NEXT MARKET CRASH: 8 Ways to Prepare for Economic Collapse

so listen if you turn on a news if you're following any experts on Twitter if you're reading any news sites that you're going through everyone's trying to predict the next big market crash economic collapse financial crisis and everybody's worried because fear sells eyeballs everybody studying this stuff so today I have two outcomes with this video for you one is for your day-to-day conversations with people that you're doing business with to know to have an educated conversation with them about the subject the second outcome of this video is for you don't know how to pivot with your own finances and prepare yourself both offensively and defensively on what to do with the next market crash so four things are gonna be covered one is the cause of a market crash two definitions three history and four how to prepare for the next market crash by the way before I get into explaining everything one of the facts I'm gonna share with you in this video that want you to be thinking about and answer it and see if you can get the answer since 1926 till today 1926 till today that's roughly 90 something years of the market 92 years of the market how many years do you think markets been into positive out of those 90 something years ninety two years how many years has the market been in the positive like I want you to say 22% 43% 68% what do you think it is I'm gonna answer down a few minutes before I get into sobbing said that let's start off with definitions first number one everybody drops this word about crash correction bear market what does it really mean a market correction is when a market tanks by 10 percent a bear market is 20 percent and a crash is when the market tanks 35 to 60 percent that lasts three to six months when that happens that's a crash so now a lot of these words you hear about correction bear market crashed it's also you hear a lot of people say recession and some channels are even talking about depression we need to always know the difference between recession and depression recession is when a market economic decline six straight months or higher if it lasts for six months or higher then we're in recession a depression is when the market is in recession for two plus years and the GDP of the country drops by 10% when that happens we're experiencing a depression so if anybody drops that word you got to be able to say wait a minute depression is you know we're talking about two years and we're talking ten percent GDP that's very unlikely I'll give you the history of what that really means when it comes down to the numbers but the part that you really have to worry about and this is the part that no expert can explain to you on what could happen is the one word you hear it's called Black Swan people will say oh we may have a Black Swan a Black Swan may happen a Black Swan way this words being dropped so what is a Black Swan a Black Swan is something difficult to predict would massive massive economic consequences so we can't predict a Black Swan a 9/11 could be a Black Swan a thing that even if you watch the movie big short and they could be able to predict it based on all the neg and loans that people weren't making their payments on their mortgage payment that's not a Black Swan because that one the experts could predict it's something we cannot predict that's something we always have to worry about that's not what this video is about this video is about things that you and I can't predict and things that we can watch and see trends SEO can kind of see what's going on here I have to worry about these three things I can't do anything about these four different things so now that's definitions so now that we've covered some of the terminology whether what's a correction bear market you know a crash or recession the depression of Black Swan let's talk a little bit about history and facts you can kind of get an idea about some of the trends that are taking place earlier I asked you questions since 1926 till today roughly 92 years what percentage of the time the markets been on the up what percentage of the time each given year has been on the what was your answer I'm so curious by the way I would like you to post your answer below comment before I even say it and after I give you the answer I want you to tell me if you're shell-shocked by the answer ready here's what the answer is 74% at a time the markets been up 74 percent of the time the markets been up what does this mean to you listen every one of these experts that write books and once they write a book and they say 15 years from now the markets gonna collapse and it's going to be terrible it's gonna be Armageddon that book sells for fifteen years until people really realize that guy didn't know what he was talking about and into our people that say the markets gonna blow up the next seven years you should go in guy named Harry dent wrote a book everybody was like oh my gosh we're gonna be billionaires everybody's gonna be a billionaire listen if everyone's gonna be a billionaire that's an absolute hype they shouldn't be paying attention to right if everyone's gonna become millionaires or make a lot of money it just doesn't work out that way right so here 74 percent which means what no matter how bad things are in the next 20 years 15 years are gonna be positive give or take if we do what we've done the last 92 years that's something for you to be paying attention to so let's go a little bit deeper let's look at a little bit of history every time we've had a recession how long has it taken us to recover how big has the drop in and how long did it last and last but not least how much did the GDP of America actually drop up let's look at this May of 1946 we had a recession it lasted 36 months the SMP dropped 30% during that 36 months after the drop off 15 months it took us to recover 15 months and during that period the GDP dropped roughly 1.7 percent remember it has to drop by more than ten percent to be a depression remember that and that doesn't count as a recession that's why it's only depression August 1956 15-month raishin mark you drop 22 recovered 11 months GDP look at that three point seven percent that's bigger GDP even though was smaller December 61 duration only six months minus 28 recovery 14 months one point six percent nineteen sixty-six duration a to drop 20 to recover seven months point six percent roughly the same the next year let's come a little bit to now let's go 1990 2000 July of 1990 three months minus 20% five months recovery one point four percent March of two thousand thirty one months minus forty nine percent fifty five months to recover 0.3% we would had a GDP didn't change in an October of 2007 the most recent one we experienced seventeen months minus 57 percent 65 months to recover and even that was five point one percent GDP which by the way if you think about it five point one is a very big number in today's economy we almost got to a depression just ten years ago but we have to get above 10% you kind of see what's going on here here's the point though when you look at these numbers everybody looks and says well but the market dropped and what about this and what about that here's one data to be thinking about I don't want you to make an emotional decision this is not an emotional oh my gosh better worry from 1997 till today 1997 till today say roughly 4,000 days each years 365 days times 11 years from 1997 till today if you would have taken your money out and would have missed on the 50 best days from 1997 till today your portfolio would have been 60 percent less if you would have missed out on the best 50 days what does this mean this is not necessarily a message to those about 55 years old because it has to do with your age and your risk tolerance this has to do with the person that's watching this that's 29 31 years old you are not necessarily going to be that affected by a market crash if it were to happen on a 20-year period because if you miss those best days you are in a way going to be affected by your networks gonna be affected by so if you try too much to time it it'll hit you so in reality is I'm sharing this with you to kind of get a better idea on how long it takes what could happen what are some of the trends in worst case scenario how bad has it been can I handle how bad it's been if I can I'm gonna be okay based on my age we'll talk a little bit about that in a minute here let's talk about now cause of crash what causes the market to crash number one take money what is fake money we just keep having fake money fake wealth right the next one fake success people are rich but you know they're broke too big difference you know people look like they have a lot of money let me tell you like I remember we had a guy he had 18 properties and yet equity and all these properties and he would go around telling everybody is worth fifteen million dollars and in a market tank he lost every penny of equity short sale everything yet to get rid of he was trying to sell this property that property this property but at the peak when everything was looking good he was on board fifteen million dollars I'm worth 10 million dollars he was it was fake money and a moment we had a crash he lost it all that went away you have to be very careful with knowing the difference between fake money next one market manipulation happens a lot some are done by the public some is done by you know private by the people so some you and I do it as investors Marc Marc Amanda pleasure you try to do it and the other one is that the government's doing and we talk about that here in a minute for geopolitical terror 9/11 happens we could experience some like that when it happens again that's a Black Swan type of an event it is geopolitical but it is Black Swan because it's unpredictable and it's massive consequences it could happen at any time you can't control that number five conflict foreign what am I talking conflict with foreign trade tariffs you're hearing right now with Trump in China and you know Mexico in Canada and can we get an agreement all we're gonna get it before midterm election because it's taking a hit what are we gonna do here some of those things takes a hit into the market maybe not a crash but it can be a hit number six war wars hurt markets number seven assassinations you have to know that's another thing that sometimes the market takes a hit when assassination sample matter if everyone John F Kennedy I think it's November 22nd 1963 I think is November 22nd 1963 when John F Kennedy was assassinated that day they shut down the market the next day market took a hit 2.8 percent Reagan attempt on assassination the market tanked 1.2 percent a Nixon resignation the market tanked 1.3 percent Cuban you know Missile Crisis market tanked 2.7 percent those are some of the things that you have to know that can cause a crash and then the next one is bubbles when it comes out to crash you got also know about different kind of bubbles now what causes a bubble when bubbles happen we are becoming way too optimistic a lack of irrational common sense we lose common sense it's almost you know how they say when a person is in love their brain when they study the brain it's as if they're on drugs when you start making money consecutively you become irrational and you lose common sense because you really start believing you know what you're doing and you don't but you really start believing oh my gosh everything's gonna be fine for me lack of paranoia unreasonable confidence bubbles controlled by the government which I'll talk about here in a minute some of the bubbles that we've experienced real estate 2006 we experienced it Bitcoin a little bit earlier this year everybody thought they were going to become millionaires and billionaires with Bitcoin we realize after all this a theory and Bitcoin bit cash you know everything Ripple all these things that were taking place we realized a technology solid we may be going to corrupt old currency I don't know if bitcoins worth $50,000 I don't know if it's worth $100,000 some people say it's a still it is I may be wrong but a lot of would have was happening with bitcoins with signs of a bubble young people were excited everybody changed their profiles on their Twitter account cryptocurrency expert cryptocurrency expert you're 17 years old yeah but I'm a cryptocurrency expert all of these things are signs of what a bubble happens right I pure bubble back in the 90s everybody was going public raising money everybody was tech boom credit bubble oh my gosh today school on 1.4 trillion dollars if we start defaulting on that it's going to be very interesting now you got the debt bubble which we experience a little bit in oh wait you got some of these investors in Silicon Valley these new people that are coming into some money and they're just throwing money at startups and these real P guys that have been around for a while they're kind of upset with these other guys that it's a very funny thing going on right now with peas and and investors going and throwing money at new startups but that's all a bubble right let me spend a little bit of time talking about bubbles controlled by the government it's very important for you to know this part and I'm gonna try to say it in the simplest way possible that makes sense to you because sometimes you hear words and here's how we watch the news or we read the article here's how we read let me take some if you've ever done this before you'll read an article one of the challenges that we're facing today is quantitative easing and that that depth that Hammond boom you're lost you change the article and the reason why I change the article is because you don't know what quantitative easing means or you watch somebody use a big water you don't know what it means when it comes down to money you actually have to pause and search and find out what that word means to educate yourself we have to be very careful with bubbles controlled by the government for example the federal rates you know the race that we have currently right now they keep raising the rates and the market keeps going down you know sometimes they lower the rates and they call it quantitative easing now what is quantity quantitate easing we did back in 2008 when the market collapsed and then all of a sudden banks became so tight they were not giving money to small business owners and the moment the small business owners no longer getting money to go grow their businesses economy takes a hit because job 65% of jobs in America are created by small business owners we need these small business owners to be getting loans to start creating jobs right so the government's at the top saying oh my gosh what do we do let's lower the rate and they keep lowering the rates and they keep lowering the rate and then all of a sudden the banker who doesn't care about the feds lowering the rates he doesn't care about the economy he cares about keeping his job and the only one person that can fire him isn't the customer isn't a federal government official it's his boss that works at the bank so the more money he lends and the businesses go out of business and they lose the money he's fired so him the banker sat down and he said well I know the government gave us some money and I know the rate is very low right now it's zero percent to a quarter of a percent why don't we go buy some Treasury bonds and we get two percent on that and if we're paying you know zero to a quarter but we're getting two percent we're making minimum one point seven five or maybe two I'm at least reporting positive numbers who cares forget about giving any money to small business owners and we experienced this for three four five years very interesting times so the government comes out and they say quantitative easing here's what we're doing they are putting money slowly but surely into banks and they buy banks toxic assets is what they buy toxic securities these are companies that are about to go on default and they're gonna go out of business they buy those assets from the bank the bank starts feeling a little bit better because those toxic assets are gone gradually money is being put into these banks and the with the hopes of the bank taking this money and given to small business owners and what they end up doing is they notice that these banks are putting their money in Treasuries the government Fed goes and buys all the Treasuries and a more day by the rates go from 2% to one and a half percent to one percent to half percent whatever the number may be where the banker is in there saying why not gonna buy Treasuries they force the banker to hopefully land to the small business owner for five to % so it gets the market going it's purely market manipulation with fake money the value of dollar goes down it devalues the dollar again I don't want to be too technical but hopefully I explained it to in a way that makes them somebody explains quantitative easing just know that it's the government buying toxic assets with the hopes of manipulating the market and the banks to lend money to small business owners so they can prosper and create jobs that's in essence what it means and a value to market value dollar goes down but that's still a bubble do you have to be paying attention to so these are some of the causes of why we may have a market crash on last but not least how should you be prepared for it number one is anticipation you have to anticipate one of the numbers that you have to keep in mind for nine straight years a markets been in positive let me say this one more time for nine straight years the markets been in positive and if you look at the question I asked since 1926 what is it 74 percent right for 92 years 74 percent of the time the markets done better that last nine years right a hundred percent but that's not really our free-throw shooting percentage or free-throw shooting percentages what 74 percent so we need to have three downturns to go back to 74 percent because that'll be nine on twelve that's exactly 75 percent so you have to know those things so just keep in mind and trust what's happening with the history you can't be too naive about it right so market is going to crash it's not a big deal we may have a correction or a bear or a crash but it's gonna be taking place number two your risk tolerance you have to be very true to your risk tolerance if you're 55 you can be going you know oh my gosh I'm gonna go all market cash all this other stuff I don't recommend that if you're 28 and you got a couple hundred thousand dollars you also can't press the panic button too early right now because you're young you can afford a 20 year run rate you can't miss those best 50 days you just have to make sure you make a few pivots and adjustments here and there number three cash I'm a fan of cash I'm explain to why I'm a fan of cash I was on a podcast recently with with an entrepreneur named Petros he owns a gym gym 700 different franchises of gyms that he owns absolute start of a guy and he's one of these guys that actually knows how business works and he's good at what he's doing very authentic very open about his mistakes flaws all these he asked me a question he says what do you think about the market crash I said I can't wait for it he says what do you mean I said I honestly can't wait for it why do you say you can't wait for it that's it's gonna hurt a lot of people what do mean can't wait for the market crash that's a first of all it's inevitable and every time market crash happens wealth is made by those who are prepared for it what do you mean go a little deeper listen Mickey Mantle's baseball card PSA 10 1952 was just bought for 12 million dollars I think that guy that bought it for 12 million dollars if a major market crash happens hissing need for cash not a lot of people have cash and say I'm sitting on 60 million dollars of cash and I go up to my cell give you 3 million dollars I will take you for it to remain happy for 12 million dollars I'm giving you cash right now you don't have to worry about it okay do 4.2 million okay 4 million I'll give it you 4 million 12 million I wait five years ten years Markie comes back up I sell that twelve million dollar Mickey Mantle call for twenty four million dollars I spent four million dollars to twenty four million dollars that 6x my money because I had cash right when the market crashes homes are on sale like right now I'm in Plano I'm in Dallas everybody thinks oh my gosh housing in Texas is so cheap everybody wants to say that 20 years ago it was today it's the same price as LA I'm telling you right now hole pricing in Texas there's the same as in LA if you're living in Plano Highland Park those types of communities you're looking they just sold the house in Dallas for like 30 40 50 million dollars Dallas Texas the most expensive house the biggest house in America was just on sell in Dallas on our seventy-five million dollars what are these things it's little overpriced right so you got to be sitting on cash because some of the guys that spent twelve million dollars on the house and he put us all his money into it the market crashes he done said have the cash he has to sell that house for four point two million three point eight million dollars and the person who can capitalize on that opportunity is the one that has cashed by the way some people say Pat that's cold that's cruel it has not fair isn't that why capitalism so ugly no it's greed for the person that wasn't prepared for market crash that person deserves everything they get it's greed the fact that the person thought the market is always gonna go up nine years straight we've been in the positive how are you not prepared for you became too irrational too confident too optimistic lost Peron Oya your stomach got too big so you start kind of paying attention to everything the reason why I'm making this video is for you to be aware that when this happens you need cash and my recommendation is 15 to 25 percent cash not a lot of people agree with that number I agree with that number it's work for me here's what I mean by it you got a million dollars right now in mutual funds stocks bonds real estate just make sure you got somewhere between 150 to a quarter million dollars in cash today that you prepared for it Pat that's ludicrous I know it is ludicrous I'm just sharing with you my opinion I may absolutely be wrong I'm just sharing with you what I believe is a good positioning to be at a time where the markets been positive for nine straight years nine straight years the markets been positive while the market since 1926 74 percent of the time is in a positive you got to pay attention to those numbers let me give you another thing here for you to be thinking about this is numbers here okay maybe only we can make it bigger for them to see it today today the Dow Jones is at twenty five thousand seven twenty that's what it closed that today twenty five thousand seven twenty the SMP 500 is at two thousand seven 23 2007 23 can you tell me the last time Dow Jones was at six thousand 503 and the last time the SMP 500 was at six seventy six again six seven six that's four times more than four times less than what it is today and the Dow Jones nearly four times what it is today can you tell me one the last time was we were at 65 over 3 or 6 76 76 or anything it was 1949 1973 1988 2001 try 2009 just 9 years ago let me say this one more time just 9 years ago you know who loves this boost people who had cash during this time because those cash at that time you buying Ford stock at 75 cents you buying Citigroup at 80 cents you buying companies value stocks that are gonna come back up for nothing because those people had cash in place so you can buy them I'm not telling you this 100 percent every body but a small group of people were ready for this time they prepared for it number four avoid major real-estate investments right now I'm avoiding major real estate investments ran up for a couple different reasons number one the current tax setup that Trump has doesn't benefit people that own big real estate properties investment properties that you live in especially you live in a house I'm not talking necessarily investment properties that you're buying as long as you keep your cash I'm not talking investment you buying a big house I wouldn't do it right now I just wouldn't be doing a write in a matter of fact I'd be renting right now if I was you I wouldn't be buying a house right now if I was you I just wouldn't be but that's my opinion on what I'm saying I could absolutely be wrong that's one of the things that be talking about thinking about if I was your number five caching on some of your profits what do I mean by that you got a house that's sitting there six hundred thousand dollars you have two hundred eighty thousand dollars in equity in it maybe cash in a little bit maybe cash on a little bit of profits is what I would do maybe got ten properties sell a couple of them maybe you got some stocks that are doing very good and you made 17% profits on some of them you have some dividends cash in some of the difference and dividends and take some out take some out and set it aside put in your cash portfolio that you have number six precious metals maybe three to five percent I recommend today maybe three to five percent some gold seven to me it may be the best one out of all of these is protect your career become an expert today listen let me explain it to you when the market crashes you know who is exploited amateurs you know when the market crashes who becomes the hero experts you say this one more time when the market crashes amateurs get exploited experts become heroes for some of you that are watching saying how cruel how cruel for you to you know see amateurs being exploited amateurs have the option to stop watching Netflix and watch videos like this and say I disagree with the guy and go do research and become smarter and read business books instead of watching news feed and finding out who's got the new big BOTS who's got the best big boobs or who's dating cooler who's dating what amateurs have the same amount of 24 hours in a day 168 hours in a week but they're entertaining themselves rather than being prepared my challenge to you watching this go become an expert right now before the next market crash become a beast at whatever you're doing right now become so good that when a market crashes everyone needs you because you're irreplaceable those guys get elevated elevated in market crashes elevated in economic collapses elevated when financial crisis comes around one of the best tips I can give you is protect your career last but not least call a timeout study all your portfolios look all your investments look at everything cash artifacts collections stocks bonds mutual funds real estate equity positions ownership look at everything and study it more often than you do before look at it weekly rather than used to look at it every quarterly look at it on a weekly basis go look at your mutual fund and see words the allocation with the bottom with the stocks that you own is it balanced is it to growth is a to small cap what is it looking like right now where's your 401k look can I actually pay attention to it so now those are the four things I wanted to share with you in today's video definitions okay little bit of history cause of a market crash preparation on how to prepare for it and I got two videos I want you to watch one video is 20 rules of money it gets deeper into it if you watch this you got to watch 20 rules of money and the other video after you watch it is how to double your money watch this first because this leads into this not the other way around so watch this first then go watch the video how to double your money if you got any questions for me send me a tweet at Patrick mid David with any questions you may have from today's video and if you haven't subscribed yet click on the sub button right here take everybody love you bye bye

Channel: Valuetainment

Views: 1,295,929

Rating: 4.8964972 out of 5

Keywords: Entrepreneur, Entrepreneurs, Entrepreneurship, Entrepreneur Motivation, Entrepreneur Advice, Startup Entrepreneurs, valuetainment, patrick bet david, market crash, great depression, recession meaning, market prediction, market crash 2019, market crash coming, black swan

Id: PUB3pFA_RBA

Length: 26min 10sec (1570 seconds)

Published: Tue Nov 06 2018