🔵 How The Stock Market Crash Will Happen

hi and a big welcome back to the channel today today's video has been requested so many times in the last few months that i've lost count so the question was neil will you make a video explaining just like you did with a housing crash and other markets exactly how and when the stock market will crash either in 2020 or 2021 so that's exactly what i'm going to deliver to you today a step-by-step process of exactly how the stock market is and it is going to crash very shortly [Music] so the first thing before we get into the seven steps is most people ask me neil what is the stock market what is a share well really simple this is all you need to understand at this stage a share is basically a percentage of that company's value that's it that's all you need to know right now and the stock market is basically an accumulation of all of the companies within the stock market so stage one then is unrealistic and rapid growth now if you're a student of economic history like myself you only need to look back at previous stock market crashes and you can see there tends to be this rapid growth uh which is usually unrealistic and not really connected to anything just before any crash and i think that's exactly what we're seeing again now a lot of people said back in you know earlier this year in spring that this was the big drop off that we'd had and i said back then no that really wasn't it that was just a blip and i wasn't surprised at all when the stock market regained everything that it lost back in the springtime now if we look at the 08 crisis which a lot of people are comparing the current crisis we're into i would say that's probably the wrong crash to look at and analyze i really don't think that's correct what a lot of economists are talking about and comparing it to i think we're better off comparing it the most like for like recession is the 1929 great depression in the united states now before you panic and think wow well that was a 90 drop of the stock market i'm not saying we're going to see a 90 drop so i just want to clarify that now i do think we are going to see a huge crash a huge drop but would it be 90 i think that's quite doubtful that's quite high so you might be asking then so why is the stock market going up why is it completely disconnected from the economy where everything is going down except unemployment which is going up surely the stock market should be crashing alongside all the smaller businesses as well and the reason for that i'm going to get into detail on it shortly but a quick answer is that the reason that is not happening is because of stimulus so all this stimulus that's being created the monetary supply alone just to put this into context here the monetary supply has been increased by 30 percent it's staggering 30 just in the last year alone so if you think how many decades it took to get the monetary supply to where it was last year and then this year for the stimulus creation to boost it by another 30 percent it's absolutely insane so all of this money is going into hard assets or or the stock market or housing you'll probably notice how the housing market is just booming right now because of all this extra money and stimulus now let me come on to stage two then because this is where low interest rates come in when you have historically low interest rates just like we have not just in the usa but all over the world right now this creates a bubble and i'll explain why it creates a bubble when you have easy credit and easy access to credit at almost zero percent there really isn't any risk for individuals or companies to take on debt so what do they do they ramp up their debt to the absolute maximum not realizing that when we're in a recession or a crisis like this there is only one way for things to go and that is down but at the same time it means there's only one way for interest rates to go later on which is up so this just compounds the problem and makes it even worse but the biggest problem that dwarfs all of this combined is something called share buybacks which i'm absolutely staggered that this isn't all over the media all over the news and the other youtubers aren't talking about this day and night share buybacks are the worst possible thing that could ever happen to a stock market and for this very reason they were made illegal up until 1982 and if you ask many economists what caused the 1929 great depression they will say that the huge crash was caused by share buybacks now if you don't know what these are let me explain now this is where a company borrows money while it's really currency but i'm just going to call it money for simplicity at historically low levels they then take this money and do they invest in r d research and development do they invest in improvements to their efficiency do they try and bring costs down in the company do they try and incentivize employees or recruit or head hunt some of the best employees from other companies no they don't do any of that what they do instead is they buy their own shares which what this does it inflates the value of the share it's artificial it's what i would call smoke and mirrors like a magician would do it's a trick they inflate the share price of their own shares thereby reducing the equities and making their company look much better much well you know much better well run and much more profitable than it really is if you're enjoying this video so far please give me a quick favor just click the like button below really helps me out to actually get this video ranked on youtube because some of my videos can be quite controversial and they don't always get ranked so i really appreciate that and why not subscribe to the channel while you're here if you enjoy these videos you like my common sense logical approach to finance subscribe to the channel and you'll get a video like this every week so of course when the average person and even some of the professionals as well look at that company or look at the stock market as a whole they say wow the stock market is rallying it's really doing really fantastic right now but if you apply common sense and logic here obviously the stock market can't be doing well how can the stock market which remember is an accumulation of all those companies how can it be booming and doing well how can its value be going up when the value of those companies is going down because they are losing profitability and many of them are taking historic losses in the billions of dollars so how can the stock price be going up again it's being artificially propped up this is all fake it's not real and something like this can only go on for so long you only have to look back in history at previous recessions and you'll see a repeat of things like this going on and one thing that really annoys me and it should annoy you as well is that rather than these companies using this liquidity their spare cash and saving it for a rainy day for a crisis like we're currently in no they do their share buybacks and then what do they do they ask the government for a bailout that is absolutely disgraceful and scandalous and worse than this some of the stimulus money some of the the bailout money was actually used by these companies to do share buybacks and now they have a cash liquidity crisis they want the government to bail them out and remember what i always say in my videos the government doesn't make money the government only gets their money from taxing so basically they're taxing you and i as citizens from our income and then they're using this income to give it to bail out these big companies and the banks just like oh wait the banks and the big insurance companies were bailed out by taxpayers so overall these companies are in big trouble because like a bad gambler they didn't know when to quit they just kept going kept going until a crisis has come and now they have no way out except a bailout so of course if you haven't guessed by now stage three is a huge bubble as a result of all of this stimulus as a result of the practice of share buybacks plus a whole host of other things which is going on in the stock market not least of which and this is a really controversial subject the federal reserve buying assets yes you did just hear that correctly the federal reserve is buying assets and you might think well how can they do that is the federal reserve a government institution no it's not it's a private institution they create money out of thin air and then they loan it to the government to commercial banks at an interest rate so why is the federal reserve allowed to purchase all of these big assets and treasuries and bonds and this is the crazy thing and you can fact check this if you don't believe it as of this week the federal reserve a private institution owns over one-third of all mortgages in the united states so that means that one in every three of you watching this right now the federal reserve owns your mortgage stage four then is when the crisis comes about and it doesn't matter how the financial crisis comes about in the 2008 crisis this was a mortgage-based crisis brought on by subprime loans also arms adjustable rate mortgages known as variable rate mortgages in other countries when the initial rate ended a lot of people couldn't pay the mortgage anymore at a higher rate and they defaulted on their mortgages and the whole house of cards just collapsed upon itself if you haven't watched that video yet it's on my channel it's probably the best video i've ever produced so far and it really goes into detail and explains how the next housing crash will happen it's got just under 2 million views on that video so i would highly recommend you watch that so the main problem with stage 4 is that all spending either stops or just dramatically slows down and when that happens it takes us on to stage five which is the start of the recessionary cycle the recessionary cycle begins with uncertainty when you have uncertainty in the marketplace you have uncertainty everywhere spending slows down which of course then affects businesses and then when that happens to businesses they start to make layoffs like we've seen in this crisis and in fact the layoffs in this crisis are much higher than any other financial crisis recession or depression that we have ever seen so far and of course when that happens it just kicks gdp off a cliff which we have already seen just look at this graph here and you can see why gdp fell off a cliff because 70 percent of gdp comes from consumer spending and how can consumers spend when they don't have jobs when they've been laid off or if they're just uncertain what tends to happen in human nature is that people tend to start paying down debt and saving more that's why you've seen the rate of savings going up in the united states because people are uncertain they've started saving money now of course this isn't everyone this is the people who can afford to save money on the other side you have people who are already poor who are getting into even more debt because where they were poor before now they have no job they have no way of paying their mortgage or their their rent and other things that they would normally spend money on so of course this if you just look at some of the videos there on youtube of malls shopping centers even just look at this clip of oxford street in london now oxford street is normally absolutely booming you cannot walk down the street at this time of the year you're just bumping into people non-stop but look it is completely empty this is just insane and another example i can give you is that just last week i went to a theme park and on a nice day like this this theme park is usually full just think about disneyland and other places they are full but actually i would estimate that it was only at about 5 capacity at most i would say 10 capacity and half the rides and half of the restaurants were closed down and if we just look at retail on the high street just look at the statistics from yelp that are coming out they are absolutely scary and even if you look at the amount of restaurant and retail closures they're estimating that around half of these will never open again they will never reopen what does this do it means that anyone who is employed by these small businesses which regardless of what the and people tell you is not accurate actually it's not the big businesses that make up the most employment it is the small businesses and medium-sized businesses which make up the vast amount of employees so when these people are losing their jobs and you watching this may have lost your job or you probably know someone who's either furloughed or has lost their job it means that people can't spend money anymore so gdp simply drops and when gdp drops that means that these companies these big companies in the stock market are losing money so how can it be possible that they are going up in their share value it can't or should i say it can't for very long now one thing to bear in mind if you look at previous recessions and depressions the stock market can be up to six months behind the general economy now this isn't always the case when it comes to individual share prices of certain companies but when you look at the stock market as a whole it can take up to six months for example it isn't true that the stock market is booming across all the companies if you look at what's booming it tends to be the top companies within the stock market if you look at all the other companies many of those are down quite heavily well you may be asking then as we come to the end of stage five well why isn't the stock market crashing so let's talk about stage six stage six is the federal reserve buying assets and creating stimulus or as is better known quantitative easing they prefer the term large-scale asset purchases but this is what is holding up the stock market right now it's all of this new stimulus money creation which is basically just inflating the price of everything and you can see it in housing as well it's going to housing it's going to stocks and shares and other assets and this is one of the reasons that i say that cash that isn't invested it's just sat in the bank is not always a good idea yes it's good to have some cash available for when there are crashes and crises so that you have money for a rainy day or so that you can purchase assets that have come down in price but then the downside of this is when the federal reserve is creating all this new money it actually depreciates the money already in existence and you only have to look at the inflation calculator of the us dollar going back 100 years to see what the dollar was worth then compared to what it's worth now and we haven't even seen the inflation yet the inflation out of all of this will come later and it's going to be huge some of you are probably already noticing it in certain items or even in food but you're going to see this in a lot of things coming up very soon stage seven then this is the final stage the final step in the crash process and this is where the crash actually occurs so if we look at gdp and when that started to reduce and then when it started to crash i would say that we're looking at anywhere from a six month period onwards from april 2020 so from april 2020 through to now we are just coming into october so i would say that any time from now onwards we're going to start to see the stock market coming down now however let me add a caveat to that if the federal reserve continues this stimulus creation they do another round of stimulus they start doing bailouts and all sorts of other things then this is just going to kick the can down the road and this could drag on for a little while longer however some people are saying this is just going to keep going on and on and on because of the stimulus that is not accurate and that will not happen it will 100 crash at some point and the reason for that is the fed doesn't have enough money it can't create enough money in order to stave this off forever now you might say well can't the fed just keep printing and printing and that's true they can print into infinity but they won't and the reason for that is if they keep printing into infinity it will create hyperinflation just like we saw in venezuela and hungary and zimbabwe and all these other countries that have had this problem so that won't happen so eventually they will have to let the markets crash so the housing market will crash the stock market will crash and if you remember my prediction video from a while back where i said there would be a second wave there's no doubt about it it will happen around the end of the year in flu season well surprise surprise we're already starting to see this happen now the uk just this week has announced another lockdown which could last as long as six months now if the usa follows sue and announces similar lockdowns this ladies and gentlemen is it this is the nail in the coffin for the economy it simply cannot carry on uh in this way it it just it breaks all the rules of finance and economics for it to just keep booming for the housing market for the stock market to keep booming in this way they will come down and i know people think i'm crazy for saying this uh and i get a lot of criticism on it but this is just common sense just look back over history and you will see what i'm saying here to be true so if you're in any kind of financial predicament right now i.e you are an investor you buy stocks and shares you're in the market you have a pension your your pensions invest in the market you don't really understand a lot about finance but you want to learn more i will post a link below which is a link to our private investment forum it's a community some of the people in there are absolute geniuses been investing for decades and it's a very very nice friendly forum i'll post a link below so you have to go through patreon tier 1 will get you into that forum where you can learn all of this learn more about finance i'm very active there as well every day so that is the end of today's video i really hope you enjoyed it and clicked the like button please do that favor for me really appreciate it and why not subscribe i'll bring you a video like this every week but until next week thank you so much god bless you

Channel: Neil McCoy-Ward

Views: 497,835

Rating: 4.9314833 out of 5

Keywords: stock market crash news, stock crash, stock market crash analysis, neil mccoy ward, stock market, why the stock market will crash, stock market collapse, market drop, stock market explained, stock market crash 2020, stock market crash, stock market analysis, reasons the stock market will crash, recession 2020, stock market crash 2021, economic collapse, upcoming stock market crash 2020, stock market crash coming, federal reserve, stock market investing, share buybacks, news

Id: 0g8FaKvRKMg

Length: 19min 54sec (1194 seconds)

Published: Sat Sep 26 2020

Reddit Comments

[u/nonotofthisworld]

Definitely this year! Or next year, or the year after...

But on a more serious note, have a close look at his right eyebrow, it's often goes a lot higher than the other? Not sure what this signifies but perhaps someone more experienced on markets can chime in.

[u/RAJTableTennis]

That guy's a total fraud, nobody has any idea what the stock market will do. His shtick is to list a bunch of things that are true to make himself seem credible, and then he links them together with really bad logic to make a clickbaity prediction.

[u/pintord]

Learned a lot about share buyback. Bunch of legal crooks!

[u/kick_thy_bucket]

Finally a video that actually helped me understand the current situation and the impact it will most likely have on the US and Global economy.