The Stock Market Is About To Collapse (Do THIS Now)
Summary
TLDRThe 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
🚨 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.
📈 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.
💡 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.
🔄 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.
Mindmap
Keywords
💡Stock Market
💡Correction
💡Overbought
💡Dollar Cost Averaging (DCA)
💡Cost Basis
💡Leverage
💡Stop Loss
💡S&P 500
💡NASDAQ
💡IPO Activity
💡M&A Activity
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
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