The Stock Market Is About To Collapse (Do THIS Now)

Summary

The video script delivers a crucial message to investors about the potential for a stock market correction, emphasizing the importance of preparation and strategy. It recounts a past Nvidia stock dip and rebound to illustrate the value of buying low. The speaker forecasts an overextended market due for a pullback and advises viewers to either accumulate more shares at lower prices or set stop losses for protection. The script also discusses broader market trends, economic indicators, and investment opportunities, particularly in small-cap stocks, while maintaining a bullish outlook for the long term.

Takeaways

• 📉 The speaker warns investors about potential overextension in the market and the possibility of a correction, advising against rash actions like selling out of fear.
• 💡 The importance of staying informed and not ignoring signs of a market correction is emphasized for smart investing.
• 📈 The S&P 500 is close to its all-time highs, with a significant year-to-date gain, which may indicate overextension.
• 🏹 The analogy of a sports player's performance correction is used to explain how rapid market gains can lead to a pullback.
• 🛑 The speaker will not sell during a correction but will instead look to buy more stocks at a lower cost basis if the opportunity arises.
• 🚫 Stop losses are suggested as a strategy for investors who want to protect gains in the event of a market downturn.
• 🧠 The speaker stresses that 80% of investing is mental and emotional preparation, urging investors to have a plan and stick to it during market fluctuations.
• 📊 Current market indicators such as GDP growth, CPI decrease, and positive corporate earnings reports are presented as a positive setup for the market.
• 💼 The potential impact of the Federal Reserve's interest rate decisions on market performance is highlighted, with rate cuts possibly benefiting small-cap stocks.
• 🚀 The speaker remains bullish on the market in the long term, suggesting that any correction could be a buying opportunity.
• 📚 The video transcript calls for joining a community of investors for support and to stay informed about market trends and opportunities.

Q & A

What was the initial advice given by the speaker regarding the stock market?

The speaker advised investors not to click, smash, or buy anything immediately and to listen carefully to the information provided, which is considered super important.

How did the speaker describe the situation with Nvidia's stock price?

The speaker mentioned that Nvidia's stock price dropped from $130 to $98, causing panic among many investors. However, experienced investors in the speaker's community understood the situation and took advantage of the lower price, as the stock later recovered to $130 within a month.

What is the current status of the S&P 500 index according to the video?

The S&P 500 index is very close to its all-time highs, with the video suggesting it might have passed or gone lower by the time the video is viewed. It has also risen 4.3% in the past five days and is up almost 20% year to date.

What does the speaker suggest is the problem with the rapid increase in stock prices?

The speaker suggests that while rising prices are not inherently problematic, the issue arises when the increase is too quick, leading to stocks becoming overextended and setting the stage for a market correction.

What is the analogy used by the speaker to explain the inevitable correction in the stock market?

The speaker uses the analogy of a basketball player's shooting percentage, explaining that if the player's percentage is too high compared to the average, it will inevitably drop back to the average over time, similar to how an overextended market will correct.

What is the speaker's stance on selling stocks during a market correction?

The speaker firmly states that they will not be selling any stocks or shares during a market correction, regardless of how deep or alarming the correction may be.

What are the two potential strategies the speaker suggests for long-term investors facing a market correction?

The speaker suggests either using the correction to lower one's cost basis by buying more stocks at a lower price or setting up stop losses to protect against significant losses if the market drops.

What does the speaker consider the most important part of preparing for a market correction?

The speaker believes that the most important part of preparation is mental and emotional, emphasizing the need for a plan and the discipline to stick to it without improvising based on emotions.

What upcoming event is the speaker watching closely in relation to the potential market correction?

The speaker is watching for the Jackson Hole event, where Jerome Powell's speech will likely influence the market's direction and could trigger a correction.

What historical data does the speaker reference to support the potential for a positive second half of the year?

The speaker references data showing that since 1950, 83% of the time, if the first half of the year had a 10% or more return, the second half was positive, with an average return of 10%.

What investment opportunities does the speaker highlight in the current market?

The speaker highlights opportunities in small-cap stocks, as represented by the Russell 2000, which have not participated in the recent market rally and may benefit from potential Fed rate cuts.

Outlines

00:00

🚨 Stock Market Warning and Analysis 🚨

The speaker begins with a strong warning for stock market investors, emphasizing the importance of not making hasty decisions. They recount the Nvidia stock scenario, where a drop from $130 to $98 led to panic among many, but savvy investors saw it as an opportunity to buy at a lower price. The speaker then discusses the current state of the S&P 500, noting its proximity to all-time highs and the potential for a market correction due to rapid price increases outpacing the average. They stress the importance of being prepared for a correction and outline strategies for long-term investors, such as buying more of a stock at a lower price to decrease the cost basis or setting up stop losses for protection. The speaker also shares their personal strategy of not selling during a correction and instead using it to improve their investment position.

05:00

📈 Market Overextension and Preparation Strategies 📉

This paragraph delves into the concept of market overextension, using sports analogies to explain the inevitable correction when prices rise too quickly. The speaker discusses the S&P 500's performance, noting its significant year-to-date gains and the overbought status of many stocks within the index. They highlight the importance of mental and emotional preparation for investors facing a potential correction, advocating for having a clear plan and sticking to it rather than reacting emotionally. The speaker also touches on the significance of upcoming events, such as Jerome Powell's speech at Jackson Hole, which could influence market direction and the likelihood of a correction.

10:01

💡 Analyzing Market Indicators and Opportunities 💡

The speaker provides an in-depth analysis of various market indicators, such as GDP, CPI, consumer spending, and oil prices, all of which point towards a positive market outlook. They discuss the impact of central bank policy, particularly the Federal Reserve's cutting cycle, and the resurgence of M&A activity as a sign of a revamping market. The paragraph also explores the potential of small-cap stocks, as represented by the Russell 2000, which have lagged behind the market rally but may present opportunities if interest rates are cut. The speaker encourages investors to look for opportunities amidst market volatility and to be prepared for various scenarios following significant market events.

15:01

🔄 Market Volatility and Long-Term Bullish Outlook 🔄

In the final paragraph, the speaker maintains a bullish stance on the market for the long term, outlining a strategy to acquire stocks during periods of market correction or sideways movement. They suggest slowing down the dollar-cost averaging (DCA) approach when the market accelerates and vice versa. The speaker also mentions the potential for a bull run in the latter part of 2024, despite any short-term volatility or corrections. They conclude by inviting viewers to join their community for support and information, and they hint at upcoming opportunities and plans within their academy.

Keywords

💡Stock Market

The stock market is a platform where shares of publicly traded companies are issued and traded. In the video, it is the central theme as the speaker discusses the current state of the market, its potential for corrections, and investment strategies within it. The script mentions the S&P 500 and NASDAQ, which are key stock market indices, to illustrate market performance.

💡Correction

A correction in the financial context refers to a decline in the price of a stock, bond, commodity, or index by a specified percentage, typically around 10% from its recent peak. The video discusses the possibility of a market correction, suggesting that the speaker sees the current market as overextended and due for a price adjustment.

💡Overbought

Overbought is a term used to describe a security that has risen in price to a level that may be difficult to justify based on its current earnings or economic outlook. In the script, the speaker uses this term to describe the S&P 500, indicating that many of its stocks have risen too quickly and may be due for a pullback.

💡Dollar Cost Averaging (DCA)

Dollar cost averaging is an investment strategy where an investor consistently buys a fixed dollar amount of a particular investment, regardless of its price. In the video, the speaker advocates for DCA as a strategy for long-term investors, suggesting increasing the frequency of purchases during a market correction to acquire stocks at a lower cost.

💡Cost Basis

Cost basis is the original value of an asset for tax and accounting purposes, calculated as the original purchase price plus additional costs of acquisition. The script mentions decreasing the cost basis by buying more of a stock during a price drop, which can be beneficial for long-term investment returns.

💡Leverage

In finance, leverage refers to using borrowed money to increase the potential return of an investment. The speaker clarifies that when he mentions leveraging oneself, he does not mean borrowing money but rather using a market downturn to one's advantage to buy more stocks at a lower price.

💡Stop Loss

A stop loss is an order placed with a broker to sell a security when it reaches a certain price. The speaker mentions setting up stop losses as a strategy for investors who want to protect themselves from significant losses during a market correction.

💡S&P 500

The S&P 500, or Standard & Poor's 500, is a stock market index that tracks the performance of 500 large companies listed on stock exchanges in the United States. The script uses the S&P 500 as a benchmark to discuss the overall health and trends of the stock market.

💡NASDAQ

NASDAQ is an American stock exchange known for listing technology and biotechnology companies. The term is used in the script to highlight the performance of the technology sector in the context of the broader market trends.

💡IPO Activity

IPO stands for Initial Public Offering, which is the process by which a private company goes public by offering its shares to be traded on a stock exchange for the first time. The speaker mentions IPO activity as an indicator of a vibrant market, suggesting that increased IPOs are a sign of a healthy economy and investor confidence.

💡M&A Activity

M&A stands for mergers and acquisitions, which refers to the consolidation of companies or entities through various types of financial transactions. The script discusses M&A activity as a sign of a revamping market, indicating that when companies are actively merging or acquiring others, it can be a positive signal for the economy.

Highlights

Warning to investors to avoid impulsive actions in the stock market and to pay attention to the provided analysis.

Nvidia's stock price fluctuation from $130 to $98 and back to $130 within a month, illustrating the importance of not panicking during market dips.

The S&P 500 is near all-time highs, with a potential for overextension and the need for caution among investors.

The concept of market correction as an inevitable result of rapid price increases, using the analogy of a sports player's performance.

The speaker's stance as an 'Uber Bull' on the market for the next few years, while also acknowledging the possibility of short-term corrections.

The strategy of not selling during a market correction and instead using it as an opportunity to lower the cost basis of stocks.

The alternative strategy of setting up stop losses for long-term investors to protect gains during a potential market downturn.

The importance of mental and emotional preparation for market corrections and having a predefined plan to follow.

Statistical analysis of the S&P 500's performance in years starting with above 10% gains and the average performance in August.

The impact of Jerome Powell's speech at Jackson Hole on market direction and the potential for a rate cut announcement.

The current economic indicators pointing towards a positive market outlook, including GDP growth and CPI decline.

The resurgence of M&A activity due to expected easing monetary policy and its implications for the market.

IPO activity as an indicator of market health and potential opportunities in the second half of the year.

The underperformance of small caps like the Russell 2000 and the potential for a turnaround if the Fed cuts rates.

The speaker's personal strategy of acquiring stocks during potential market corrections and normalizing purchases afterward.

The importance of community and joining like-minded investors for support and information sharing.

The announcement of the reopening of the speaker's academy for new members and upcoming plans for the community.

Transcripts

so I have an important warning for all

investors in the stock market right now

please listen up this is super important

don't click nothing don't smash nothing

don't buy nothing I ain't selling deadly

Squad just listen to me the information

is super important now like in every one

of my videos the bottom line is going to

come first and then you can head out but

if you want to stay for the full

analysis you're more than welcome to do

so so listen to me carefully here a

month ago when Nvidia was trading at

$130 and then all of a sudden it dropped

to 98

a lot of people were panicking running

for the hills but smart experienced

investors like the ones we have in my

community basically knew exactly what

was going on and we knew how this thing

is going to play out there was a limited

time to get this stock at a cheaper

price and lo and behold the stock is now

back at $130 a month later so if you

like Nvidia as a stock and you didn't

buy at 98 you didn't decrease your cost

basis in the stock and you set out

because you fear that it might drop

further well that's a good lesson for

you and that really is applicable to

what is kind of Brewing up in the market

right now which I want you to be

prepared for you see the S&P 500 is

currently at 5600 very very close to the

all-time highs by the time this video

comes out maybe we pass it maybe we go

lower but we're flirting with alltime

highs again and we're up 4.3% of the

past five days we're up almost 20% year

to date so the IND index is doing very

well the problem with an index that's

doing very very well is that we have a

lot of stocks right now in the stock

market that are beginning to be a little

bit overextended too quickly the problem

isn't that the price is going up the

problem is that the price is going up a

little bit too quick and when you steer

away and you get away from the average

too quick the inevitable result is

always going to be a correction much

like with sports if I'm still Curry and

I'm shooting 40% from three-point range

and after 60 games I'm at 55% what's

going to happen well my percentage is

going to drop all the way back to 40 in

the remaining 25 games 26 games whatever

that may be and the same principle

applies in the stock market if the

average is getting left behind by the

index and by individual stocks that are

flying way too quickly way too high

eventually the correction is going to

bring it back down to earth that's how

this thing works now

what am I saying here I'm saying here is

that the market in its current

configuration is a little bit

overextended and it's due for a

correction maybe a small correction

maybe a small pullback maybe a major

correction maybe a serious pullback and

maybe nothing but to sit here as a smart

investor and to ignore what seems to be

Brewing up in this market just because

I'm a bull and make no mistakes about it

I'm an Uber Bull on this market for the

next 3 four five years years to sit here

and absolutely ignore the fact that

we're currently in a setup for a

correction short term is going to be

performing a disservice to my community

and I'm not going to do that so as a

service to my community I'm going to

show you the data and I'm going to show

you what I'm thinking and how I'm

prepping for this because a lot of you

may say well Tom just a few days ago you

told us that this is

1995 and because this is 1995 the next

four years are going to be epic

explosion of gains well the Market

doesn't work like this my guy it doesn't

the market goes up it goes down it does

not go up in a straight line for four

years you're always going to have

Corrections and if you're seeing one

coming a mile away just sit there and

ignore it and say la la la la la la la

this is not happening it's not a good

strategy for a long-term investor having

said that I see a correction in order

for this Market whether it happens this

week next week or doesn't happen at all

I do not know but what I will do I'm

going to set up everything so I'm

prepared if it actually happens now the

first principle I want you to understand

is that no matter how deep this

correction is no matter how scary or

alarming it may be I will not be selling

any stock or any shares or anything of

that sort during this correction none

whatsoever what I will offer to you as a

potential strategy for a long-term

investor is one of two things one which

I will be doing is use this crisis to l

Lage yourself into a better cost basis

what do I mean do you take leverage do

you borrow money no that's not what I

said by leveraging yourself what I mean

is that if a correction happens and

actually takes prices of stocks that I

want to own in my case Tesla or paler or

the S&P 500 and it drops these prices

below a certain threshold then I will be

buying more of them on an ongoing basis

and I'm not going to stop until the

price climbs back up but if a correction

doesn't happen well I'll just keep

buying normally every single week like

nothing happened but there's another

thing you can do here I'm not a huge fan

of it myself but it's a legitimate

strategy for long-term investors if

you're seeing a correction ahead and you

want to buy some insurance what you can

do is set up some stop losses if you

have a lot of stocks in which you have a

lot of gains and you feel like the

market is getting a little bit

overextended this would be a good time

to put in some stop losses that if the

feet hit the shin so to speak then in

that case you're not going to be

absolutely demolished by whatever

happens and psychologically mentally

you're going to be a better position

because seeing read in your portfolio is

not for everyone now I'll tell you what

in my view the most important part of

this preparation project that I'm doing

here in this video it's not the numbers

it's not the mathematics which I'll show

you in a second I'll show all the data

and what am I basing my theory on and

everything so you can judge for yourself

because what I want to develop here is a

community of thinking people not for

robots that do what I think is the right

thing right but beyond that I think 80%

% of what we do here and 80% of

investing in general is all mental and

emotional so if you want to prepare for

an upcoming correction or a pullback or

even harder than this what you need to

do is basically mostly focus on your

psyche and your emotions make sure that

you understand that this is coming and

when it's coming you have a plan and

that plan is do ABC don't

improvise don't do anything outside the

plan and just carry out what whatever

the plan you set up when you were

thinking logically and not emotionally

doing that is 80% of the business now

let's talk a little bit more in depth

about what's coming up now year to date

the S&P 500 is up almost

20% NASDAQ is almost up 20% these are

terrific numbers but way above the

normal performance of either of these

indices in the normal year right let's

continue the S&P 500 is slow getting

into overbought territory what do I mean

by that well about 50% of the stocks in

the index in the s&p500 is currently

overbought on top of it we have moved a

long ways away from the 200 day moving

average right now the 200 day is at

5,000 we're currently at 5600 so we're

getting ahead of the average and when

this happens faster than normal and more

aggressive than normal well the average

serves like a magnet it's going to pull

the market back down so it continues to

rise slower whether this happens today

tomorrow next week or doesn't happen at

all I don't know I don't know but

looking at the current setup of the

market here's what I'm seeing we've

started the month of August on the S&P

500 at

5446 that was the 1 of August currently

after all the turmoil or the turbulence

and all the volatility we're at 5608 at

least as of the making of this video

right so we are up 3% on the s&p500 in

August so far in the first 20 days of

the month now that's good right well yes

and no and I'll explain why I'm saying

no you see there's the statistic that

shows what happened in the 23 times that

the S&P 500 started the year with above

10% performance this year we're at

11.4% so we are in that category a

really really good first half above 10%

whenever that happens the average

performance on the August month is .6%

so if we're talking about averages right

the average here shows us that August is

supposed to be a negative .6% month on

average and we're currently running at

3% a lot a lot higher than the average

performance of August in a year like the

Year we're having right now does it

guarantee that we will have a correction

no does it guarantee anything no past

performance statistics they don't

guarantee any individual results in any

specific years there's always outliers

but the general concept is that we are

above know almost 4% above the average

where we should be in August in a year

like today and when you add it up to an

overextended market and overbought S&P

500 and the fact that we have Friday

coming up in Jackson Hall this smells to

me like correction territory because

what happens in Jackson Hall when j po

is going to give his speech on Friday is

going to determine whether this

correction actually happens or not and

going to explain right now what because

whatever J Paul does in Jackson Hall on

Friday is going to determine the big

piece what happens in the next couple of

weeks I'll explain because you see last

year Jackson Hall with the davish Dr pow

gave us plus 4% on the S&P 500 that's

good but a year prior when Jerome pow

was talking about more paying ahead the

market ended up tanking 8% on the day so

whatever J Paul says in the Jackson Hall

speech is going to have a huge impact on

that market because you see people will

be focusing on two things that joh pal

is going to have to answer number one

are we getting a 0 25 or 0.5 that's

number one number two is it a one and

done or are we willing to talk about

more Cuts this year two three four five

rate Cuts is going to be very important

to what the market does with it as far

as a potential correction yes or no but

you have to consider the fact that J pal

might say something which the M media is

gonna take and make shish kebabs from

it's going to drop the market it might

happen now as a smart investor all you

got to do is prepare for every scenario

every alternative got to be prepped for

if the market goes up or the market goes

down following what happens on Friday in

jall you have to have a game plan if the

market keeps going up your dollar cost

average in a normal Pace if the market

drops and your stocks are getting to a

Zone where you would like to increase

your dollar cost average increase your

annual buying weekly buying monthly

buying whatever that is for you increase

to continuous buying you have these

stocks then the drop is your friend

because longterm I remain very bullish

on this Market very bullish because

here's the thing look at the data with

an objective analysis right gross

domestic product is up it's up above

expectation CPI is down a lot faster

than people thought at

2.9% we have consumer spending doubl

than

expected inflation is below 4 and a.

half% is actually doing better than

people expected with the claims and we

have oil below $80 per barrel in August

which supposed to be the peak month for

oil we have the Middle East situation

easing up people talking about a

ceasefire so World War III at least for

now is kind of off the table we have

easing monetary policy by the Central

Bank in the United States so we have a

fed that's going into a cutting cycle

for the next

year we have m massive m&a activity

starting to happen which we haven't seen

in years we have obviously AMD spending

5 billion all over the news you saw it

we have Mars buying up K NOA essentially

Snickers buying up Pringles for 36

billion and we have a Canadian company

trying to buy 7-Eleven for $30 billion

all of this is happening right now and

all of this is happening because cheap

money is about to hit the market so m&a

activity is back on the table it's a

clear indication of a revamp Market the

next thing is IPO activity but that's

again down the pipeline but here's the

thing since 1950 whenever we had a first

half the year of 10% or more which we

had this year in 2024 83% of the times

the second half was positive and the

average return in the second half of the

year was

10% and since

1928 the bottom of the second half was

August 50% of the time so August

statistically is really the creek

of the second half the year in the setup

like we have right now especially if you

look at S&P 500 earnings 81% of

companies beat earnings with the average

of 5% in this season with about 90% of

companies that have already reported so

the setup is not bad at all so what do

you do in the setup except DCA well Tom

you've been banging the drama about DCA

this and DCA that and DCA normally if it

goes up DCA faster if it goes down but

what else well there's actually a lot of

opportunities in the market even as we

speak today yes Nvidia corrected yes

paler corrected back but there's still a

lot of opportunities one is what Tom Lee

has been saying for weeks for months hey

look at the iwm look at the Russell 2000

look at the small caps these guys

haven't had an all-time high in 700 days

in two years they've completely missed

the 2023 rally and they're down from

November 2021 minus 12% and all of this

happens because the FED rais in interest

rates guess what happens when the FED

starts cutting rates it's going to be

the opposite Tom Lee is saying it not me

the opposite process is about to happen

and the funny thing about it is despite

the market being very good at pricing in

in present times future developments

somehow the iwm is still lagging since

Black Monday on August 5th it's up 5%

the Fang is up 10% so half the Fang so

Tomley isn't wrong here it might take

time and it might find new bottoms

before it spikes up again I don't know

but as a general concept if you're

looking for on top potential the Russo

2000 is in a really good setup If the

Fed actually drops rates and if the

economy doesn't collapse to this point

it seems the economy and collapsing and

fed is dropping so that's a really

interesting space to actually explore

opportunities in now I want you to

understand something despite the

choppiness ahead despite the volatility

ahead despite the potenti potential deep

stock market correction that might

happen who knows the rest of 2024 after

that plays out seems to be in the great

setup for a bull run now I remain

bullish which means I'm going to be

doing the following I'm going to be

using the sideways period we have in

August potentially if it continues into

September which statistically it should

I'm going to use the next month and a

half to acquire cheaper stocks and then

when the market if the market goes into

hyperdrive in October November December

then I'm going to slow back down and DCA

is normal that's the only thing I'm

going to do waren buet literally tells

you hey when everybody's bullish you got

to be bearish and when everybody's

bearish you got to be bullish that's all

and we've been doing it we've been doing

it in 2020 2021 2022 2023 this year the

Monday Mayhem that happened we bought so

pay attention keep your head in the game

join our community at Discord discord.gg

NES surround yourself with smart

levelheaded people that's going to keep

you in check and obviously as you can

see since I'm home the academy is going

to reopen once this video launches we're

going to reopen another 10 spots for new

members we have a lot more planned for

this month next month we're going to do

some incredible things in the academy

would love to see you there thank you so

much I'll see you next one