The stock market will crash. There is no doubt. Crashes happen every so often. To deny it is simply a fairy tale. Knowing that markets crash every few years, you have a few choices:
Hold on for dear life. That’s the strategy of 99% of investors from all levels. They call it the “investing for the long term” which insiders in the industry refer to as the “not really sure what to do in a bear market” strategy.
You could move all of your assets into cash. Some do this and try to remain liquid. Try not to lose their money. They may trigger capital gains on their earnings so that may not be advisable for some.
There’s always REAL assets. This is generally not a strategy for many because it involves more effort. Buying something physical means individuals need to actually learn the market they’re investing in.
You could potentially invest in index funds to spread out your risk, or at least that’s the intention.
Someone may decide to keep their investments offshore in a completely different country to diversify geographically.
But regardless, stocks will eventually crash and assets will depreciate. But that’s ok because you shouldn’t be chasing appreciation as an investor. If you rely on it, that’s just speculation. If you earn income on an investment, a monthly check from a property you rent for instance. Or maybe a quarterly dividend from a stock. You get this money regardless of market fluctuations.
Many people today are buying real estate and taking a loss, hoping that the house will appreciate in value and then can be sold for a higher price. There’s nothing wrong with that. But you must be willing to risk everything you invest.
The common question is, WHEN? When will the stock market crash? When can I sell my FANG stocks and finally start to prepare for a crash?
Of course, those who ask these questions are usually the buy and hold on for dear life investors. Not because they want to be. It’s simply a lack of sophistication about markets. And that’s totally fine. It’s being hidden from the school system. The mainstream media won’t let the secret loose. And most investors are still using outdated metrics which are a fools trap.
Instead we can look quite simply at what central banks are doing on a daily basis. That’s it. That’s the most important factor to determine will stocks rise or fall.
If stocks are being purchase by central banks. If central banks are printing money and buying assets. Stocks will rise. If central banks are selling assets, they will fall in correlation. That’s it. End of story.
You don’t need to believe that stocks will always rise and then become heartbroken that your life savings is evaporating. That you should have made this move or that. Just accept reality and prepare accordingly.
Will the stock market crash? Yes absolutely. When? When the central banks decide. They are creating an environment that requires them to prop up the market. If they sell off their assets as they have been, the stock market will decline.
In 2018, central banks have eliminated a total of $1 trillion from their balance sheets. This has been completely correlated to the wild fluctuations in equities we have seen this year. It is no coincidence. The reason the markets came up from the panic of 2008 and 2009 was central bank intervention. They claimed that everything was great but unfortunately, they were unable to actually get this off of life support.
So if this market was so strong, why wouldn’t central banks not reduce exposure to the markets? Why did it take 10 years to get interest rates up to a level that still considered historically very low? Sadly, the truth is very obvious.
If you’re still here watching this video, thank you for being here.
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