A WARNING for ALL Investors

What's up guys, it's Graham here. So, we'll be able to look back at this video in the future and see how all of this pans out. But I'm recording this today as we've just had our single best 50-day rally ever in history, and that also means that we're officially out of the bear market. Trust me, that's saying a lot because not even three months ago, we've had some of our single worst days ever in history, where the stock market dropped so significantly that it triggered what's known as a stock market circuit breaker, where the stock market just stops trading for fifteen minutes to give people time to cool off and then reevaluate their strategies.

Combine that with record numbers of unemployment, a stimulus package where trillions of dollars just pumped into the economy, and much of the country still in lockdown; saying that we've just had our single best 50-day rally ever in history is a big deal. Especially when you look at stock prices today and just how much they've increased over the last week. Like, even as of our last Friday, the SP500 is up 2.6 percent, meaning that we're nearly in the green so far for 2020 in the middle of everything going on and after one of the most severe stock market drops we've ever had.

Now, I want to make it clear that I'm not making this video from the perspective of someone who continually thinks the stock market is about to fall, because despite what some of my titles might lead you to believe, the actual narrative of the contents itself does not change year after year, and it's the exact same advice. That's why this is something we really have to talk about because I promise you this will end up impacting you as an investor. I really want to clarify this, because I believe this has the potential to make you a lot of money in the future.

Of course, as usual, just make sure to destroy the like button for the YouTube algorithm, because it helps me out tremendously. Plus, I got that drum cover for everyone I promised last week who smashed the like button. So, as usual, if you guys hit the like button, I will deliver on what I said.

So, with that said, let's begin here. First, here's what we need to talk about: the single best 50-day rally ever in history, with the SP500 returning almost 38% within that time frame. I'll link to the article down below in the description, but it continues to say that if history is any indication, stocks ended up even higher twelve months later 100% of the time. The average six-month return after that was another ten point two percent, while the average one-year return after that was seventeen point three percent.

Even though this seems incredibly encouraging and probably just another reason for you to go and invest all of your money into stocks right now, it's just as equally important to acknowledge that statistics like this can be proven to be true until one day they are not. Just because something has continually happened in the past doesn't mean it will always prove to be the case. That's because you could typically always find some sort of metric to back up whatever you want to believe in.

For example, a few months ago, if you were bullish, you could go and look at this across seven periods since 1990; after the S&P 500 declined by 10% or more in a quarter, the stock market index posted an average return of 7% in the next quarter. But on the other hand, if you were bearish, you could look at this from the exact same news outlet; they warned that it took the stock market one month to fully digest catastrophic news from the last great financial crisis, leading to a subsequent 14% loss in the S&P 500 the following month.

My point is, no matter what you want to believe, you could find information to back it up, either positive or negative. Especially online, it's very easy to get yourself caught up in this echo chamber that just reinforces whatever you want to think, even here on YouTube. But I absolutely love YouTube; you're gonna watch one video from Edie in 90 Day Fiancé, and all of a sudden they recommend hundreds of other videos for you to see. But maybe it's also my fault for clicking on all the videos that they recommend and watching them all the way to the very end and hitting the like button, so maybe I'm just making the problem worse.

Anyway, I'm just getting to two main takeaways: one, statistics like this can always be proven to be true until one day they are not. That includes that the S&P 500 has always been up following a really strong 50-day rally. Is it likely to be the case? Maybe, but it certainly doesn't guarantee it from happening just because it always has.

Number two, be very careful of any sort of confirmation bias with anything you read online. There's always gonna be evidence to support whatever you want to believe in if you look hard enough. Whether or not it's actually true, closing yourself off to other information can really hinder your ability and performance as an investor. Again, that's not to say that the markets won't be up even higher by the end of the year because I think there's a strong likelihood it can be. But this is the reason why, despite everything going on, I've just repeated myself non-stop that the only thing you could do while the market acts completely crazy and irrational is buy consistently and hold. That's it.

I understand, too, logically that some of these things just don't make sense, and these are the comments I get a lot: "But Grant, why should I invest right now? The market's too high; I should wait.” Again, the market's gonna drop, but I'm gonna make the jump. My answer to that is the market is always going to be at new all-time highs, and there's always going to be a reason to say that this time is different.

Over time, inflation is going to increase these numbers, our population is going to grow, businesses will expand, new markets will be created, and new problems will definitely arise. But over decades, everything is gonna turn out. Take a look when I first started making YouTube videos; by the way, this was all the way back in 2017. I was talking about investing in the S&P 500 when it was almost at 2400, which at the time was an all-time high back then. People were telling me back then that the markets were at an all-time high, and it was a bad time to invest in it; it was gonna drop anytime soon.

And I mean, it did eventually drop, but now it's back up to 3,200. Well, here's the other comment I get a lot: "The market is so disconnected from reality; it's just a big pump; it's gonna dump." Well, the only reality is that the stock market doesn't have to do anything, despite how disconnected it is from everything else. There's just no way to predict what's gonna be happening, just like no one could have guessed we would be here today with trillions of dollars of stimulus just being pumped into the markets.

Because of that, I strongly doubt that anyone can accurately and consistently predict where the markets are gonna be a few years from now. Like they say, a broken clock is always right twice a day, and I say this as someone who's been investing consistently month after month before the collapse, during the collapse, and even now today. Admittedly, I have invested a lot more than usual over the last two months, but even then, I still have enough cash sitting on the sidelines that if any good opportunities were to come up, I have enough to take advantage of them.

Really, overall, I'm not changing a single thing despite how the market reacts. It's unpredictable; it's volatile, and if you're waiting for all the bad news to start subsiding before buying back in, you're probably gonna be out of luck and too late. That's why I've always taken the approach that no one really knows what's going on; no one knows what's going to happen. As long as you just invest consistently month after month, despite everything else going on, you're gonna be that much more profitable as an investor.

I don't necessarily like remaking the same videos over and over again, but sometimes it's a necessary reminder for the people who forget that the simple approach still works. Think of it like having a workout buddy who keeps telling you to push it one more rep. You know they're just gonna say, "One more, one more rep, one more rep." But guess what? You end up doing one more rep. Well, think of this almost like your financial workout to keep investing consistently. Keep investing consistently; don't sell.

Just imagine me whispering in your ear in some sort of style by an old, gay, balding guy: "Smash the like button, but keep holding." This is not to say that the market cannot go down another twenty or thirty percent from here; maybe it can, or maybe it goes up another twenty percent. But really, none of that matters when you're investing long-term.

The price between right now and the time you actually need the money and retire is really just white noise. Even though it's cool to look at, unless you're day trading, it doesn't serve any practical purpose to panic or celebrate at the stock market's performance. You're better off just not checking your accounts and not looking at the prices, and just setting up an automatic investment routine. That way, it's out of sight, out of mind. Plus, instead of being fearful about drops like this, you should look forward to them. In a way, it's like a holiday, Black Friday sale for your money.

But you shouldn't be upset if I lower the price of my YouTube Creator Academy by $200 in the next 48 hours, right? Link down below in the description. But anyway, of course not, because now you're saving money, and investments can very much be the same way.

I'll tell you the only time you should actually be concerned about this is if you're within a few years of retirement. In which case, you would have typically rebalance your portfolio prior to then anyway; that way you wouldn't have so much exposure to volatile stocks and most of your portfolio would have been moved over to something that's stable and safe. But again, outside of retiring or any position where you need the money immediately, any sort of market drop like this is a good opportunity.

And yes, that's really going to test a lot of people. When the market drops, they would continue investing and not sell anything, but it's been shown time and time again that continuing to buy in and hold is gonna pan out the best long-term. That's my warning to even the people who are investing right now, including myself. I am continuing to invest as prices inch higher and higher, and this is the advice that I continually tell myself.

One, don't think that just because prices have gone up that it's too late to buy in. Alright? This sometimes stops me from thinking this way and just wishing I had invested more money sooner. Or it's also easy to look at something and think to yourself, "Oh wait, I missed the boat. It's too late to invest right now. It's gone up too high. I'm gonna wait for another drop." The truth is that moment may never happen, and the prices right now might end up looking very cheap in the future.

Now, I don't believe either that the market has to or will always go up. It's really just as easy to see all the positive news out there and think, "Ooh, I better jump in right now because everything is really good, and prices go up, and I don't want to miss out on this.” And then, of course, as soon as the market drops down from there, like, “Oh wait, no, never mind, let me sell now at a slight loss, and then I'm gonna buy in even lower, and then that time I'm actually gonna time it right."

So here's what I've noticed: the type of person that tries to time the market and buy in at the market low is usually the person who never actually buys in at the market low, because they think to themselves at the time, "Oh wait, no, it's gonna drop even worse." And if it does actually drop even lower than that and they're right, then they think to themselves, "Oh, you know, everything is just doomed anyway. I better invest in crypto." Human psychology is a weird thing for sure.

That's why it's best just to throw all of that out the window and instead just invest consistently. That's it. Do what's proven to work. This applies even if the market just drops as soon as they post this video or even if it continues going up after I post this video. The advice stays the exact same. You will never once ever hear me say, "Guys, this is it! This is the real time! We better all sell right now. Did you just see the article that CNN posted five minutes ago? This is it; this is the big time selling! That's it, I'm selling everything!"

And then, of course, when everything calms back down in like one and a half months, maybe 45 to 47 days precisely, then we could buy back in to make a ton of money. "CNN said it, so it must be true!" No! Instead, I just had the same message over and over again, and I just try to drill it in people's heads that they should always smash the like button.

But no, besides that, invest consistently; buy and hold, that's it. If the market goes up, keep buying consistently. If the market goes down, keep buying consistently. Very simple. And if that doesn't do it, then this will. We're gonna be looking at a chart of the Dow Jones. Here's the last five days, and then we got the last one month, and then the last six months, and finally the last five years.

Do you see all of those ups and downs on there? Almost every single one of those was a newsworthy event. See this one in December of 2018? That was a big drop, and that news was everywhere. But when you zoom out even more since 1980, you go and see this. All of a sudden, that December 2018 drop seems like a blip on the radar, and it didn't even matter at all.

But wait, it gets even better! If you go back a hundred and twenty years, we see that all of those drops, all of those ups and downs and bumpy months made no difference at all. If you invested at pretty much any time in the past, you would be up money. And if we have the ability to pin out fifty years in the future and look back at today, I'm sure we would see a similar result as well.

Imagine all of the people who bought in right over here, and they thought to themselves, "Why buy when the market is up 25 percent already? It's too late to invest." Even though decades later, it's trading significantly higher, and not investing means they would have missed out on everything, even if it means that it dropped right after they bought back in.

So, let me just end all of it by saying this: just because prices are up doesn’t necessarily mean it’s too late to buy back in, and there will always be opportunities out there. But at the same time, you also have to be prepared if a sell-off happens as well. This is all part of the investing process, and just as it went parabolic over the last two months, it could go down too.

Don't think that you're a failure as an investor if you end up losing money in the short term, but it's certainly going to test your endurance and strength to buy in right the market down by continually reinvesting back into it, and then riding it back up to profitability without losing any sleep. It's certainly difficult, but that's why so few people are actually successful with investing, because really as easy as it sounds, it's difficult to follow that consistently.

So, with that said, you guys, thank you so much for watching. I really appreciate it. As always, make sure to destroy the like button, subscribe button, and notification bell. Also, feel free to add me on Instagram; I post here pretty much daily. So, if you want to be a part of it there, feel free to add me there, as on my second channel, The Graham Stephan Show, I post there every single day I'm not posting here. So, if you want to see a brand new video from me every single day, make sure to add yourself to that, as on my podcast, by the way, new episodes every single Sunday morning at 9:00 a.m. Pacific Standard Time.

And lastly, if you guys want two free stocks, use the link down below in the description, and WeBull is going to be giving you two free stocks when you pause it $100 on the platform, with one of those stocks valued potentially up to $1400. So, if you want two free stocks, with one of them valued up to a lot of money, use the link down below in the description. Let me know which two free stocks you get.

Thank you so much for watching, and until next time! But really quick, here's a drum cover as promised. [Music]