Hey guys, it's sasha, the stock market is taking a big beating this morning. The s p 500 is down about 1.1 percent in pre-market trading, as i'm recording this video and is now four percent down from its all-time high. Just two weeks ago, many grow stocks are down two to three percent this morning after the long weekend and the u.s treasuries are continuing to increase in january up at a two-year high of 1.83 this morning, suddenly oil price is now jumping back up as well. It's up at 85, which is the highest it's been since 2014, but that's not the worrying thing here.

The worrying thing is that the pace at which is growing is very very fast. The sharp increasing oil price doesn't happen very often the only times it's happened. This sharply in the last 50 years was in the run-up to the financial crash in 2008, in the run-up to the dot-com crash in 2000 and in the run-up to the massive stock market crash in 1973. So the last three times we saw oil price spiking like this.

We happen to see the three biggest stock market crashes since the great depression immediately afterwards, and then we remember that we have inflation running at seven percent, with the u.s feds, still keeping interest rates at historical, all-time lows of just above zero percent and seemingly not wanting To increase them, the situation for investors certainly does not look good. I am seeing a lot of pain in my own investing portfolios, including in my light year, account who just happened to be the sponsor of today's video light. Here is a brand new and the only completely free, investing app in the uk for us stocks at the moment, and because you don't have to pay anything to make trades in light year. It is pretty useful as a platform to have, in times of volatility when you may want to buy or sell stocks more often than at other times, not having to pay any fx fees for deposits of up to 3 000 pounds per month or any trading fees Is awesome, i have not paid a penny for investing in the likes of tesla, fiverr and palantir in my own portfolio, when the same exact transactions would have cost me about four dollars with trading 202 or 12 with free trade plus the same again, when i happen To sell so, if you're based in uk - and you want to try the only free, investing app out there for us stocks feel free to use my link in the description, you will also get a 10 bonus if you sign up using that link and make a Deposit of at least one pound, so you actually get paid for trying the platform out now back on the subject of inflation, the stock market has magically now come to this realization or is coming to it that the highest rate of inflation in 40 years, plus the Fed doing absolutely nothing about, it is actually not a good thing, which is really weird, because i've been speaking about this for months now, but for some reason, public opinion is only just slowly now beginning to catch up to what is actually happening out there.

Just this morning, we've heard the news that inflation in the uk is also beginning to spiral out of control. In the last three years, the uk minimum wage has risen at record levels. We've gone up from six pound 19 10 years ago to nine pounds 50 from april this year. That's an increase of 54, and yet news this morning is reporting that, because of inflation running away, the rising wages have now started falling in real terms in the uk.

So people's buying power is dropping despite wages going up, and this is exactly how the inflation spiral works. This is what i've been explaining before wages that are rising in absolute terms, are dropping in real terms in terms of what products or services you can buy. With those wages and that causes an upward pressure on wages, especially at the lower end of the pay spectrum, because people want to be paid more because they can't afford to meet their basic daily needs and upward pressure on wages then causes the cost of basic goods. And services to go up because they require the services of people who are putting an upward pressure on their wages, which causes price inflation to go up.

Which means the wages that have already now gone up because of the upward pressure are still not rising fast enough. Because the price of goods is accelerating, this is the problem, and this problem is not endemic to the uk. This is just exactly the same phenomenon that we're seeing hit in the united states on the 26th of january. The u.s fed will announce its latest view on increasing rates and inflation.

Remember that only two months ago, at the end of november, the official policy was that everything is fine. Everything is okay, inflation is just going to go away all by itself, and now everyone is suddenly out of absolutely nowhere, pooping their pants, because inflation has begun looking a whole lot more real. How unpredictable every couple of weeks the timeline is shifting forward. As far as the fed is concerned, we went from maybe one small increase at the end of 2022 to okay, we'll do three small increases during 2022 to okay, we're gon na start ramping up from march onwards uh about a week ago, and this may only just Be the start, the likelihood is that the announcement next week will continue bringing that overall timeline forward, because the fed in reality has no choice now sure they are stuck between a rock and a hard place, both the rock and the hard place being things that they Kind of put in there themselves, printing money like there's no tomorrow, turns out to be a bad strategy when tomorrow actually does show up and the effects of increasing the base rate on the u.s economy and us government spending is going to be very significant, especially if The fed does what some say is the only way out which is increasing rates to a level above inflation, so that they can then exert the natural economic downward pressure on prices, so with inflation at seven percent and rising we're talking interest rates of 10 percent.

In that scenario, which is quite different to maybe not 0.5 at the end of 2022, which is what we heard two months ago, the interesting situation we find ourselves in is that the stock market has started to fret in advance. Remember not a single shot has yet been fired. We haven't had a single increase in rates yet and at the moment the official position is that we are at least two months away from the first, probably quite a small increase, maybe not 0.25 or something. But despite that, if you're invested in grey stocks, you will know that most growth stocks have had a massive chunk of their share price wiped out since november.

I am in exactly the same spot and most of my own positions are down as a result and when your position is down 50 or 60 percent already before any kind of crash has even happened. You have some tough choices to make because remember at the moment the stock market is only down four percent from its peak and that peak was only two weeks ago. So, in the grand scheme of things as far as the overall stock market is concerned, absolutely nothing has happened. Your portfolio is 50 down, but the stock market is barely sneezed and if the big crash does happen, we're talking a 30 to 50 drop in this drop.

In the stock market overall, the big question is what happens to your growth stocks? Do they over index and fall another 50 to 80, or maybe even worse, is possible. The stock market has had plenty of irrational moments, plenty of moments when companies drop in terms of the valuations to levels that seem absurd, and it may well happen because it's happened before we see a big correction that begins looking more like a crash developing through the Rest of this year, the pressure on growth stocks is likely to be amplified and the longer the growth path for the stock. The worse will be just like. We've been seeing over the last couple of months, stocks that are expected to take a longer before breaking even, for example, several years are getting smashed a lot harder than others.

Stocks like fiver, for example, that i hold in my portfolio. So what do you do in this situation? Do you cash in and sit it out? Uh sit around on your cash waiting. Well, remember that the cash that you are holding on to will also be losing seven percent a year at the moment, as well, because of inflation and in real terms, the purchasing power of that cash is probably dropping over 10. But then the stocks are losing their value in dollars, so when a stock falls 50 and the dollar falls another 10 at the same time, you're really getting smacked by both of those at the same time as an investor in grow stocks - and here are three really Important things to remember: first, the stock market is a complex and unpredictable creature.

Things can happen at any time that will completely change the tide. Just like we had no idea what the next two years will look like in january 2020. We have absolutely no idea. What's going to happen in the next two years, even if we like to think that we do what looks absolutely nasty today, what looks like an impossible situation could look a whole lot better in just a few months, because of reasons that we can't see now, but That will be mighty obvious when we're doing analysis in retrospect and if you cash out after you've, already lost half of your money only to miss out on 100 gain on the way back up.

Your investing returns won't look too good, and that brings me to my second point to remember, which is the biggest bounce days usually happen immediately after some of the worst periods in the stock market. And if you are out of the market on the five on average biggest balance days of the year, you will lose money in the stock market. Yep lose money by just not being in the market by sitting in cash during those days when the rest of the stock market goes up 9 to 10 per year on average, so fear is a very big factor in many people losing their shirt. Everyone panics, the media, tells you to panic.

You sell out you miss the bounce and bang your year ends up in the red and here's the most important truth, because i am getting daily comments. Multiple comments from people saying sassy you suck favor is 50 down. Why? Don't you delete your channel and go back to sleeping burgers dislike unsubscribe. Well, here is an unfortunate math lesson that you absolutely need to know getting a 10 return on average in the stock market does not mean getting a consistent 10 return on every dollar you put in at every single point.

During every single year. Let's say a company you invest in has dropped in value by 50 and then let's say you go and invest the same amount into the company again after the drop as you had invested just before at the peak the share price, then in this example for example, He slowly makes its way back to just the same price. It was before the drop and the rebound that rebound is not immediate. Let's say it takes three years, then the original money that you had invested at that point has made a zero.

Absolutely nothing is flat, but the money you had invested after the job is now up a hundred percent, which is 26 per year, and that means that on average, your return for the total amount of money, including the money, is made. Absolutely nothing is 13, which is more than the market average. This is the magic of investing over time. This is the magic of investing during the good and the bad times.

So if you want to do well in investing the key is to invest on the bad days when everyone is panicking. Just like you were investing when everything was going up and everything looked rosy and then, if the market falls further, i'm just going to keep buying shares at even bigger discounts. This is the beauty when your outlook is 5 to 10 years or longer, because short-term drops are only ever a good thing. It just lets you buy the same shares cheaper because everyone is running around waving their hands in the air above their heads.

If you found this video useful, please don't forget to smash the like button for the youtube algorithm. Thank you so much for watching. I really really appreciate it and, as always i'll see you guys later, you.