I Have some bad news? You have to listen to this. Three quarters of economists expect a recession in the next two years. Half of economists think that the recession will start in the next two months, Germany may already be in a technical recession, and recent industrial data says that German economy is about to collapse. The big economic slowdown last year means that more and more companies are going to post negative earnings growth, and this means that a recession in the US and around the world is definitely coming later this year or next year according to Forbes, The same article shows that we are way overdue a recession because you see the current economic expansion is the second biggest since World War II which means a recession is way overdue and the Wall Street Journal says that the probability of recession is the highest it's been in seven years.

CNN says that trade issues with China will cause a recession this year, and the recent easing on interest rate hikes by the FED is a big warning sign because when the FED slow goes down and pauses rate hikes, that means the economy is about to get destroyed. The recovery in the stock market in January and February is just a bear. Market Rally, Do Not hold your hopes up And all the Bulls who think that this means that things are improving are wrong. Unemployment is at record lows, but this data is misleading because so many people are working part-time and actually low unemployment is a bad thing.

And yes, every recession indicator that has perfectly predicted every recession in the last 70 years says that a recession is on the way guaranteed. Does this sound familiar to you? Well, I have a confession to make. This is not recent news. Each of these headlines is from January of February 2019 exactly four years ago I Just changed the dates and some of the screenshots to show you the parallels.

It's uncanny, right? But this is where the stock market was in early 2019. a recession was 100 coming. The stock market in 2018 was just a precursor for one of the biggest crashes ever. That was inevitable.

And you know we are now way overdue for a crash in the three years immediately after these headlines. Four years ago just happened to be the second biggest stock market Bull Run in history when the stock market went up 100 in three years. and that includes the crash in 2020.. over the last 10 days, the stock market has fallen by three and a half percent.

And of course, the moment that the stock market has the tiniest Wobble the smallest drop every Finance YouTuber has immediately come out with a constipated thumbnail and a video about how the biggest crash in history is now on its way again. Five reasons why I Think the US has headed into one of the worst recessions and stock market crashes in history. What if we're as Bulls long term wrong? That is five to seven years of Hell could be ahead of us. Let's talk about this: Global recession.

Uh, the World Bank says that we could be headed into one. How severe is that recession? What's it Look like? It's sharp right now. So if we think of the second third quarters of this year, the big downturn part of that is China. But it's really, uh, most of the world on the full times like this when the noise is overwhelming.

Here is what the Godfather of Value Investing Benjamin Graham has to say To understand the whims of the market. It's sometimes easier to imagine the entire stock market as being a person. Let's call them. Mr Market As far as people go, Mr Market is unpredictable, very Moody and not very clever.

Mr Market is easily influenced and this causes him to have major mood swings. You can see this in practice in the way that the market always swings back and forth between unsustainable optimism to unjustified pessimism. As a result, when the market is too optimistic about future growth, stock become too expensive. On the other hand, sometimes the market is too pessimistic, wanting you to sell in unwarranted circumstances.

Does that sound in any way familiar? Remember how old this book is? The Intelligent Investor needs to be a realist and stop herself from following the crowd. She should likewise ignore the mood swings of Mr Market. This is one of the key ideas in Benjamin Graham's book called The Intelligent Investor. and if you want to quickly read the key ideas of the guy that inspired Warren Buffett You can do so on Blinkist, who are the sponsors of today's video.

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Make sure you go and check it out. The link to Blinkist is in the description. So one of the most popular arguments about the impending doom of the market crash is that we are way over. Do I Hear this all the time because you see if you go and look at the historic chart of the S P 500, you see that it goes and drops every now and then and on average.

That happens every whatever number of years because there's always going to be an average and we're now double the whatever number if you don't count the flash crash in 2020. So according to this line of argument, we are overdue a massive recession and we'll probably have a monster stock market crash. And the problem with this line of argument that is incredibly popular at the moment is that this is Not how conditional probability works. Let me share a really unfunny Soviet joke from my childhood: a statistician is going through an airport or going through the security to get onto a flight and he puts his bag through the scanner and the guard calls him over and asks him to open his bag.

He opens the bag and inside is a bomb and when the guard naturally inquires us to why this guy happens to have a bomb in his bag, the statistician says, well, the historical likelihood of there being a bomb on a plane is fairly low, but the chances of there being two bombs on the same plane are pretty much zero. So I Always carry one with me. And the point here is, for whatever reason, a common misconception is that the stock market follows some kind of preset wave pattern, so there is a necessary pattern of ups and downs and UPS following downs and downs, Following ups. And if you've had a particular length period of Upson, of course, there has to be a down.

Except when you look at the returns by year, there are actually very few years when the stock market gets a roughly zero percent return. and there are also very few years when the stock market gets a 10 return of thereabouts. Even though that is the long-term average, most years are actually either very strongly positive or very strongly negative. so the expected return does not follow a normal distribution centered on 10 being the average.

Because most of the observed outcomes are in the Tails. And the reason this is important to understand is this: as humans, our brains are naturally trained to find time-based series patterns. That's how the world around us works. That's how we survive the season through the year, follow a sine wave with temperature and rainfall going up and down through the year, and you naturally learn to observe it and expect things to happen at certain times of the year.

But just looking at this chart, in the modern era, since World War II, there have only been two occasions where two consecutive years ended in the red. Just think about the 1973 oil crisis and the.com crash. Even the big bad financial crash in 2008 rebounded with a 23 growth the following year in the S P 500 in 2009. So there have been two times when we had two consecutive years finishing down compared to 15 times when instead there was a rebound.

So if we do use this logic, if we do go down the road of pretending that this matters in any way whatsoever, by the way, it doesn't, then these are the stats. And you know the fascinating thing: Those 14 times out of 16 when the market did not, in fact keep collapsing and get worse in the second year, the average growth in the S P 500 after the red year before the next red year was 58. But of course, if you point out the fact that there is no good evidence for an inevitable stock market crash, the next most popular strawman argument is that job's data is too hot I'm sure you've heard this one. I'm not sure who started this trend, but I hear it every single day on CNBC and it's now spread like the plague right across YouTube The job dates in January was too hot so the FED will have to raise rates to 20 percent.

There's no other way. and I Guess the reason that this posits turned up in the first place is because on average low unemployment is something that stimulates the economy. And when you have low unemployment, people have jobs. They go and spend money that they get paid in those jobs that stimulates demand.

High demand means High inflation and the FED is fighting inflation. So the theory is that if you keep increasing rates, eventually some of those people are going to lose their jobs. When they lose their jobs, they'll have less money. They'll have less money to spend, Demand will drop, and as demand is lower, inflation will fall.

And hey, I have time for random straw man arguments Except in the same breath as sharing this economic thesis. Those same people will also tell you the money printers during covert injected a boatload of money into the economy. So which is the primary reason or what is the waiting? Between this different reasons and because of stimulus checks, because of working from home, people will now have more disposable income than they did before Covid. Well, yeah, no, you've probably seen this chart of U.S credit card debt where people will say that it's spiking now and this is really bad.

This means that people have no money, so blah blah blah recession is coming. Except the real thing in this graph is this dib during Covid, which incidentally is much easier to see if you use a proper axis and zoom out. So when people had a bow load of money, some of them actually used it to pay down debt I Know how incredible as well as invest in GameStop and Jpegs and monkeys wearing funny hats. The problem was that Financial reality was not in any way sustainable.

The real point of this graph from where I'm looking at it is that the core Financial behaviors including people's usage of debt are returning to their pre-covered Trend And when you look at inflation is inflation being driven because people have too much money? Because let's entertain that idea. If that was the primary driver, a low unemployment was a massive problem. People didn't know what to do with their money, they're just going out and spending on whatever, then I guess fact is like apparel, new and used cars would be completely off the charts. You know, the discretionary part of the index, but these just happened to be the lowest components of CPI.

So instead the war in Ukraine has kept Energy prices very high and these are now falling this year and energy will now have a big negative contribution to CPI in 2023 instead, and shelter is currently running hot, but house prices and rents are now correcting quite sharply, which will filter through into inflation data later this year. Just because unemployment is often a causal effect and the primary causal effect for inflation running hot does not mean that it is always and the only potential primary cause or factor, but a lot of the financial commentators. I Like that guy with a hammer where everything they see is a nail, the fact is I have no idea which way the market is going to go this year. The truth is, nobody else does either and it is way way more complex than just looking at one or two metrics and saying that.

You know for sure because look, this data says so when you next hear that person telling you that a big crash is 100 Definitely absolutely coming in 2023, please remember to set your attitude to ignore. The fact is a bunch of stocks are still on sale after last year. and if you're a long-term investor, remember Benjamin Graham's lesson: The enterprising investor doesn't follow the Market's ups and downs. Enterprising investors Buy In the low markets and sell in the high markets.

And right now we are in a low. Market Thank you Blinkist for sponsoring this video. Remember to check the link below to subscribe and thank you for watching this video. I'll see you guys later Foreign.