Why the markets could crash by 15%. And, why you should NOT panic | Akshat Shrivastava

Summary

In this video, the host discusses market panic triggered by Warren Buffett's significant sale of Apple stock, a sharp NASDAQ drop, and concerns over tech stocks like Microsoft. He explains macroeconomic factors, including Japan's interest rate changes, and their impact on the market. The host, a full-time investor, shares insights on recession fears, the importance of cash hedging, and the potential for a market correction. He also promotes a free AI online masterclass for skill enhancement and offers a prognosis on market movements, advising viewers on investment strategies during this period of uncertainty.

Takeaways

• 📉 Market Panic: There is a current sense of panic in the markets due to significant news affecting investor sentiment.
• 🍎 Warren Buffett's Move: Warren Buffett has sold 50% of his Apple stock, which is a significant move considering Apple makes up a large portion of his portfolio.
• 📊 NASDAQ Downturn: The NASDAQ index fell by 2.5% in a single day, indicating a substantial market downturn.
• 📉 Tech Stock Decline: Major tech stocks like Microsoft have seen a decline, with Microsoft's stock falling by roughly 13-33% in the last month.
• 🌐 Global Economic Factors: The script suggests that global economic factors, including wars and economic slowdowns, are contributing to market instability.
• 🇯🇵 Japan's Interest Rate Change: A change in Japan's interest rate from near zero to 0.25% has disrupted interest rate arbitrage, leading to market panic.
• 💡 Market Expectations: It's crucial for investors to understand the current situation and set their market expectations realistically.
• 💰 Buffett's Cash Position: Warren Buffett is sitting on a large amount of cash, indicating a wait-and-see approach before reinvestment.
• 🤔 Market Timing: Even seasoned investors like Buffett cannot perfectly time the market, highlighting the importance of patience and strategy.
• 🛡️ Hedging Strategies: The script recommends having a cash position and hedging strategies to take advantage of market opportunities.
• ⚠️ Recession Concerns: Recession concerns are prevalent, but the script suggests that savvy investors can future-proof their investments even in a recessionary environment.

Q & A

Why is there panic in the markets currently?

The panic in the markets is due to several factors, including Warren Buffett selling 50% of his Apple stock, a significant drop in the NASDAQ index, and concerns about a potential recession.

What is the significance of Warren Buffett selling 50% of his Apple stock?

Warren Buffett's portfolio is heavily weighted towards a few stocks, with Apple being the most prominent. Selling half of his position is a significant move that could signal a lack of confidence in the market or a strategic shift in his investment strategy.

What does the NASDAQ index drop of 2.5% in a single day indicate?

A drop of 2.5% in the NASDAQ index in one day is a substantial fall, indicating a potential loss of investor confidence and a possible market correction.

What is the role of the Bank of Japan's interest rate policy in the current market situation?

The Bank of Japan's decision to increase interest rates from near zero to 0.25% has disrupted interest rate arbitrage, leading to a decrease in borrowing for investment in global assets, including US stocks, and contributing to market panic.

What is the current state of the US unemployment rate as mentioned in the script?

The US unemployment rate has ticked up to 4.3%, which is a sign of a broader economic slowdown and could be contributing to the market's negative sentiment.

What is the speaker's perspective on the use of artificial intelligence in career development?

The speaker emphasizes that learning how to use artificial intelligence is one of the most important skills in the current job market, and it can help individuals future-proof their careers.

What is the Growth School and how does it relate to the video's content?

Growth School is a platform mentioned in the script that offers education on artificial intelligence and machine learning. It is the partner for the video, offering a free masterclass for the first 1,000 users through the speaker's link.

What is the potential market correction according to the speaker's analysis?

The speaker suggests that a 10% market correction is very likely, especially in the US market, and advises investors to be prepared with cash to take advantage of potential buying opportunities.

What is the speaker's view on the potential for a mega market crash?

The speaker does not believe that a mega crash with a 30% or 40% correction is likely. He suggests that a 10 to 15% correction is more plausible and that anything above 20% would be considered the start of a bear run.

What advice does the speaker give regarding investment strategy during a market correction?

The speaker advises investors to keep some capital ready to downward average, to not rush to buy individual stocks without understanding market developments, and to build positions in stocks that are not overvalued.

What is the significance of the yield curve inversion mentioned in the script?

A yield curve inversion, where short-term interest rates are higher than long-term rates, is considered an anomaly and a sign of potential economic trouble, often preceding a recession.