Valuetainment - December 05, 2018


Episode 224： 8 Ways to Prepare for Economic Collapse


Episode Stats


Length

25 minutes

Words per minute

201.49956

Word count

5,142

Sentence count

455

Harmful content

Misogyny

3

sentences flagged

Hate speech

2

sentences flagged


Summary

Summaries generated with gmurro/bart-large-finetuned-filtered-spotify-podcast-summ .

Is a market crash coming? What does it really mean and how can we prepare for it? What is a black swan? What is an economic collapse? What are the odds of it happening and what can we do to prepare?

Transcript

Transcript generated with Whisper (turbo).
Misogyny classifications generated with MilaNLProc/bert-base-uncased-ear-misogyny .
Hate speech classifications generated with facebook/roberta-hate-speech-dynabench-r4-target .
00:00:00.000 30 seconds. One time for the underdog. Ignition sequence start. Let me see you put them up. Reach the sky, turn the stars up above. Cause it's one time for the underdog. One time for the underdog.
00:00:17.320 I'm Patrick Bedeby, your host of Value Entertainment. And today we're going to talk about the one topic everybody is so concerned about, which is market crash, economic collapse. Is it coming? And if it is, how to prepare for it?
00:00:27.820 By the way, before I get into explaining everything, one of the facts I'm going to share with you and I want you to be thinking about and answer it. And see if you can get the answer. Since 1926 till today. 1926 till today. That's roughly 90 something years of the market. 92 years of the market. How many years do you think market's been in the positive? Out of those 90 something years, 92 years, how many years has the market been in the positive?
00:00:54.640 Like I want you to say 22%, 43%, 68%. What do you think it is? I'm going to answer that in a few minutes before I get into it. So having said that, let's start off with definitions first.
00:01:04.960 Number one, everybody drops this word about crash, correction, bear market. What does it really mean? A market correction is when the market tanks by 10%. A bear market is 20%.
00:01:16.400 And a crash is when the market tanks 35% to 60%. That lasts three to six months. When that happens, that's a crash.
00:01:25.140 So now, a lot of these words you hear about correction, bear market crash, it's also, you're hearing a lot of people say recession and some channels are even talking about depression.
00:01:33.580 We need to always know the difference between recession and depression.
00:01:35.800 Recession is when a market economic declines six straight months or higher. If it lasts for six months or higher, then we're in recession.
00:01:45.320 A depression is when the market is in recession for two plus years and the GDP of the country drops by 10%.
00:01:54.920 When that happens, we're experiencing a depression.
00:01:58.180 So if anybody drops that word, you've got to be able to say, wait a minute, depression is, you know, we're talking about two years and we're talking 10% GDP.
00:02:05.000 That's very unlikely. I'll give you the history of what that really means when it comes down to the numbers.
00:02:09.040 But the part that you really have to worry about, and this is the part that no expert can explain to you on what could happen, is the one word you hear.
00:02:15.740 It's called black swan. People will say, oh, we may have a black swan. A black swan may happen. A black swan may happen.
00:02:21.960 This word's being dropped. So what is a black swan?
00:02:24.860 A black swan is something difficult to predict with massive, massive economic consequences.
00:02:32.520 So we can't predict a black swan. A 9-11 could be a black swan.
00:02:37.020 A thing that even if you watch the movie Big Short and they could be able to predict it based on all the nagging loans that people weren't making the payments on their mortgage payment,
00:02:45.200 that's not a black swan because that one the experts could predict.
00:02:48.040 It's something we cannot predict. That's something we always have to worry about.
00:02:51.620 That's not what this video is about. This video is about things that you and I can predict and things that we can watch and see trends and say,
00:02:56.820 okay, I can kind of see what's going on here. I have to worry about these three things.
00:03:00.500 I can't do anything about these four different things. So now that's definitions.
00:03:03.500 So now that we've covered some of the terminology, whether what's a correction, bear market, you know, a crash, a recession, a depression, a black swan,
00:03:10.360 let's talk a little bit about history and facts so you can kind of get an idea about some of the trends that are taking place.
00:03:14.960 Because earlier I asked you a question since 1926 till today, roughly 92 years, what percentage of the time the market's been on the up?
00:03:23.800 What percentage of the time each given year has been on the up? What was your answer? I'm so curious.
00:03:27.640 By the way, I would like you to post your answer below comment before I even say it.
00:03:32.600 And after I give you the answer, I want you to tell me if you're shell-shocked by the answer. Ready?
00:03:37.500 Here's what the answer is. 74% of the time the market's been up. 74% of the time the market's been up.
00:03:45.360 What does this mean to you? Listen, every one of these experts that write books, and once they write a book,
00:03:51.820 and they say 15 years from now the market's going to collapse, and it's going to be terrible, it's going to be Armageddon,
00:03:57.500 that book sells for 15 years until people really realize that guy didn't know what he was talking about.
00:04:02.440 And then there are people that say, the market's going to blow up the next seven years, and you should go in.
00:04:06.480 A guy named Harry Dent wrote a book. Everybody was like, oh my gosh, we're going to be billionaires.
00:04:11.660 Everybody's going to be a billionaire. Listen, if everyone's going to be a billionaire,
00:04:15.400 that's an absolute hype that you shouldn't be paying attention to, right?
00:04:18.320 If everyone's going to become millionaires or make a lot of money. It just doesn't work out that way, right?
00:04:22.920 So here, 74%, which means what? No matter how bad things are, in the next 20 years, 15 years are going to be positive, give or take.
00:04:32.460 If we do what we've done the last 92 years, that's something for you to be paying attention to.
00:04:37.280 So let's go a little bit deeper. Let's look at a little bit of history.
00:04:41.040 Every time we've had a recession, how long has it taken us to recover?
00:04:45.080 How big has the drop been? And how long did it last?
00:04:48.640 And last but not least, how much did the GDP of America actually drop off?
00:04:52.700 Let's look at this. May of 1946, we had a recession.
00:04:55.780 It lasted 36 months. The S&P dropped 30% during that 36 months.
00:05:02.460 After the drop off, 15 months it took us to recover. 15 months.
00:05:06.180 And during that period, the GDP dropped roughly 1.7%.
00:05:09.780 Remember, it has to drop by more than 10% to be a depression. Remember that?
00:05:14.300 That doesn't count as a recession. That's why it's only a depression.
00:05:17.100 August 1956, 15-month duration. Market dropped 22.
00:05:21.120 Recovered 11 months. GDP, look at that, 3.7%.
00:05:23.840 That's bigger GDP, even though it was smaller.
00:05:26.780 December 61, duration only 6 months, minus 28.
00:05:30.280 Recovery 14 months, 1.6%.
00:05:32.320 1966, duration 8, dropped 22.
00:05:35.780 Recovered 7 months, 0.6%.
00:05:37.620 Roughly the same the next year. Let's come a little bit to now.
00:05:41.160 Let's go 1990-2000. July of 1990.
00:05:44.520 3 months, minus 20%.
00:05:46.800 5 months recovery, 1.4%.
00:05:48.960 March of 2000, 31 months, minus 49%.
00:05:53.940 55 months to recover, 0.3%.
00:05:57.780 Weird how the GDP didn't change.
00:06:00.100 And in October of 2007, the most recent one we experienced,
00:06:03.400 17 months, minus 57%.
00:06:06.280 65 months to recover.
00:06:08.980 And even that was 5.1% GDP.
00:06:12.960 Which, by the way, if you think about it,
00:06:15.440 5.1% is a very big number in today's economy.
00:06:19.920 We almost got to a depression just 10 years ago,
00:06:22.720 but we had to get above 10%.
00:06:24.680 Do you kind of see what's going on here?
00:06:26.120 Here's the point, though.
00:06:27.260 When you look at these numbers,
00:06:29.820 everybody looks and says,
00:06:30.720 wow, but the market dropped,
00:06:32.220 and what about this, and what about that?
00:06:33.780 Here's one data to be thinking about.
00:06:35.300 I don't want you to make an emotional decision.
00:06:36.760 This is not an emotional, oh my gosh, better worry.
00:06:39.780 From 1997 till today.
00:06:42.360 1997 till today.
00:06:44.840 Say roughly 4,000 days.
00:06:46.840 Each year is 365 days times 11 years.
00:06:49.580 From 1997 till today.
00:06:52.460 If you would have taken your money out
00:06:55.140 and would have missed on the 50 best days
00:06:57.920 from 1997 till today,
00:07:00.800 your portfolio would have been 60% less
00:07:04.840 if you would have missed out on the best 50 days.
00:07:07.380 What does this mean?
00:07:08.660 This is not necessarily a message
00:07:10.300 to those above 55 years old,
00:07:11.900 because it has to do with your age
00:07:13.040 and your risk tolerance.
00:07:14.240 This has to do with the person
00:07:15.360 that's watching this that's 29, 31 years old.
00:07:18.040 You are not necessarily going to be
00:07:19.800 that affected by a market crash
00:07:21.620 if it were to happen on a 20-year period.
00:07:24.540 Because if you miss those best days,
00:07:26.500 you are in a way going to be affected by it.
00:07:28.140 Your network's going to be affected by it.
00:07:29.380 So if you try too much to time it,
00:07:31.160 it'll hit you.
00:07:31.760 So in reality is I'm sharing this with you
00:07:34.420 to kind of get a better idea
00:07:35.900 on how long it takes,
00:07:36.980 what could happen,
00:07:38.000 what are some of the trends,
00:07:38.980 and worst case scenario,
00:07:40.580 how bad has it been,
00:07:41.900 can I handle how bad it's been.
00:07:43.920 If I can't, I'm going to be okay
00:07:45.260 based on my age.
00:07:46.560 We'll talk a little bit about that
00:07:47.840 in a minute here.
00:07:48.460 Let's talk about now cause of crash.
00:07:50.560 What causes the market to crash?
00:07:52.840 Number one, fake money.
00:07:54.780 What is fake money?
00:07:55.980 We just keep having fake money.
00:07:57.600 Fake wealth, right?
00:07:58.620 The next one, fake success.
00:08:00.220 People are rich, but you know they're broke.
00:08:02.500 It's a big difference.
00:08:04.140 People look like they have a lot of money.
00:08:06.100 Let me tell you,
00:08:06.700 I remember we had a guy,
00:08:08.900 he had 18 properties,
00:08:10.760 and he had equity in all these properties.
00:08:12.800 And he would go around telling everybody
00:08:14.120 he's worth $15 million.
00:08:15.600 And in the market tanked,
00:08:17.300 he lost every penny of equity,
00:08:20.080 short sale,
00:08:21.100 everything he had to get rid of.
00:08:22.520 He was trying to sell this property,
00:08:24.000 that property, this property,
00:08:25.420 but at the peak when everything was looking good,
00:08:27.340 he was, I'm worth $15 million,
00:08:29.720 I'm worth $10 million.
00:08:30.660 He wasn't.
00:08:31.720 It was fake money.
00:08:33.220 And the moment we had a crash,
00:08:34.480 he lost it all that went away.
00:08:35.660 You have to be very careful
00:08:36.480 with knowing the difference between fake money.
00:08:38.360 Next one, market manipulation.
00:08:39.720 Happens a lot.
00:08:40.820 Some are done by the public,
00:08:42.740 some is done by,
00:08:43.880 you know, private,
00:08:45.140 by the people.
00:08:45.700 So some,
00:08:46.600 you and I do it,
00:08:47.620 as investors,
00:08:48.440 market manipulation,
00:08:49.380 you try to do it.
00:08:50.400 And the other one is,
00:08:51.460 that the government's doing it.
00:08:52.360 And we talk about that here in a minute.
00:08:54.420 Four, geopolitical terror.
00:08:55.920 9-11 happens.
00:08:57.160 We could experience something like that
00:08:58.360 when it happens.
00:08:59.400 Again,
00:08:59.780 that's a black swan type of an event.
00:09:01.920 It is geopolitical,
00:09:03.040 but it is black swan
00:09:03.820 because it's unpredictable
00:09:04.880 and it's massive consequences.
00:09:07.260 It could happen at any time.
00:09:08.360 You can't control that.
00:09:10.020 Number five,
00:09:10.620 conflict.
00:09:11.520 Foreign.
00:09:12.140 What am I talking conflict with foreign? 0.99
00:09:14.000 Trade,
00:09:14.600 tariffs.
00:09:14.960 You're hearing right now
00:09:15.700 with Trump and China
00:09:16.720 and, you know,
00:09:17.660 Mexico and Canada.
00:09:18.560 Can we get an agreement?
00:09:19.620 Oh, we're going to get it
00:09:20.300 before midterm election
00:09:21.140 because it's taking a hit.
00:09:22.620 What are we going to do here?
00:09:23.600 Some of those things
00:09:24.740 takes a hit into the market.
00:09:26.200 Maybe not a crash,
00:09:27.160 but it can be a hit.
00:09:28.500 Number six,
00:09:29.180 war.
00:09:29.580 Wars hurt markets.
00:09:30.960 Number seven,
00:09:31.520 assassinations.
00:09:32.260 You have to know,
00:09:32.720 that's another thing
00:09:33.320 that sometimes the market
00:09:34.140 takes a hit
00:09:34.760 when assassinations happen.
00:09:36.660 Matter of fact,
00:09:36.960 when John F. Kennedy,
00:09:38.180 I think it's November 22nd, 1963.
00:09:41.600 I think it's November 22nd, 1963
00:09:43.560 when John F. Kennedy was assassinated.
00:09:45.640 That day,
00:09:45.980 they shut down the market.
00:09:46.760 The next day,
00:09:48.040 market took a hit.
00:09:49.260 2.8%.
00:09:50.360 Reagan attempt on assassination.
00:09:52.460 The market tanked 1.2%.
00:09:55.640 Nixon's resignation.
00:09:58.180 The market tanked 1.3%.
00:10:00.680 Cuban Missile Crisis.
00:10:03.200 Market tanked 2.7%.
00:10:04.980 Those are some of the things
00:10:06.580 that you have to know
00:10:07.300 that can cause a crash.
00:10:08.400 And then the next one
00:10:09.060 is bubbles.
00:10:09.660 When it comes down to crash,
00:10:10.580 you've got to also know
00:10:11.080 about different kind of bubbles.
00:10:12.140 Now, what causes a bubble?
00:10:14.020 When bubbles happen, 0.74
00:10:15.480 we are becoming
00:10:16.160 way too optimistic.
00:10:17.200 Lack of irrational common sense.
00:10:19.580 We lose common sense.
00:10:21.280 It's almost,
00:10:21.940 you know how they say,
00:10:23.100 when a person is in love,
00:10:25.200 their brain,
00:10:25.920 when they study their brain,
00:10:26.960 it's as if they're on drugs.
00:10:28.640 When you start making money
00:10:30.180 consecutively,
00:10:31.420 you become irrational
00:10:32.920 and you lose common sense
00:10:34.320 because you really start believing
00:10:35.740 you know what you're doing.
00:10:36.980 And you don't.
00:10:37.920 But you really start believing,
00:10:39.040 oh my gosh,
00:10:39.720 everything's going to be fine for me.
00:10:41.400 Lack of paranoia.
00:10:43.000 Unreasonable confidence.
00:10:44.620 Bubbles controlled by the government,
00:10:45.760 which I'll talk about here in a minute.
00:10:47.200 Some of the bubbles
00:10:47.860 that we've experienced.
00:10:48.700 Real estate, 2006,
00:10:50.020 we experienced it.
00:10:51.040 Bitcoin,
00:10:51.540 a little bit earlier this year.
00:10:52.700 Everybody thought
00:10:53.320 they were going to become
00:10:53.880 millionaires and billionaires
00:10:54.820 with Bitcoin.
00:10:56.240 We realized,
00:10:57.140 after all this Ethereum,
00:10:58.500 Bitcoin,
00:10:59.040 BitCash,
00:11:00.020 you know,
00:11:00.320 everything rippled,
00:11:01.160 all these things
00:11:01.600 that were taking place,
00:11:02.880 we realized that technology's solid.
00:11:04.760 We may be going to cryptocurrency.
00:11:06.540 I don't know if Bitcoin's worth $50,000.
00:11:08.600 I don't know if it's worth $100,000.
00:11:10.400 Some people say still it is.
00:11:12.400 I may be wrong.
00:11:13.720 But a lot of what's happened
00:11:15.160 with Bitcoins
00:11:15.720 was signs of a bubble.
00:11:17.500 Young people were excited.
00:11:19.000 Everybody changed their profiles
00:11:20.240 on their Twitter account.
00:11:22.400 Cryptocurrency expert.
00:11:24.000 Cryptocurrency expert.
00:11:25.320 You're 17 years old.
00:11:26.460 Yeah,
00:11:26.620 but I'm a cryptocurrency expert.
00:11:28.240 All of these things
00:11:29.120 are signs of what a bubble happens,
00:11:30.800 right?
00:11:31.280 IPO bubble.
00:11:32.160 Back in the 90s,
00:11:33.020 everybody was going public.
00:11:35.280 Raising money.
00:11:36.120 Everybody was.
00:11:36.920 Tech boom.
00:11:37.940 Credit bubble.
00:11:38.900 Oh my gosh.
00:11:39.500 Today,
00:11:39.800 school loan.
00:11:40.320 $1.4 trillion.
00:11:41.100 If we start defaulting on that,
00:11:43.560 it's going to be very interesting.
00:11:44.820 Now,
00:11:45.400 you got the debt bubble,
00:11:46.440 which we experienced a little bit in 2008.
00:11:48.460 You got some of these investors
00:11:49.740 in Silicon Valley,
00:11:51.180 these new people
00:11:51.980 that are coming into some money
00:11:53.280 and they're just throwing money
00:11:54.740 at startups.
00:11:55.600 And these real PE guys
00:11:56.800 that have been around for a while,
00:11:58.400 they're kind of upset
00:11:59.300 with these other guys.
00:12:00.240 It's a very funny thing
00:12:01.200 going on right now
00:12:01.740 with PE's.
00:12:02.840 And investors going
00:12:04.080 and throwing money
00:12:04.700 at new startups.
00:12:05.660 But that's all a bubble,
00:12:06.880 right?
00:12:07.640 Let me spend a little bit of time
00:12:08.840 talking about bubbles
00:12:09.640 controlled by the government.
00:12:10.600 It's very important
00:12:11.140 for you to know this part.
00:12:12.020 And I'm going to try to say it
00:12:13.360 in the simplest way possible
00:12:15.340 that makes sense to you.
00:12:16.660 Because sometimes you hear words
00:12:18.220 and here's how we watch the news
00:12:20.060 or we read the article.
00:12:21.180 Here's how we read.
00:12:22.040 Tell me if you've ever done this before.
00:12:23.960 You'll read an article.
00:12:25.580 One of the challenges
00:12:26.400 that we're facing today
00:12:27.320 is quantitative easing.
00:12:28.700 And then boom.
00:12:29.980 You're lost.
00:12:30.420 You change the article.
00:12:31.980 And the reason why
00:12:32.660 you change the article
00:12:33.380 is because you don't know
00:12:34.000 what quantitative easing means.
00:12:35.480 Or you'll watch somebody
00:12:36.380 use a big word.
00:12:37.160 You don't know what it means
00:12:37.740 when it comes down to money.
00:12:39.060 You actually have to pause
00:12:40.380 and search and find out
00:12:41.360 what that word means
00:12:42.000 to educate yourself.
00:12:43.500 We have to be very careful
00:12:44.980 with bubbles controlled
00:12:45.860 by the government.
00:12:46.560 For example,
00:12:48.520 the federal rates.
00:12:49.440 You know,
00:12:49.600 the rates that we have
00:12:50.260 currently right now,
00:12:50.860 they keep raising the rates
00:12:51.700 and the market keeps going down.
00:12:53.320 You know,
00:12:53.760 sometimes they lower the rates
00:12:54.960 and they call it
00:12:55.560 quantitative easing.
00:12:56.900 Now what is quantitative easing?
00:12:59.200 We did back in 2008
00:13:00.840 when the market collapsed
00:13:02.580 and then all of a sudden
00:13:03.920 banks became so tight
00:13:05.300 they were not giving money
00:13:06.780 to small business owners
00:13:07.960 and the moment
00:13:08.900 the small business owners
00:13:10.060 are no longer getting money
00:13:11.400 to go grow their businesses,
00:13:12.940 economy takes a hit
00:13:13.900 because jobs,
00:13:14.900 65% of jobs in America
00:13:17.360 are created by small business owners.
00:13:19.440 We need these small business owners
00:13:20.900 to be getting loans
00:13:21.680 to start creating jobs, right?
00:13:23.800 So the government's at the top
00:13:24.980 saying,
00:13:25.300 oh my gosh,
00:13:25.860 what do we do?
00:13:26.500 Let's lower the rates
00:13:27.580 and they keep lowering the rates
00:13:28.780 and they keep lowering the rates
00:13:30.060 and then all of a sudden
00:13:31.460 the banker
00:13:32.140 who doesn't care about
00:13:34.020 the feds lowering the rates,
00:13:35.580 he doesn't care about
00:13:36.660 the economy,
00:13:37.760 he cares about
00:13:38.620 keeping his job
00:13:39.580 and the only one person
00:13:40.680 that can fire him
00:13:41.620 isn't the customer,
00:13:43.460 isn't the federal government official,
00:13:45.460 it's his boss
00:13:46.200 that works at the bank.
00:13:47.120 So the more money he lends
00:13:48.060 and the businesses
00:13:48.540 go out of business
00:13:49.200 and they lose the money,
00:13:50.240 he's fired.
00:13:50.880 So him,
00:13:51.660 the banker sat there
00:13:52.600 and he said,
00:13:53.040 well,
00:13:53.740 I know the government
00:13:54.760 gave us some money
00:13:55.440 and I know the rate
00:13:56.120 that's very low right now,
00:13:58.100 it's 0% to a quarter of a percent,
00:14:00.580 why don't we go buy
00:14:01.300 some treasury bonds
00:14:02.320 and we get 2% on that
00:14:04.280 and if we're paying
00:14:05.460 0 to a quarter
00:14:06.600 but we're getting 2%,
00:14:07.880 we're making minimum 1.75
00:14:09.300 or maybe 2,
00:14:11.060 I'm at least reporting
00:14:12.000 positive numbers,
00:14:13.200 who cares?
00:14:13.920 Forget about giving any money
00:14:14.920 to small business owners
00:14:15.800 and we experienced this
00:14:16.820 for 3, 4, 5 years.
00:14:18.020 Very interesting times.
00:14:19.480 So the government comes out
00:14:20.660 and they say
00:14:21.500 quantitative easing,
00:14:22.760 here's what we're doing,
00:14:23.980 they are putting money slowly
00:14:25.900 but surely into banks
00:14:27.360 and they buy banks
00:14:29.060 toxic assets
00:14:30.500 is what they buy.
00:14:31.940 Toxic securities,
00:14:33.120 these are companies
00:14:33.940 that are about to go on default
00:14:35.320 and they're going to go out of business.
00:14:36.840 They buy those assets
00:14:37.760 from the bank,
00:14:38.820 the bank starts feeling
00:14:39.720 a little bit better
00:14:40.580 because those toxic assets
00:14:42.040 are gone.
00:14:43.420 Gradually money's being put
00:14:44.960 into these banks
00:14:46.000 and with the hopes
00:14:47.660 of the bank taking this money
00:14:49.100 and giving to small business owners
00:14:50.500 and what they end up doing
00:14:51.920 is they notice that these banks
00:14:53.080 are putting their money
00:14:53.720 in treasuries,
00:14:54.220 the government fed
00:14:55.560 goes and buys
00:14:56.160 all the treasuries
00:14:57.000 and the more they buy
00:14:58.720 the rates go from 2%
00:15:00.360 to 1.5%
00:15:01.260 to 1%
00:15:01.880 to 1.5%
00:15:02.460 whatever the number may be
00:15:03.460 where the banker's sitting there
00:15:04.640 saying,
00:15:04.920 why am I going to buy treasuries?
00:15:06.280 They force the banker
00:15:08.480 to hopefully lend
00:15:10.100 to the small business owner
00:15:11.680 for 5% to 8%
00:15:12.760 so it gets the market going.
00:15:14.700 It's purely market manipulation
00:15:16.380 with fake money.
00:15:17.920 The value of dollar goes down,
00:15:19.380 it devalues the dollar.
00:15:20.480 Again, I don't want to be too technical
00:15:22.640 but hopefully I explained you to
00:15:24.580 in a way that next time
00:15:26.200 somebody explains
00:15:27.120 quantitative easing,
00:15:28.360 just know that it's the government
00:15:30.140 buying toxic assets
00:15:31.800 with the hopes of manipulating
00:15:33.580 the market and the banks
00:15:34.800 to lend money
00:15:35.660 to small business owners
00:15:37.100 so they can prosper
00:15:37.880 and create jobs.
00:15:39.020 That's in essence
00:15:39.880 what it means
00:15:40.460 and the value of the market,
00:15:41.420 value of the dollar
00:15:42.040 goes down.
00:15:43.080 But that's still a bubble
00:15:44.100 that you have to be
00:15:44.660 paying attention to.
00:15:45.420 So these are
00:15:45.920 some of the causes
00:15:47.480 of why we may have
00:15:48.980 a market crash.
00:15:49.820 And last but not least,
00:15:51.100 how should you be prepared for it?
00:15:52.660 Number one
00:15:53.140 is anticipation.
00:15:55.000 You have to anticipate.
00:15:56.700 One of the numbers
00:15:57.480 that you have to keep in mind
00:15:58.320 for nine straight years
00:15:59.280 the market's been in positive.
00:16:00.700 Let me say this one more time.
00:16:01.940 For nine straight years
00:16:03.120 the market's been in positive.
00:16:05.020 And if you look at the question
00:16:06.140 I asked since 1926,
00:16:07.560 what is it?
00:16:09.280 74%, right?
00:16:10.520 For 92 years,
00:16:11.760 74% of the time
00:16:12.940 the market's done better.
00:16:13.800 The last nine years
00:16:15.080 we're at 100%.
00:16:16.160 But that's not really
00:16:17.400 our free throw shooting percentage.
00:16:18.800 Our free throw shooting percentage
00:16:19.840 is what?
00:16:21.140 74%.
00:16:21.540 So we need to have
00:16:23.360 three downturns
00:16:25.040 to go back to 74%
00:16:26.400 because that'll be
00:16:27.200 nine on 12.
00:16:28.040 That's exactly 75%.
00:16:29.560 So you have to know
00:16:30.740 those things
00:16:31.220 to just keep in mind
00:16:32.100 and trust what's happening
00:16:33.340 with the history.
00:16:34.140 You can't be too naive
00:16:35.140 about it, right?
00:16:36.280 So market is going to crash.
00:16:37.960 It's not a big deal.
00:16:39.080 We may have a correction
00:16:40.080 or a barrel or a crash
00:16:41.140 but it's going to be
00:16:42.160 taking place.
00:16:42.680 Number two,
00:16:43.140 your risk tolerance.
00:16:44.660 You have to be very true
00:16:45.640 to your risk tolerance.
00:16:47.080 If you're 55,
00:16:48.000 you can't be going,
00:16:49.120 you know,
00:16:49.360 oh my gosh,
00:16:50.000 I'm going to go all market,
00:16:51.080 cash,
00:16:51.380 all this other stuff.
00:16:52.060 I don't recommend that.
00:16:52.740 If you're 28
00:16:53.440 and you got a couple
00:16:54.660 hundred thousand dollars,
00:16:55.440 you also can't press
00:16:56.280 the panic button
00:16:57.040 too early right now
00:16:57.920 because you're young.
00:16:59.400 You can't afford
00:16:59.960 a 20-year run rate.
00:17:00.980 You can't miss
00:17:01.480 those best 50 days.
00:17:03.060 You just have to make sure
00:17:03.960 you make a few pivots
00:17:04.900 and adjustments
00:17:05.440 here and there.
00:17:06.480 Number three,
00:17:07.620 cash.
00:17:08.960 I'm a fan of cash.
00:17:09.980 Let me explain to you
00:17:10.420 why I'm a fan of cash.
00:17:11.120 I was on a podcast recently
00:17:12.820 with an entrepreneur
00:17:13.840 named Petros.
00:17:14.580 He owns a gym.
00:17:15.840 Jim.
00:17:16.200 700 different franchises
00:17:17.440 of gyms that he owns.
00:17:19.260 Absolute stud of a guy.
00:17:20.340 And he's one of these guys
00:17:21.220 that actually knows
00:17:21.760 how business works
00:17:22.500 and he's good at
00:17:23.020 what he's doing.
00:17:23.640 Very authentic,
00:17:24.180 very open about his
00:17:25.000 mistakes,
00:17:25.840 flaws,
00:17:26.100 all these things he's doing.
00:17:26.780 He asked me a question.
00:17:27.480 He says,
00:17:27.900 what do you think
00:17:29.140 about the market crash?
00:17:30.180 I said,
00:17:30.620 I can't wait for it.
00:17:31.600 He says,
00:17:31.900 what do you mean?
00:17:32.340 I said,
00:17:32.520 I honestly can't wait for it.
00:17:34.360 Why do you say
00:17:35.020 you can't wait for it?
00:17:36.160 It's going to hurt
00:17:36.800 a lot of people.
00:17:37.220 What do you mean
00:17:37.600 you can't wait
00:17:37.980 for the market crash?
00:17:38.720 I said,
00:17:38.900 first of all,
00:17:39.720 it's inevitable.
00:17:41.300 And every time
00:17:42.060 market crash happens,
00:17:43.500 wealth is made
00:17:44.540 by those
00:17:45.800 who are prepared for it.
00:17:47.340 What do you mean?
00:17:47.840 Go a little deeper.
00:17:49.160 Listen,
00:17:49.520 Mickey Mantle's baseball card,
00:17:50.980 PSA 10, 1952,
00:17:52.660 was just bought
00:17:53.360 for $12 million.
00:17:54.840 Now,
00:17:55.200 you think that guy
00:17:55.780 that bought it
00:17:56.240 for $12 million,
00:17:57.400 if a major market crash happens,
00:17:59.760 he's in need for cash.
00:18:00.920 Not a lot of people have cash.
00:18:02.640 And say,
00:18:02.960 I'm sitting on $60 million
00:18:04.060 of cash
00:18:04.740 and I go up to him
00:18:05.360 and say,
00:18:05.460 I'll give you $3 million.
00:18:06.160 I won't take you for $3 million.
00:18:07.780 I paid $12 million.
00:18:08.840 I'm giving you cash right now.
00:18:10.060 You don't have to worry about it.
00:18:11.420 Okay,
00:18:11.700 do $4.2 million.
00:18:12.740 Okay,
00:18:13.080 $4 million,
00:18:13.580 I'll give it to you.
00:18:14.320 $4 million,
00:18:15.100 $12 million.
00:18:15.760 I wait five years,
00:18:17.040 10 years,
00:18:17.500 market comes back up.
00:18:18.380 I sell that $12 million,
00:18:19.760 Mickey Mantle call
00:18:20.280 for $24 million.
00:18:21.640 I spend $4 million
00:18:22.660 to $24 million.
00:18:24.320 That's 6x my money
00:18:25.500 because I have cash.
00:18:27.300 Right?
00:18:27.780 When the market crashes,
00:18:29.200 homes are on sale.
00:18:30.460 Well,
00:18:30.560 like right now,
00:18:31.120 I'm in Plano.
00:18:31.720 I'm in Dallas.
00:18:32.300 Everybody thinks,
00:18:32.940 oh my gosh,
00:18:33.820 housing in Texas
00:18:34.660 is so cheap.
00:18:36.160 Everybody wants to say that.
00:18:37.780 20 years ago it was.
00:18:39.320 Today,
00:18:39.780 it's the same price as LA.
00:18:41.240 I'm telling you right now.
00:18:42.460 Home pricing in Texas
00:18:43.680 is the same as in LA
00:18:45.000 if you're living in Plano,
00:18:45.980 Highland Park,
00:18:46.540 those types of communities.
00:18:47.820 You're looking,
00:18:48.360 they just sold the house in Dallas
00:18:49.540 for like $30,
00:18:50.440 $40,
00:18:50.660 $50 million.
00:18:51.660 Dallas,
00:18:52.200 Texas,
00:18:52.980 the most expensive house,
00:18:53.960 the biggest house in America
00:18:55.400 was just on sale in Dallas,
00:18:56.580 $175 million.
00:18:58.060 What are these things?
00:18:59.620 It's a little overpriced,
00:19:00.780 right?
00:19:01.440 So you've got to be sitting on cash
00:19:02.620 because some of the guys
00:19:03.440 that spent $12 million on a house
00:19:05.120 and he put all his money into it,
00:19:07.360 the market crashes.
00:19:08.420 He doesn't have the cash.
00:19:09.340 He has to sell that house
00:19:10.180 for $4.2 million,
00:19:11.380 $3.8 million.
00:19:12.500 And the person who can capitalize
00:19:14.200 on that opportunity
00:19:15.220 is the one that has cash.
00:19:16.640 By the way,
00:19:16.960 some people say,
00:19:17.500 Pat,
00:19:17.640 that's cold.
00:19:18.660 That's cruel.
00:19:19.700 That's not fair.
00:19:21.000 Isn't that why capitalism's so ugly?
00:19:23.060 No.
00:19:23.880 It's greed for the person
00:19:25.480 that wasn't prepared
00:19:26.320 for a market crash.
00:19:27.480 That person deserves
00:19:28.460 everything they get.
00:19:29.600 It's greed,
00:19:30.160 the fact that the person
00:19:31.040 thought the market's
00:19:31.740 always going to go up.
00:19:32.920 Nine years straight
00:19:33.680 we've been in the positive.
00:19:34.580 How are you not prepared for it?
00:19:36.180 You became too irrational,
00:19:37.620 too confident,
00:19:38.360 too optimistic,
00:19:39.580 lost paranoia.
00:19:40.980 Your stomach got too big,
00:19:42.300 so you start kind of
00:19:42.980 paying attention to everything.
00:19:44.380 The reason why I'm making
00:19:45.320 this video is for you
00:19:46.460 to be aware
00:19:47.240 that when this happens,
00:19:48.540 you need cash.
00:19:49.120 And my recommendation
00:19:49.740 is 15% to 25% cash.
00:19:51.960 Not a lot of people
00:19:52.720 agree with that number.
00:19:53.980 I agree with that number.
00:19:55.080 It's worked for me.
00:19:55.800 Here's what I mean by it.
00:19:56.740 You got a million dollars
00:19:58.520 right now
00:19:59.580 in mutual funds,
00:20:00.600 stocks, bonds, real estate.
00:20:01.860 Just make sure
00:20:02.920 you got somewhere
00:20:04.000 between $150 to a quarter
00:20:05.320 million dollars in cash
00:20:06.220 today
00:20:06.820 that you prepared for it.
00:20:08.360 Pat, that's ludicrous.
00:20:09.600 I know it is ludicrous.
00:20:10.600 I'm just sharing with you
00:20:11.240 my opinion.
00:20:12.040 I may absolutely be wrong.
00:20:13.980 I'm just sharing with you
00:20:15.120 what I believe
00:20:16.080 is a good positioning
00:20:17.440 to be at a time
00:20:18.740 where the market's been positive
00:20:20.360 for nine straight years.
00:20:23.560 Nine straight years
00:20:25.140 the market's been positive
00:20:26.500 while the market
00:20:27.820 since 1926,
00:20:29.040 74% of the time
00:20:30.100 is in a positive.
00:20:31.000 You got to pay attention
00:20:31.680 to those numbers.
00:20:33.340 Let me give you another thing
00:20:34.200 here for you to be thinking about.
00:20:35.820 This is numbers here.
00:20:36.960 Maybe only we can make it
00:20:38.260 bigger for them to see it.
00:20:39.800 Today,
00:20:40.480 today,
00:20:41.340 the Dow Jones
00:20:42.040 is at $25,720.
00:20:43.780 That's what it closed at.
00:20:44.720 Today,
00:20:45.560 $25,720.
00:20:47.260 The S&P 500
00:20:48.420 is at $2,723.
00:20:50.580 $2,723.
00:20:52.280 Can you tell me
00:20:53.440 the last time
00:20:54.760 Dow Jones
00:20:55.900 was at $6,503?
00:20:58.260 And the last time
00:20:59.200 the S&P 500
00:21:00.200 was at $6,776.
00:21:01.960 Again,
00:21:03.080 $6,776.
00:21:04.360 That's four times,
00:21:05.480 more than four times
00:21:06.820 less than what it is today.
00:21:08.820 And the Dow Jones
00:21:10.080 nearly four times
00:21:12.140 what it is today.
00:21:13.920 Can you tell me
00:21:14.520 when the last time
00:21:15.160 was we were at $6,503?
00:21:17.020 Or $6,776?
00:21:18.700 When do you think it was?
00:21:20.000 1949,
00:21:21.300 1973,
00:21:23.020 1988,
00:21:24.460 2001,
00:21:25.900 try 2009.
00:21:27.300 Just nine years ago.
00:21:29.120 Let me say this
00:21:29.600 one more time.
00:21:30.520 Just nine years ago.
00:21:32.480 You know who loves this?
00:21:34.120 Boost?
00:21:34.760 People who had cash
00:21:35.540 during this time.
00:21:36.560 Because those who had cash
00:21:37.980 at that time,
00:21:39.240 you're buying Ford stock
00:21:40.500 at $0.75.
00:21:41.960 You're buying Citigroup
00:21:43.100 at $0.80.
00:21:44.360 You're buying companies,
00:21:45.960 value stocks
00:21:46.960 that are going to
00:21:47.780 come back up for nothing
00:21:49.880 because those people
00:21:50.920 have cash in place.
00:21:52.160 And by the way,
00:21:52.580 I'm not telling you
00:21:53.100 this is 100% everybody,
00:21:54.720 but a small group of people
00:21:55.860 were ready for this time.
00:21:56.940 They prepared for it.
00:21:58.100 Number four,
00:21:58.960 avoid major real estate
00:22:00.040 investments right now.
00:22:00.840 I'm avoiding major real estate
00:22:01.880 investments right now
00:22:02.500 for a couple different reasons.
00:22:03.460 Number one,
00:22:04.560 the current tax setup
00:22:06.560 that Trump has
00:22:07.520 doesn't benefit people
00:22:08.960 that own big real estate properties.
00:22:10.400 Investment real estate properties
00:22:11.840 that you live in,
00:22:12.500 especially you live in a house.
00:22:13.480 I'm not talking necessarily
00:22:14.380 investment properties
00:22:15.960 that you're buying
00:22:16.580 as long as you keep your cash.
00:22:18.000 I'm not talking investment.
00:22:19.380 You buying a big house,
00:22:20.940 I wouldn't do it right now.
00:22:22.220 I just wouldn't be
00:22:22.920 doing it right now.
00:22:23.440 Matter of fact,
00:22:23.800 I'd be renting right now
00:22:24.980 if I was you.
00:22:25.920 I wouldn't be buying a house
00:22:27.160 right now if I was you.
00:22:29.120 I just wouldn't be.
00:22:29.940 But that's my opinion
00:22:30.880 on what I'm saying.
00:22:31.600 I could absolutely be wrong.
00:22:33.600 That's one of the things
00:22:34.280 I'd be thinking about
00:22:35.380 if I was you.
00:22:35.880 Number five,
00:22:36.500 cash in on some of your profits.
00:22:37.980 What do I mean by that?
00:22:38.780 You got a house
00:22:39.260 that's sitting there,
00:22:39.880 $600,000.
00:22:40.980 You have $280,000
00:22:42.100 in equity in it.
00:22:43.420 Maybe cash in a little bit.
00:22:44.960 Maybe cash in a little bit
00:22:45.820 of the profits
00:22:46.340 is what I would do.
00:22:47.360 Maybe you got 10 properties,
00:22:48.440 sell a couple of them.
00:22:49.440 Maybe you got some stocks
00:22:50.440 that are doing very good
00:22:51.480 and you made 17% profits
00:22:53.640 on some of them
00:22:54.320 and you have some dividends.
00:22:55.460 Cash in some of the dividends
00:22:56.400 and take some out.
00:22:58.080 Take some out
00:22:58.600 and set it aside
00:22:59.200 and put it in your cash portfolio
00:23:00.400 that you have.
00:23:01.520 Number six,
00:23:02.260 precious metals.
00:23:03.260 Maybe 3% to 5%
00:23:04.660 I recommend today.
00:23:05.560 Maybe 3% to 5%
00:23:06.560 some gold.
00:23:08.460 Seven,
00:23:09.280 to me,
00:23:10.060 it may be the best one
00:23:11.260 out of all of these
00:23:12.100 is protect your career.
00:23:14.060 Become an expert today.
00:23:15.220 Listen,
00:23:15.400 let me explain it to you.
00:23:16.920 When the market crashes,
00:23:19.020 you know who is exploited?
00:23:20.780 Amateurs.
00:23:21.920 You know when the market crashes,
00:23:23.460 who becomes a hero?
00:23:24.920 Experts.
00:23:25.940 Let me say this one more time.
00:23:27.460 When the market crashes,
00:23:29.680 amateurs get exploited,
00:23:31.460 experts become heroes.
00:23:33.180 For some of you
00:23:33.980 that are watching
00:23:34.480 saying,
00:23:35.180 how cruel.
00:23:36.460 How cruel for you to,
00:23:37.960 you know,
00:23:38.200 see amateurs being exploited.
00:23:39.620 Amateurs have the option
00:23:42.260 to stop watching Netflix
00:23:43.860 and watch videos like this
00:23:46.080 and say,
00:23:46.740 I disagree with the guy
00:23:47.980 and go do research
00:23:49.340 and become smarter
00:23:50.620 and read business books
00:23:52.060 instead of watching newsfeed
00:23:53.680 and finding out
00:23:54.600 who's got the new big butt, 1.00
00:23:56.200 who's got the best big boobs, 1.00
00:23:57.940 or who's dating who
00:23:59.000 or who's dating what.
00:24:00.140 Amateurs have the same amount
00:24:01.320 of 24 hours in a day,
00:24:02.460 168 hours in a week.
00:24:04.420 But they're entertaining themselves
00:24:06.060 rather than being prepared.
00:24:08.040 My challenge to you
00:24:08.780 watching this,
00:24:09.540 go become an expert right now
00:24:10.600 before the next market crash.
00:24:11.980 Become a beast
00:24:12.820 at whatever you're doing right now.
00:24:13.860 Become so good
00:24:15.020 that when a market crashes,
00:24:17.060 everyone needs you
00:24:17.940 because you're irreplaceable.
00:24:20.020 Those guys get elevated.
00:24:23.460 Elevated in market crashes.
00:24:25.880 Elevated in economic collapses.
00:24:28.280 Elevated when financial crisis
00:24:29.800 comes around.
00:24:30.800 One of the best tips
00:24:31.420 I can give you
00:24:31.940 is protect your career.
00:24:32.740 And last but not least,
00:24:33.960 call a timeout.
00:24:34.940 Study all your portfolios.
00:24:36.440 Look at all your investments.
00:24:37.560 Look at everything.
00:24:38.220 Cash, artifacts,
00:24:40.140 collections, stocks, bonds,
00:24:41.520 mutual funds,
00:24:42.440 real estate, equity positions,
00:24:44.040 ownership.
00:24:44.700 Look at everything.
00:24:46.160 And study it more often
00:24:47.740 than you do before.
00:24:48.800 Look at it weekly
00:24:49.940 rather than you used to
00:24:50.820 look at it every quarterly.
00:24:52.380 Look at it on a weekly basis.
00:24:53.760 Go look at your mutual fund
00:24:55.300 and see where it's the allocation
00:24:56.600 with the stocks that you own.
00:24:59.080 Is it balanced?
00:24:59.800 Is it too growth?
00:25:00.560 Is it too small cap?
00:25:01.860 What is it looking like right now?
00:25:03.500 Where's your 401k?
00:25:04.520 Looking to actually
00:25:05.440 pay attention to it.
00:25:06.640 Thanks everybody for listening.
00:25:07.980 And by the way,
00:25:08.400 if you haven't already subscribed
00:25:09.480 to Valuetainment on iTunes,
00:25:11.340 please do so.
00:25:12.580 Give us a five star.
00:25:13.980 Write a review
00:25:14.540 if you haven't already.
00:25:15.480 And if you have any questions
00:25:16.480 for me that you may have,
00:25:17.660 you can always find me
00:25:18.580 on Snapchat,
00:25:19.560 Instagram,
00:25:20.300 Facebook,
00:25:20.840 or YouTube.
00:25:21.520 Just search my name,
00:25:22.400 Patrick VidDavid.
00:25:23.260 and I actually do respond back
00:25:25.400 when you snap me
00:25:26.260 or send me a message
00:25:27.380 on Instagram.
00:25:28.400 With that being said,
00:25:29.100 have a great day today.
00:25:30.140 Take care everybody.
00:25:30.860 Bye bye.