The Next 26 Days Will Make Millionaires in 2025 (Here's How)

Summary

In this video, the speaker explains how to navigate a stock market downturn, focusing on the impact of President Trump's tariffs on global trade and the US economy. Using historical data, the speaker shows that bear markets, though challenging, present significant opportunities to buy undervalued stocks. Key strategies include relying on data-driven decisions and using indicators like the Fear and Greed index to gauge market sentiment. The speaker recommends buying stocks like Amazon, Google, Meta, and TSMC, which are currently undervalued, offering substantial upside potential during the downturn.

Takeaways

• 😀 Market downturns present opportunities for long-term investors, as buying during fear can lead to significant gains when the market recovers.
• 📉 The current market downturn is driven by President Trump's tariffs, which aim to reduce the trade deficit but may cause higher consumer prices and job losses.
• 📊 Historical market data shows that bull markets last about 4.3 years and deliver a 150% return, while bear markets last 11 months with an average loss of 32%.
• 🔍 Bear markets are typically followed by recoveries within 24 months, but the recovery time can vary based on the severity of the downturn.
• 📉 Recessions, marked by two consecutive quarters of declining GDP, are closely tied to bear markets, as inflation, tariffs, and reduced spending impact the economy.
• 📈 Being greedy when others are fearful requires data-driven decisions, not emotional reactions, to navigate market downturns effectively.
• 🧠 CNN’s Fear and Greed Index, which indicates extreme fear in the market, serves as a useful tool for identifying potential buying opportunities.
• 🗣 The AAII Sentiment Survey shows individual investors' market outlook, with a highly bearish sentiment indicating a good time to consider buying.
• 📉 The NASDAQ 100 (Triple Q’s) offers more volatility and higher potential returns compared to the S&P 500, making it attractive in downturns.
• 💼 Long-term investors should consider funds like Vanguard’s VGT for a diversified, low-fee option with exposure to the tech sector.
• 📈 Stock recommendations include Amazon (undervalued by 42%, potential 72% upside), Google (undervalued by 34%, potential 52% upside), Meta (undervalued by 27%), and TSMC (undervalued by over 50% with potential gains despite tariff concerns).

Q & A

What is the main reason for the current stock market downturn?

The main reason for the current market downturn is the implementation of tariffs by President Trump, particularly those affecting imports from Canada, Mexico, and China, which has led to higher prices and lower consumer spending.

How do tariffs impact stock prices and the economy?

Tariffs lead to higher costs for consumers and businesses, reducing consumer spending and corporate earnings. This, in turn, can result in lower stock prices as the economy slows down.

What is the relationship between tariffs and job losses?

The imposition of tariffs has been linked to job losses, as the National Bureau of Economic Research found that tariffs can increase costs for importers, which may lead to layoffs or a shift in production to countries with lower costs.

What does historical data suggest about bull and bear markets?

Historical data shows that bull markets last about 4.3 years on average, with a return of about 150%, while bear markets last about 11 months on average and result in an average loss of 32%. Bull markets tend to last longer and return more than bear markets lose.

How does the length of bear markets compare to bull markets?

Bear markets last on average 4.3 times shorter than bull markets. Bull markets also return three times more than bear markets lose, which makes downturns valuable opportunities for investors.

What are the key data points that help investors know when to be greedy during a downturn?

Key data points include the CNN Fear and Greed Index, which measures extreme fear in the market, and the AAII sentiment survey, which tracks investor sentiment. A fear index in the extreme fear zone signals a potential opportunity for being greedy when others are fearful.

Why is it important to have cash on hand during a market downturn?

Having cash on hand allows investors to take advantage of buying opportunities during market downturns. Dollar-cost averaging, or spreading out purchases over time, can also help smooth out volatility and reduce risk.

What are the main factors that indicate the market is in extreme fear?

The two main factors are when market momentum dips below its 125-day moving average and when market volatility spikes near 30. These signals suggest that stocks may be undervalued, presenting opportunities for long-term investment.

Which stocks are highlighted as potential opportunities during the downturn?

The stocks highlighted as opportunities include Amazon, Google, Meta, and TSMC. These companies are currently undervalued, with analysts predicting significant upside potential based on their growth and business performance.

Why is TSMC considered a good investment despite recent tariffs on chips?

TSMC is considered a strong investment because it manufactures the majority of advanced chips used by major tech companies like Tesla, Apple, and Nvidia. Despite concerns over potential tariffs, analysts believe the company is still undervalued with significant upside potential.