A Stock Market Crash Is Coming: Are You In Denial?

it's brian preston the money guy let's just go ahead and acknowledge that it's coming i mean there is going to and this is why you have to be careful listening to the talking pundits who are always predicting the bear markets because they eventually are right they will be right at some point but so i want to give you some perspective on this before we bring in you know my favorite punching bag which is the financial media but it is something you ought to know is that if you're worried about a 10 downturn that's going to happen about every 11 months if you're worried about that 30 percent downturn that's going to happen once a decade if you're worried about that loss of 50 in the market that is going to happen every few decades so you need to realize there is a strong likelihood to be a successful investor you're going to have to acknowledge it's coming you need to be prepared and you need to go ahead and start making those right decisions to be pro to make sure that you still survive and have success through whatever volatility comes your way but here's the thing we know it's coming but no one knows when and anyone who tells you that they do know when i would get very very nervous because if we look at just the financial media in general we pulled some headlines from 2009 at the end of the great recession all the way through 2021 present day and what you can see is each of these headlines like the risk of a double dip recession is rising uh and now here comes the recession of 2011. how about why soaring assets and low unemployment mean it's time to start warring or six signs we're closer to the next recession than you think or wall street thinks a double-dip recession is more likely than a v-shaped recovery that was in 2021 and yet you can see overlaid in the background as the s p 500 it is that steady walk up the mountain yeah there are some bumps on the road and there are some downs but nobody knows when it's coming and here we've come through the last 10 almost 11 years now of fantastic market performance and yet every single step of the way somebody out there was suggesting oh you better be nervous the next one is coming and they were wrong had you followed their advice you would not be sitting in a fantastic position today well it's very important to realize how does the media get paid they don't get paid by the success of your network statement they get paid by keeping your attention by keeping your eyeballs keeping your ears making sure you're clicking on their stuff and look they know as as cr as animals we experience pain in a two-fold factor to pleasure i mean and so fear sells a lot more newspapers it sells a lot more clicks it sells a lot more of your attention so there's a reason that it's going to drive their behavior not to focus on the optimism that's creating innovation the technology and all the good stuff that we all enjoy in our life they're going to have you keyed in on all the divisive scary stuff because it's very self-serving in the long term to their business model so know that and that will help you out tremendously and so our opinion is when it comes to your portfolio when it comes to your wealth building you would be much better served not trying to figure out how do i avoid the next downturn how do i not experience it how do i not participate it and rather focus on thinking am i going to be okay going through it if i know that it's going to rain do i make sure that i keep an umbrella in my car i'm not going to carry an umbrella around me every single day but i'm going to make sure that should something happen i am prepared for it portfolio design and investing is no different don't try to avoid the rainy days just make sure that you've structured yourself in a way that you're prepared when it does happen so the easiest thing i do and this is a financial mutant trip the tip here is that you can actually if you set up an automated plan for investing dollar cost averaging meaning that i'm a buyer no matter what's going on out there in this crazy world we live in ever expanding crazy world we live in i am buying through the process we have a pretty powerful illustration that shows that even if we hit an extremely extended period of down turns and bad news you can still prosper and build independence even in the worst of times so let's go back to the great depression and show you just how powerful dollar cost averaging can be if you look at the dow jones industrial average it closed at dollars on september 3rd of 1929 and then on november 23rd of 1954 it closed at 383 so that was a couple decades of performance where really the market did not move a ton if you would have bought in 1929 and you would have sold in 1954 you would have only been up about two dollars on that investment that seems scary that seems scary however if you would have thought you know what i'm gonna be this person like brian talks about i'm gonna set an automated investment plan in place and i'm just gonna invest ten thousand dollars every year beginning in september of 1929 all the way through the end of 1954. so over that what's 25 26 years i'm gonna do ten thousand dollars a year each year what you would find is that if you just allowed that money to work you just allowed your army of dollar bills to keep working for you that at the end of this 25 year period that 260 thousand dollar initial investment would have compounded to one and a half million dollars or an 11.7 percent annual rate of return through the great depression so this is the perfect illustration people if you've been following the money guys show you know we tell you drive through it this is this is the perfect illustration is don't let a negative event side rail your success we want to give you all the components that could help you create success we've already showed you dollar cost averaging is one of those powerful tools but there's more i want to i want to talk to you about creating a plan not this is not just one component of investing through the downturn of driving through it this goes bigger to your overall financial planning concepts and the first component that i want you to understand is you need to have budget if you don't know what your if times get dark and you're scared about where you're how you're going to pay your bills you first need to know what do you need what is your bare bones budget to make it through no matter what is happening you know that number that is going to serve you very well and then once you know that number once you've figured out that what that is that informs the next step which is making sure that you have adequate liquid and available emergency reserves should the downturn happen should something take place and you need to tap into your resources you have a pot of money sitting there for exactly that purpose and exactly that reason you cannot know how much of an emergency fund or emergency reserves you should have unless you have actually done the process of doing the budget to figure out what you are actually spending and then that leads to the third component that really ties this all together is that you need to know the timing of where you are in your wealth building process and integration with your goals it is going to be completely different for a 25 year old who's 30 to 40 years from retirement versus a 60 year old that is landing the airplane of retirement in the next five years your goals are completely different your asset allocation is completely different and truthfully your world view during downturn should be completely different i want all my 25 to 35 even 40 year olds when we go through the next downturn i want you to be looking for opportunity you have decades until you need this money how is there a way while everybody else is panicking to be your mini warren buffett self to say where can i be greedy while others are fearful be a contrarian by if you flip the switching you're the 60 year old and you know you're five years from retirement what is your plan what variables are you taking into account that if we do have the next great recession you have enough resources to get you through that three to five year period just that you know that you don't have to sell at the worst time and all of your principal and all your investments are going to be aligned with your personal goals and the desire to live off of these funds but maybe you're sitting out there it's okay guys i hear you i understand what you're saying but man i've been doing the hard work of saving and my portfolio has just gotten to the place that where the numbers are bigger like when i was starting out on my journey you know i had 10 000 and i made a ten percent mistake it wasn't going to derail things but i have a million dollars now and i make a 10 mistake that that starts to become painful that's scary or maybe you're someone that says i'm just so busy i've got the family stuff going on and i've got community stuff and i've got my work stuff and i'm nervous that maybe some of the things that should not be on the back burner are falling to the back burner as it relates to my personal financial situation or maybe just because life happens things have gotten complicated your tax return is more complicated you've begun to get stuff at work that you haven't had before like options and incentives and r issues and you're just thinking guys i i i want to make sure that i'm prepared but i don't know what i don't know and i want to make sure that i have a co-pilot there with me it might be the time to start thinking about taking your relationship to the next one you're describing the abundance cycle this is what we do is that we want you when you get to be successful enough because you we planted the seeds of knowledge you've applied these you've learned you've grown your assets if you do feel like you don't know how to maximize or you don't know how to preserve your investment capital or you just are so busy exactly what beau said this is the time we love to work we even have a website you go to aboundwealth.com we have a work with us if you go to moneyguy.com we also have a work with us page we'll walk you through how do you take your relationship to the next level and kind of take this abundance cycle to the graduation point of us actually helping you with some of these complicated decisions the fact of the matter is the reason that we get rewarded for investing is because there's risk involved there it's not an easy smooth straight line right it's going to be uncertain they're going to be dot-com bubbles and they're going to be real estate bubbles and they're going to be pandemics and they're going to be european economic crises there's always going to be another thing that's going to cause the market to freak out a touch but if you follow these four steps and you understand that getting risk on the right right on the front and matters you understand that diversification can be key you recognize your unique financial personality and you understand that bad things are going to happen and that's okay that's part of the process that's part of the plan you too can build a plan that's not just good before the downturn happens and it's not just good during the downturn but it continues to be a good plan even when we get on the other side of it and move through the downturn and that right there is the best way that you can prepare yourself for the next market crash so guys you can tell this is our passion so thank you for just coming and listening and and being on your path to becoming a financial mutant we love creating this content and we're going to keep creating more and more information to make you more successful i'm your host brian preston mr bohansen money guy team out

Channel: The Money Guy Show

Views: 38,625

Keywords: money guy show, debt, budget, cash, real estate, insurance, how to make money, save, credit card, compound interest, buying house, buy stock, success, personal finance, A Stock Market Crash Is Coming: Are You In Denial?

Id: KPwwnFo6nL4

Length: 11min 49sec (709 seconds)

Published: Fri Dec 03 2021