s gold standard exit.
• Warning Signs: Key indicators include dollar weakness, bond market stress (10-year Treasury yields nearing 5%), and a 7% fiscal deficit during expansion, raising debt crisis fears (echoed by Ray Dalio, Scott Bessent).
• Fed Dilemma: Persistent inflation (median CPI at 3.5%) limits Fed action, with “transitory” rhetoric risking credibility. Tariffs and a weaker dollar could fuel secular inflation.
• Investment Shifts: Felder is bullish on commodities (e.g., oil, energy stocks), citing low prices, bearish sentiment, and insider buying (e.g., Buffett, Icahn). Emerging markets and Europe may offer value, but U.S. recession risks temper optimism.
• Risks: A mishandled trade war or debt crisis could spiral, with modern factors (401k exposure, rapid information flows) amplifying panic compared to the 1970s.

Felder urges diversification into real assets and international markets, warning of a debt-driven crisis if policy missteps occur.