The Wealth Effect

Investors,

Let’s talk about wealth.

In order to do so, we’ll first need to discuss debt, but only for a bit.

This might seem like a bland topic at first, but I promise you that I’m going string this into the market to explain why it’s so important to understand and why it’s a key component of my bullishness on stocks & Bitcoin.

One of the key Doomer narratives that I’ve debunked over the past few years is the idea that the U.S. consumer is strapped with too much debt.

Considering that I worked in the banking industry as an analyst (and got promoted to an AVP role), I’d like to think that I have some first-hand experience to understand credit and how banks view the credit-worthiness of borrowers.

Fundamentally, it is extremely rare for a bank to lose money on a loan.

Why?

Even if a borrower goes bust, banks position themselves within the debt stack to ensure that they get repaid as the company’s assets get liquidated and that there is sufficient collateral to support the loan.

At their core, banks lend to borrowers based on the following factors: