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Well howdy there folks in this sort of market there are a lot of lies being told in this sort of market right now we’re in an ultra volatile market you’ve got earnings going on you’ve got stocks moving up crazy amounts moving down crazy amounts all this going on people are scared people are like oh my gosh my stock about to go down 20 30 percent all these sorts
Of things and um i want to just kind of get through all these lies in one video because i see so much that is said out there and i’m like that’s that’s not even accurate information and the great thing about the stock market is you can look back at data and basically decipher whether things are lies or whether they’re truths essentially and so i want to kind of
Share my perspective somebody that’s been doing this for a really long time and kind of show you the data behind it okay i hope you enjoy this video i hope you get a lot of value out of it today i think it’s a really really important video first thing you’re going to hear out there that i don’t know how this gets out there but the fed everybody talks about the fed
Right and so people assume or people are told that essentially if the fed raises rates that means the stock market’s going to be a disaster zone we’re going to head down it’s going to be a bad stock market and if you look back just a data throughout time you find that is the furthest thing from the truth okay so 1971 through 1974 essentially the s p 500 did go
Down outside of that period and that’s when rates went from 3.75 to 13 outside of that you’re gonna find that every single time period the stock market actually went up and did very very well okay 1976 through 1981. look at this the fed funds rate went from five and a half percent which we can’t even imagine a five and a half percent fed funds rate it went from
Five and a half percent to twenty percent twenty percent could you imagine a twenty percent if you told people we’re going to have a twenty percent rate like everybody out there would say the stock market is going to crash like 50 right but look at what happened here right fed funds rate goes from five and a half to 20 and the s p 500 over that time goes up 68
And given that’s not even in the computer age that wasn’t even in this ultra age of uh productivity and artificial intelligence and all the crazy advantages we have nowadays right that’s extraordinary that the fed funds rate went to 20 and the market did not only good it did amazing during that time period right 68 percent return that’s a no joke was holy smoke
Is right there okay now 1983 to 1984 we went from nine and a half percent to eleven and a half percent and what happened s p 500 during that year we went up eight percent 1985 through 1988 went from six percent fed funds rate to 9.75 remember these rates are crazy high like we can’t even fathom these type of rates right and what did the fed what did the s p 500 do
During that time when the fed was raising rates went up 52.42 that’s extraordinary once again this is totally before like the computer age and and all the things companies have that are super uh advantages now through looking at their data for their businesses and um all the outsourcing and basically global manufacturing all these things weren’t even a big thing
Back then and still we had an extraordinary market every single time the fed raised rates 1994 to 1995 what happened we went from three point two five percent to six percent and the s p 500 during that year went up four point four percent 1999 to 2000 went from five percent to 6.5 percent s p 500 went up 10.48 during that year we’re seeing a trend if we look at 2004
Through 2006 went from 1.25 to 5.25 that’s a big raise there okay s p 500 during those two years went up 17.7 percent and then 2015 the most recent one 2015 through 2018 we went from zero percent to 2.5 and the s p 500 during that time went up 28 and that was despite during that time uh the tariff situation which was huge news in the stock market during that time
Everybody’s talking about tariffs and how companies profitability was being hurt during this time because of the tariffs and all this stuff right all that that drama was going on and yet the s p 500 still found a way to return over 28 during that time right so what you can learn from this is in fact if the fed raises rates that does not mean the stock market’s
Done doesn’t mean we’re ruined doesn’t mean all our stocks are going down you know 50 from here doesn’t mean that at all actually what it does mean is we’re actually more than likely going to have a really good stock market if the fed raises rates and that’s just going to pass that’s just going on literally the facts and the data from the past okay if we go ahead
And i want to give this gentleman a credit for this downtown josh brown okay let’s take a moment to break down the hysteria okay the average total return for stocks during a rate height cycle positive 23 a big caveat that you’re you’re not seeing is a volatility on the way to those returns that’s on the table right for example 1973 through 1974 was rough you had
The vietnam war you had watergate you had the arab oil embargo you had inflation and stocks fell 50 before recovering stocks historically hedge inflation better than any other asset class by out distancing it over time but there’s a price you have to pay for this work and that is volatility and that’s essentially exactly what we’re seeing right now in this market
So much volatility in this market it’s it’s insane right you’re seeing uh literally i covered this last week i told you guys we’re seeing you know the mega cap stocks large cap stocks the biggest of the big companies trading like penny stocks where some of these stocks are moving down and up 20 plus percent and these are companies with hundreds of billions of
Dollars of market capitalization like i mean if this was crypto even people would be like this is crazy okay never mind the biggest of the big companies and so you you the price you have to pay during this time is this ultra volatility that freaks a lot of people out and what ends up happening is a lot of people get scared right a lot of people end up making very
Poor short-term decisions around their money and they sell out of stocks and they let uh other bigger investors who under who have the right mentality and understand here’s the thing right imagine for a moment and then i got a lot of other cool stuff to show you guys in this video okay imagine for for you know this example you got a stock here okay this stock is
Um ten dollars a share let’s say for instance right now now everybody understands based upon where this net income for this company is going over time and what valuation they should be able to command that this company is likely going to become a 50 stock right so you got the stock at 10 it’s likely going to 50 over the next five years so if this stock reports
Batter and good earnings whatever the wall street wants to look at whether that stock goes down to eight whether it goes down to nine whether it stays at 10 whether it goes up to 11 12 13 14 down to six it doesn’t matter in the end it’s all just a huge buying opportunity because the stocks likely go into 50 over the coming years right and so you the the finesse
Of wall street right in the the beauty behind the madness i guess you could say is that the people that get scared in these sorts of markets they sell out of these great assets for prices that are usually disgustingly low because they’re scared because they’re getting shaken around with all this volatility right even though they don’t have to sell out they don’t
Have to sell out but they’re in this situation where they feel they have to sell out because it’s so scary and so they sell out the big funds come in buy up those stocks the hedge funds all big money they come in load up on those shares and then everything likely ends up working out for that company next thing you know it’s a 40 50 60 70 stock in the coming years
And the smaller monies over there looking like oh yeah i remember when i used to hold that stock but it was scary because i held it in this year and there was dot dot going on and the fed was going to raise rates and it’s like the fed was going to raise rates and you sold out of a company that’s got a great business model for the next five ten years in front of
Themselves and growth to through the roof for the next five ten years and you sold out because the fed might raise rates like what are you doing here yeah the fed raises rates that’s usually a very very bullish thing for stocks so but this is what happens in the market and um it’s unfortunate because it happens over and over and over again and this isn’t the last
Time it will happen and won’t be the last time it happens it’ll just continue to go on right this is a great uh post b man sent me essentially i love this one okay a days decades the simplest post you ever saw right there but i’m like it’s the truth it’s the truth you know in this market you’re up you’re down you’re all around right and a lot of us have been hit
Very heavily the past several months and you know it’s been it’s been painful there’s been a lot more downs and ups right but over time this is the trajectory this all of the volatility will go away next thing you know will be smooth sailing and we’re going to have some crazy upward moves and you know everything kind of plays out right and the great companies that
Have um unbelievable business models that are going to grow revenues 10 plus per year year after year after year after year their stock prices will thrive and um there’ll be a ton of money to be made right now look at this so risk shows you the russell growth index essentially january performances obviously recently it was the worst one we’ve ever had so it was
A rough but you know a lot of folks assume well okay russell and all the markets we’re down you know significantly in january well that means it’s going to be a horrible year not at all there’s many times that you’ll see we’ll have a bad january and actually end up having a great year and uh the market actually ends up trending up quite well and so and never get too
Caught up into this whole making a judgment based upon oh january was a disaster that means this whole year is done we’re done and actually if you listen to what a lot of folks say even tom lee and some others they said you’re going to have ultra volatility i try not to make you know short-term uh market predictions myself because you know that’s just not my thing
But in terms of the people that do like to stick their head out there and try to make those predictions almost all of them even the people that are very bullish on the market said we’re going to have tremendous volatility in the first half of this year you’re gonna have some massive moves up some massive move downs and that’s exactly how we started out this year
The worst january ever but that doesn’t mean the whole year is done essentially doesn’t mean like oh man you know the russell’s done for this year the the s p 500 is done for this year nasdaq because you’re going to find many of these years the markets actually ended up trending back and recovering very very nicely as the year went throughout and by the end of the
Year many of those years you ended up actually coming out with a gain and some of those years you end up coming out with 10 plus gains and that’s just for the overall markets remember some stocks in there are going to be up 30 40 50 60 100 plus right so yeah don’t get caught up into well it started out so bad so it’s gonna be a whole bad year it doesn’t mean that
At all okay it’s just another thing that you know folks like to try to you know say and it’s just it’s completely false right now you have obviously earnings season going on right now and this is about to we’re about to get into small cap season really this week starts kind of the small caps and then we kind of got that going for like the next three weeks maybe
Four weeks essentially small caps i know a lot of my small caps are all reporting of course air gaming is one of the first to to report okay and essentially what you have happened here is everybody starts to look right and they see all this volatility in the market and they start to make decisions around buying or selling and not really buying stocks but selling
Out of stocks that they really like for the long term because they’re about to report earnings and they’re thinking oh man you know i should probably sell other stock because it could go down 20 could go down 30 right could go down 15 10 and um you know i don’t know if i want to go down like that maybe i’ll just buy back and so they put themselves in this mindset
Where they start making all these short term decisions and that’s just not the way to invest at all and the sad thing is people are doing this with companies that they ultra believe in for the long term they’re just scared and they’re like ah maybe i’ll be able to buy it back for 20 cheaper the next day after they report because look at all these stocks that have
Fallen right rather than look at it from the perspective of oh it could also go up as well right why do i need to make a short-term decision to sell out of a stock when it could easily just as much go up as they could go down right and you saw this with the amazon earnings perfect example amazon’s obviously a great company we all know that right there’s nothing
You can really say bad about amazon i mean i know their their growth is not going to be uh what they had expected to be this year at least in 22 but outside of that like amazon’s a beast like it’s a it’s a fun you know the company has so many different businesses it’s it’s it’s just it’s an incredible company right but you had people selling on the stock in mass
The day before earnings because they looked at the facebook earnings and in you know what meta i don’t know why i still call it facebook meta fell 25 on their earnings and so amazon shareholders right they got scared and they’re like oh my gosh you know look what happened to paypal look what just happened to meta maybe we’re about to go down and what did they do
They they went to the floodgates and they sold that stock and they sold that stock and they sold that stock and ended up moving down like seven percent the day before earnings which is extraordinary because amazon’s a one and a half trillion dollar company or so so you know how many people need to go out and sell and put selling pressure on that the the day before
Earnings to get that stock price to go down the way it did and here it is right amazon’s a great long-term company and people are trying to time this out and trying to be like oh it might go down 20 percent 25 so let me get out i’ll get back in after earnings and it’s just the silliest thing and guess what ended up happening obviously to amazon well stock went up
And i had a great next day and so then people are next thing you know you sold out at you know 2700 something and then you got to buy back at 3100 3200 you know 400 500 a share more expensive than essentially where you sold out at and it’s like for what for what because it could go down it could easily go up as well and keep in mind the more battered stocks are the
Higher probability that if they just report decent numbers something positive in there their stock prices are going to fly up amazon’s stock price was higher in uh the summer of 2020 than it is today it was 3 450 back in july of 2020 and so going into these earnings at 2700 you know it was really low and i even had serious thoughts i was going to throw 100k just
In amazon um i didn’t do it because i looked at it from a perspective of i was like you know that would be even me making a short-term decision right i love amazon for the long term but i was looking at it from a perspective this stock’s so beating down it’s 27 100 something high probability uh something will be seen as a positive and there and the stock will go
Up obviously hindsight’s perfect and i wish i would have done it but that would have been me making a short-term decision right and i’m like nah don’t go there jeremy we’ve done that earnings trade just crap before let’s not go down that route but i have serious thoughts about that right and so this is where you start to get everybody in this sort of market that’s
Ultra volatile right starting to make these short-term decisions these just aren’t decisions that would usually be made but when the market gets ultra volatile people make that and it’s sad because look at how many people sold off that stock the day prior to earnings for what for what man you know to hopefully it goes down to 2 400 you know sure it could happen
It just gets when these stocks get more and more beaten down it gets more and more unrealistic stock hasn’t moved in a year and a half you know to get it down to 2400 would have been a beautiful thing but it’s it’s pretty darn unrealistic right you know it’s like you start getting very very greedy in the market and that’s the thing that happens right people start
Getting really really greedy in the stock market stocks you know continue to go down and down and down and it can’t get low enough people are like oh it’s going to go even lower and i’ll buy it down it’s like you realize how greedy you’re getting by hoping these stock prices continue to go down more and more and more same thing happens on the upside right when
Stocks are going up and up and up people are like you know one percent drop in a stock people are like bye bye-bye got to get in and it’s just it’s it’s silly in the end right i posted this in the discord chat because there’s another lie that’s obviously told out there like the market’s been so amazing it’s been so amazing and so i pulled up the russell and i
Was like you know i feel like the russell hasn’t really done much and i feel like the you know some of the other indexes have definitely outperformed the russell so i posted this i look back at the past five years the russell’s up 45 44 in the past five years and you think about the the flood of money out there you think about how much progress has been made from
Companies uh you know in the markets in general right in terms of the russell and a 44 percent gain in a five-year period is is not good not good especially for a time period where the flood of money was out there and you had a lot of companies making great progress with their businesses and we’re obviously living in a time period of um you know really ultra ultra
Profitability for companies out there in the way they figure out how to run their businesses more profitably more profitably than we’ve ever seen right and so that’s just this is not great performance in the end right and this is another thing that’s kind of told out there and it’s like you know you really look at the data and you’re like 44 5 years you know that’s
Okay but not great when you’ve had this flood of money out there so you know and if you look at the valuations i go over this all the time the ford p metrics and things like that uh for small cap stocks we’re trading at uh unsustainably low prices essentially and that cannot last for very long you know i looked at the s p 600 small caps you know that’s that’s not
Um that’s not sustainable how low we’re trading even mid caps are trading so unsustainably low uh the market can only stay in those unsustainable levels for so long and then it has to come back and so what ends up happening in this sort of market is the smaller investors have their shares essentially almost stolen from them because they end up making really bad
Decisions around short-term selling and meanwhile long-term investors who who you know uh understand this game they buy up those shares at significant discounts and those companies their gross stories are likely going to play out i mean while the people that didn’t really know what they’re doing they just had their shares essentially stolen from them and it’s
Unfortunate and it happened i’ve seen it happen before it’s going to happen again it’s happened to me when i was in my first few years of investing and um you know it’s just it’s unfortunate end and so the moral of the story is don’t make short-term decisions to sell out of stocks uh based upon it could go down because it could easily just go up and at the end
Of the day if you’re really truly a long-term investor who’s planning on holding that stock for the next three five seven years you’ve got to be willing to hold through the earnings and if you get a big dip cool buy the dip right and if you don’t then great you know you prosper but there’s no there’s no worse feeling to me personally than trying to sell out of
A stock because it might go down and then that stock goes up and you’re on the sideline that to me is the worst feeling i would much rather be in a stock and it goes down 20 then me sell out of a stock and then it goes up 20 i’m on the sideline looking at an alumni yeah i sold out of that and now it’s up 20 great great job jeremy okay there’s no worse feeling
Than that in my personal opinion okay we got a massive valentine’s deal sale coming up for the private stock group financial fortress program if this is a time period when you want to take stock market investing serious which it should be uh make sure you check out pin comment down there sign up for the wait list so you can we can send you that deal as soon as it
Comes out uh it’s a pretty big deal make sure to subscribe the channel much love as always keep your head out there and have a great day
Transcribed from video
This is a BIG LIE By Financial Education