Hey this is tom, and i pulled over. I pulled over, don't worry so i want to have a two minute conversation with you about where we headed as far as the stock market and the economy in general. Now i'm gon na be fear-mongering here, but i want to give you a realistic snapshot of our trajectory now bottom line. It's not good, but again, i don't think we're on the eve of that collapse, but i don't think we're headed into a good place and i don't know if there's a lot we can do to avoid it.

To be honest, however, i do think there are opportunities out there to make a significant amount of money for those who will be waiting for the opportunity to come, knocking on their doors. So what do i mean by that? Well, essentially, check this out, so you remember how everybody was asking me well tom: why would inflation lead to a stock market crash? Well, it's a slow burn and there's a lot of lagging indicators, but essentially the way it works is a setter, and i'm going to show you some examples from what's going on right now, so inflation basically increases the cost of goods in your production process or the Cost of services it doesn't matter, but the way you make business is you either produce a product or a service. You mark it up. You sell it to the customer and that's your profit as things become more expensive, whether it's headcount becomes more expensive or goods or electricity or commodities whatever it is.

You rely on to provide your goods and services at that point. Your margin starts to become weaker and weaker margin being how much you profit from your go to services now prime example of how that works could be easily seen. If you look at what just happened with target and walmart target walmart just reported earnings a little while ago, and you can see that in both those cases the margins got significantly lower. So both target and walmart actually had an increase in revenues, slight increase in revenues.

So they haven't lost in the business. In fact, they've gained a little bit of business, but their margins got annihilated by inflation, which means that their earnings per share were not as good as anticipated. So essentially, the inflationary pressures are turning. Companies like walmart like target to less profitable, because the margin which is basically how much the profiting is getting smaller and smaller.

It's getting eaten by you, know higher costs of providing services and high cost of making goods. Now, as this persists and make no mistake about it because um it will persist, if you look at what's going on right now with the global energy market, there's no end in sight. For this i mean we're going to be at elevated energy costs for a while, and energy is probably one of the most, if not the most influential part, in your cost of good. If you're manufacturing energy is probably your number one concern now add on top of it supply chain issues, material shortages, etc, etc.

China look down, you can throw in ukraine war commodities, so i know they're saying to you that inflation is eight percent, but everywhere you look. Is not really eight percent. You know. Energy costs are not up.

Eight percent they're up for let's just in february energy i mean crude oil was like what 60 bucks it's now doubled. So i i don't. I don't you know, i don't think anybody's fooled by the eight percent that they're showing on tv. So if we assume that inflation is going to persist - which it is and if we understand the fact that the fed doesn't really have ultimate power to kill it, they can try to mitigate it by raising interest rates.

But raising interest rates is not a magic solution to stop inflation, because if you have supply chain shortages and a complete of a global supply chain, interest rates alone are not going to be a magic solution. So with that mind, we have to understand that the next couple of years are going to be basically filled with inflationary pressures as the next few years get filled with inflationary pressures you're going to have a push by the fed to raise interest rates. Now, raising interest rates becomes very important because what it does it it slowly squeezes the economy. When you raise interest rates, money becomes more expensive, more scarce company companies have less access to capital, less projects are being done, etc, etc, etc.

So as inflation goes up and kills margins and that screws with the economy, the fed is pushing, from the other end, raising interest, which is also screwing with the economy. So now imagine you're a business and your margins have gone to and also now capital is becoming more and more expensive, so you can get access to cheap funding. So, as all of this is happening, what the first thing you have to do as a business. Well, you basically say: let's get rid of some employees right.

The first thing you can actually manage costs with is employee and the amount of employees you have in your business is basically um. I would say a complete derivative of how profitable look elon musk just spoke about it and why he's cutting 10 percent uh of of his workforce? Well, that's kind of the fact in every company there's always the fat layer and that's the first thing that goes, but it's going to be way more painful. So once you start cutting employees on the macro level, which means it's not a specific company, that's struggling. Let's say a peloton not doing well, they're firing employees etc.

So once you have the situation where it's a macro collapse of employment, cutting you have a massive amount of people who are now not earning a good salary. So the disposable income goes lower and lower, which means that discretionary spending goes lower and lower, which means the same businesses that just fire these people will now have less traffic, because there's less and less people with more and more disposable income. So it's a snowball effect where the fed is pushing inflation is pushing and now less and less people have money to spend and that puts the economy into a death spiral. Unfortunately, which is very hard to avoid at this point.

So the trajectory is almost very clear. It's very visible to see how it's playing out. There are ways to get out of it and i'm not saying it's a hundred percent, but it's very unlikely right now that there would something drastic would need to change ukraine. War needs to stop immediately.

China lockdown opens up immediately global supply chain, somehow magically work themselves out and etcetera, etcetera, etcetera. Energy prices go down back to the 30 40 level, which is where it needs to be for this thing, so there's a lot of unprobable scenarios that need to happen to avoid this worst case outcome. I just outlined now here's the problem. Once this happened, you saw what happens with the stock market when real world economics are not good.

A lot of you may say: well tom. This is economy. What does that have to do with the stock market? Well, when target and walmart reported bad earnings, their stock collapsed so there to think that there's going to be a disconnect between the economy, the stock market, yeah, that's not going to happen. So in that case, the next question you should ask yourself: well damn what do i do? Well, i don't know, but here's how i see the timeline for this to happen right now.

The market is not doing so. Bad people think that we're already in this crazy kind of collapse, but the s p 500, is only down like 11 since december 2021.. If you go back in history and you look at the last 100 years, every single crash - we had you analyze it and you kind of create an average you're going to see that the average drop in the s. P 500 is around 35 we're down 11.

and the average duration of a bear market is about 10 to 11 months, we're only six months into this thing right. So if you look at statistics as kind of an added factor to see, if this is you know, cut on the bottom, it seems like it isn't, but here's the thing the market doesn't just behave in the linear fashion, so the market doesn't just go point. A point b: it behaves like this, so there may be many more bull runs ahead of us. You know the sap running can go to what 4 500 4 600 - maybe maybe even higher, but if you look at it for kind of a 2023 2024 so next year or the year after a recession and the stock market crashes highly probable.

Unfortunately, so, although i don't think it happens in this year, i think next year and the year after we're definitely in the high risk area. And if that happens, i think that there's gon na be a lot of money to be made, because everything will drop to the floor. Remember like for those of you who have been around. You know the dot-com bubble crash when these companies crash they crash hard and violently so gon na be able to pick up a lot of cheap companies, for you know pennies on the dollar, but that's not tomorrow, that's not next month, and that may be many moons Ahead and there might be more bull runs, but if you keep that in mind and you kind of build yourself towards you - know, setting yourself up to a high cash position in the next couple of years to jump in when the market actually bottoms out, then you Might send to make quite a significant generational wealth leap and but here's the thing there's two ways to attack this kind of realization.

One way is to say: well, i'm just staying in cash for the next two years. Waiting for my opportunity, statistically speaking, that's not always the best option so being out of the market in high inflation times is not always the good. You know the best idea. So what statistically has been proven to be the best strategy is to basically long term over the course of 10 15 years.

If you do a short time frame, it might not work but, let's say a decade worth of data. If you have a decade worth of time, then double you know double down. Dca dollar cost average into a drop is kind of a no-brainer. As long as you can wait it out long enough.

For like say, 10 15 years, the market always eventually goes up, but here's the thing in this climate right now i wouldn't just go 100 cash and just wait, but i would keep that in the back of my mind, saying well, you know there might be some Cool opportunities ahead, and i want to be ready for that time when the big pain comes, and i think it's almost inevitable that it will at some point 2023. 2024. I want to be ready for that, but in the meanwhile just play cautiously, and you know make sure that you don't follow back on one of these upcoming bull runs that are going to be. You know, there's going to be, i think few of them.

It's it's nice to utilize them, but it's don't fall in love with the bull run right now, because just the macro can't support a sustained long, actual bull run at this point. But then again you know: let's see what happens. Yogi berra once said. It's tough to predict, especially the future.

So let's see how this thing plays out.