Stock Market at All time Highs! – Are we in a BIG BUBBLE?

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Good day subscribers thank you so much for joining me today i am jeremy this is a financial education channel and today we’re talking about stock market at all-time highs the stock market closed today at all-time highs the highest has ever been ever in history guys and the question is when you see a day like today you wondered are we in a big bubble is this bubble

About to pop and i pulled up a lot of statistics and things we’re going to dive into here today on this video and look and see do we have something to worry about out there or things just copacetic are things okay you know is a stock market a good value right now to get into is it an overpriced value if you’re buying in all those kinds of things guys and the reason

I don’t do a lot of macroeconomic related videos on this channel is mainly because i have like a philosophy that if you focus on small companies if you focus on investing in the small companies that will do well despite a recession or despite anything that happens out there then you’re doing your job you’re doing your job right you can’t just sit there worrying

About if the next recessions coming or if we’re in a bubble and all those kinds of things but i am aware and i do pay attention these kinds of things and i have a perfect analogy guys say there’s three guys they’re all going out surfing right well one guy decides he’s just gonna sit on the beach all day because he heard there were a couple sharks in that water

A few months ago and he’s like screw that i’m just gonna look out there i don’t want to i don’t want to get eaten i do not want to get eaten i’m just gonna look for sharks all day another guy he goes out there he doesn’t care about anything he’s like i’m just gonna have fun i don’t care about sharks the third guy he goes out there he surfs he has a great time

But he’s always paying attention to his surroundings he’s always aware you know looking out for things but he’s having a great time i like to be that third guy the third guy is a guy i like to be where i’m in the markets i’m doing things i’m investing i’m trying to make money i am making money all those kinds of things but i’m also aware i’m paying attention to

What’s going on in case that shark does come i don’t want to be eaten whereas the second guy he might just get eaten and the first guy he’s never gonna make any damn money no matter what because he’s never involved in the stock market he’s just a negative nancy you things although everything’s overvalued don’t matter what there always have a reason or what not so

That’s my analogy guys so let’s die into this so first off the stock market closed at pretty close to 20,000 were approaching now 19,000 750 it’s amazing because when i started in stocks the dow was at like 7000 that doesn’t seem that long ago guys it was like 8 years or something it’s amazing we’re at that now now one of the statistics i love to look at is the

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S&p 500 p/e ratio as a whole so taking all the companies that are in the s&p 500 what their earnings were last year versus what their stock prices are currently right now we have a value of excuse me a p/e ratio of 26 that’s very very high unless we assume that companies are earning a lot more this year and will earn a lot more next year than they did last

Year so this is this is a trailing ratio here guys so it’s basically everything the companies are in last year versus our current stock price but you can see that’s much higher than any year’s in recent history the last time it was this high was 2009 which was in the great recession guys it’s never even been close to this high lately you know we had a 20 in 2010

We had 16 2011 2012 he had 14 it was unbelievable 2013 17 and then it’s just gotten higher and higher and higher until now we’re at a 26 so super high but you know we got a lot more things to dive into here 2010 to 2012 by the way of my favorite time ever investing it was a shooting fish in a barrel because company’s profits were going up much higher p/e ratios

Were relatively low you know that’s why i did that’s why one of the main reasons i had such great returns is most of the company you can invest in during those years most of them went up some of them went up a lot more than others but most of them went up as a general hold because everybody’s earnings were pretty much going up and p/e ratios were so low it was a

Fabulous fabulous fabulous time to be investing guys who doesn’t tend to 2012 so let’s go ahead and look at this here guys this is basically what i have pulled up here this is gdp growth and this is for the entire world so it’s taking them to the entire world gdp growth and look at we’re pretty we’re in a pretty low level here you see the basic mean it’s a round

Of three for the last few here guys last three four years were were under three we’re at about two and a half and that’s kind of where we’re stuck right now you can see when times are really great and things are growing very nicely we’re well over a four but the median ratios are about a three so we’re we’ve been under three for a little while now a few years here

Guys so that that to me shows that unless we can get back above three we’re probably we’re probably overvalued a bit because how companies suppose it’s being bring down those p/e ratios a lot if the gdp growth around the world is not gonna pick up to a substantial amount you can see years when we had gd a great gg well let me speak great gdp growth we had also

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Great stock performances generally speaking you would look back most of those years were in the world gdp growth was over four percent of those are generally pretty good years to be in the stock market very good years guys i can tell you 2010 you know look at where the gdp growth was 2011 and i can tell you his stock market went up quite nicely those years it was

Quite nice here so i’m looking at this i’m like gdp growth really has to get back above three percent worldwide for us to bring down those p/e ratios a bit no this is from the wall street journal and i’ve been thinking this for the while now and this was basically an article posted from october so a couple months ago the federal reserve officials are concerned about

Rising corporate borrowing lever levels minutes from the feds most recent meetings show according to the minutes from the the late september policy meeting released wednesday some members of the federal open market committee worried about some corporations are using ultra low rates to do more than usual borrowing if you participants express concern that protracted

Period of very low interest rates might be encouraging excessive borrowing and increased leverage in non-financial corporate sector the minute say i’ve seen this guys time and time again some of these huge companies big companies even apple for instance are taking out billions of dollars tens of billions of dollars sometimes even hundreds of billions of dollars

Worth of debt basically to buy back their own stock it’s not like the lot of these companies like borrowing to build a huge manufacturing facilities and create all these kinds of jobs that a lot of them are borrowing money straight up to show they can buy back their debt and they’re paying it at such a low interest rate that they’re like okay that’s fine we’ll just

Pay two to three percent of interest rate let’s take out a big fat loan and buy back stock and is it’s financial engineering at its finest and i’ve seen this with so many huge companies guys so i’ve been thinking this for a while the feds now talking about it and it’s a big concern let’s look at some statistics here guys borrowing surged look at the us sales of an

Investment grade non-financial corporate debt year-to-date look at how high it is it’s right for the highest it’s ever been in the history of the united states here guys unbelievable is way higher than right before the the financial crisis which you see how high there was during the excuse me right before the financial crisis there in 2008 look at where we’re at

Here guys almost 700 billion and like i said this money is not being really used to make a bunch more jobs or or create a bunch more manufacturing facilities and all that kind of stuff this money is really being borrowed just to take out no debt so they can buy back stock financial engineering guys so let me even take out that to pay dividends and i think that is

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So ridiculous i’m like how is that even allowed you can take out a debt to pay dividends it’s insane but that’s what’s going on guys so i look at this and it worries me it worries me do i go ahead and jump out of stock market now no now there’s one last factor and i can’t give you any statistics behind this i can’t show any facts or figures it’s called the jeremy

Reading basically what the jeremy reading is is i look through companies constantly guys you know that i do it on this channel i do it in my private time all those kinds of things when i have a lot of trouble finding good deals that means we’re probably a little overvalued in the market right now i have the hardest time i’ve ever had my investing life finding

The deals in the stock market allah why it went a hundred percent in gopro i posted the video yesterday i’m a hundred percent on one stock usually i only go 100 percent on one stock if i believe it is so much like we talked about i can’t find that many other good deals i look around it i don’t see much for good deals you know i like when and i like apple and i

Was invested in those and i think there’s still decent decent values but even those names they’re not like oh my gosh this is the greatest deal ever in history and i see i see so many overvalued companies i see a lot of companies and i’m like i wouldn’t want to bet a guy that i wouldn’t really want to buy that i search through his stocks it is so hard for me to

Find a by guys you know we do that isn’t a by section on the on the channel every week so many of those companies are almost never a buy i’m like well if you drop 10 and 20% then there’s a buy but it’s so hard to find value out there right now so that’s the jeremy reading and and i think this is just kind of like i don’t know we don’t know unless world gdp growth

Really takes off then we can begin to see either you know the p/e ratios on a lot of these companies come down quite substantially to more of a middle range because average p/e ratio on the sp500 is usually around 15 so one way way way about that guys we’ll see how this plays out it will be fun to see well hopefully unless we’ve enough in a recession or something

That won’t be fun unless you’re a short seller and then in that case good luck anyways thank you so much for watching your come across this video and you have not subscribed yet you may want to talk about personal finance in the channel talk about entrepreneurship i’m an entrepreneur and we also talk the stock market the most on this channel thank you for watching

Guys and have a great day you

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Stock Market at All time Highs! – Are we in a BIG BUBBLE? By Financial Education

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