Welcome back to the channel everyone today, i want to talk about why a market crash is good for amc and also talk about some of the indicators that we can use to tell how the overall market is faring, so stay tuned and let's make some money, but Guys before i dive into the video, i just want to give a massive shout out to the 4 100 of you that have currently ding that notification bell, because you guys are always the first to watch a new video as soon as it's released. So guys be sure to drop a like down below subscribe to the channel and ding that notification bell, if you haven't already so that you don't miss another video. Just like this one, and just a quick one before i dive in with the key information, if you haven't already checked out, my line of amc related merch be sure to check it out linked in the description below my personal favorite is the to the moon, t-shirt Or maybe even the space a t-shirt, and now i want to dive straight in with the key information, so i want to explain all of this bit by bit. The first part market crash equals stocks go down now.

That part is fairly obvious. If the overall market crashes pretty much, all stocks are going to fall by between 10 to 30 percent, maybe some will fall by even 50 percent. If those stocks fall, it means hedge funds in general, are going to lose a large portion of their assets under management. Don't forget, even though citadel is very heavily shorting amc they're, not 100, all in on amc.

They do hold a lot of other long positions and if the market crashes, those positions are going to fall drastically if those assets fall or the value of their assets under management falls, it means they're going to have less dollars available, they're, not only going to have Less physical cash on hand to continue adding to their amc, sure position, but they're also going to have less cash and less margin in their trades. For example, we know that citadel makes highly leveraged investments. They trade using lots of leverage or using lots of margin, meaning they've borrowed lots of money from other institutions and other firms. If some of citadel's long positions move downwards and move against them, that means they're going to be left owing money to other institutions and not having the same amount of money that they borrowed, because, obviously the value of their trades, the value of their assets, has gone Downwards and if they have less dollars available, it means they can't maintain their short malarkey.

Obviously, if they've got less cash or even potentially negative cash, because they owe money to other banks, they can't continue adding to their short positions in amc and continue beating the price down if they can't continue adding to their amc, short positions and they can't continue beating The price down it means the price suppression is going to stop. There's going to be nothing left. Holding amc down on top of this as a lot of hedge funds are also going to have less dollars available. Remember this part here they might not meet those margin requirements and therefore they may have to sell off some of their long positions or even cover some of their short positions, so they have enough cash to meet those collateral requirements.

What i'm saying is that some of these smaller hedge funds are going to be covering their amc shorts just so they can get the cash out to meet those cash margin requirements, so they can continue trading their longer, maybe more leveraged positions, both the price suppression, stopping And the smaller hedge funds, covering their short positions to meet those margin requirements is gon na cause the price of amc and gamestop to shoot up. If the price shoots up, it means their payments are gon na shoot up. Firstly, you've got their interest payments which are gon na go upwards because they have to pay money to borrow the amc shares. Obviously, if the amc shares are more expensive, therefore, the interest payments are going to be more expensive as well.

Not only that, but they've also got their margin interest to pay as well, if they're borrowing, money from other banks say jpmorgan or some of the other large institutions, they're also going to have to pay money on that borrowed money as well and then also when they Execute those married put transactions or those transactions that reset the clock on fail to delivers that cost them a transaction cost as they have to pay off another party to pass the fed the delivers onto and the party. Obviously the other party don't want additional risk. So citadel and other hedge funds basically have to pay money to another institution for them to take. The filter delivers as all of those interest payments and transaction costs, shoot up, it'll mean more shorts, can't maintain their malarkey.

Therefore, that'll also mean more price suppression, stopping more price shooting up and more moas. So therefore, we can see that while a market crash isn't necessarily a good thing in general for most americans and most people around the world, it is good for the amt squeeze book. As effectively as stocks are falling, it means hedge funds are going to have to sell off some of their positions and also cover their short positions. So they can meet margin requirements, meaning they are going to have to cover their amc shorts.

There's another poster on reddit who speculated something similar market correction could trigger a moass. I think the fed meeting in september could be a catalyst if they decide to raise the interest rates and begin tapering bond purchases. Then the market is going to head straight for a correction which i also feel could trigger the mother of all short squeezes with amc and gamestop, but why we are headed for a market correction. I know i know stocks only go up right, but the market in the economy was doing very well before the pandemic, and now the s p 500 is way way above pre-pandemic levels, a lot of that on speculation of a reopening and the money printer going bruh.

It's like dropping a rubber ball from two foot and having it bounce up as high as six foot. That's just not natural, the vix and other inverse etfs are at their absolute lowest in history, with every mention of tapering or interest rates. That has happened over the past year. They jump up higher and higher in volume.

Each time, then they settle back down a bit but as a whole, they're slowly leveling out from their slide watch the spikes in the fear and greed index and you'll see what i'm talking about. Look at the three year on the vix super high frequencies are betting on this. They want it to happen. They're shorting a hell of a lot more than meme stocks, and if the market corrects a la 2008 to 2010, then they're gon na make a ton of money on those other stocks that fall.

I think the gains from the shorts on other securities and other stocks that aren't being diamond handed will be used to cover the shorts on meme stocks. Super high frequencies won't go bankrupt, they'll break even or come close. They're kicking the can down the road as long as possible waiting for this to happen because they need this to happen, so they can cover their amc shorts without getting liquidated or without going bankrupt. Now i wanted to be a little bit more specific and talk about exactly why the market crashing will cause amc and gamestop to go upwards.

Why wouldn't amc and gamestop crash as well, if the overall market crashes, and for that i think you've got to look a little bit towards a negative beta when researching stocks for investment. Take a glance at the beta number. This value measures the volatility of a stock compared with the volatility of the market as a whole. A high beta means the stock price is more sensitive to news and information and will move faster than a stock with a low beta, as in a stock with a high beta will crash faster when the overall market collapses and will crash more violently as well.

Not just 10 to 30 percent, but 50 to 75 in general. High beta means high risk, but also offers the possibility of high returns if the stock turns out to be a good investment. A negative beta coefficient, on the other hand, means the investment moves opposite of market direction. If we look to amc, we can see that amc has a beta of negative 4.17 and therefore quite high in the negative, beaters or quite low in the negative betas, not sure which way around.

That is, but you know it's more than negative 1 or negative 0.5, for example, and if we look to gamestop, we can see the gamestop has a beta of negative 6.97 and is therefore even higher or even lower than the amc negative beta. So therefore, as amc and gamestop have negative beaters, it's likely that they'll move inversely to the market as in when the market starts, crashing, amc and gamestop will go up, and i also wanted to quickly come back to the schiller p e ratio that i mentioned in A video the other week, the schiller p e ratio calculates the average p e ratio, which is price to earnings of all companies in the s p 500.. This basically compares the stock price to the company's profit. Therefore, a higher the p ratio is.

That means they have a much higher stock price than they are generating profit. If you look at this chart here, we can see the current shiller. Pe ratio is 38.58, which is obviously very high, and the only time this was ever eclipsed was in 1999 to 2000. During the dot-com boom or the dot-com bubble, we currently have a higher schiller pe ratio than we had in 2020 in 2008, in black tuesday, 1930 1970's recession, black monday 1937 recession, pretty much every single recession we're currently higher than and if we have a look at That schiller p ratio on a monthly basis.

As far back as march 2020 that schiller p e ratio has been increasing at quite a substantial speed, even only looking back in june, when amc last ran up that schiller, p e ratio is 36.86 and it's already now 38.58. Nearly up a whole two points. Therefore, i personally think the s p 500 is currently very, very overvalued and is heading for a market correction, that market correction could impact and cause amc and gamestop to rock it to the moon. Guys be sure to.

Let me know down in the comments below what you think about a market crash and whether a market crash would be good for amc and, as always guys, if you enjoyed this video, be sure to check out some of my others. Alternatively, subscribe to the channel and ding that notification bell, because that way, you'll be alerted when i upload a new video cheers.