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Jim polson has come out and said that the stock market returns we’re gonna get for the next five years are gonna be very weak we’re gonna look at exactly why he’s making this expectation that the markets gonna be weak for the next five years when i look at what he said and i’m gonna tell you why you don’t have as much to worry about if you are a stock picker out

There and i’ll explain why in a detail right there so right off the bat let’s check this out here guys somebody must have flipped his flapjacks wrong he is bearish on the stock market he says stock market returns are gonna be weak for the next five years okay five years now who is this guy jim paulsen i’ve seen him a lot on cnbc and whatnot over the years bloomberg

And whatnot he’s a chief investment strategist at the laphroaig group llc he’s also a member of the investment committee he authors market and economic commentary like i said i’ve seen him on cnbc bloomberg and a lot of those publications in the past olson has been an investment industry professional since 1983 most recently as chief investment strategist at

Wells capital management where he worked for 20 years all right i just thought it was fun to like look up his net worth and i was like dang this guy’s worth seven point eight billion i can’t believe it that’s insane but i found it wasn’t him it was a guy named john paulson who i think runs a hedge fund i couldn’t find anything about it but so let’s look at what he

Actually has to say here okay he says get used to it stock market returns are gonna or setting up to have a tough five years ahead as economic benefits shift from wall street to main street that’s a conclusion of a model constructed by jim paulsen chief investment strategist at laphroaig group who said a sharp rising consumer confidence compared with the generational

Low in unemployment has happened before and almost always signified a low or worse in the mark this is quote from him because confidence is high today the unemployment is low ie the capacity this recovery is near a peak the risk return profile of the stock market had worsened considerably now and investors should prepare for far less satisfying returns for the neck

Five years polson said in a note to klein’s it’s a big prediction there say the markets gonna be weak for the next five years but it’s not like he’s got a doomsday theory for the overall stock market who’s not like he’s one of those guys that has a doomsday theory for the whole economy we’re gonna have a crash a stock market crash i a massive recession a depression

You know he’s not one of those guys he’s just saying that the market returns are gonna be weak the timing of analysis seems apt as multiple economic signs point to above trend growth ahead while stock prices have languished as we know recently okay however polson said his main street meter isn’t met by a market timing device but rather a look over the long term

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On what can be expected from stocks now the economy may have turned a quarter rising values in the msm almost always other than the 1970s i guess was an exception coincide with lower equity values and vice-versa the indicator reached its lowest reading since 1960 as a current bull market began it now sits at the third highest level as measured by the university

Of michigan’s consumer confidence survey compared to the labor department’s core measure of unemployment when the ratio is high main street has probably been good for a while poulsen says ok so once again he’s not necessarily bearish on the overall stock market in the sense of oh we’re gonna have a stock market crash coming up we got a massive recession coming up

Anything like that he just says while looking at the trends and look at how the economy strengthens i we believe that main street is going to start getting benefits and wage growth and those type of things but actually wall street the returns are gonna be very good so now i want to get into two points with you guys on why you shouldn’t worry quite as much ok you

Shouldn’t worry quite as much so the first point the first point we’ll talk about here is you assuming you know you’re a subscriber here and you actually pick stocks yourself you’re what we call a stock picker okay you are a stock picker and the great thing about being a stock picker is regardless whether the market let’s say goes you goes nowhere for a year or

Whether the stock market goes up 5% a year or twenty-something percent in a year like it did last year right regardless of what happens you as a stock picker give yourself an opportunity for phenomenal returns okay the only time a stock picker really you know can’t make much money in the market is maybe if we’re in a massive crash at a particular time a massive

Recession something like that and even those times you can pick up a lot of great values everywhere and also if you know how to play with options you can make a lot of money on put options some of those kind of things so there’s always there’s always opportunity to make money in the market but years where the stock market is not going up a ton you as a stock picker

Give yourself a great opportunity like this is our time to shine right if the stock market is gonna be weak the next five years okay if it only goes up 1% 3% 5% a year it is what it is us as a stock picker guess what’s gonna happen okay there’s gonna be a ton of stocks that go down massively there’s gonna be a ton of stocks that go up massively it’s our job to

Find the ones that are gonna go up massively and invest in those companies the ones that are undervalued and have big growth going for them okay it is a simple dealio okay it’s a simple dealio so you as a stock picker that’s the beautiful thing is you give yourself the opportunity when the stock market just goes up a ton right everybody makes money everybody makes

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A ton of money and it’s just brand in whether you’re a stock picker or whether you just got your money in an index fund or it’s in your 401k or whatever like regardless you pretty much make money if the stock market goes up a ton when when when the real players start to shine is when the markets not really doing much and people are like dang man i can’t make any

Money up from the stock market right now and then you got stock pickers out there that have stocks that are up 20 30 40 50 percent and it’s like i’m doing okay okay so that’s the first point okay the second point is i don’t totally disagree with him in the sense of stocks might you know just kind of be lame it might be a lean period i don’t know i would say i’m

Much more bullish on the overall stock market where the overall stock market won’t go i’m certainly not bearish on the stock market like like unless i see economic data weaken in a real way like i’m still very bullish on the stock market but could it be a lame period it could i think i think you know the markets will do good i think there are certain industries in

The stock market that i think are going to continue to be weak such as any industry that counts on low-wage jobs okay we’re talking about jobs that pay minimum wage or something very close to minimum wage because what you have when an economy is strengthening okay everything is getting stronger across the board then also wages are getting are going up okay when

You have wages going up those hurt those business establishments that basically just have a bunch of minimum-wage workers okay and just because the economy strengthens doesn’t mean necessarily people are going to go buy more big macs or walker’s or something like that right those type of industries can be hurt in a real way also they lose a lot of they’re better

Employees because you know as economy strengthens more and more jobs are available there are actually more jobs available right now than there are people out there to fill the jobs united states of america right now it’s a pretty remarkable time at the moment right now okay so when you have that type of situation basically anybody that pays low wages you’re at a

Huge disadvantage right now because you’re gonna have your your workers are gonna leave they’re gonna leave they’re gonna go get a better job somewhere else and a lot of people are unmotivated by getting better jobs and money and those type of things okay but here’s what happens things get more expensive as the economy strengthens real estate cars anything okay

Across the board things start going up inflation starts to happen as the economy starts to strengthen okay so what you end up happening is you have workers that maybe aren’t as motivated well guess what when everything’s getting more expensive they’re forced into a situation where they have to go look for a better job because i like banging this one paying $10 an

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Hour it’s just not cutting it let me go look for another job oh there’s this one opening over here for $17 an hour let me go apply for that job that’s what ended up happening so even the unmotivated workforce which is a good percent of the workforce out there i would say a quarter to at least a third of the workforce is pretty unmotivated let’s just put it that way

When you have even those guys and gals reaching up for jobs that hurts the low paying industries even more because they’re losing some of these workers that you know and they’re just kind of stuck with the the last trend of workers they’re the last trend to workers it’s a tough situation of being for some of these companies okay so i think his i think his point is

Interesting you know he’s definitely not a doomsday person which i respect because these doomsday guys that all are always saying all the stock murray’s going to crash huge recession they say year after year day after day it happens every single time they do this for years and years and years and then they want a pat on the back when someday eventually the stock

Market does go down when someday eventually we have a recession it’s like dude you’ve been saying that for five six seven years now and you want to pat on the back because finally it came to fruition finally it happened guess what guys i’m here to tell you there’s gonna be a recession someday there’s gonna be a stock market crash someday who the hell knows when

It’s gonna be it’s gonna happen someday okay but all these guys that want to pat on the back for you know saying it whenever it does happen it’s like dude but when you say it all the time it’s just i don’t even know how these guys have credibility i think you know cnbc in bloomberg they just bring them on to get ratings up or something and get an interesting

Conversation but i’m like they bring these same guys on sometimes that have been doomsday guys for years and years and years and years i mean mm you know 14 they were saying that we’re gonna crash 2015 2016 2017 they’re still saying it it’s like dude where’s where’s the crash we’re still waiting for your big crash man when’s it gonna happen so interesting stuff as

Always let me know your guy’s opinion down there in that comment section i would love to hear from you guys as always make sure you follow me on instagram if you have not already i posted a ton of content on there especially anything in relation to news and the stock market monday through friday a lot of content going on there thank you for watching have a great day

Transcribed from video
Jim Paulsen "STOCK MARKET WILL BE WEAK FOR 5 YEARS" By Financial Education

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