The Upcoming Stock Market Collapse | Round 2

What's up? Grandma's guys here. So, as usual, the market makes absolutely no sense and continues proving time and time again that anything can happen. For example, even though the NASDAQ just narrowly avoided its worst January ever in history, when asked about the future expectations of the market, 62 percent of my Instagram respondents felt like prices were going to fall lower. Even though immediately after, 65 agreed that the more people thought the market was going to drop, the less likely it was to actually drop. Which is really just another way of saying we are for real.

We got a lot to talk about today because now we have statistical evidence that proves exactly when the stock market is most likely to see the next rally, why Warren Buffett is now outperforming Kathy Wood, how home prices are growing increasingly out of control while rents rise as high as 35 percent, when we're going to see an upcoming cryptocurrency executive order, right as Kathy Wood predicts 1 million Bitcoin before an ominous crypto winter. And if that wasn't scary enough, a Twitter account is now tracking the whereabouts of Elon Musk's private jet, even though I offered five thousand dollars to take it down.

So, sit back, relax, grab some popcorn, and you can hear all of that and more on today's episode of finding new ways to creatively ask you to hit the like button and subscribe because it helps me out tremendously with the almighty YouTube algorithm.

All right, so the first order of business that we have to talk about is the stock market. Even though a large portion of the market fell to its worst January in decades and we've been warned that a catastrophic stock market crash isn't over, we need to talk about what history says about these types of movements. Because I have to say, the more I looked into it, the more surprised I was to start.

It's easy to see why people are still extremely concerned about the state of the market, with an upcoming interest rate hike expected in less than 45 days, and our economy at the brink of slowing down. Bork and Stanley even warned their clients to hunker down for a few more months while slowed earnings growth and Federal Reserve uncertainty topped the primary market concern. However, what I found really interesting is that the historical data tells an entirely different story.

MarketWatch noted that when the economy is not in a recession, the average S&P 500 correction saw a decline of just 15.4 percent, with very few resulting in a bear market for prices that would fall at least 20 percent. CNBC also analyzed 11 periods since 1990 where the S&P 500 declined more than 10 percent in a quarter, and they found that the index posted an average return of seven percent that following quarter.

Even more surprising, both the S&P 500 and Dow Jones have posted positive results after a 10 percent decline in all periods except after 9/11 and during the dot-com bubble. That was it. And if we want to take it a step further, since 1990, both indexes posted average one-year gains above 18 percent in the annual periods after a quarter decline of 10 percent or more. In the S&P 500, it was also found that stock market pullbacks of 10 percent or more occurred 11 times throughout the last 20 years.

Some of the highest returning days occurred right after some of the worst performing days, meaning if you're not invested during those top moving days, your overall return as an investor begins to drop substantially. For example, since 1950, if you just missed the top 10 best trading days, your overall return drops from seven and a half to six point two percent. Missing the best 15 days takes you down to 5.8 percent, and missing the best 25 days brings you down to just a five percent annual return. In 2020, the cost of missing those five best days was, as Bloomberg calls it, annihilation because you would have ended the year with a loss of 30 percent. Seriously, that's a very scary statistic in terms of how important those days are to you as an investor.

The moral of the story is just this: when you invest, as long as you're diversified within a good company or a good index, the best thing to do is absolutely nothing. Just keep holding, stay invested, and keep buying. If the market drops, that's your chance to buy more, and if it drops even further, don't panic and just keep buying as usual. Eventually, things will recover.

Now, I know this sounds like the typical boring repetitive investment advice that you hear all the time, but the fact is this strategy has worked over the last 100 years. So why fix what isn't broken? However, this only applies to the stock market. Then, when it comes to cryptocurrency, there's a lot more to break down.

First, we have quite a few headlines talking about a crypto winter. Prices fell 50 percent from their peak, and 65 percent of the month was spent in a decline. Now, in the big picture, a 50 percent drop in cryptocurrency is actually rather mild, with an average pullback being closer to 77 percent and lasting approximately seven to eight months. This is all leading to fears that we could soon be entering what's known as a crypto winter, as prices fall and then lay dormant for sometimes months or even years while the market consolidates.

For example, the stock-to-flow model has predicted Bitcoin's price since 2010, and the entire market routinely sees a period of exponential growth, a sell-off, a period for cooling off, and then it's back up even further. That's not to suggest that this will always happen in the future just because it's happened in the past. But if history is any indication, a crypto winter is nothing to panic about, and it's just a normal part of staying invested.

Now, the payoff for holding, according to Kathy Wood, is a Bitcoin price reaching a million dollars by 2030, along with a 185,000 Ethereum, as it might displace traditional financial services and its native token, Ether, could compete as global money. Even though that's going to be a very tall order to fill, because second, we have a cryptocurrency executive order we have to talk about.

Since the beginning of cryptocurrency's entire existence, regulators have been frothing at the mouth for the opportunity to track, tax, and contain it from turning into a money-grabbing loophole. As far as what we currently know, the White House is set to label cryptocurrency as a threat to national security, and in the next few weeks, they'll task government agencies to develop regulatory policies around crypto, NFTs, and stablecoins.

The executive order is most likely going to make an appearance in the next few weeks with the goal of developing a framework from which cryptocurrency could operate legally. Of course, Bloomberg also reported that the agency is expected to weigh in on the possibility of the U.S. issuing a government-backed coin known as a central-backed digital currency, according to the people familiar with the talks.

Even though we don't know exactly what's going to be written in the executive order, it does seem as though what they want to do is assign specific roles for various levels of the government to oversee policy responses and potentially develop their own U.S.-backed stablecoin, instead of just banning cryptocurrency altogether. In the big picture, though, I see this as a sign that they're taking it very seriously, and they're doing their best to assimilate it within our economy.

Even Bank of America says that in this case, regulation is a good thing, and that once rules are established, the uncertainty over how to invest in crypto will be lifted. However, where I believe this is going to eventually be an issue is at the point where the SEC begins calling certain cryptocurrencies securities, which represents a piece of ownership that people could buy and sell for a profit.

As of now, it's far too easy for anybody to launch an NFT, create their own ICO, pump it to the moon, then rug pull it while their buyers lose millions. So overall, I think that regulation is going to add a new layer of trust to the entire market, and once that happens, even more people will feel comfortable buying and using it, especially when scams are by far the top threat to investors, according to the SEC.

I also think all of this is just getting us one step closer to eventually getting a Bitcoin ETF, which is something to absolutely look forward to. Finally, in terms of what's going on with the market, we have to talk about real estate. In the last year, prices have risen another 18 percent according to the National Home Price Index.

However, it's beginning to show signs of slowing down, having increased at a slightly slower pace than previously suggesting that potentially the market might, dare I say it, slow down. This comes at the same time that mortgage rates jump for the third straight week under the assumption that the Fed will begin to raise rates in March, thereby making the cost of getting a loan slightly more expensive.

However, the real punch to the market over the next year isn't going to be so much rising prices, but instead, it's going to be rising rents. It's so much, in fact, that Utah saw a 35 percent increase in rents, and it's likely to only get worse. See, one thing to keep in mind is that when you sign a rental agreement, you lock in that price for a set period of time. It's usually one to two years, but during that time, rental prices could fluctuate, but you're not going to feel the effects of higher rents until all of a sudden your lease is up, and then it costs you a lot more money.

Like throughout the country, rents are up 14 percent year over year, and with a lack of supply and increasing costs, rents have to go up just to make financial sense. Of course, it's very easy to blame it all on the greedy landlords who try to extract as much money from the tenants as possible, but the fact is increasing housing prices means the overhead just to break even on a property is a lot higher.

The labor for repairs and maintenance is also a lot more expensive as well. Materials could also often be so backlogged that they now cost two to three times higher than they used to. As a landlord myself, I've seen it; every single aspect of owning a property is now significantly more expensive than it was a few years ago, including my own insurance and property tax. It's no different than going to the grocery store and seeing coffee prices rise because there's a shortage of labor; shipping costs more, and the end result is that you have to earn more to pay for it.

So obviously, something like this could only go on for so long until things begin to slow down. But since so many rental agreements are beginning to expire and renew, if you're in a position where you're renting and you want to keep your costs fixed, do your best to shop around, negotiate with your landlord, lock in a longer term upfront, and make yourself as indispensable as possible.

I'll tell you from first-hand experience, it's way cheaper to keep a good tenant who's paying less than it is to re-rent a property to a new tenant who's paying more, who might be difficult to work with. So absolutely, use that to your advantage and just expect that throughout the next year, rising rents are going to be a main topic of discussion.

So overall, the moral of the story is: it's always better to keep buying into the market, stay the course as usual, and expect that honestly anything can happen. Let's face it, sometimes the entire stock market is completely unpredictable, and it'll often do the exact opposite of what you think it will. Like in 2020, the companies who were facing bankruptcies saw the highest returns, and in 2022, the companies with the best earnings are falling 25 percent on weak guidance.

But long term, as long as you stick with the plan, keep investing, hold as usual, and hit the like button for the YouTube algorithm, you'll come out ahead profitable! Not financial advice; for entertainment purposes only, just in case I'm wrong.

So with that said, you guys, thank you so much for watching. Make sure to subscribe. Feel free to add me on Instagram or 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. Thank you so much for watching, and until next time!