If The Market Crashes: DO THESE 3 Things To Build Wealth

i had no idea that a pandemic was going to come out of nowhere and decimate our stock market and destroy our economy if i had known that i would have shorted the stock market in march of 2020 when the stock market was in free fall i was making videos about we've been seeing the stock market do a lot of up and down and up and down and up and down and at this point you really need to know what you should be doing with your money to protect your money that way you can build wealth no matter whatever is happening and that way you can protect your money no matter what's happening so in this video i'm gonna be going over things that you can do to build wealth and protect your money against whatever happens in the market including a market crash so let's jump right in every single time a market crashes it doesn't matter which market crash we're talking about two things happen first people are blindsided and they lose a lot of money and second people always start praying and hoping that this never happens again now while history doesn't exactly repeat itself it does rhyme and so what you want to do is you want to be in a position where you're starting to prepare for the next market crash right now that way you cannot just survive but thrive through the next market crash because the interesting thing about market crashes is you see more millionaires created out of market crashes than any other time look i'm sorry to be the bearer of bad news but the market will crash again i have no idea when it's going to happen and everybody has a prediction as to what's going to cause it like all this quantitative easing free money high unemployment but the market will crash we don't know when and so you need to be in a position where now you're preparing for it that way you are ready that way you can survive and thrive through the next market crash my mind has to systematize things which is why i love outlines so much which is why if you want to know how to survive and thrive through the next market crash there are five things that you need to understand and know which is what i'm going to be going through in this video but before i get into that i need you to do me a quick favor and smash that thumbs up button below i've always been kind of like a tough guy i played football in high school and i try to lift every single day but i also really like tulips tulips are my favorite flower because i like the way they look but the interesting thing about tulips is they're also a symbol for financial education tulips are originally from turkey and when turkish merchants brought tulips to the netherlands the dutch fell in love and tulips kind of became like the symbol of luxury because they were this really rare flower and obviously they're really beautiful and then what happened is you saw people in the netherlands start to buy tulips not just because they're a nice flower but because people wanted to own them as a status symbol and so then people started to buy up the price of tulips and you saw the price of tulips started to rise now the dutch farmers and merchants were getting rich buying tulips because they would buy tulips one day and then when they would go around to sell the tulips they would be able to sell it for so much more because there were so many people that wanted to buy tulips and not enough tulips out there everybody wanted tulips in their garden because it was a real status symbol and if you had tulips and meant you were rich and so now these farmers and merchants were getting so rich that the investors started to get excited they thought if the farmers and merchants can get rich by buying tulips why can't we do it too so then the investors started buying up tulips not to sell them in the open market or to plant them but because they saw them as a great investment now here's the thing if you're an investor you don't want to be the person going to auctions or growing tulips or doing any of that you just want to be in the business of managing money so the investors then started creating tulip derivatives that way they didn't have to own or take care of these actual tulip bulbs they could just trade these pieces of paper so now investors started creating this tool of derivatives and lots of people had the ability to now go out and buy tulips on paper because now you can invest in tulip bulbs that's when tulip prices really started to skyrocket because now you had everybody trying to buy tulips not to plant in the front yard but so you could get rich because tulips were going up in price so fast it got to the point where people were literally selling their houses or refinancing their houses that way they could go out and buy one tulip bulb because tula prices were going up so fast and everybody was getting rich buying tulips now you have two lip bulbs costing as much as a house and you have these farmers and merchants sitting on all these tulip bulbs thinking wow we are rich let's sell some of these toilet bulbs that we can cash in on all of our profits so the farmers held an auction to sell out their tulip bulbs and guess what no one showed up nobody actually wanted to buy the tulips and nobody really wanted to pay that much money to own a tulip bulb people were buying tulips not to own tulips but just so they could get rich quick when the farmer started to realize that they had to cut the prices of the tulip bulbs significantly so somebody would actually buy it and that's when the price of tulip bulbs crashed and not everybody that had refinanced their homes or sold their homes to buy a tulip bulb were left holding nothing except a pretty flower this is a true story it was called tulip mania and it happened in the mid 1600s and this was the first recorded financial bubble in history after that financial bubble we've seen market crashes happen again and again and again not with tulips but with other assets because people will always be greedy people will always be looking for speculative investments and people will always look for a way to get rich quick when you have all three of these things that are fueled now by cheap and easy debt that's how bubbles are created and once a bubble hits a peak where now people are not willing to buy more of this thing that's what causes the bubble to burst and now you have a bubble boom and bust that's why the first thing you got to do if you want to be able to survive or thrive through the next market crash is understand market crashes so every asset class and our economy goes through cycles kind of like this where you have boom phases and bus phases but over time you see the overall kind of baseline of this thing go up so if you're talking about the stock market you see stock prices go up and down and up and down and up and down but over time you see the value of the stock market go up when people talk about market crashes the most common thing that they're talking about is the stock market and you see these type of stock market booms and busts happen every eight to 15 years or so what happens is people start buying assets and the economy grows and companies grow and then the price of these assets start to grow up and that's when the media comes out and they say that this asset price the stock cannot stop growing and it's booming and this gets more people excited that people start coming and buying more buying more and now the media gets even more excited talking about how everybody is getting rich and now the speculators get so excited and everyone's talking about how they're getting rich and so now people are going into debt talking about all these stocks and assets that they're buying and now you're going on your uber drive and your uber drivers telling you about how they refinance their home that way they can put their money in the market and this causes asset prices to soar even more and eventually you hit a breaking point where asset prices go up way too high and once that happens people stop buying the stock or they stop buying this asset and this causes prices to cool down once things start to come down a little bit now the media comes out and they talk about how everyone's losing money and how the stock is starting to struggle and how a lot of people are starting to sell and this causes prices to come down even more so now people start panicking because you had all these people buying these prices right before the top and then things start to come down especially if you're leveraged now you're really in the red and so people start panic selling this causes the media to come out talking about how everybody is losing money and why if you want to survive you have to sell everything now and this causes prices to go down even more and then you have people coming out thinking wow this price of this asset or the stock is really low it's below what i think is worth and so now people start to come back in and they start to buy and that's when you see the cycle start all over again warren buffett has a great quote on this he says that bubbles happen because people see their neighbor who is dumber than they are get rich and so they want to buy in two when you see a stock in the news talking about how the stock is starting to go up you might be a little bit skeptical but then you start to hear about all of your friends buying the stock and making all this money and you're like well if they're making money i might as well do it too so that's when you come in and you buy and you might not even know why you're buying it you're just buying the stock because everybody else is doing it and it looks like it's going up and so now you buy in and then you might see the stock go up a little bit and you're thinking wow if i had just leveraged up my bet a little bit more i would be able to make so much more money so now you've been the genius you are you leverage up your bet through the help of margin or debt and now you own all this stock and you might not know why you're investing in it but you're making money and then eventually things get a little bit too hot and that's when things correct and now you're in the red and now you're panic selling that's why the very first thing you got to do before you can do anything else is you got to understand how the game works because the majority of people are playing in this game but they're playing on the losing side they come in and they buy here are the greed and then they panic and they sell here because they start to worry and they start to lose money and so you got to understand how the game works that way you can win in the game the second thing you got to do is you got to be prepared because market crashes can happen at huge extremes you can have like 2008 economic depressions or you can have smaller economic crashes the way you do that is just by preparing your own personal finances that way you are ready for anything first thing you got to do is you got to have an emergency savings fund if the economy crashes and your company goes under and you don't have a job for a little while you need to have some cash that you can fall back on that where you're prepared so you want to have something like three to six months worth of expenses saved in a savings account that's their liquid just in case something bad happens that way you can fall back on that second thing you want to do is pay off some of your consumer debt this might be your car or your credit card debt if you have this consumer debt this is debt on things that are not making you any money pay it off once you lay your financial foundation then you want to get a little bit on the offensive by diversifying your assets or having different income streams that way if something bad was to happen you are not financially devastated maybe you have different income streams like real estate rental income and dividend income instead of just your job that way if something were to happen to your job you do have some other income to fall back on and you can have different types of assets maybe you have some stock assets maybe you have some hard assets maybe you have some cryptocurrency that way if things were to go bad your money isn't tied up in just one asset class because if you see the stock market crash your other assets might be okay but the interesting thing about diversification is when the majority people talk about diversification they're really not diversified at all they say something like yeah i'm diversified i got some money in blue chip stocks and i got some emerging economy etfs and i got some growth etfs so i'm diversified but all of your money is just within one asset class it's all in stocks paper assets and so if the stock market crashes all of your stocks all of your funds go down if we're talking about being really truly diversified that means having your money in different asset classes having some of your money in stocks paper assets having some hard assets like real estate having some commodities like gold and silver and now maybe even have some cryptocurrency the whole point of this type of diversification is really to protect you from any type of scenario because the next thing you gotta understand is three when the market crashes you gotta remember your goal the reason why you really gotta know your goal and your strategy because one stock might be a great investment for one person but that same stock might look like a losing investment to another person and so if i came to you and i asked you is tesla a good investment the answer is it depends what's your strategy what's your goal are you a value investor in which case you're looking for a beat up and undervalued company that you can buy and hold for the long term where the company turns around if that's the case then maybe not but if you're a momentum trader and you're looking to make some money quickly then this could be a great investment if you can come and buy and sell it and make money if you are a long-term value investor and you're investing your money in the stock market for the long term because you want to build long-term wealth and you come in and you buy here and this investment that you buy comes down to here then you don't want to be panic selling as long as you believe in the underlying value of investment the only that you want to do is come in and buy more i'll talk more about that in just a minute because you have a long-term horizon you're not trying to buy and sell your stock in six months or a year because you are trying to invest in this company or this etf for the long term but if you're a trader and you want to make money quickly and you buy here and you see the stock come here then you got to have your risk parameters in at what point you sell because if you see your stock coming down then you might want to just sell quickly because you don't know maybe the market is just correcting or maybe it's crashing but you want to make sure you have your risk parameters in there because you're trying to invest for the short term and so if you come in and you're like all right i'm buying here and i want to be a long-term value investor and i believe in the underlying value of this company or this etf and then you start to see this company this fund come down and now six months later you're like uh you know what i'm just gonna cash out right now that way i can cut my losses well now you're kind of switching sides what is your strategy are you a trader or are you a long-term value investor because if you still believe in the long-term value of this company you're just not happy with the price then you are switching sides that's why you got to start by understanding your goal and knowing what your strategy is because if you're investing for the long term then you gotta understand market crashes are part of the game and speaking over the long term what we've seen happen time and time again is that over the long term you see the us economy strong companies and the stock market continue to go up now that doesn't mean that it always continually goes up in a straight line we see it kind of go through these waves like this but over the long term the market corrects and so do strong companies and so you got to understand if you are a long-term investor all you got to do is ride it out if anything come in and buy more that's what the fourth thing you've got to understand is don't panic if you come in and you buy the stock right here let's assume you buy it for a hundred dollars a share and then it goes up to here at 200 a share and you don't sell it it might look like you made a hundred dollars but you don't actually make any money until you sell your stock so on paper you made a hundred dollars but you haven't actually made any money and then let's assume that the market crashes and the price of the stock comes down to 50 at this point it looks like you have lost fifty dollars because you put in a hundred dollars and now you're down fifty percent but again you don't actually lose any money until you sell this is where you have to be able to manage your emotions and it sounds silly but the people that can manage their emotions can make the most money in the stock market because now you're thinking financially not emotionally and when things come down you remember your strategy and you remember why you bought and so now you keep the long-term horizon in mind now look sometimes this can be really hard because when you own a share in a company and all you see is this company going lower and lower and lower and lower you might think it's the end of the world but one thing that you have to remember is that a company stock is different than the actual company and so you got to remember if the company is doing okay this is your research so if you are a long-term investor you have to be doing this research if you see that this company is doing okay and they're still growing and they're able to grow and turn around then this might be a company you want to continue holding on to but you also don't want to just go down with the ship because if this company goes bankrupt you lose everything so the first thing you got to do is never want to invest more money than you can lose that's why trading on margin has its own risks so you got to first understand how much money you're putting in are you okay losing this money second is you got to understand your strategy if you're a trader and you start losing money you got to have your risk parameters at what point do you sell if you are a value investor if you're investing for the long term you got to understand what factors are you paying attention to that way if this company starts to go under when are you going to sell this is where the best thing that you can do is remember what your original goal was is a long-term investing or short-term trading and making decisions based off of the research on that these four things that i just talked about are going to help you survive through a market crash better than the vast majority of people now if you really want to thrive through a market crash you got to come in and number five buy when you see a market crash happen it doesn't matter what asset class we're talking about whether it's cryptocurrency or stocks or real estate when you start to see these asset prices crash the people that come in and then buy are the ones that come out as winners over the long term because now you get to buy a great asset at a discounted price because everybody is panic selling and this is when you want to come in and buy but there's some tricky parts to this because some people are trying to be traders right and if you're trying to trade and you have a short term time span and you come in and buy here well three months later the stock price might be there and now you're losing even more money this is where you gotta again understand your strategy and have your parameters in place i like investing for the long term so if the stock prices are coming down here i'm gonna come in and buy and then if it comes down here i'm gonna buy more and if it comes here i'm gonna buy more so i like to buy phases i call this drip investing where when asset prices start to come down i start buying and as they come down more i buy even more aggressively there's a couple things that i do to make this happen now before i tell you that i do got to let you know that investing has risks you are never guaranteed to make money when you invest you might even lose money so make sure you always do your own due diligence and never blindly listen to a random guy on youtube but the first thing i got to do is i got to keep some cash on the side ready to invest and so you got to understand the cash is an investment position now your cash is going to get eaten away by inflation but i always have some cash ready to invest just in case the second thing is when it comes to this drip buying schedule i like to bind faces and the way i do that is first i have my own list of investments that i want to own so if we're talking about the stock market i have a list of stocks and etfs that i want to own and these are things that i believe in and i already done this research now if these prices start to come down that's when i start to buy and as they go lower i buy more aggressively and so this might be every 10 to 15 percent this docker etf goes down that's when i come in and i buy more aggressively so i'm paying attention to when these prices come down and when they do that's when i buy the lower they go the more i buy market crashes are kind of like a black friday sale for investors because you can come in and buy great assets at a discounted price the thing that you got to remember is it is impossible it is impossible to try to perfectly predict when the bottom is so it's impossible to try to time the market the people that try to time the market during the 2020 market crash missed it and then they saw a lot of people come in and buy and they missed that rally and so what you got to remember is it's impossible to try to time the market and if you do try to time the market it's like trying to catch a falling knife and so it's impossible to know how far down is going to go and how long it's going to take for the market to turn back around and so if you are investing during this time you got to have faith and you got to remember it takes time and patience for things to turn around because there's no way to predict when this rise is going to happen again but the reason why you see so many millionaires born during a market crash is because this allows people to come in and buy a ton of assets at a discount price and when things do turn around now you have these asset owners who see the prices of their assets skyrocket because now the economy is just turning around and you have these people that are owning huge amounts of shares or assets because they were able to buy at a huge discount market crashes make more millionaires than any other time you see more millionaires come out of recessions than any other time because that is when you can come in if you have cash and you are financially educated you can come in buy assets for pennies on the dollar and then just ride the market up when the 2008 crash happened you saw so many more real estate millionaires come up than any other time you saw a lot of people lose everything in the 2008 crash because they were over leveraged in real estate they were buying properties they shouldn't they were taking on risky loans when they couldn't afford it and then when the bubble burst it gave opportunity for people who were now ready and educated to go and do something i mean that's when i started buying real estate i started buying real estate after the 2008 crash and you know we're in michigan and we have ford gm chrysler as as our primary economic drivers that's right and when the 2008 crash happened gm went bankrupt chrysler went bankrupt and ford was on the verge of bankruptcy so you had the biggest employers in our state pretty much almost completely wiped out and you saw massive amounts of foreclosures i mean you had properties here selling in some instances for 95 off the first investment property that i ever bought was a small condo about a thousand square feet and prior to the 2008 crash similar condos were selling for between the ranges of 120 to 150 000 wow so they were selling between 120 and 150 000 but i was able to come in and buy it for 8 000 cash that wasn't the down payment that was the actual price of the condo 8 000 you that means unheard of in this market it's a good area right next to a bunch of shopping in a good school district and i bought the property put a little bit of money to renovate it and i rented it out for about six no not about for 600 a month and i was just getting started in real estate so i made a ton of mistakes but that was the type of market that we saw and i mean there was just so many different types of distressed deals for people who were financially prepared people who were financially educated now i wasn't very financially educated and i i didn't have a ton of money with me i was i was in college i was running my event planning business and you know i was making decent money but i was funneling that money into assets because i started reading books about money and every book said that every wealthy person invests in real estate i had no idea what the heck that meant i didn't have any real estate investors in my family i told my dad dad i want to invest in real estate he was like you're stupid go study but i was like you know this is something that i wanted to do you know any time i was actually studying for my mcat the medical college admission test and anytime i took a break now studying i went on to the news yahoo finance and it said that real estate prices hit rock bottom and to me an 8 000 condo was normal because i hadn't known anything else that's all that i knew and so uh you know that i started buying i started buying as many different things as i could because i was like well i'm making a little bit of passive income i made a ton of mistakes but anytime i made some money i was buying properties and and as i started to grow i started to buy bigger and you saw all different types of distressed deals you saw physically distressed which was where properties were physically beat up and you know i got to meet a whole bunch of different contractors so we were doing a lot of stuff with uh renovations i got to be pretty good with that and then we also saw financially distressed which was you know there was a property that i bought it was an apartment complex 20 units in a grey area growing area um probably worth a million dollars we were able to come in and we bought it for just over four hundred thousand dollars why because it was vacant or mainly vacant the people that were there were not paying rent and needed a little bit of work and the owner was so overly leveraged it was interesting because at that time there was this big thing on zero down real estate buy real estate with no money down and the owner of the property was actually one of those real estate gurus and he used to uh teach people how to buy properties or no money down how you can create cash flow with these properties and as i started to go into this deal i looked up the owner i saw that he was this guru teaching this and i went on to his website and he like had this course or whatever and the home page of his website was him in front of this property this 20 unit property which now he was foreclosing on which was being foreclosed on that i was about to buy for 40 cents on the dollar but he was talking about how he bought this property for like 1.1 million with very little money out of his pocket and how it's making him rich and then that was the property that you know the banks forced him to sell because he had so much leverage he didn't know how to manage the property and then we were able to come and buy it for pennies on the dollar wow so market crashes are a part of our economic cycle you see booms you see bus there are times when the market goes up and there's times where the market goes down yeah now 2008 was uh an exception i mean that was it wasn't things going down it wasn't like just a cliff it just went like it it was pretty wild what we saw in 2008 now that i look back and kind of really understand it but market crashes happen they happen in stocks to happen in real estate they happen in cryptocurrency you see it happen across all asset classes and the mistake that people make is either a they assume that no market will ever crash or b they try to just perfectly wait for the crash now let's start with a you you uh assume that no crash is ever going to happen well this this is where people get greedy people get they get emotional they invest in emotion rather than financials we talk about all the time when you invest on fine on emotions not financials now what you're doing is the market goes up your friends start to get rich they start making all this money and you hear about your friends making these trades or investments and they're doubling their money and you're like holy moly i need to get in on that i want to make some money too so now you're buying way up here and what happens is you get the media effect and what the media effect is is as the market is going up that's when the media comes out and they start reporting on it they say oh my god xyz stock asset is booming 19 year olds are becoming millionaires people are getting rich don't miss out on this opportunity by now yeah what that does now it creates this new frenzy so people now start coming in they start buying more and this pushes this asset class to above normal and it just keeps going and and that can be fueled with the help of easy debt cheap leverage because if people have access to debt and leverage and easy access to it then that just makes the bubble bigger because now people can put more than what they're willing to lose they put in their own money they put in margin from the broker they might go into credit card debt they might refinance their home to now take this cash and put it into this thing which looks like ev is making everybody rich it's a guaranteed way to get rich quick and people you know as much as we want to talk about it people have this innate want to get rich quick right it's like wanting to lose weight fast who wants to lose weight slowly but if you want to actually lose weight sustainably you got to put in the work if you want to actually build wealth you got to put in the work you know there's always going to be people who are greedy they want to get rich without putting in the work and so but so that's that's what happens right that fuels the bubble even bigger and then you get to this point where people are looking at this investment they're looking at the fundamentals of their investment and they're saying holy moly this asset is worth a lot a lot more than it probably should be worth maybe we should take some profits off of the table so then you have some of your you know your fundamental investors that are now cashing out a little bit because they they've seen gains which are a little bit rich and so now they sell and so that's when you start to see the market turn a little bit once you see the market turned the people who are buying really high start to panic and they say oh no maybe i should sell maybe i need to start selling and then you know you start to see it go down and that's when the media comes in and they say this thing is on its way down the bubble has burst get out while you can now what happens is sell sell sell sell sell sell sell and now your fundamental investors come back and they say holy cow this asset should be worth a whole lot more money but it's selling for way cheaper let me come on and buy and so that's what what creates these boom and bust cycles it's you have people that get excited they get emotional they get greedy they want to buy you can leverage that up with cheap and easy debt which allows it to go even higher and then eventually it gets too high it gets you know this might be your baseline of where it should be but it will go above that baseline because of debt and emotion right right and so then once it starts to turn down then it will go below baseline because again debt and emotion when people start selling with debt now not only do they lose that hundred dollars that they put in they lost the other hundred dollars from the stock brokerage which causes it to go down even more cause the bubble to go down causes a whole bunch of other issues people panic people get scared the media is now talking about how the whole economy is about to implode the world is going to end people get scared to start cashing out and that's what causes it to go down and this is where now the money is made the money is made when you buy and so now the smart investors come on they say hmm this looks like a good opportunity for me a good opportunity for me so let me come in and buy so then you kind of ride it back up so these type of booms and bus happen and so for the people that always like to say it's not gonna happen you end up getting burned because then when you see it happen you're on the losing side and it's okay i mean to go down it's just understanding it that way you can write it back up assuming you have a good investment and so the people that say oh it's not going to happen or i don't think it's going to happen they're the ones that get the most surprise and they're the ones that sell at the bottom right then you have the people that say you know i'm just going to wait for the crash to happen look right now we are in a weird economy man we are in a weird market we have people talking about a stock market crash a real estate crash a cryptocurrency crash sure all these things are possible and they will all happen but nobody knows when right you know it can happen in six months or or six years or 16 years like it's impossible to predict when yeah now there are real issues in our economy right now yes there are real issues in each asset class yes and you know you should always have some cash ready to invest that way you can take advantage of opportunities but you know you can never predict when a crash is going to happen or how big it's gonna be yeah nobody could have predicted the 2020 pandemic crash and economic shutdown like we were in the office before that we were doing a marketing campaign and and uh you know on that monday i was like you know a lot of things are going on with this pandemic let's just take a couple weeks off you guys work from home and we'll figure it out yeah it took a year and a half before we started to come back into the office like normal you know nobody could have predicted that i had no idea what was going to happen i mean i stopped buying real estate i had no idea what was happening it was it was weird it was it was scary and so you cannot predict what is going to happen you cannot try to time the market and on top of that it's impossible to predict now because of all you know what i like to call the x factor government regulations and other outside factors which can manipulate the market i mean you would have expected that when 2020 happened you would have saw a massive stock market crash which did happen but the crash to last much longer we saw the biggest recession since the great depression yet this recession only lasted two months why because the fed stimulated our way out of it i don't think anybody could have predicted that i mean yeah maybe you would say the fed that they would uh print money if we see a crash yeah i think everybody would would say that but to the extent that we saw the trillions of dollars that went into the market the unlimited quantitative easing the amounts of bailouts that went out no i don't think anybody could have predicted that i could have never saw that happening and you bring up kind of a good point there too because you know you mentioned all these kind of problems with the economy and things like that but if the if kind of the federal reserve and all these other kind of places if they just continue to pump money into the economy why would anything ever crash yeah and that's where things get scary because now we're not just talking about markets because you have each asset class right you got real estate you got stocks you got cryptocurrency which are you can kind of look at in their own individual bubble like i love real estate and i love the stock market i also love cryptocurrency and but in and i love talking about them right but the thing that's scary is now if we take a step back and we don't just look at each individual asset class we look at the economy and the dollar so like for example real estate what caused the 2008 real estate crash well one you had all the ninja loans no income no job no asset loans that were going out you had subprime mortgages meaning if you had a 500 credit score don't worry you can get you a mortgage and the way it worked was you had literally zero percent down payment mortgages for people who could not qualify for a loan even if you didn't have a job and you had no assets to your name so you have no job you have no assets you got no cash in the bank you go to the bank and say i want to buy this 300 000 home they'll say okay how much money do you earn i don't really earn any money what assets do you have i don't really have any assets okay here sign the paperwork and if you close by this friday we'll even give you a free tv there were commercials on tv saying if you can close and buy a home you don't even need any money down a bank will give you a hundred percent loan sometimes you even stop more than a hundred percent loans where if a home is worth a hundred thousand a bank would give you a hundred and five thousand that would help cover all of your extra closing fees so banks are giving you 100 loans you don't need to show any assets and then they would give you incentives like a free tv that way you can close quickly so you obviously had some risky people you had some risky loans being made and then you had the growth of variable interest rate mortgages variable interest rate mortgages mean that hey you can get a mortgage uh right now it's going to cost you 500 a month in three years it's gonna go up to fifteen hundred dollars a month but banks didn't tell you that part they would just focus on hey you can get this mansion this big home for five hundred dollars a month some people said all right cool let me buy that home and then three years go by interest rates go up and now your payments go from 500 to 1500 to 1800 and now you cannot make your payments anymore you were already paycheck to paycheck so what do you do the bank says or they told you before you can refinance no problem or you can just sell your home you'll have equity home prices only go up just like the stock market only go up just like the stock market only goes up because stocks only go up you know and so you have this type of euphoria and that's when things started to go down and so now you owned a home you had no equity in your home because home prices went down a little bit and now you cannot afford your monthly payments so what do you do you say hey banker you told me i could refinance and the banker says uh well uh you have no equity so i can't refinance you how about you try to sell and they look at you and they say sell if i sell i have to bring twenty thousand dollars to the closing table i don't got twenty thousand dollars so now the banker's stuck the homeowner stuck and you as the homeowner are now sitting on a quote asset which is underwater you can't afford the payments it's a money hole it's not an asset it's a it's a money pit now right and then that's when things start to go down because then that's when banks start to foreclose on you and that's and this bubble right there was the issue then that bubble became 100 x bigger because you had the realistic crash and then you had the financial sector ultimately just get so close to being annihilated because banks got greedy they said oh wow i mean homes only go up in value so we can lend you money sure they started lending money but then they said how do we leverage up these bets so then they started taking these loans which were already risky which were already sub prime which were already with no assets no down payment no collateral they would take these loans chop them up create new securities new assets and then sell them and they would sell them again and again and again and again and again and again and then they would go out and create insurance and buy insurance out against these investments because then the insurance companies said we want to get in on the fund you banks keep taking up all this to keep taking all of our money so how about you give us some money too so then the insurance company started creating insurance they started insuring these these bad investments and so now when home prices started to go down it wasn't just within the housing market it was the entire financial sector now wall street was on the verge of collapse because now home prices started to go down which was bad for the housing market but then you had the financial sector almost collapsed because now all these loans these derivatives upon derivatives upon derivatives just like dominoes falling over falling over falling over which made this bubble much much much bigger and that's when the bailouts came out and you had the banks that were too big to fail the insurance companies which are holding your pension which were holding your retirement money which were holding your life insurance on the brink of collapse why because they were ensuring these bad investments because they wanted to get rich too and so now the government says oh my god what do we do we encouraged everybody to be a homeowner we told everybody to go out and buy a home because homeownership is obviously the only way that you can become wealthy american dream yeah you gotta own a home which which we saw what the real cost of that is when you go out and try to live the american dream when you can't afford it and now the government says we got to do something we got to save the big banks we got to save the insurance companies and to start printing money where does this money come from well the united states government is not a for-profit entity they are an entity which gets their money from you and me taxpayers tax dollars the harder you work the more taxes you pay right so now the government makes some money through taxes which they then redistribute in the form of infrastructure in the form of paying teachers in the form of just doing a whole bunch of different things well the government doesn't make enough money through taxes to pay their bills as it is that's why the government is drowning in debt we have a national debt crisis and so now when they want to start bailing out these banks not only are they taking your tax dollars to pay out these banks to make sure they have money to buy their bad assets because they made risky loans but then they said we are going to print money trillions of dollars now in 2008 it was nowhere near what we saw in 2020 but it was still a big chunk of money it was a historically the largest bailout that we've ever seen and they start bailing out the banks they start bailing out the insurance companies they tried to get private mergers and buyouts to happen but we saw an insane amount of money being printed and so that made people feel okay i mean obviously some people were very angry but the the real thing is now that causes what inflation money gets printed which means the united states that the united states is now into more debt and this money goes up to these big corporations these big banks this insurance companies and so now who pays the price or you think oh the government pays the price where do you think the government gets their money it's through you and it's through me through tax dollars and then the average person gets screwed over again through inflation because now when you go to the store and you buy a groceries it's gonna cost you 25 more than it did before wow because more money keeps getting printed more money you know this this money comes from somewhere money is supposed to be representation of value gold is a real representation of value because it takes time effort and labor to mine an ounce of gold it is a representation of value our dollars are supposed to be a representation of value but the representation doesn't come from a physical asset because our dollars are not backed by gold in 1971 president richard nixon took our dollar off of the gold standard which means that now our dollars are not backed by gold is backed by a promise that the united states government is going to support the dollar so the united states government says that your hundred dollars can buy you something right that's the only reason why people accept it right and if you look at you know the real representation of value it costs 12 cents to print a 100 bill so when we talk about representations of value your 100 bill has value because the united states government is in power right and it is the strongest government in the world we have the world's reserve currency we have the strongest economy in the world but if that gets challenged if the united states government gets challenged as the world's superpower if our economy gets challenged as the world's strongest economy now we have problems because then our dollar is going to be challenged as the world reserves currency and if that happens now all of a sudden people are working for this this money right these dollars and they're going to say wait what is this dollar actually worth this is really risky you need to pay me more dollars and that some people start asking for more money and that's when you start to see real inflation because people start to realize that their money is fake yeah they start to realize that their money that they're working hard to earn is fake it's not real money is just paper and that's when you start to see more economic issues so you talk about concerns you know yeah we can look at things in a bubble right we look at the real estate market we can look at it as a bubble we can look at the stock market in its own little bubble we can understand valuations like right now we have companies with very high valuations we have companies making growing revenues growing profits why because of inflation the price of the products are higher so people are having to pay more money so you know we don't know if they're actually selling more products or if just the cost of the products are higher because of the inflation they're making more money and there's a lot of dollars in our circulation right now which is causing people to not go out and buy same with the cryptocurrency market people are losing their trust in the federal reserve bank and the government i don't blame them so people are trying to move into cryptocurrency which is the people's movement of money that's what cryptocurrency is it's from the bottom up not from the top down we are getting rid of the federal reserve bank we're getting rid of the central authorities to control our money and people are controlling money that's what cryptocurrency is all about and then you have the technology behind blockchain and all that but this is where now what do you do you got to get educated man you have to get educated because then this is where people say we need to convert our dollars to assets we need to go and buy things we need to buy assets yes you do but you do not want to chase assets you don't want to just blindly throw your money into things you don't want to blindly listen to a random guy in youtube right i mean you gotta you gotta be educated right so when we talk about the education you gotta learn and you know you can let you gotta learn by doing you gotta be willing to make mistakes you're going to lose money you have to be okay with that there's gonna be times where you lose money you have to understand asset cycles you have to understand how to value your investments i mean this is one of the reasons where you know we talk about in the stock market the question everybody asks when it comes to investing their money in the stock market is what stock should i buy but that is the worst question that you can ask if you want to know how to invest your money in the stock market because what's a good stock for you might not be a good stock for me and vice versa because you have different goals you have a different outlook and you have a different risk strategy risk tolerance right and so right if if you want to see growth you want to see higher appreciation if you're 25 years old and you want to see that potential growth then you should not be investing the same way that a 45 year old does who wants to just see cash flow right or for a 65 year old who just wants to see the preservation of their money there's different goals which come with different strategies and you need to know kind of what it is that you want to do and based off of that you need to know how to research companies right and so you know people talk about investing for cash flow which is good i love cash flow that's what i love wrestling in real estate but you've got to understand that in real in stocks what does that mean it means that a company like mcdonald's has a whole bunch of profit and instead of taking this cash and investing it back into their company to grow faster they're just paying it out to you now this is good for you because now you get your cash right now but in terms of future growth that means that mcdonald's doesn't have the same future growth potential as a small startup does who doesn't have a profit because they're investing every dollar that they earn and more through debt and other investments to grow as big as possible as fast as possible because they're trying to acquire more market share so this is you know this is what financial education is you need to be educated about what your investments are that's why we created stock market insiders and the whole idea behind that is now you can learn from a real coach who is walking you through different stock market lessons every single week you have group coaching session every single week where you learn how to invest your money into these stocks you learn how to value companies you learn how to read fundamental analysis you mean you learn how to analyze companies on a fundamental level right it's not for traders these are people who want to actually invest in companies for the long term but if this is for people who want to now understand how to read cash flow statements and profit and loss statements and understand how to value companies so every week you get a group coaching session that we can learn a lesson and then you can apply what's going on in the market right now to your lesson because all these lessons are live then you get access to your exclusive community of investors we have a private discord group for stock market insiders and even if you're a complete beginner we have a course that you get for free when you sign up for stock market insiders that walks you through the different lessons that you need to know about the stock market so you get your the class you get the weekly coaching you get the community and then you get all the previous recordings and it is man this is a super affordable program it costs less than the cost of dinner for two people and you get access to all of that you know to invest in your financial education and if you still aren't believing in the idea just try it out for free we got a free 10-day trial you can just try it out you can go to the coaching classes you can watch the previous recordings you can go through the entire class you can ask your questions and the discord you can ask your questions to the coaches and then you can decide if it's worth your money or not and so this this is what financial education is all about i mean one of the things that you know we're trying to do here at minority mindset is make financial education accessible and make it real you're not learning from people who are just teachers you're learning from people that actually do what they teach what they teach i mean our coaches here are people that have been investing for years these are people who have gotten great returns and have real money to show their success and we're talking about hundreds of thousands if not millions of dollars in the market so you know if you want to try stock market insiders i'll put a link in the description below but this this is where financial education is so important that way you can start making the right decisions with your money and understand what's going on and this gets to the question of okay so what do i do if the market's going to crash do i keep putting my money in cash or do i go out and invest my money and it's a dilemma because if you just keep your money in cash well now your money is being eaten away by inflation for who knows how long but if you you're going to just invest your money all all right now but then you could be buying at the peak and if the market crashes now you don't have any cash to go out and invest right and this is a hard answer and there's nothing like right because we don't know when the market's going to crash but what you can do again is be educated exactly you got to prepare you got to think what you were saying before about you know kind of the 2008 crash that happened you know there was a lot of things that led up to that point you know you mentioned a lot of things with the housing market and banks and things like that and how that kind of trickled down led to economic stimulus and things like that but kind of moving into what happened over the last year or so nobody could have predicted that that was totally off the wall so i think that kind of really puzzles a lot of people and they have the most the hardest time understanding that you know how do they actually are there ways that they can prepare you saying just you know kind of get in ahead of it or you know what how do they prepare so again it's it's it's that what do you do with your money right now right and i can't tell you what to do because that gets me in financial trouble gets me in legal trouble but what i can do is talk about what i do i you know crashes happen when people run out of money where people are fully invested when there's no more buyers at the table that's when prices start to come down and so as long as investors have cash to invest that means there's more buyers out there which can continue to push asset prices up so what you want to do now is all right now what you want to what i do is i invest my money in in two different ways i have passive strategies and i have an active strategy my passive strategy this happens in the markets up down sideways it does not matter i have money going into etfs in the stock market that gives me exposure into the stock market because i believe in the american economy i have money going into cryptocurrency because i don't trust the federal reserve bank this is happening you know my my stock market uh passive investing happens every week every wednesday monday gets withdrawn from my account and it goes into these etfs in cryptocurrency i have daily investments that are happening daily buys dollar cost averaging into certain cryptocurrencies that i like and then i also uh i'm passively buying gold i buy gold every month physical gold not etfs real gold because gold is a representation of value and you know you can buy gold silver it doesn't really matter so this this is something that's happening all the time whether the market's up down doesn't matter this is this is what i'm doing then i also have money that i use for my active investments to buy real estate to invest in startups to put money into cryptocurrency whatever it is even in stocks so this is money that's now when i have cash and i find a deal i'm going to invest this money into it this is where now i'm being extra picky with my money right i'm being very picky when i'm looking for real estate deals if it does not fit my investment criteria i don't want to buy it now we were in austin properties in austin were selling for one caps one and a half cap what that means is you buy a million dollar property it's going to pay you it's going to pay you 10 000 or 15 000 a year in profit for a million dollar investment it's not that much and the reason why they're so low is because these investors the the sellers are saying don't value our property based off of how much rent is making today or how much profit is making today value this asset based off of how much profit is making next year the year after that and the year after that with five to ten percent annual rent increases i don't like doing that that's speculation because what happens what happens if rent doesn't go up what happens if the economy slows down and you can't do that now i'm paying for next year and the futures prices today when i have no idea what's gonna happen in the future yeah you're right so i don't do that yeah i buy based off of what it can generate today and that leaves me a cushion so if the economy slows down i got i got room to lower rents if we need to same in the stock market when i'm investing in companies i'm being picky man you got to be pickier than ever don't just go on and start chasing don't chase learn educate yourself find something that's undervalued that you believe in for the long term and then even if you do see a market cash just keep analyzing because if it's a company that you believe in then you just want to own it for the long term you don't want to panic and sell but again that's the financial education same with cryptocurrency look you cryptocurrency you're going to see wild swings up and down it is not uncommon to see a 30 price 30 price movement up or down so you have to be willing to accept that and understand it and know what it is that you want to invest in i mean we could see a 2001 style.com crash in the cryptocurrency market which could also trickle down into other asset classes and so when that happens or if that happens you would see cryptocurrencies and technologies get wiped out but again education there are um you know we we talk about earning interest on cryptocurrencies which is great but there are some investments quote unquote investments out there in the cryptocurrency market which pay unreasonably high interest rates there's there are some investments out there that are paying seven eight thousand percent a year interest wow and these you know these are public right now why because they're highly risky and they will probably go bust and and you know some people are trying to play that game where all right let me put my money in hope that i can double my money triple my money and then pull out but it's a risky gambling game i don't like gambling so you gotta again be smart and just just know that if you're making investments don't chase the hype chase the value and buy based off of that and don't chase and that way you know if things go down now you know you have cash that you can use to now come in and buy yeah and so what you're basically saying is know what to do with your money today that's how you prepare for a crash you got to know what you want to do with your money today and tomorrow you have to know you have to be prepared you got to know that crash is going to happen and when the crash happens you're going to buy because the majority of people are going to run and get scared that is the best time for you to buy and you also need to know what to do with your money today in case a crash does not happen tomorrow because you don't want your dollars to be eaten away by inflation so you have to know both and you have to be able to understand and do both you can't just wait uh wait for it and you cannot just do it today and when people are looking at that what do we really consider kind of like a crash like what crash is a 20 price drop or more under 20 is considered a correction so if the stock market falls 15 percent is the correction if it falls 25 percent it's considered a crash just technical terms but you know that that's where the crash is and uh you know when the real estate crash happened in 2008 it was between 90 and 95 percent in some areas obviously different assets different subsets of an asset are gonna see bigger crashes than others but that's kind of the way it works so with what's going on right now kind of in real estate and like stock market crypto as we kind of talked about it's very very volatile what do you think is going to kind of come next as far as you know a lot of people are buying right now stock market has hit a record this year in all the major indexes as far as crash coming up people are buying right now things are looking good well so you're saying what's going to happen is the market going to crash what's going to cause it to crash yeah because thing you know mainly because we came off of a september that was so wild at least for stocks now we're in october things are kind of coming back at least a little bit so you know people are kind of they're confused they're not sure what to do well we're looking at day-to-day swings which which have nothing to do for investors investors are looking at the long term what we're looking at is what's going on with the economy and what's going on with the dollar our economy is not growing fast enough the federal reserve bank and the government want to grow the economy good but their opinions on how to grow the economy are different than my opinions on how to grow the economy if you ask the fed and the government how do we grow the economy they will say stimulate right print more money and inject it into the economy cool you can grow the economy for the short term as long as people keep accepting the dollars but you are hurting the majority of people right you are making the majority of people poorer every time you print another dollar what you need to do if you want to grow the economy is you need to promote innovation creativity and entrepreneurship that's the only way that you can sustainably grow the economy now in terms of risk factors obviously our economy is not growing fast enough hopefully that gets picked up we have supply chain issues across the world which are affecting our country which is really hurting us we're just slowing down the economy we have issues with the dollar you know that that is the a big concern for a lot of people who are studying money it's when are people going to realize that this dollar that they're working for is just a piece of paper and as more and more people start to see that the united states government is is just printing more of this money and the dollar is losing value well you have countries around the world that are holding on to trillions of dollars and if they start to lose faith in the dollar and they start to dump the dollar that's going to be a real concern because that people are going to run from the dollar they're going to try to convert the dollar into something safer gold cryptocurrency real estate companies right they're gonna want something that's real not something that's a piece of paper right so you're saying the next crash that could happen could be more than just the united states it might be global we're in a global economy the next time we see a crash a real crash is is going to is going to hurt because we have so many factors coming together we have so many we have so much money petting that's already happened we are at historically low interest rates the federal reserve bank cannot raise interest rates to keep wanting to increase inflation we have a national debt that is ballooning faster than ever our national debt is higher than a gdp so what do we do what do we do we'll get financially educated you got to get financially educated you need to know what to do with your money you need to understand what the dollar is you need to understand what's going on that way you can use your money smartly you don't want to panic you do not want to panic you just got to be educated that way you can come out of whatever is coming a financial winner now we don't know when the next crash is going to happen if it's going to be six months or however many years from now but you just have to be educated that way you can make smart decisions with your money that way you can prepare be prepared and come out of the next crash a winner because more millionaires are made out of crashes and recessions at any other time we're going to jump back into the video in just a second but before we do i want to tell you very briefly about market insiders our investing coaching program if you've been thinking about investing your money into the stock market the real estate market or the cryptocurrency market and you're looking for some extra guidance this is what market insiders was created for it is not a class market insiders is a coaching program where every week you get access to a real estate cast a stock market class and a cryptocurrency class which is live led by one of our investing coaches our investing coaches are not investing gurus these are real investors who've been investing for years they've gotten great returns and they have the money behind them i'm talking about hundreds of thousands if not millions of dollars invested themselves and they're teaching from their experiences and their failures that way you can learn from them every single week now the cool thing about market insiders is you get access to more than just the weekly coaching you get the weekly investing coaching you get access to all of our previous recordings you get access to our investing classes and you also get access to a private discord community that way you can chat with other investors so if you're trying to get started as an investor in the stock market the real estate market or the cryptocurrency market or you're trying to figure out how you can be a better investor and get better returns the market insiders is for you that way you can get that kind of handheld coaching guidance because now it's not just a class where you're going to be left hopeless trying to figure it out for yourself every week you're going to get access to stock market real estate and cryptocurrency coaching sessions and it's all included now if you're skeptical about all this i get it that's why you don't have to pay a penny today you can try out market insiders for free with our 10-day trial during the 10-day trial you'll get access to everything you can join the coaching calls you can watch the previous recordings you can attend the classes you can go through the discord and chat in there you can ask your questions and then you can see if it's right for you if during those 10 days you realize i hate this this sucks well then you can quit and it's not going to cost you a penny but if you go through it and you say wow this is amazing i'm blown away by the education well then you can stay and if you decide to stay it's not going to cost you an arm and a leg market insiders cost less than the cost of going out to eat it costs less than 30 dollars a month so if you want to try it out i'll put the link to how you can learn more and join market insiders with the free tile in the description below it was very important to me that you feel comfortable investing in your financial education that's why i wanted to make sure that you had nothing to lose and everything to gain which is why if you want to learn more you can get started with a free trial that way you don't have to commit to spending a penny until you know if it's right for you or not so if you want to learn more and try out market insiders and see if it's right for you i'll put the link to where you can get started with your free trial in the description below in 2020 we saw the stock market go from breaking record highs to breaking lows and record speeds to breaking highs again that was the quickest boom crash and boom cycle we have ever seen now you have a growing number of people that are pointing at things like the business bankruptcies that have happened and that are happening the unemployment numbers potential lockdowns and the money printing saying that these things could help trigger a stock market crash but like with everything else it's not so simple and if you really want to understand what's going on and what might be coming you have to start by understanding the broader picture and you have to start by smashing that thumbs up button below if we take a step back and look at how the stock market has grown back in 2007 the stock market peaked at just below 14 000 points and when i talk about the stock market i'm talking about the dow jones so in 2007 the dow jones peaked at right around 14 000 points and then in 2008 as we all know the stock market crashed in 2008 and 2009 the stock market bottomed out at right around 7 500 points so almost a 50 drop after 2009 that's when we saw the stock market start to recover and they recovered until about 2012 and into early 2013. in late 2012 and early 2013 that's when the stock market went back to around 14 000 points heating is early 2007 high now from 2013 until 2019 the stock market just kept going up from 14 000 points to much higher because the economy kept growing and the stock market naturally kept going with it then in 2019 things became very interesting because in 2019 the economy started to slow down and the stock market was kind of getting a little worried because people were saying that if the economy is slowing down then the stock market's going to come down so that's people started talking about a potential stock market crash but that's when in 2019 interest rates were cut so typically interest rates are only cut when you're in a recession because lower interest rates stimulate the economy because now it's cheaper for people to go out and borrow money and when it's cheaper for people to go out to borrow money you're more likely to buy a home you're more likely to spend money and businesses can borrow money for cheaper and then they can invest this money into their business so interest rates were cut in 2019 not during a recession though but in a very growing economy if you remember back in 2019 there was tons of headlines talking about how the united states is in the strongest economy ever and in the strongest economy ever we were cutting interest rates which is something you typically do when you're in a recession so the reason we were cutting interest rates is because the economy was slowing down people were getting worried about what was going to happen and that kind of kept the stock market going up even more this brings us to 2020 which i'm gonna put on his own line because 2020 was a crazy year and i think it definitely needs its own diagram so in january february of 2020 we were breaking new highs in the stock market and in february of 2020 the stock market hit right around 29 000 points for the first time in history but then as we all know in february that's when the pandemic came and it shut everything down and then in march people panicked everybody was like what is going on because we have never experienced or at least i have never experienced an economic shutdown like this before and everybody on wall street did not know what to expect and so people were panicking they were selling their stocks and we saw the fastest stock market sell-off in history and we saw the fastest bear market in history so we went from 29 000 points in february to right around 19 000 points in march just one month later then in april may this is when things started to turn around because people started to kind of understand this virus a little bit more people started to understand this pandemic a little bit more and the economy started to open up a little bit so that's when money started to flow back into the market and so now we saw the stock market start to go up so in may june july august september october we kept seeing the stock market go up i mean there were some months in the middle where the stock market came down but in general the stock market kept going up from 19 000 points higher then going into november and december so this is towards the end of 2020 i'm going to talk about 2021 in just a second so we'll talk about end 2020 what we saw happen is the stock market reached new highs so in december we saw the stock market break 29 000 and hit 30 000 points for the first time in history in december of 2020 so february we've broken you high march we saw the fastest stock market sell-off in history then in march to december of 2020 we saw one of the fastest stock market rallies in history where we broke a new high some of the things that contributed to that were low interest rates remember how we talked about how interest rates were cut in 2019 well in march interest rates were also cut again we thought interest rates go to the lowest levels ever that's why i hear people talking about these low mortgage rates because we have never seen interest rates this low so we saw interest rates get slashed to insanely low levels in march and we also saw a lot of stimulus happen so we saw people getting stimulus checks we saw businesses getting bailed out and we also saw a bailout in the stock market because for the first time in history the federal reserve bank started buying corporate bond etfs the federal reserve bank kept pumping money into the market and so we have seen an insane amount of stimulus not just for people not just for businesses but also the stock market and so this kind of pushed the stock market up to brand new highs which is why towards the end of 2020 we saw the stock market break 30 000 points and now the question is what is next in 2021 the first thing we can look at is the money supply or cash that's going into the stock market because on a very basic level at the end of the day the stock market and stock prices are determined by supply and demand if you have a ton of people that own stocks but nobody that wants to buy a stock if these people try to sell the stock well nobody's going to be buying it and so now the people who are selling stocks they're going to have to cut their prices and that's going to push stock prices lower because nobody wants to buy a stock that's what happened in march because everybody was worried about our economy everybody thought the economy was going to collapse so nobody was buying stocks and so the stock market collapsed so if you have no buyers and a lot of people who are selling this makes stock prices go down but if you have a ton of people that want to buy stocks and not a lot of people that are selling this push the stock price is higher so you have to look at the kind of money supply that's going into the market and how much money is going out of the market to really kind of understand what's going on well in this early time march april may june what we saw happen was during this time we saw a ton of money sitting on the sidelines so during this time we had a ton of money leave the stock market and we saw some of the biggest piles of cash held by investors in cash not in the stock market so if your money is in cash not in the stock market that means you have less money going into the stock market during this time we saw a lot of retail traders so people who are trading off of robin hood and weeble and apps like that we saw a lot of retail traders go into the market but we saw a lot of bigger investors who have a lot of cash pulling their money out and so during this time people were scared and there was not a lot of money in the market but towards the end of 2020 we saw the complete opposite happen we saw now towards the end of 2020 a record influx of cash into the market and now we actually have less money sitting on the sidelines in the end of 21 than we did before this whole pandemic started so during this march april may time we saw a record amount of cash leave the stock market and sit on the sidelines now towards the end of 2020 october november december we saw a record amount of cash entered the market where now there's less cash sitting on the sidelines towards the end of 2020 than there was before this whole pandemic even started now before i get into what triggers could cause a stock market crash and what might be coming i do got to give credit where credit is due because ak made a great youtube video where he talked about how this cash inflow and outflow affect stock prices and how earnings and buybacks could also affect stock prices if you haven't seen the video i will link it for you in the description below there's three things that you need to look at that i'm going to be talking about first is understanding stock market pricing and what affects the stock market prices second understanding stock values because the value of a stock doesn't always correlate with its price and third understanding the triggers that could really affect the stock market starting with pricing of the stock market you have to remember that when people buy stocks they're not buying stocks based off of what they think is going to happen today they buy stocks based off of what they think is going to happen in the future so the stock market kind of prices in the future economic expectations what you don't want to get confused is confusing the stock market with the economy because the stock market is not the economy the economy is what's going on in the world right now the economies whether you have a paycheck whether your neighbor has a paycheck what is going on in the economy is the economy the stock market is what people think is going to happen in the economy in the future the way warren buffett explains it is in the short term the stock market is a voting machine and in the long term the stock market is a weighing machine essentially in the short term the stock market can be very emotional because people can start panicking and they'll start selling and then they can get really excited and they'll start buying and this can push the stock market up or down we've talked about this on our youtube channel which is why if you haven't subscribed yet make sure you do that but over the long run the stock market tends to rationalize if you focus just about pricing like i talked about earlier you have to look at supply and demand and you have to look at how much money is in the market money in market because if there's no money going into the market stock prices are going to go down but if you have a ton of money going on the market at least in the short term you're going to see stock prices go up and so you have to look at the factors that affect the money in the market every financial analyst and money manager will tell you that the thing that affects the money in the market is how well the economy and companies are doing because if companies are doing really well is going to attract more people to invest in the market but i'm going to talk about this when i talk about valuations in this section i really want to just talk about what affects the money in the market if people have more disposable cash what we've seen happen now is people are more likely to invest in the stock market because of the growth of digital brokerages so a couple things that affect this are digital brokerages and cash that people have so if and when people get more stimulus checks there's a good chance that some of this money is going to go into the market second thing to look at is regulations because when the 401k was created guess what that pushed a ton of money into the market because now it created a system where employers and employees can invest their money into the market and your money gets tied into the market because when you invest in a 401k you're not taking that money out until it's time for you to retire so if we see more regulations that incentivize people to invest in a 401k or to create more investments like that then that could put more money in the market the next thing you have to look at are interest rates because this recession isn't over and there's a very good chance we could see interest rates drop even more now as interest rates come down it makes borrowing money cheaper and now institutions can borrow more money and where will they throw it back into the market so if interest rates come down money supply goes up and if the money supply goes up chances are we're gonna see more money go on the market and the most interesting one of these things are probably buybacks because the way buybacks work if you remember in 2020 there's a lot of negative kind of publicity around stock buybacks is where a company has a ton of cash in their bank account and now what they do with this cash is they use this cash to buy their own stock so a company is deploying cash into the market to buy their own stock and this essentially acts like a big buyer of a company and this pushes stock prices higher well the 2020 after this whole pandemic started there was a really kind of bad pr around buybacks because naturally a lot of companies wasted a lot of money on buybacks and then didn't have any money to take care of themselves when this pandemic happened and so taxpayers had to come in and bail out these companies and so you saw almost no buybacks happen at 2020. well after that lots of companies got very precautious and they started saving a lot of cash because nobody knows what's going to happen in this pandemic and everybody was worried as the company started saving a lot of cash and they also weren't doing any buybacks in 2020 because of all the negative press around buybacks but if we go into 2021 and this pandemic goes away and this kind of risk factor goes away then what we might see is that these companies have a ton of cash that they're not using and this cash could now be used as buybacks because we didn't see that many buybacks happen in 2020 so 2021 could be the year of buybacks if corporations have a lot of cash that they're now ready to deploy into the stock prices which would make stock prices go up even more second let's take a look at valuations because you might have heard people talk about how this stock market that we're seeing is the most overvalued stock market in history all valuations really mean is how much this company is selling for so if you're a company and you made a hundred thousand dollars in profit the question is if you were to sell your company today how much would somebody be willing to pay for that company if you made a hundred thousand dollars maybe somebody's willing to pay a million dollars or maybe they're willing to pay 10 million dollars the question is what is a fair valuation now there's not one single right or wrong answer here because some industries are going to have much higher valuations than others like if you are a restaurant then maybe it's 15 to 18 times earnings that's kind of a general range if you are a tech company then it's gonna be many times more than that i mean we're seeing some tech companies that are selling for a hundred times earnings so if you make a dollar in profit you're gonna sell for a hundred dollars if you make a million dollars in profit you're gonna sell for a hundred million dollars this valuation debate gets really heated because lots of people say it doesn't make sense for a company to be valued at a hundred times earnings especially now because some tech companies are being valued at a thousand times earnings so if you make a million dollars you're not selling for a hundred million dollars you're selling for a billion dollars and so some people say these valuations just don't make any sense well this is where you have to kind of come in and be a judge and decide what's a fair valuation the reason people are saying that this is the most expensive stock market in history is because valuations are higher than we have ever seen before now the one caveat that you really need to understand about that is that right now the reason why valuations are higher than kind of what we saw in february is because right now a lot of companies are not making the money that they were back in january or february or back in 2019 because of economic shutdown that because of slowdowns because of this pandemic so based off of today's profits yeah the valuations are really high because a lot of companies are not making any money what people are doing is they're valuing companies today based off of how much money they think the company is going to make in the future because a lot of people especially investors have their eye on the future where the economy will open back up and this pandemic will be gone and so the valuing companies based off of what it will be post pandemic so if 2021 and 2022 come and the economy opens back up and companies are making a ton of money then these valuations might come down because now companies are making profits assuming stock prices don't go up significantly and then valuations might go back to normal levels but if the pandemic slows down and the economy doesn't recover and now companies have these super high valuations but companies aren't making any money now that's going to create some issues because you have super high valuations for companies that are not making any money and the future is going to look more bleak then and that's where you could see a correction and that's why you have to look at number three what could cause a stock market crash what are the potential triggers for this now just so we're all on the same page typically when we talk about a stock market crash we're talking about a 20 drop off of a stock's highs anything less than 20 and is considered more of a correction and more of 20 and that's considered more of a crash there's two ways that i want to analyze this one from an emotional level because as we all know the stock market is emotional and second from a more fundamental level so looking at the economy looking at jobs looking at the value of our dollar what we saw happen back in march of 2020 was an emotional crash because everybody was scared everybody started panicking and people started panic selling now if lockdowns come back and we see this pandemic get worse we could see more emotional selling but chances are we're not going to see a march type of stock market crash emotionally because well we've already experienced it that kind of like initial shock factor is gone because we've been living through this pandemic and we kind of know what's going on so yeah i mean if things get worse than expected then we're gonna see an emotional sell-off but we're talking about like an emotional crash we saw back in march i don't think it's gonna happen i could be wrong but i just don't think we're going to see it happen because people are more familiar with what's going on in the market and that initial shock factor isn't there the second thing we want to look at is what ak calls a sentimental indicator because back in march and what we see happen time and time again is anytime all the news headlines are bearish meaning pointing downwards then typically that means it's a good time to buy and if you see all the headlines saying the stock market cannot go down then that's typically a good time to sell because that might mean the stock market will be coming down because everybody thinks the stock market's going to go up so it's kind of like a contrarian view to the media because what we've seen happen is when the media says that the world is ending that's a good time to buy stocks and when the media says the stock market cannot be stopped that's usually a good time to sell stocks at the top when all the headlines said that the economy is over and the stock market's done for that's when we had all the cash on the sidelines and the stock prices were down so that was a good bullish sign meaning the stock market would go up because now there's a lot of cash on the sidelines and there's a lot of potential in the stock market now what we're looking for is if all the media says that the stock market is going up meaning bullish stuff then that means that all the extra cash is deployed in the market and now there's no excess cash waiting to be put in the market because if there's no more cash going in the market then that kind of limits the upside in the stock market at the time we're recording this video we're not there yet we're seeing kind of a blend of good and bad headlines which means there's probably more cash sitting on the sidelines that still has not been deployed what you want to pay attention to is once everybody starts talking about how the stock market cannot be stopped and the stock market's going to go up forever that's when typically what that means is there's a lot of cash that's now in the market and there's not a lot of extra cash outside of the market and you may want to kind of use that as a signal that the stock market might be hitting highs and could be getting ready for a correction if we look at this from a fundamental level now we're talking about how strong is the economy and how strong is the underlying company because at the end of the day when you buy stocks you're not just investing in stocks you're investing in a company you're getting ownership in an actual company and so if the underlying company that you're investing in isn't making any money then that eventually is going to cause fundamental issues and that would cause stock prices to come down so this is where we have to look at the strength of the economy because we still have a lot of americans out of a job we still have a lot of businesses that are out of business and we still have a lot of room to grow in the economy so if the economy does not recover the way that a lot of people think it's going to recover after this pandemic that's going to cause fundamental issues kind of like what we talked about in the valuation section and that could cause stock prices to come down because if people don't have jobs then they don't have money to spend if they don't have money to spend they don't have money to shop on amazon and lululemon and an apple and if amazon lululemon and apple are not making money then we could see the profits go down if the profits go down eventually that's going to hurt the fundamental part of the stock market and that could cause stock prices to come down the thing here is people are very hopeful because now we have this vaccine coming and we have this pandemic fatigue where people just want to go out and live their lives and spend money and we have this new stimulus plan the risk of course is nobody has a crystal ball and we don't know what things are actually going to be like once this pandemic actually goes away and so if things are worse than what people expect then that could cause a correction maybe even a crash in the stock market now as we're talking about fundamentals you also need to understand how the value of our dollar plays a part in the stock market because 2020 was the year of money printing where the government printed more money than ever a lot of this money went into the stock market but what happens when you print all this money is the value of our dollars go down now as the value of our dollars go down the price of things go up this is what inflation is and so you have to kind of wonder how this inflation and how this money printing and how the devaluation of our dollar is going to affect the stock market in the long term this is the reason why some people like ron paul are calling this the biggest financial bubble in history because we have never seen money printing happen like this before we're not going to see the real inflation and effects of all this money printing until the economy recovers because right now we're actually in a deflationary economy rather than an inflationary economy now i know this is where things get a little bit confusing but just stick with me so a deflationary economy is what happens when you see an economy slow down because as an economy slows down people lose their jobs if people lose their jobs then they don't have an income if you don't have an income you don't qualify for more loans or more credit if you don't qualify for more loans you are less credit worthy which means now there's less money being used in the market because we live in a credit-based economy people don't spend money based off of how much money they have in their bank account they spend money based off of how much credit and how many loans they can get and so if people cannot qualify for loans they cannot qualify for credit there's a lot less cash in our economic system so there's less cash in the economic system and we print more money we're actually just trying to fight off deflation because there's less cash in the system we have the same amount of cash we just don't have as much credit in the economic system nobody cares if you're spending crash or credit because it's the same way if you go to the store and you spend 100 the store owner doesn't care if this is your cash or if this is a loan you got from somewhere else right so cash and credit work the same in the economic system and so right now when you're in a slowing economy you're in a deflationary system because there's less credit available which means there's less cash floating around so as more money is printed this is fighting off deflation rather than creating more inflation because we're trying to make up for this lower credit supply so the issue that everyone's worried about when they talk about all this money printing is what happens when the economy recovers and then the credit system recovers and now there's more money in the system because we had all this money printing and now we have all this extra credit and so now we see the effects of inflation so i don't know what's going to happen but what i do know is the united states is the world's superpower and as the world superpower it's really hard to destroy the dollar yeah we can see the value of the dollar go down but there's a lot of people out there saying that the dollar is going to collapse and that it's not going to exist anymore but for that to happen it's going to take a very extreme case so i don't think we're there yet so there's a lot of upside in the stock market especially as we come out of this pandemic and the economy starts to open up the question is what is our economy going to look like when the economy fully opens back up are people going to have jobs or are they not are people going to be able to pay their mortgages or are they not there's a lot of uncertainty that we don't know the answer to and i cannot predict because i don't have a crystal ball but these are things you want to pay attention to but before i let you go there's one more thing that i want you to be aware of when it comes to stock market crashes because one indicator that has almost always been there in every stock market crash is looking for euphoria euphoria is when people get excited and they think that the stock market cannot come down and so what they do they go and buy stocks without knowing what they're doing and so this is when you have uber drivers telling you stock tips like oh my god you got to go buy this stock because i'm making so much money and it will never come down when you start to get into that system where everybody's just throwing their money in the market and they're leveraging up their investments because they think that the stock market can never come down that's when you hit the euphoria phase and that's when you really want to start to get cautious because nothing can go up straight up forever and so if you start to see that euphoria happen that's when you want to take a step back but in general the stock market has a lot of upside and so we just got to be aware of what the potential triggers are what to look out for and what's going to happen in our economy when the economy opens back up the last 12 months have been a real roller coaster in the stock market because some people made a killing with the stock market crash and boom and other people lost almost half of their life savings and half of their retirement fund when the stock market crashed because they started panicking and selling their 401ks and other investments back in february of 2020 the stock market was hitting new record highs and then come late february and early march the stock market crashed faster than we've ever seen happen before and then after april and may we saw the stock market rally faster than we've ever seen happen before by december of 2020 the stock market had hit new all-time highs and some people had made a ton of money and other people were kicking themselves because they sold their stocks and major losses now naturally people are worried about what they should do with their stocks should you be buying more stocks should you be selling your stocks should you be holding your stocks or should you be hitting that thumbs up button below on february 7th 2020 about three weeks before the stock market crashed i released this video where i talked about why i was selling some of my stocks because i had some concerns about the economy i would love to stand here and tell you that i made that decision to sell because i had some really sophisticated and very formal and very complicated algorithms that told me that the stock market was going to crash and so i sold right before that but that really wasn't the case i honestly just got really lucky i had some money in the market for a long time and after the run-ups that we saw in 2018 and 19 and early 20 i decided to pull some money off the table so i decided to sell i had no idea that a pandemic was going to come out of nowhere and decimate our stock market and destroy our economy if i had known that i would have shorted the stock market in march of 2020 when the stock market was in free fall i was making videos about why this is a great time to buy stocks because market crashes are some of the best times in history to buy stocks because you can buy stocks at a discounted price just like before i would love to stand here and tell you that i knew the stock market was going to rally faster than ever and that i knew the stock market was going to turn around almost overnight but i didn't i mean i'd be lying if i didn't tell you that i was very surprised to see how fast the stock market actually recovered we saw so many things happen in 2020 that we have never seen happen before like we have never seen the fed so involved in helping prop up markets the fed was pumping trillions of dollars into markets we saw some of the biggest stimulus plans in history and we have seen unemployment programs like we never saw before these were things that nobody could predict and they helped the stock market boom faster than ever now here we are on the flip side of things with the stock market breaking new record highs and you might be wondering what's next i'm a long-term investor i like to look at values i want to find a company that's undervalued buy it and own it for a long time i'm just not a big fan of trading it's not my style i tried day trading back when i was in college and i made some money but i lost even more money i'm gonna go over some of the things that i did and some other things that i'm doing but i need to remind you that my strategy is not your strategy you need to have a plan for yourself because not everyone's financial goals are the same and if your goals are different than mine we're gonna have different strategies on how we use our money plus i'm just a random guy in youtube so you need to make sure you always do your own due diligence and never blindly listen to a random guy on youtube when we saw the stock market crash happened back in march i was investing pretty aggressively i didn't expect to see the stock market turn around in six months but i was investing because i thought that this was a great opportunity for me to come in and buy companies at a great discounted price when i saw a big chunk of my investments grow by 50 or more in less than six months i was pretty surprised and so i used that as an opportunity to take some money off the table but just breathe didn't you just say that you don't like trading yeah i get it when i invest my money i don't plan on selling it for years but this was just such a strange situation i mean it is weird to see such a fast growth in your money when you still have so many fundamental issues in the economy we still have a very high unemployment rate this pandemic still exists we have lots of people not paying their mortgages we have lots of people not paying the rent yet the stock market just keeps shooting up so that kind of had me a little concerned as to why the stock market was going up so fast so i wanted to use it as an opportunity to take some money off the table because that just seemed like the smart thing to do nobody can predict the top or the bottom of a market and i am kind of of the belief that green is green if you made a profit and you sell your investment for a profit that's okay you shouldn't kick yourself for not making a bigger profit to be fair i am very bullish on the economy i think the economy is going to soar in 2021 because this pandemic will hopefully go away and we will see more jobs come back and more people will have money and more people will be able to pay the mortgages and i think we will see a strong recovery but there's still a pretty good chance that we'll see a lot of volatility in the stock market because there's a lot of uncertainty ahead i still have a good chunk of money in the stock market that i plan on holding but i took some money off of the table just because i mean it was almost crazy how fast the stock market shot back up this is why like i hinted that in the beginning of this video you need to have a strategy for yourself are you a trader are you just trying to add some more income to your life or are you investing for long-term wealth you want to start by looking at your goals and let your goals decide what your strategy is and then your strategy should determine what you do with your money not just what's happening in the world because guess what things are always going to be crazy in the economy if you're just trying to make money in the short term and you saw a huge gain then this might not be a bad time for you to take some money off the table and if you're investing for long-term wealth and you made a huge gain maybe you can take some money off the table but let the rest of your money ride that way if things go down then you have cash that you can use to jump in even more investing has risks you are never guaranteed to make money when you invest which is why you have to just make calculated decisions on what you're doing with your money the stock market could keep going up it could crash or it could go sideways there are real concerns about the long-term health of our economy i don't like really talking about politics but cnn has been a big supporter of joe biden and even cnn wrote an article about how some of his policies could create a potential stock market bubble with things like excessive economic stimulus which could lead to higher inflation if the economy continues to struggle in 2021 and people don't have jobs and people don't have the means to pay their mortgages that people cannot qualify for credit we could see the economy continue to struggle for a long time and that would cause the stock market to come back down but if this pandemic goes away quickly and we see companies make more money and they invest in themselves and they hire more employees and more people have jobs and people are spending we could see the economy start booming which would help the stock market go up even more at the core fundamental level if you are investing in the stock market for the long term the question you need to ask yourself is do you believe in the american economy if you believe that the american economy will continue to grow and prosper then you should not be really scared about investing your money for the long term because even if we see a dip or a crash in the stock market you will be able to ride it out booms and bus are part of the stock market and every asset class has it so if you plan on investing your money for the long term and you believe in the economy then you shouldn't have nothing to worry about if you don't believe in the american economy and you think the dollar is about to collapse and you think our economy is going to crumble then you shouldn't be buying stocks and you should just be selling your profits because you don't believe in the future of the economy our economy is made up of companies which sell products to people if people make more money they'll be buying more products which help companies make more money which helps the stock market go up if people don't have money which is what we saw happen when the lockdowns hit the united states then people don't have the means to spend which means companies don't make any money which causes the stock market to go down now obviously this can be manipulated a little bit because the government can print more money and give it to people so people have money to spend even though they're not earning money but in general that's how it works so when you're investing in a stock in the stock market you're not just investing in a ticker symbol you're investing in a company because now when you buy a stock you're buying actual ownership in a company if you go out and you buy one share of the mcdonald's company you become one of the shareholders and owners of the mcdonald's corporation if mcdonald's makes more money people are going to value the stock more and the stock price will go up and you make more money if mcdonald's stops making money then people will value the stock less and your stock will go down the economy and the stock market are not the same thing but they are similar and the stock market ultimately depends on the health of the economy right now the economy is still struggling but the stock market is booming because people believe that the economy will start booming in the future if that does not happen we could see the stock market come down however if you believe in the long-term health of the economy then over the long term the stock market should continue to go up too there's a lot of different ways that you can invest in stocks you can invest in individual companies like mcdonald's you can invest in funds they give you exposure to the general stock market or you can invest for passive income this is why again it is so important for you to know your financial goals that way you can create an investing strategy based off of that by the way if you do want to learn more about how to actually invest in stocks and find a good brokerage our team has written articles on this on our website the minoritymindset.com and i'll also link it for you in the description below if you are looking to invest money then you should be asking yourself what's going to be in more demand tomorrow than yesterday some of this is pretty obvious like because of the pandemic we have seen technology and the use of technology grow faster than ever sometimes it's not so obvious like one thing that you may want to consider looking at is we have a new president coming into the office and joe biden has different investment goals than donald trump did donald trump made a ton of investments into the military which is why you saw companies like lockheed martin boom during his presidency lockheed martin is in the business of creating military equipment so when donald trump and the trump administration funneled a ton of money into the military some of that money went into corporations like lockheed martin which created equipment for the military so one of the things that you can do is look at what the biden administration wants to change and improve upon because that could be a place where you invest your money some examples are pharma this pandemic doesn't look like it's going to go away overnight and so you can bet there's going to be a lot of investments in the pharma industry to help take care of people or at least hopefully take care of people joe biden has also said that he's a big supporter of alternative energies and green energies like solar energy so there's a chance that these solar companies and green companies could see a lot more investment cannabis his administration seems to be a little bit more open to cannabis deregulation so you could see more money flow into this industry and infrastructure joe biden says that he wants to help fix the infrastructure in the united states even though i feel like every single president in the history of time has said that but something for you to think about what you don't want to do is just start blindly buying companies because you think oh joe biden is going to invest in solar so let me go invest in every solar company i can get my hands on you need to be researching companies understand what they do and see if this is something you believe in if it's not something you believe in that you don't think is going to have value in the future don't invest in it just because you think a president likes it investing is a long-term game it's not a way to get rich quick overnight and so you need to make sure you have the right mindset when it comes to investing especially in the stock market because the stock market can be very emotional you know i don't consider myself the smartest person or the most talented person but one quality that i think i do have is the ability for me to find the opportunity when i see a problem i mean that's the whole reason why minority mindset started in the first place i was working on

Channel: Minority Mindset

Views: 201,663

Keywords: minoritymindset, minority mindset, minority123, jaspreet singh, rethink rich, financial education, financial literacy, finances, stock market, stocks 101, how to invest, money management, investing 101, building wealth, how to manage money, financial advice, investing, buying stocks, housing market, inflation, wealth, passive income, personal finance, real estate, real estate 101, real estate investing

Id: EtJU1t-op3I

Length: 96min 6sec (5766 seconds)

Published: Sun Feb 13 2022