Will There Be a Stock Market Crash?
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- čas přidán 20. 06. 2024
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Investors live in fear of market crashes. So in this video, I look at the likelihood of a crash, how long they last and whether valuations affect the probability of it happening. I also discuss how likely a crash is at the moment and what you can do to help protect your investments against one.
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Timestamps
00:00 Introduction
00:24 How likely is a market crash?
01:14 How long do they last?
07:14 The 2:6:16 rule
09:45 Do valuations affect crash probabilities?
11:50 What is the probability now?
14:23 What can I do to mitigate against a market crash?
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DISCLAIMER
All information is given for educational purposes and is not financial advice. Ramin does not provide recommendations and is not responsible for investment actions taken by viewers. Figures that are quoted refer to the past and past performance is not a reliable indicator of future results.
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There is always a crash coming. Waste of time and energy guessing when the next one will happen.
Unless you’re trying to make money. What are you doing? Just watching? Seriously make better comments.
Lol.. because having some idea of when a drop will happen has no value?? 🤦♂️
@@shiner8375if you’re trying to time the market (predicting a crash), you’re not making money. Nobody knows when the next one will hit. Could be 1 year from today, could be 20 years. So just keep drip, drip, dripping.
Yeah this is quite a poor take it's actually quite possible to take misspricings in local equity markets into account to get better returns especially if you can rebalance into global markets and different asset classes
@@shiner8375 Time in the market beats timing the market. I am sure you've heard it a million times. Massive hedge funds can't time it consistently, so I say good luck with your attempt it.
I sold almost in full in May/June 2020. Not at the bottom but once most of the bounce-back had occurred. My girlfriend and I decided the world was going into uncharted waters with a global lockdown with no known end - so we went for capital preservation. But we stupidly bought back in December on fomo, the market having surged in the last 5/6 months. What a mistake! Lesson to us: timing the market doesn't work for the likes of us and best just sit tight. Don't even go into 'defensive' stocks or suchlike. The market 'always' recovers at some point....
Yeah, incase of Japan that some point has taken 20 years to arrive. Not good for someone in their 50s
@@wmrajput Also SP500 took 25 years to recover from 1968 highs.
It could take 30 years to come back sometimes
Very sensible. Not scared at all! Thank you Ramin 😊❤
Hi @alexm7310 that's great, glad it was reassuring. My pleasure! Ramin.
**Summary of the Video:**
- **Introduction:**
- Discusses fear of market crashes and their impact on investments.
- Examines the likelihood, duration, and valuation effects on market crashes.
- Video sponsored by Incog, a data privacy app.
- **Defining a Market Crash:**
- Correction: 10% fall from an all-time high.
- Bear Market: 20% fall.
- Market Crash: 30% fall.
- Time period matters for defining and assessing the probability of crashes.
- **Duration of Market Crashes:**
- Market crashes are rare and usually short-lived.
- Longest recovery periods in history (e.g., Great Depression, WWII, 2008 Financial Crisis) took several years.
- Median time for the S&P 500 to recover is 61 days.
- **Probability of Market Crashes (**2:6:16** Rule):**
- Correction (10% fall): 16% chance annually.
- Bear Market (20% fall): 6% chance annually.
- Crash (30% fall): 2% chance annually.
- Probability decreases over longer time periods.
- **Impact of Valuations:**
- High valuations increase the probability of crashes.
- Currently, U.S. stocks are highly valued, increasing crash probability.
- Correction: 39% chance.
- Bear Market: 20% chance.
- Crash: 6% chance.
- **Mitigating Crash Risks:**
- Diversification helps but is limited in effectiveness.
- Stocks tend to move together during crashes.
- Better protection through assets like money market funds, short-term government bonds, or gold.
- **Incog App:**
- Helps control personal data from being collected and sold by data brokers.
- Offers a discount for viewers to manage their data privacy.
- **Final Advice:**
- Be aware of risks but don't panic.
- Diversify investments before crashes, not after.
- Consider safer assets for short-term financial needs.
Extremely reassuring, thank you
Hi @neilcook1652 thank you, I'm glad that came across. I was a bit worried that people would be scared rather than reassured! Thanks, Ramin.
@@Pensioncraft I’ve just posted a link on a meaningful money thread, as someone who invested their first thousand has lost six pounds the day after and was concerned. Separately, an interesting topic you may consider is different ways parents can plan to assist children onto the housing market….although possibly out of scope for your channel?
As always a superb presentation. The quantification of risk is effectively presented. This is presented in an easy to understand manner. Thank you.
Hi @EdfromCanada that's kind of you thanks! Ramin.
Thank you very much for these numbers! I appreciate the work you put into your videos a lot!
Thanks @mikealex6372 I thought the 2 6 16 rule would simplify things. Thanks, Ramin.
Your lecture is full of wisdom. Thank you.
Glad you think so @ql9318
Very interesting presentation. Thank you. Question: Is the Shiller Monthly Log S&P Total Real Return data downloadable?
Thank You.
Welcome @DPTrainor1! Ramin
I will continue to DCA into a handful of indexes same time each month, no matter what's happening; bull market, flat, bear market, crash.
this is the way
Great plan until (say) 5yrs before/after retirement/FI date - at which point you move into single gilts/treasuries (to mitigate sequencing risk yada yada).
If in retirement, I'll at least build a 3-year living cost buffer in cash to mitigate the market crash.
Hi @kelle_li as @stiffeification says "This is the way" 8-) Thanks, Ramin.
Very helpful overview! It would be great to learn how other asset classes perform in comparison
Great idea @temporarythoughts! I'll add that to our ideas list. Thanks, Ramin.
Great video, congratulations! If you worry about a possible market crash, *diversify* your investments. Keep 20% to 80% of your capital invested in *bonds* or others fixed-income asset (money saving bank accounts, for example). Put some Gold in your portfolio, as well (5% - 20%).
Very informative video, thank you very much.
Glad it was helpful @MA-pu6dc
Very cool Video Ramin thanks for sharing your experience
My pleasure @ebrahimhabib477 Thanks, Ramin.
Excellent video Ramin, thanks. 👌
So nice of you @shimsteriom4191
Useful, thank you.
May I ask what the 2:6:16 rule becomes for a diversified World ex-USA index?
As always a superb video. No scaremongering or clickbait thumbnails, just cool headed data and analysis. And very well done. Interesting to see that as far as the Ulcer index is concerned, there is no point in diversifying into a global equity fund, you might as well stick with the US equity market.
Hi @remco2777 thanks that's very kind of you. With regard to the US the other thing to consider is return. The US has outperformed developed markets ex-USA in 56% of the years from 1975 to 2023 i.e. there's a good chance that the US will underperform. And given high US valuations relative to the rest of the world I'd say the risk of US underperformance is higher than usual. I certainly wouldn't concentrate all of my equity holdings in one country even if it's the US. Thanks, Ramin.
Thanks again for another great video.
I'm glad you enjoyed it @michaelcloresandersm.d.7050 Thanks, Ramin.
Very helpful for a new investor, determined to stick to DCA for 10-12 years.
Hi @auldare7053 that's great! It's precisely the reassurance that I was trying to convey. Thanks, Ramin.
Excellent analysis Ramin, thanks. Really useful and well presented.
Thank you @timetraveller3063! Ramin.
thanks for pensioncraft this is a really excellent presentation of balanced facts that put investment decisions in lens of time horizon and statistical risk removing human fear and euphoria psychology that dominate many investor decisions.
Useful info. Thanks for sharing
Hi @TheCompoundingInvestor thank _you_. Ramin.
Great video! And very timely thank you :)
Hi @TheAdem8888 I'm glad you found it helpful. Ramin.
Great video!
Hi Sacha! Thanks, Ramin.
If you're scared of a market crash, you shouldn't be invested in equities, simple. A correction, bear market and crash is when we get the chance to lower our average price dramatically, it's a good thing and is needed for overall market health.
Great insight and data Ramin!
It's more nuanced than that for many investors.
If you have retired and cannot buy at the lower prices then there is absolutely nothing good about a crash.
I’m retired at 50 and 100% in equities for the moment.
If a crash happens of 30%+ I’m happy to sit it out and wait for it to recover.
I’ve a separate cash portion to get me through & I can relocate to a cheaper country (I’ve already left the U.K.)
Too many people aren’t prepared to take enough of a calculated risk to generate growth / real wealth.
No risk, no reward.
If you've been in global equities for the last 3 years then I guess you will feel ok if there is a 30% drop as you're still way ahead. Recent history will make people a bit complacent imo.
@@jont96686 that's whereyour bonds come into play
I keep my 3-6 months emergency fund (6 when shit is bad i.e. pandemic, 3 months when I am feeling relatively comfortable) and keep another 8 - 10% in cash reserve within my portfolio to "buy the dip". Having an active dividend portfolio also helps my cash flow where needed.
Hi @dingzhuxi interesting. I keep a cash buffer in my "fun portfolio" which is 10% of my total investments. This is dry powder in case markets tank so I can buy stocks more cheaply. Thanks, Ramin.
@@Pensioncraft yeah totally agree with what you said here. My cash reserve is mostly for the "play" money as well, especially with my 401k and other investments "maxed" out. Been having a fun ride with AMC and GME "gambling" as of late lol.
Thanks for this. Better the devil you know. I wish you would talk about defensive strategies like stop-limit, stop-loss, how does gold react to a crash, how does real estate react, etc. The other factor is the age of the investor. 👍
Hi @MrMatisse22 that's an interesting idea thank you! I've done something along those lines long ago for our members (it's one of our member explainer videos) but didn't put it on CZcams. Thanks, Ramin.
Agree. That would be interesting. As someone recently retired, my risk appetite is different to an investor in their 20s or 30s.
excellent infos as always
Glad you like them @rajahua6268
Excellent info
To mitigate crash risk
Would you purchase individual bonds or bond fund?
What maturity length would you. Choose
Hi @@michaelnitake2534 the hedge that always works is money market funds and cash (zero duration) but the returns historically haven't been great. Government bonds pay you term premium for taking duration risk but the term premium is currently low or negative so I'm not buying duration. Once the curves un-invert I might take some duration risk again. Thanks, Ramin.
@@Pensioncraft Hi Ramin, What are you thoughts about TLT/TMF etfs? Thank you in advance for your reply!
Thank you ramin for your response
In general what are your thoughts about individual government bonds bs a bond fund to mitigate interest rate risk? Or if you use a bond fund as a hedge what duration do you target?
A good presentation of fact which were explained however my concern is the inflation figures which are no longer reliable. We are seeing enormous revisions after the initial announcement, and on top of that we have had different methodology to arrive at these figures with some claiming US inflation when calculated using the old method was as high as 18% !
Great Video, I would have shown Debt to GDP, as the debt recovery is going slow or extended the recovery period.
Hi @colonelflashman972 there's a counterargument to high debt slowing the growth of equities because if the fiscal stimulus creates growth that's helpful to corporate profits and stock prices. Thanks, Ramin.
It’s that time of year again, new UK tax year. A period of indecision between safe cash ISA or riskier Shares ISA, before eventually just going for it and hoping for the best.
I moved into Money Market Funds on Dec 15th, 5 months ago. Boy, I really have FOMO right now.
Did you move everything into MM? I have about 25% in short-term bonds. The rest in equity ETFs
I sure wouldn't chase performance now. You may have been early and did miss some capital gains but I wouldn't be surprised to see a 10% drawdown on key indices from here at least. Even a 30%+ drawdown seems incredibly probable and imminent in my opinion but then again I don't know much only been in capital markets for 40+ years and 14 years on wall street. Risks have never been greater and growing exponentially at fastest pace ever. Precious metals are screaming something and very few are listening.
The adage is 100 minus your age should be equity/stock exposure so maybe you didn't miss much depending on your age and risk tolerance. FOMO may be tempting but I wouldn't pile on after the frenzy and media spin doctors hype I would actually be looking at UVIX, SPXS, and SQQQ but that's not advice - just what I'm hedged with and add daily. I never provide legal tax or economic advice services or products whatsoever. Consult your own professionals for that stuff. Good luck.
Hi @25Soupy well to look at it positively at least money market funds are generating reasonable returns at the moment. But this illustrates why de-risking at the first sign of a market wobble is usually a bad idea i.e. most of the time the market recovers quickly and you're left locked out of a rising market having to buy back at a higher price. Thanks, Ramin.
All eyes are on Nvidia financial report on Wednesday I think if they disappoint the Nasdaq and others could sell off quite sharply but most expect them to continue beat earnings 🤞
Very good points.
For those sitting on £20k considering where to put this year's ISA money, do I drip feed or plough it all in ?
I'm going for some higher dividend UK stocks and leaving the drip investments into my SIPP in global and S&P ETFs.
If you are 10 or more years from retirement, whether you invest now or in 6 months will make little to know difference.
Always drip feed if you want to be on the safer side, especially these days, when you can park cash for like 4% interest.
@@Starstreak170 I drip feed so I can sleep at night.
How d I buy American direct t bonds in. Y SIPP
Intersting stuff Thanks , so i have a question ? , maybe some of you watching could throw in some advice , so for example if some one had a lump sum to invest in say the next 6months , would it be wise to wait for a correction to happen and then invest , after a correction or crash ? , like buy low , sell high ?
My View: Right now the markets are rather expensive (though not in a bubble); so I would not enter in any index fund, which of course does not mean that the market will not continue going up; but definitively not worth for me. Regarding individual values; the story is different; though even there it is more and more difficult. It takes some time and research. As for me, right now, I buy Repsol (an extremely defensive Stock) - always when it falls under 14 and take the dividend of 5/6% twice a year. Occassionally I also add some other values (recentlly Alphabet - already plus 20%), but for little money. There is danger everywhere, buy if I was to invest a lump sum right now, then in two good Reits (e.g Frenchise Properties, Merlin) and for a short time, maybe 6 to 12 months - depending on ones benefit expectations.
Depends on your horizon..if medium to long term I’d say get it in the market now, or over the next month. Getting your lump sum asap in generally works in your favour…there are no signs of an imminent market correction
@@royjays4588 .. thanks , that's info i'll be looking into , i just feel with the markets riding high at the moment , maybe isn't the right time to jump in ? , maybe wait a few months or until the end of summer to see if a correction happens , and then jump in !
Hi @londreslush usually it's a drag on return if you hold money back from markets. That's because there's always something to worry about e.g. x.com/michaelbatnick/status/1158431761874980866 Thanks, Ramin
Great video !! I love your videos without strong emotions and well researched. You mentioned World wars were reasons for many crashes! Possibility of China invading Taiwan or allying with Russia, Trump winning election, Russia war on Ukraine, Middle East wars, I’m in my late 40, the crashes you mentioned lasted for more than 10 years. I’m worried I might lose the value of my investment by the time I retire.
Depends when you’re going to retire. I’d say keep investing throughout and be patient
I worry about a crash but, given a 5-8 year tolerance I have, I worry more that it will simply stay flat or decline over that time. And I’d have been better off in bonds.
Statistically the chances of this happening are very low, as Ramin explains here.
If, you want to grow your wealth you must be prepared to take a calculated risk.
No risk, no reward.
But that’s also the reason why you should keep a mix of bonds and equities right? You don’t know when and where a crash will be and bonds will pay in that period as well, so it makes sense to keep a mix.
Bonds can also decline, just look at the last years at long-term bond etfs, they are in waiting mode for rate cuts - but that is only if inflation subsides as well. A true prolonged stagflation would be disaster for long-term bonds ETFs, they are already down 40-50%, but have a better dividend yield. Just have some % in very different asset classes, smth like 60% stocks, 20% bonds and 20% eveything else (commodities, metals, individual bonds, money market fund/high yield deposits, cash, foreign currency, etc)
If you’re investing for 10 years plus, stay out of bonds.
Hi @gravity-arbor (cool handle by the way) over a 5-8 year period 100% equity would be risky so a mix of bonds and stocks and currently some money market funds would probably make sense. The particular allocation depends on your risk capacity and risk appetite. Thanks, Ramin.
Who knows no one knows but helpful video.
Excellent video. Is the US market still expensive after removing the magnificent 7?
No..but it’s also not growing that much (S&P anyway). Still better than UK
Uk is like 6% in 10 weeks i have about 11% from company choices in those weeks so UK is actually recently the best-performing stocks of very recent.
I think the reason for UK always being undervalued is this pessimistic view shown by yourself on your post despite the facts showing different data to your view.
@@craigsteel5629 UK has had a couple of good months…before that it can’t compare to the US. If you want to bet on the UK over the longer term then go ahead, but I’m not going overweight on it.
@mikew5274 sp500 p/e ratio ~24. With some crazy high and overinflated stocks. Ftse 100 ~11. So UK is very much undervalued and the sp500 is potentially overvalued. I think that is due to the attitude of the countries people, US are optimistic and bullish, UK are pragmatist and don't boast or shout from the roof tops and sometimes tear down suçcess BAE, diageo, gsk etc. The only UK stock which has had an American-type treatment has been Rolls Royce lots of debt but great earning potential so is valued on that potential pe30 and 1yr gain of 280%. If more UK stock were looked at in the same light as rolls royce then a lot of UK stocks would skyrocket, but in general, there is a consensus to keep the UK down.
Hi @orlandolopez4410 Figure 8 from Yardeni shows that at the moment (2024-05-19) the S&P 500 forward price to earnings multiple is 20.3x and if you exclude the megacap 8 it's 18.1x. The graph is here yardeni.com/charts/megacap-8/ Thanks, Ramin.
I kinda like the 2:6:16 format of discussing crashes, only thing I disagree is calling 20% a bear market for some reason, I think a bear market is a PROLONGED downturn...And limiting it to 30% crash...The SP500 lost 50% of its value over 2008-2009. And thats the SP500! Others lost even more...Japan dropped from 38k for the NIKKEI at the top in 1990 to 8k for the same NIKKEI in around 2003. Thats a 80% drop over 10 years. If you dollar cost averaged though it looked much better for you...if you took profits from time to time - even better. The whole "lump sum and hold" mentality would be dead for many in those circumstances.
Agree. When at the market peak like right now, take some profits and build a cash position which can be invested in US treasury bills paying about 5.4% APY. For a risk free, it's not bad. So, if the market does crash and you need to use the money, you can use it without selling equity at a loss. If you are not in retirement yet, you can even buy more stocks at a cheaper value.
I buy stocks that are undervalued in certain moments and then I sell them with benfits and I always keep a bit of cash (30%) for the moments that you are mentioning that I put into the SP500 when the market goes down (e.g. 2019); otherwise buy and hold (with relatively defensive stocks).
You’re looking at historical events and fearing the worst…the world is vastly different now and there are no signs of a major crash happening,assuming no world war. Traders might be nervous but long term investors should just switch off and enjoy life
@@mikew5274no sign of crash is the funniest comment on this channel 😂
@@spatialmemory5040 You’re confusing a crash with a correction, which absolutely could happen. I don’t see what I’d call a crash happening, but as I’m not intending to touch my equities for 10 years I don’t really care. I fully expect them to be worth significantly more in 10 years than they are today. But I sleep well on my bed of cash which is 30% of my total pf and can sustain me through virtually any downturn
Ulcer index.. interesting
Seems to me commodities keep rising yet mining stocks are still cheap. I’m starting to slowly add making it at least 10 percent of my portfolio. I may even go higher. Defense stocks seem good. The elite have us blowing each other up with expensive bombs. $6,000 in an ETF defense fund 6 months ago you made 10 percent.
What happens to money market funds when markets crash?
Well...prices are too high now. Money market works better while waiting for a correction
Hi @stex83 if you hold money back from markets when valuation is high that strategy usually underperforms one where you steadily invest in stocks throughout your life. That's because valuation is a terrible timing signal i.e. valuations can stay high for a long time. Thanks, Ramin.
@Pensioncraft Hi Ramin. Thanks for this.
I get your point, however the problem is that entering the market now might mean being in a drawdown for a long time. It's a risk I can't afford...
Be interesting to look at what happens to inflation and savings rates during a "crash", are you hit from all sides?
i made the mistake of being partially invested in the basket case uk market since 2008 and i have not been dissapointed expecting the worst, its been dire, the ftse barely above where it was 22 years ago and taking into ac inflation the capital destruction has been horrific….also what about japan, 30 yrs for its market to recover. Some if this is poor advice
Ftse 100 total return index (aka dividends reinvested) was 3400 in 2010. Now it's 9200.
A 2% chance of a crash doesn't sound much but if you are 20 years away from retirement (such as myself, for example, although I'd love to retire earlier) that becomes a 40% chance of at least one crash before I retire. It's quite sobering especially if something like the 2000s repeats itself. If only I was on a generous DB scheme!
Edit - the probability above is wrong so I made a correction below in the comments.
Might not be as great as you think especially when you are out of the company where they are. My DB scheme has been pushed back from when I was joined. Was at 65 when I joined and has now been moved back to 67. They don’t treat it as it’s being deferred so they are effectively taking 25,000 from me because they are not paying out against what I have paid in. I’m waiting for them to decide they can’t afford to pay it and retrospectively change the scheme again.
Astounding just how soundly people can misunderstand statistics and probability. I hope you educate yourself soon sir.
@@TheUndulyNoted Looks like I forgot my GCSE maths lol. At least one crash in next 20 years = 1 - (0.98^20) = 0.33 or 33% (2 s.f)? :D
Complete wrong mindset dude.
That’s why is good to have 5 years living expenses in the money market so you don’t have to sell stocks during retirement.
I’m actively counting on a sizeable dip - on average after rates get cut the S&P dips by double digits
Translation, you’re trying to time the market.
Buying on dips can be an effective strategy. Good luck.
@@VoiceOfThe you got me - though I have long bets that will short squeeze if the main market dips (so I have bias)
@@robertdewar1752 If you know where's the dip. You buy when starts to dip, and it may dip even more the next week.
Hi @simoncelt5590 you have to discriminate between reasons for the rate cut. If it's to stave off a financial meltdown (e.g. 2020) that's very different from lowering rates because the economy is okay and inflation is falling (2024). That's not such a bad backdrop for risky assets like stocks. Thanks, Ramin.
Covid dip aside, I can't remember when there's even been a correction worth mentioning...this is kinda scary
hi
I’m not sure how you calculated this but a recession in the USA typically every several years the last one was 2008 we are way past do I would think every year past the average the odds go up also the average down turn is over 30%.. the published odds of recession are around 50% depending who’s numbers you look at
That is a great point, the odds of a downturn do not happen in isolation. The greater the number of years since the last one, the higher the chance of it happening now. Got to say, this is the most bearish and cautionary I have since this channel. I believe they will be on the right side of history. But one other fact not mentioned, 10% drop needs an 11.1% increase to get back to the same level.... But 20% fall needs a 25% increase, and a 30% fall needs a 42.8% increase. You can't time it exactly. But I'll sit in money market and take my 5%, wait for that rainy day.
@@danyunowork take everything with a grain of salt no one knows what going on and be safe. I’m in money market past two years planing to buy bonds catch the rate cut wave i like etf TUA
I keep drip feeding into global all cap. In the event of a crash, I’ll allocate extra money into the S&P500.
If you’re invested in both funds you have unnecessary duplication you’re paying extra for.
Who knows ups and downs are to be expected I personally don't let in concern me .
That's a great attitude @pip1723! Thanks, Ramin.
Just see where the big players are putting huge sums of cash. Then follow the money, dont keep cash in the bank, so go gold, silver/crypto.
The previous crashs shows a double top before the crash happens...looks like this is happening as well...Next year we will enter into a recession/crash before we can continue to move up ward because there is too much inflation and imbalance to continue to grow the economy, plus you need to have interest rate low again to spur growth.
Hi @RedEyeFish1 I don't believe there are any reliable crash timing indicators, which is why it's usually best to have an investment strategy that doesn't rely on the ability to forecast crashes. Thanks, Ramin.
Keep investing, high of low, no one uptil today has been able to time the market even a broken clock is right twice a day !! Over 10 yeats you will Be happy
what happen if stock m did crash how bad would it be ?
Hi @raybeard for me it would be _great_ because I'm still in the accumulation phase of investment so it would mean buying stocks at cheap prices. That increases long-term return for newly invested money. A recent video I made Will There Be A Stock Market Crash czcams.com/video/pY1dFKkIgQA/video.htmlsi=NSNJ1yr-Sx9qUZaR shows the stats on the probabilities and durations of crashes and you may find that interesting. Thanks, Ramin.
>60% chance of no correction according to the data in this video. So the rational thing to do is carry on as normal.
Vanguard's Global All Cap fund continues to look like a good place to be if youre worried about a valuation-based correction/bear market/crash given the inclusion of emerging market stocks and small caps, both of which are trading much cheaper.
Hi @Tbc810 that's right the probability of a deep and long-lasting crash is always low but it puts people off investing nevertheless. Unfortunately EM and small caps usually sell off more than large caps. But I've got an overweight in cheap markets at the moment for holding over the long term (S&P 600, UK small cap value / quality / momentum). Thanks, Ramin.
Physical Gold/Silver and CASH is better, look what all the state banks are piling up and Buffet with 200 billion dollars in CASH to buy the upcoming dip which you will suffer under LOL!
good ppt, but the FED today is different, they just PRINT to recover any crash in no time.
Go To ANY stock ticker and compare the 52 week high to current price almost 95% of tickers are down over 50% if not more. People think this Is the bottom but even that bottom will slip further.. save your money in a savings account the END!!
Yes. It's deliberate.
I hope so. Another buying opportunity and time to use leveraged etfs
27 % of the last 94 years are negative (sp500). 73% positive. Many down years were obvious so you could mitigate. 30's depression. 70's oil crisis.
Plot a bell curve of annual returns and you'll see a bell curve. Yes, the mean value is positive but the "tails" of the distribution cover a wide range of outcomes each year. Stock returns are essentially random, and the idea that you can predict them is foolish.
@@chrisf1600 You can predict stock markets to a point.... if you buy after the crash it's unlikely that it will again crash much more. For example I bought China 50% down, Finland 25% down...
Good stuff but i think the use of the word probability is a bit wooly.
True @mk91-vz1oj - these are empirical probabilities but focussing on that would have distracted from the purpose of the video. Thanks, Ramin
Good to have a historical context. With elections coming up in both the US and UK in the coming months my guess is there is far more likelihood of a correction coming than anything else but a rapid bounce back. However I’m not mystic Meg so what do I know 😂
Yes, have contingency plans. Dimon, Bezos, Buffet etc. are all going bearish on stocks, something is up.
Eventually there will be a crash. But not worrying about it, DCA into good companies and keep some cash on the side and you really don't need to worry about a crash. If it does then its discount time. Load your 🛍️ up👌
Recency bias. How many are ready to accept a lost decade?
How about 3 decades of no returns aka Japan? 30 years of zero total return if you lump sum. And Japan is not some small economy, there are smaller esimilar examples, France CAC 40 - 20 years of zero total return....
@@MagicNash89 That requires a huge economic crisis. I though cannot see anything like that with the situations the world as a whole in general and the west in particular is in. I think if that really happens we will have far more serious problems than the fallen market.
@@royjays4588 Japan literally had it, this is not some hypothetical situation, this is not some small insignificant country. And they didn really have a huge economic crisis, they had an asset price bubble pop. This was not Great Depression in terms of social effects. The Japanese still lived a pretty high standarts life, but the stock market index was down MASSIVELY for many years. No return for 30 years. A downturn of 80% over 10 years.
Us and the rest of the West is set for long term Stagflation.
Hi @gringadoor5385 that's one of the arguments for diversification i.e. a lost decade is more likely if you only invest in domestic stocks. Globally diversified portfolios are less likely to suffer from a lost decade but the chances of a lost decade is very low indeed e.g. for the US it's happened twice since 1870. Thanks, Ramin.
Calling 20% a bear market is...questionable, at best. There should be a time indicator next to those.
Hi @MagicNash89 I said in the video that it's over the coming year for 2 6 16. I also looked at other horizons in the video. Thanks, Ramin.
Interesting but also flawed presentation. The crash probability calculations were definitely incorrect... as we can see from Shiller data that during last 100 years there have been 5 big crashes of 7+ years... which means that US was in middle of a long crash 48% of the time, although half of that was going up from the crash. So pretty absurd to claim like 2% odds. Also, SP500 had a 25 YEAR crash between 1968-93... the dividends must have been great for it to be only a decade long crash according to Shiller.
So yeah, this didn't ease my crash anxiety much...
👍
Crash is inevitable, its a case of when not if.
That's true @ab-yt-acc5217 But my point is that that fact shouldn't scare people away from investing in stocks. That's why you earn a big risk premium for doing that. Thanks, Ramin
i made the mistake of being partially invested in the basket case uk market since 2008 and i have not been dissapointed expecting the worst, its been dire, the ftse barely above where it was 22 years ago and taking into ac inflation the capital destruction has been horrific….also what about japan, 30 yrs for its market to recover. Someof this is poor advice
I can understand your feelings. Difficult situations. Best is to be global invested.
Yes. As to when - who knows but it gets CZcams eyeballs so who cares!
The problem is that the past has nothing to say about the future!
To 99%! All these probabilities are just theoretical
The past is likely the best available option in attempt to predict future probabilities. Yet, nothing is certain, maybe except erosion of hard cash over time. So invest we must, there is no other way to preserve wealth over time.
Surely a crash is the initial impact, whereas you appear to be talking about a bear market?
Hi @jasonedwards6870 I looked over a one year horizon i.e. how likely is a 10%, 20% or 30% fall in the S&P 500 over the coming year. That's where the 2:6:16 comes from. The reassuring thing is that (a) the probability of a large fall is low and (b) the recovery is usually very quick. Thanks, Ramin
Good investors love crashes because they can buy cheap stuff or short.
Think everyone knows SP500 is over valued having hit a new high. But then we have finally recovered after the pandemic, inflation issues, Ukraine/Russia war/energy prices, etc, and that would explain the new high. IMHO opinion the new high is not unreasonable, and it could take a breather before pushing higher, or dip and then push higher. But then it only needs some bad news to spook the markets and cause a dip. I tend to invest when markets dip; I mean you don't put money in on highs, so waiting for the inevitable dip before drip feeding in more money.
But what if the gains you miss by not being invested are greater than the dip you wait for? Get your money in and forget about it imo
Take the r out of Crash, and you have Cash. Problem Solved😇😬
Genius @bonanzatime - I love that! Ramin.
@@Pensioncraft Thank you. I love how you explain things. You are a natural teacher👍👍
And the r stands for risk 😁
The largest drawdown is always in the future
Hi @paulturner4419 I suppose that's true. But it shouldn't stop people from investing in stocks. Remember that a drawdown is a sale i.e. a buying opportunity. Thanks, Ramin.
@@Pensioncraft I think you need some kind of systematic sell discipline (risk off) particularly in retirement. A couple of 2000 and 2008 like crashes in retirement and you are probably sunk.
There's not going to be a crash unless there's a black swan event. The black swan event doesn't occur while people expecting a stock market crash
"Bull markets don't die of old age - they....". I've seen many variations on the end of this quote - but, having studied those few bull market endings we can consider of value, I tend to agree with you
anyone know why gold is going up?
Both uk and us in elections in Q3 and both markets to fully correct from inflation and inflation is being kept artificial high currently by the fed and boe see this correct very soon to all inflation is undercontrol in both countries meaning cheaper debt thus increase in stocks along with inflation corrections ~10%. Now 2025/26 might be a different matter when bubbles burst but right now in the immediate term there will not be a crash that would be a disaster for both countries during election year. Few election happening in europe too.
Also when people start talking crashes in hype manner that's when you now there is going to be a boost seen it too often. Now it can take many forms from mini boost to historical gains but it happens, just like when they praise a company too much you know most times its about to drop. So read between the lines
People don't want to be rational in booms or crashes. You want to be rational
Interesting Japan doesn't really get a mention. I'm old enough to remember the stock market and property crash in the late 80s. Yes, you can argue the stock market there is not that relevant these days for investors in the UK, but at the time, the stock market there was the largest in the world. Japanese brokers had all sorts of reasons to "justify" the absurd PEs that had become "normal". The Nikkei (index value) only just reached its pre-crash value a few months ago. I don't know how your probabilities have been calculated but over the last 40 years there have been a few instances of stock market crashes that shouldn't have occurred over the life of the universe based on finance theory using the common (but somewhat flawed ) assumption of normally distributed stock returns. Of course the problem with these discussions is that you can't run an investment strategy assuming there is going to be a crash but you can and should be aware of the possibility and perhaps also periodically become more/less cautious in your allocations. Also, personal circumstances change over time.
Crash = Stay invested and buy lots of "cheap shares".
The market is no more reflecting the economic conditions. The moment Bitcoin became an investment asset, market is like gambling.
Not really. Only if you invest in those crypto ETFs. Everything else is like usual.
Biggest crash of thousand years coming worst than 1929 and unlike 2002, 2008, 2016, 2020, when money was printed to hide inefficiency and bring artificial growth, making countries bankrupt. So this time there won't be money printing for unlimited unsecured assets. Thus the depression would last 3 to 5 years or 10 years or 15 years. Stock market would be worst to hit, gold, real estate would also go down but not substantial and government bonds will give best returns
Crash crash crash nothing is happend since 2020 people were screaming for crash market only keep rising
Those probabilities seem predicated on favorable demographics.
Here we go again crashing
Investors live in fear of market crashes? Are you sure? Many see it as an opportunity.
Yes of course there's going to be a crash. If you can't weather it you shouldn't be investing in equities.
The crash will come at 32.13.2021.
Yes. Probably 2025.
8-)
Next time recovering takes minimum 20 years and you $1 will become 10 cent for those 20 years.
Anyone worried about crash and then continuing with a buy and hold 60-40 stock/bond portfolio and hoping it’s on you!!! Me I’m with Michael Pento and Peter Schiff. I’m ok with a crash or going up. I make money either way.