What's up guys, it's graham here, so let's face it for anyone. Who's watched the market over these last two months. We all know that absolutely nothing makes sense anymore like if we get bad news. The stock market rallies because the news wasn't that bad and if we get good news, the stock market falls because everyone uses that as an opportunity to cash out up is now down.

Left is now right and the only people making money are betting. Your life savings in the rare fish market, so that then lends the question with the stock market acting so unpredictably, mass layoffs throughout the entire job market and a missing pet tortoise reunited with his owners after being lost for 30 years in the attic. Did we end up missing the stock market bottom now that prices are above the recent lows or is the stock market about to drop again now that economists are warning that the u.s is on the brink of stakflation and an economic hurricane while elon musk had a Bad feeling about the economy, so in this video i'm going to be dusting off my crystal ball and going over all the reasons why the stock market should, in theory, continue going down and then we'll address the counter arguments as to why the stock market should, in Theory continue going back up and listen i'll. Tell you up front, i'm not going to try to pretend like.

I have any idea what's going to happen instead, i'll give you the perspectives of both sides share my own opinion and then let you come to your own decision, because i'm just a guy on youtube making videos alone on a friday night in a half converted garage. So with that said, you guys make sure to subscribe, hit the like button for the youtube algorithm and comment down below. If you think i've missed any of these points or if there's anything you want to add. So, thank you guys so much and also big.

Thank you to ftx for sponsoring this video, but more on that later, all right now, as a quick backstory, i think it goes without saying that we've seen a pretty turbulent time throughout these last few months. Since march of this year, the fed began their operation. Quantitative. Easing as a way to fight record high inflation by raising interest rates, reducing money in the economy and crashing the stock market year to date, the nasdaq declined more than 24.

Both the s p, 500 and dow jones are off more than 10 from their peak. Some of the most talked about stay-at-home stocks have fallen as much as 70 to 90 percent and now recession concerns are beginning to increase. The fact remains when you look at the data out of the last 13 rate hike cycles, 10 of them have preceded a recession and his fannie mae concludes we're a lot more likely to see what they call a hard landing right as the fed signals that they're About to be much more aggressive than they have been in the past, but where a lot of people want to focus right now is on the stock market, which makes sense, because seeing these markets is like watching a back and forth game of ping pong, and that Leads many people to wonder how long is this going to be going on for and when could we see the bottom alright, so we should probably talk about the bad news first and get it out of the way, and these are the reasons why the stock market Could continue going down first, the fed has begun to reduce their balance sheet, see for the last two years the fed has provided a backstop to the economy by purchasing corporate debt buying mortgage-backed securities and ensuring that anyone who needs a loan got a loan at an Interest rate that would spark growth within the economy. As a result, it was estimated that 80 percent of all u.s dollars in existence were printed in the last 22 months, although the side effect.

That was something that janet yellen never expected. Runaway inflation inserts surprised, pikachu face here. This leads to what's called a balance sheet, runoff, where the federal reserve begins to sell their own portfolio in the open market and destroy the money that they receive from previously issued loans, and if that sounds confusing, here's what it means in a normal market. The fed issues, loans and when they're paid back with interest, they take that money and reissue it to someone else allowing for a constant flow of money into the economy.

In this case, however, they're getting paid back and then dumping that money into a fire. So it's no longer in circulation, okay, they don't actually throw the money into a fire like a scene from batman, but you get the idea as you're about to see this points to serious concerns about whether or not the stock market rally is sustainable without ongoing federal Reserve intervention, and generally during times of tightening the stock market, tends to flatten or, dare i say it, decline. Second higher interest rates and slowing growth in response to higher inflation. The fed's goal in the short term is to achieve, what's called the neutral interest rate, which is an interest rate that neither sparks nor halts economic growth, it's just neutral and to make things even more confusing.

This neutral rate isn't even known. It's just estimated based on various analysis and observations. Now it is assumed to be somewhere around two and a half percent, but others argue that that assumes that inflation comes down and if it doesn't, they may need to hike rates even further. With one analysis calling for rates to hit 4.25 percent, which is far from where we currently stand at just one percent as a result, s p 500 returns are shown to be three times lower and a rising interest rate environment, not to mention, there's also, data that Suggests that we're about to see an upcoming decade of subpar returns only because we've experienced so much growth already and that needs to be considered.

Third, the tech sector is seeing the most job cuts since 2020.. I'm not even sure where to begin with this, but these are some of the more notable layoffs. Tesla reduces its workforce by ten percent. Paypal begins to cut staff.

Robinhood announces that nine percent of their company will be. Let go. Netflix lays off 150 employees, the company that laid off 900 employees on a zoom call just fired 3, 000. More and honestly, this list just goes on and on and on, but as you can see, this is just the tip of the iceberg and it's expected to get worse and yes, we're still scrolling and that doesn't even include all the job freezes.

On top of that as well, this is being referred to as the pandemic reset, while companies re-evaluate demand, cut costs and adapt to an environment that isn't flush with stimulus checks and low interest rates. Fourth, we got the economic boogeyman stagflation in a way. This would be the worst case scenario for not only the stock market, but also the entire economy, and, if you're not familiar with it, here's what you need to know stagflation refers to a time where growth is slowing, unemployment is increasing and inflation is high. This would be a situation where the solution to fix one would make the other worse, and even the former chair of the federal reserve said that under the benign scenario, we should have a slowing economy.

Inflation is still too high, but coming down so there should be a period in the next year or two where growth is low. Unemployment is at least up a little bit and inflation is still high. And finally, fifth, we really have no idea how much exactly is priced in, like you know, the saying buy the rumors sell the news. Well, this is kind of applicable here.

The stock market does not care about what's happening right now. It only cares about the future. All we got to do is take the current price factor in what's likely to happen over these next few weeks, sprinkle in a little euphoria and a dash of fud and everything, that's better or worse will be reacted to at that time completely randomly, however, to counteract Some of these claims, let's talk about the good news and discuss some of the reasons why the stock market might actually start going back up, although before we go into that, some of you know i've been making it a point to diversify throughout as many different investments As possible, including a recurring investment in cryptocurrency, all thanks to the sponsor of today's video ftxus they're, one of the largest u.s regulated cryptocurrency exchanges in the world, trusted by millions of users to buy, sell track and trade, both crypto and nfts. All in one place with fees that are up to 85 percent lower than the top competitors, for example, they have no fixed minimum fees on transactions, no ach fees and no gas fees on the top ethereum and solana collections plus.

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One analysis shows why the s p 500 could actually be fairly valued. This chart shows the stock market's value in relation to interest rates and, as you can see, we're trading right around normal second inflation may have started to decline. A new report shows that monthly core inflation came in around four percent annually down from six percent in the three months before it. Of course, it's still too early to tell whether or not this inflation is going to be the new normal, but it does appear as though a slowing economy is leading to a reduction in prices which may suggest that the worst is behind us.

Third, china entered their shanghai lockdown after two months now. This is an absolutely unfortunate situation to begin with, but the expectation is that this should lead to some level of normalcy overseas. Now, of course, this doesn't mean that we're in the clear quite yet, but it is a step in the right direction. Fourth, rising inventory could lead to lower prices and even lower inflation.

It was reported that inventory levels are high, as companies chased as much merchandise as possible to support demand which is now slowed. This should, in theory, reduce some of the inflation numbers which might lead the federal reserve to ease on their rate hikes, allowing the stock market to pick back up. Fifth, many segments of the market have already dropped from peak to low up to 90 percent, the worst, which is not an insignificant drop by any means. Now, it's certainly not to say that the market can't fall even more, but this could be a sign that valuations are beginning to approach a level that's more in line with what the market can support and six anecdotally.

It does seem like there's a lot of pessimism, that the market will continue to get worse and the prices will fall, and that makes me think that if everyone believes that to be the case, it might not happen. That's because if everyone believes the market is going to behave in a certain way, they could take precautions ahead of time that would prevent that outcome from happening. It's kind of like, if i told you 100, that you are not going to subscribe in the next 10 seconds: 100 you're, not gon na. Do it well guess what now that you know that you could prove me wrong and actually go and subscribe well in a way, that's kind of what's going on here.

If people have the expectation, the market's about to drop off a cliff they're, not going to sell anything, they haven't already sold, and that gives the market the opportunity to then begin going back up in price, especially when the majority of retail investors have already sold out Of the stocks they purchased over the last two years, so as far as what i think in the short term, betting, either way is going to be the equivalent to flipping a coin heads or tails. No one knows the full scale of what's to come or if it's better than expected or worse than expected, and i'm sure half the people out there making predictions are going to come forward, saying that they were right and they knew it was going to happen. Just because it happened to turn in their favor now, that's not to say that we can't look at economic data, analyze it and come to a reasonable conclusion. But at the end of the day, we really have no idea how the markets are going to react and when the bottom is going to be, i just believe for a long-term investor assuming you're going to be keeping those investments for at least 10 to 20 years.

You're best off just buying every single week riding the highs riding the lows and over the next few decades, you're gon na be coming out just fine with hopefully a lot of profit. On top of that, another piece of advice that i directly follow all the time is to only focus on what you directly control. For example, you control whether or not you smash the like button, whether or not you cut back on unnecessary expenses, whether or not you live below your means, whether or not you invest consistently long term, whether or not you pay down any high interest rate debt, whether Or not, you keep an emergency fund, whether or not you're, over leveraged with your investments and whether or not you use your time wisely to stay, employed and hone your skills. By focusing on what you can control and ignoring everything else, you can't you give yourself much greater power to focus on the opportunities of right now without concerning yourself about what the market may or may not do in the short term.

So, thank you guys so much for watching also feel free to add me on instagram and don't forget that you could get all the way up to a hundred dollars a free crypto when you sign up for ftx us down below in the description with the code. Gram you'll also get free crypto on every trade you make over ten dollars. The link is down below in the description enjoy. Thank you so much for watching and until next time.

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