An informal video like this without a whole bunch of fancy, charts and research and analyst quotes. But something needs to be said about the current state of the market and the direction its headed. Because its gotten to the point where people are beginning to lose serious life, changing amounts of money and i feel like thats worth addressing along with my own thoughts about whats going on, i mean at this point it seems like theres, a new article every day. Talking about how a recession is practically guaranteed, while stocks plunge 40 as the economy crashes and up until right now, i worry that too many investors have a distorted point of view of what it means to stay invested, because these last two years have been a complete Anomaly, after all, i distinctly remember what it was like to graduate high school and to enter the real estate market near the absolute peak in early 2008.. Like for those who dont know, i basically started the moment. Foreclosures began to hit the market before lehman brothers collapsed. Prior to the credit market freeze and at the very very beginning of the stock market collapse from the outside. Looking in, i probably picked the worst possible time to start a career in an industry that was about to see its worst decline in history, because before then it was easy. You had investors like casey, 24 years old, who was able to flip his first property for a thirty thousand dollar profit.

Well, he took a three week leave from his job to get enough deals in contract so that he could give his employer two weeks notice. Pretty soon he had built a portfolio of eight single family homes, but when the market turned he couldnt sell them, he was stuck in 2.2 million worth of debt that he couldnt pay and he filed for bankruptcy. Of course, there were warnings that the housing market doesnt always just perpetually go up, including the lessons of the early 1990s, when the housing market dropped 10 to 20 percent and took nearly a decade to recover. But you know the saying this time is different and i didnt know any better as an 18 year old, just entering an industry that i thought i knew everything about, because i had read a book on it. Although i got ta say it was an eye opening experience to start working as a real estate agent and immediately see your co workers leaving for different jobs, because their business seemingly dried up overnight within a short time after that, our office hired foreclosure experts to help Their agents navigate the process of selling a home that was underwater, and i remember the general sentiment that no one wanted to buy anything because the market was only getting worse. I know this sounds like a dystopian universe today, but back then price reductions on homes were the norm. Homes were not getting multiple offers unless they were being auctioned off.

The bank for 30 cents on the dollar and very few people had the financial means to take advantage of those prices when 10 of the population was unemployed and the market entered a state of perpetual panic. This wasnt just a quick drop either from that point on each year, was progressively worse than the last prices, just kept falling lower and lower. For years until 2012 prices started to recover and demand came back. That increase and drop was so massive by the way that even today were barely above the same level when you account for inflation, and that was my first experience into the world of investing. I say this because in 2020 we got an extremely warped view on what it meant to make money, and that gave us a false sense of confidence, because the fed bailed us out no seriously when covet first became an issue. The market plunged more than 30 percent over 30 days and the moment the market recovered was the day the federal reserve announced their economic support. Dont believe me heres the date to the market bottom and heres their announcement, its not a coincidence. Theyll all agree that, had they not done that, we would probably be in a far worse position than we are today, but that also meant that for so many people that was their first foray into investing, where everything only goes up. Hedge funds get squeezed retail traders, get the last laugh and dave.

Portnoy says that warren buffett is washed up because day trading is the easiest game hes ever played, but with the federal reserve pulling back their economic support. The party is coming to an end were left with an economy, thats suffering from record high inflation, slowing demand and record high prices and thats whats being priced into the markets. Today, at these levels were erasing all the pandemic gains and returning to the price from before, where all of this started so to bring some context to the entire situation, heres, what you need to know on the bright side when it comes to bear markets, theyve all Followed a relatively similar trajectory so in terms of what to expect consider this technically, a bear market is defined as a 20 decline from the peak and since 1928, this has happened 26 times or, if youre doing the math. This works out to a bear market happening on average, every three and a half years, so what were seeing right now is not uncommon. In fact, it would be even more unusual if the market just continues to go up indefinitely and to give you some more context. Heres a brief summary of how bad things could really get. In 1929, the dow jones declined almost 90 percent over three years in the worst stock market drop ever of all time, but basically its just an average drop for the crypto market, but uh. I digress, even though, on the surface, it appears as though it would have taken you a full 25 years to break, even when you account for deflation and dividends.

As long as you didnt panic sell, you would actually break even in just four and a half years after that, in 1937, through 1941, there was another bear market with a loss of 50. Now, in terms of what caused this, it was theorized that it was sparked by a contraction in the money. Supply caused by the federal reserve sounds familiar right, but eventually the markets recovered, and we saw one of the longest running bull markets in history. After the end of world war ii, and then the 1960s happened with a decline of 36 percent along with the subsequent 48 drop through 1974.. It was said that, as vietnam and social programs began to push up government spending, the federal reserve responded by tightening credit conditions which caused the market to fall, while also seeing the worst inflation since well, i guess were seeing today theres also the 2001.com crash, where the Markets fell 36, while tech stocks lost 78 of their value and took over a decade to recover if they were lucky. We also have the one that i distinctly remember the great recession, while the market lost more than 50 percent after the collapse of the housing market and besides, a quick interruption with kovid weve, largely continued on the trajectory of one of the longest running bull markets. Of all time, so that begs the question in this case since were already down about 25 from the peak. How much lower can we possibly go? Well, if we look at the past, we could see that the average bear market sees a decline of roughly 35 over 289 days, with the most severe being the 2008 great recession decline of 51 percent over an entire year.

Now, unfortunately, with averages youre never going to hit the average right on the dot and, as you can see, judging by previous declines anywhere from 20 to 40 percent, is the most likely scenario. With the caveat that anything could happen, and just because it hasnt happened in the past, doesnt mean it wont happen now. Ultimately, every single market is going to be different and sometimes they just become self. Fulfilling prophecies. Millennial millionaires, for instance, are delaying their purchases because of higher borrowing costs, and experts say that this is because of an environment that theyve never experienced before, where more than a third of people making over a hundred thousand dollars, say theyre living paycheck to paycheck amid record High inflation – all of that is to say that sure in hindsight its easy to point to something and say: oh yes, it was so obvious. Everyone could have seen that one coming, but as weve all witnessed market conditions can change so rapidly that predicting when or how something will happen is the equivalent to winning a lottery ticket. Sure we hear about people doing it all the time, but the chance of it happening to you is relatively small and its even smaller that youll be able to do it twice. After all, there are dozens of economic situations working with and against each other to create the environment that we have today. Remove the russia, ukraine, war or the keystone pipeline, or a slightly different federal reserve policy and guaranteed.

There would be a series of other conditions that we would be talking about in its place, but if theres anything that ive learned about having an unhealthy obsession with all things, investing for over 14 years, its this first theres always going to be a reason not to Invest when i first started buying real estate in 2011, for example, the market had already declined 50 and i was buying some of these properties for 20 percent of their appraised value just a few years earlier, but i was told to wait a little bit longer because Shadow inventory was about to be unleashed onto the market, causing it to fall even more, but guess what that shadow inventory never came. The market started to recover and i was glad i didnt listen to it since then, time and time again, ive been told about every impending collapse possible and most of the time, its probably best to ignore it, because very few of them come true. Second, investing is not a game, i hate to say it, but unless youre a degenerate, personal finance nerd, who has fun tracking their expenses on mint.com, to see how much money you could save investing is boring, no seriously its not supposed to be fun. I know that sounds weird for me to say, because i think its an absolute blast, but im not normal and its not a sign of a healthy market when people are having a blast trying to speculate on 70 returns every week.

At some point you just have to remember if you are trying to beat the market average youre, either taking a calculated risk or youre gambling. Third overconfidence will destroy your portfolio from everything that ive seen the moment. You think you know it all and have it all figured out, youve already lost, because of that its important to recognize that in a way, the less you know the better youre going to do, because youre not going to over complicate things or take unnecessary risk. For example, every single study shows the most successful investors simply buy a broad index fund consistently and hold it for 20 years thats. Literally, all you got to do and uh no one does it because its boring fourth, a market drop, is probably gon na, be worse than you expect, like you know, when you see a decline, so you buy the dip, but it keeps dropping so you buy the Dip even more, but it keeps dropping even further and pretty soon you run out of money, and then it drops even more. Well, generally, the market bottoms take place at absolute investor, capitulation when all faith is lost and people think the economy is forever gon na be doomed. Every generation is gon na have its. This time is different moment that comes out of nowhere and its important to realize that things could drop way more than you think, and fifth, good financial habits should be practiced in both good and bad markets.

Even though sure now is a pretty good time to take on a side, hustle earn some extra money work, some different hours, cut back on expenses and live below your means. Ideally, you should always be doing that making the most of your time, regardless of how the stock market performs. In times like this, those good habits are probably going to save you 10 times over and thats. Why ive always continued to live frugally with the understanding that nothing good lasts forever? I guess ive just seen too many careers come and go watch too many businesses completely disappear and seen too many investors go belly up because they think this cant happen to me. So, im extremely and probably overly cautious in everything that i do its probably not the most optimal, but it does work for me and it helps me sleep at night plus i just want to mention number six. It was found that half of the indexs strongest days in the last 20 years occurred during a bear market and another 34 of the markets. Best days took place in the first two months of a bull market before it was clear that a bull market had begun. Thats extremely important because had you just missed the top 10 strongest days over five years, your overall return drops from 15 to 3.75, especially when the best days come right after the worst thats. Why its best to take it boring play it safe.

Stick with the fundamentals that are historically proven to work and subscribe. If you want more information, just like this, the next time the market drops so with that said, you guys thank you so much for watching also feel free to add me on instagram and dont forget to get your free stock down below in the description when you Sign up for public use of the code, graham because that could be worth all the way up to a thousand dollars, and you could also get all the way up to a hundred dollars with the free crypto. When you sign up for ftx us down below. In the description also with the codegram, you may as well do that its pretty much like free money. So let me know what you get.

https://www.youtube.com/watch?v=xF2tu_uTdFg