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Most recently, a bubble popped and brought growth stocks down with it. In this video, I explain what the implications are and what Cathie Wood thinks we should do in this situation.
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Most recently, a bubble popped and brought growth stocks down with it. In this video, I explain what the implications are and what Cathie Wood thinks we should do in this situation.
Join our free discord here: https://discord.gg/xUWB2ExVcr
Link to the source shown in the video: https://www.youtube.com/watch?v=dynmtlO2_3c
My Second Channel:
https://www.youtube.com/channel/UCPkDot_lMk7HB_c68HubbUg
Twitter: https://twitter.com/casgains
Instagram: https://www.instagram.com/casgainsacademy/
Soundtracks provided by Nanobyte, Emphermal, Defyant, and Lakey Inspired
Copyright Disclaimer Under Section 107 of the Copyright Act 1976: All rights belong to their respective owners
Over the past 12 months, the stock market has risen by a significant amount. With this uptrend. We must ask the question: was this rise warranted and, if not, are we in a bubble, kathy wood? The ceo and cio of arkhanvest recently explained where she thinks the bubble. Actually lies and how interest rates are going to impact the stock market going forward kathy explained how a bubble just popped, and it's not in stocks in this video i'll, be explaining what kathy would think there's a bubble in and what we should do today.
Welcome to cas games academy if you're new to the channel, please consider subscribing for more content like this and let's get right into it. Most recently, there's been a lot of fear in the stock market regarding rising interest rates in bonds and it's for a reason. Inflation is bound to come if the federal reserve continues printing money through policies such as low interest rates and quantitative easing either that or the federal reserve is going to have to raise interest rates and stop quantitative easing and with higher interest rates, growth companies focused on Borrowing money to expand growth will need to pay higher rates for their borrowed money. Behind all of this, cathy would think that the economy is actually on fire and described our current situation as a virtuous cycle.
First, to start off, incomes have been increasing by a huge amount lately in january of 2021 personal income rose 10 month over month, which is a significant increase compared to the previous months. In addition, consumer spending was up 2.4 month over month, which again was a huge increase compared to previous months and lastly, the saving rate has increased significantly back in late 2020. Not many consumers were saving money, the saving rate, which is the percentage of income people save, was in the low 10. Most recently, this saving rate has increased significantly to 20.5 percent.
This clearly demonstrates that the economy has a lot of firepower. If more consumers are saving money, then more spending will happen in the future and with more spending, companies will make more money leading to an increase in stock prices, as earnings increase. All of these factors suggest that the economy is on fire right now, so disposable personal income was up 11 and a half percent month to month, that's not year over year, that's month to month, if you annualize it it's up by much more than 100 annualized, pretty Pretty provocative spending was up uh 2.4 percent month to month, again again, that's not annualized so times 12. You know almost 30 percent uh so and we're seeing the saving rate, because the income growth was so much stronger than the uh consumption growth.
The saving rate went back to 20.5 at the peak in the crisis. It was up at about 35, but it had been coming down month by month and we thought it was going to slip into the single digits. It did not. It has gone back to 20.
So again the consumer has a lot of firepower here, and you know i would say the economy is on fire. I know we're not at full employment and, and yet all of the leading indicators that we think are so important are on fire and they're. They they have very high multipliers associated with them, as kathy would just mentioned, because the economy is on fire. The multipliers are extremely high at the moment. By multipliers i mean pde ratios, enterprise value to ebitda ratios price to sales ratios, and the list goes on. In other words, stocks are valued very high right now, but those valuations are there because the economy is on fire. What happened most recently was that a bubble popped and by that i'm talking about the bond bubble, it's important to understand that, when bond interest rates go up, bond prices will go down. There's a direct inverse relationship between interest rates and bond prices.
Most recently, bond prices had a huge correction leading interest rates to go up. All of this stems from the bond bubble. There were too many investors purchasing bonds and now, all of a sudden, the bond bubble popped now kathy, would actually think that, in the future bond interest rates won't go up any further. This is because there is too much of a bearish sentiment in the bond market, which means that interest rates don't have much potential to go up further.
In other words, there are too many short sellers in the bond market and this signals that selling activity in the bond market is likely near its peak in the short term and what happened this week and i think what shocked the equity market to some extent. Certainly, the higher valuation part of the equity markets was uh. It looks like uh interest rates. Continue long rates continue to go up.
We got to 1.6 percent. Yesterday, i think, on the 10-year treasury bond yield, i will say, based on indicators uh mostly, if you look at short-term traders there, there are measurements of their activity. There are, there have been uh record shorts placed on the bond market, so this the they've been playing. The momentum here uh as interest rates go down, i mean go up, prices go down, so traders have been shorting the bond market at record rates and - and i looked back as far as 20 years - so we probably are in for a a little bit of a Pause here in the movement of rates uh going up uh for that reason alone, uh there's too much bearishness out there kathy wood is indirectly saying to buy the dip in the stock market.
If interest rates don't have much potential to go up any further, then this means that stocks are likely at a low point for the time being, in other words, buy the dip. Bonds were in a bubble and that bubble has popped and now we're getting discount prices. In the stock market, usually the bond market isn't as volatile as stocks, but we're seeing bonds outpace the volatility of stocks. Right now, we do know that um 1.6 percent from 0.5 during the crisis - that is a monumental move in the bond market uh. The the the volatility in the bond market is uh, beginning to outpace that in the equity market um - and i think one reason for that is bonds have been in a bubble and the search for yield. Uh uh became extreme uh and so bond bubbles. Uh seem uh or any bubble uh when it bursts, seems a little chaotic and a tripling in the bond yield from the bottom has to feel like nothing. Bond investors have ever felt behind the scenes, there's actually a large shift occurring.
Our current situation is very similar to what happened in late 2016, where the bond market and stock market led the federal reserve so before the fed even begins raising interest rates. The market is already pricing it. In back in late 2016 and early 2017, we saw valley stocks go up and growth stocks go down. This movement over the long term is not something to worry about.
The economy is so strong that the markets are now saying. Okay, we don't need this quantitative easing and the fed is going to come to the same conclusion pretty quickly. So, let's anticipate that move. So here we are.
We think that move is on on the way. Now. This also um reminds me of uh the late 2016 early 2017 uh and at that time um. The the the quantitative easing was on its way out and the fed was going to start raising interest rates.
They had telegraphed that and the market was very nervous, and i remember one of the reasons it was very nervous was, after president, trump won the election. The odds of a cyclical burst increased because of his promise to cut taxes and that's exactly what happened uh, but in the beginning the the the equity market um responded. Uh was very nervous around this idea that interest rates would be going up and and and what happened is when president trump was elected value stocks took uh off uh, just like they're taking off now responding to this idea that this economy is getting is developing ahead Of steam, so the value stocks have taken off and in fact, if you look at year-to-date, i think financial stocks uh are up 27 percent and finance i mean i'm sorry. Energy stocks are up.
27 financial stocks are up about 11. I think technology stocks, if i'm not mistaken, are up basically one percent and healthcare um, which is another uh area in which innovation strategies or to which innovation strategies are exposed. That's actually down so traditional value stocks are are having a nice run here. So as kathy would describe value, stocks are going up and growth stocks are staying flat or correcting.
This is healthy for the market over the long term and indicates that we're not in a growth stock bubble at the moment. If growth stocks continue to go up and up, then we could find ourselves in a similar situation to the dot-com bubble, where internet stocks were so overvalued that even the tech giants that were successful over the long term needed a huge, short-term correction. In this case, we are likely not in a bubble, because innovation is correcting itself right now, and how do we feel about that? We feel really good about that. Just like we did in 2016, when we said uh value is up, and actually the market was up value up. Even more and growth strategies like ours were down, they were actually in negative territory. Back then - and i remember saying at the time uh i think this is great - i think it's great, because the bull market is broadening out to other sectors, and that can only be a good thing for us. What would be very negative for innovation based strategies is if the market continued to narrow, so that only innovation strategies worked because that's what happened during the tech and telecom bubble, and we all know how that ended. There was too much capital chasing too few opportunities back.
Then too soon um the the costs of the new technologies and the technologies themselves. The costs were too high and the technologies themselves were not ready, but the seeds uh for innovation, the innovation platforms that uh are moving into exponential growth trajectories right now they were all planted back then uh. So i actually like the fear that we have experienced. I i i like it and mostly because i don't think it'll last um, but i'm happy that there's a reality check in terms of the speculative moves that have taken place within uh the innovation space.
Overall, the recent move in the stock market downwards has created a huge buying opportunity. Right now, fear is likely not going to last a very long time, given that the economy is on fire and that bonds are being shorted at all-time highs. Right now, the correction that we are having right now is healthy over the long term, also, even if this is the peak, if you invested at the top of the dotcom bubble or in 2008 you'd, be up substantially today always remember this statement. That is now a little overused time in the market beats timing.
The market, let me know whether you have been buying the dip in the comment section below. If you enjoyed this video, please hit the like button and don't forget to subscribe and i'll see you in the next one.
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Cathie Wood is not so smart at all. She is trying to tell someone, she is a good economist. No way. What she said, I will do the other way around.
I dont see her numbers at all. How can people have more money when half of all small businesses are closed?
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The stats that “more are saving” and “higher income” is bogus. The idea that more savings will lead to more spending is bogus too.
I personally think its quite obvious if the stocks are in a bubble or not by looking at the average p/e ratio for the S&P500 and the Shillar p/e ratio compared to the previous years. Don't forget, Kathy Wood has a biased opinion on this. Remember the .com bubble. You're responsible for preserving your own wealth and only you.
Finally a YouTube channel that help me u understand the market,I watch other financial investors YouTube channel when cathie wood came out and I didn’t understood a thing thank you for this man ❤️🤟🏻
I am not sure more people are saving money. I think it is more likely that a few people are saving a lot more. The bubble we are in is that people whose jobs depend on face to face interactions like retail and restaurants are dying, while businesses like amazon and other online services are doing great. But online sales depend on people having money to spend, and all those low end jobs are gone, and it is only the unemployment checks that are keeping them spending. When that stops, things will get messy. That being said, eventually Tesla will have a very bright future.
Who’s that behind the woodshed bloody murder? Is that Kathy Wood!?? LOL Bulls and bears make money make money- pigs get slaughtered. Just FYI – higher savings is deflationary..
I invested in both stocks and Crypto currency but I see Cryptos is doing more better and profitable to invest in..💯
Mrs Jamira Lewis is ligit and her method works like magic I keep on earning every single week with her new strategy.
The best and advisable way one could be a millionaire is by spending less and investing more {e.g Cryptocurrency investment (bitcoins) is really the best way to make
SPACE AGE TRADER'S ALERT 📢 WEBULL AND YOUTUBE FOLLOWERS
This I promise you will be the week to buy the dip on the Major Teac. Stocks and some others.
Don't let the Brokers scare you with their Red Day tactics. Just remember to hedge your every trade by taking a position on both sides of it simultaneously.
That way you can make some money 💰 either way it moves. I am and I plan to buy more stocks on this red day today, while they are being discounted today for the ultra Rich.
Remember, when you can't see the sucker play, you're the sucker and it looks like the Brokers are setting up the day to play you out of a great buying opportunity.
The name of this game, is buy low and sell high.
Well the prices are low and you've been schooled.
The choice is yours now and remember a scared man or woman can't win. It's like the Lottery, you have to be in it, to win.
Peace ✌
OG Reggie B
The Robinhood of Traders
This stock market bubble reminds me of the bitcoin bubble of 2017. Suddenly everyone is a genius, including the shoe shine boy. It won't last.
COVID and unemployment. Stock market doesn't reflect this. It will. It always does. History repeats itself, it has to, nobody is listening. In fact, there are too many videos and social media telling people everything is rosy. It is in a bubble. Until……………….
Once I receive my stimulus check l'll be starting an investment in crypto known as Bitcoin
Thanks for this great video it has been helpful to us. As an investor, it's almost inevitable that you're not going to experience ups and downs along the way of investing for yourself but trading with an expert who would guide you in making huge profits is the best. Think about Mrs Olivia Williams.
If nobody has studied demographics I highly advise it because that's one of the biggest indicators of growth and our demographics are on a decline which means the economy cannot grow for people to save our economies on fire and we're doing the best ever they're absolutely insane and they probably never been poor a day in their life because 90% of the country right now is struggling to survive.. that is not an economy on fire.. it might appear that way to rich people and corporations because they have plenty of money free money with 0% interest while the rest of us are broke..all the stimulus and everything they're doing right now is doing nothing but kicking the can down the road they're delaying the inevitable but the inevitable is coming. I highly advise studying demographic cycles.. you can't have a growing economy with a decreasing demographic..
Kathy woods is literally contradicting every other word she says… I believe she is very worried about her sector because they are very speculative plays and they run up fast when there's a cash storm like there is right now but when the cash storm ends they plummet right back down… These are all speculative plays.. and for valuations to be this extreme in speculative stocks it just goes to show that people have nowhere to put their money right now because there's too much money trying to flood into the system and that's the same as every other huge bubble burst in history do your homework people wake up.. the funny thing that nobody's talking about is this is and everything bubble.. it's not one sector everything is overvalued.. talked about buying yields increasing that's not good for the stock market that means big money is going to move out of speculative plays and into bonds.. we're only seeing the tip of the iceberg right now as soon as the feds decide they don't need to help anymore we crash big and this market does not come right back up it's the great financial Awakening
You know the only problem with bulls like this is they don't look at the other side of the coin you guys should probably all listen to and understand the better perspective on the overall market because if they are right we're about to see the biggest crash the world is ever seen and it's not going to spike back up it's going to stay down for 10 20 years I feel sorry for everyone that's long all these growth stocks that are going to plummet.. this is a fictitious super inflated stock market and any of the big old time pros that have been through great depressions and stock market crashes will tell you this is absolutely a bubble…feds can't hold it forever.. investing long right now is the worst thing to do because after this next crash most of these stocks will not go back up and see these price levels for 10 or 20 years.. you look at the world economics the world financial situations it's absolutely unsustainable it's a broken system and it's about to collapse.. I beg of you please wake up people open your eyes and protect yourselves..
If income was up because of stimulus and the stimulus is temporary, isn't the income increase temporary?
was waiting for end of Q1 to buy Tesla anyway. Thought a dip could come at some point too. Happened at the same time. I am putting everything I can into it rn.
Every January the stock market skyrockets and HYPES.. why do you think all the stocks rise in January ? Because the winning stocks can disguise themselves from the fake timed pump and dump (pending fda approval penny stock for example) and disguise themselves from the pure pump and dump (weed stocks for example)
These things only matter if they are caused by govt intervention. If family income grows by natural market means then it is not a bubble but an increase in economy. If it is growing due to govt interference then bubbles are created because of artificial inflation.
All my stocks are down, nothing is green all is bloody, still bought some shares here and there among them TSLA.
I am not sure about the savings rate , millions of people lost their jobs and businesses losing their shirts … please explain what and where you get this info your talking about.
Some useful insight but missed the boat on not being in a bubble. Value isn't increasing. The relative quantity of fiat pairings are increasing as the USD (and all currencies related) are being rapidly devalued.
Cryptocurrency has proven to be globally profitable to individuals around the world but personal you'll never understand how profitable crypto is until you start investing in the market.
Most wise investors with crypto uses the opportunity of when there is a drop in the market to buy and day trade with a working strategy and a plan to navigate the market system using the low price in the market to trade daily speculating the increase in price. Get a working plan today for that profit-making. fact is, BTC is the future of crypto and the questions traders ask themselves now is if this is the right time to invest ? Before jumping into a conclusion I think you should take a look at things first,for the past few days the price of BTC has been fluctuating which means the market is currently unstable and you can't tell if is going bearish or bullish. while others still continues to trade without fear of losing, others are being patient. For me trading has been going well because I use a day trading system that helps me with signals which have made me to accumulate over 8.5btc in two weeks.get a working strategy with the help of an expert his telegram (@ ) and on wtsap (+447828450768)
The income and spending is temporary. That's the stimi money just reaching people, I'm not seeing authentic wage growth out there, and I'm actually seeing real wage decreases from workers being able to work remotely and therefore demanding less of a pay rise and in some cases accepting wage reductions.
Your looking at an old paradigm. The Fed is going to be replaced this year with the new Quantum Financial System that can process transactions at billions of times per second. The central banking system is only capable of millions of transactions a second. And the new system will not depend on interest rates guiding the market. We are in the middle of the biggest transfer of wealth the world has ever seen. From the corrupt private Rothchilds banking system to we the people. It will be backed by precious metals and not fiat currency. There will be no need for the IRS or the FTB. When the economy starts to crash, that will signal the new monetary system.