The stock market hit a new all-time high, just after the markets opened on january 4th the second trading day of 2022.. As long as the economic cycle continues to expand, we would expect profits to be growing and that's the principal driver of returns and equities. The s p 500 hit a new high of 4 818 points and we were about to see a stock market miracle. It's been an incredible year for people, long equities up like 28 and the third year in a row of big double-digit gains.

Can this continue? I actually think it can, because 2022 was going to be an amazing year, only the second time ever a four consecutive years growing by more than 15. The only other time this had ever happened before being the late 1990s, and that was just before one of the biggest stock market crashes in history. The dot-com crash saw it didn't you, it was down some boy. How come i don't know, ah dead day bad day for you another one yeah.

I know too many in a row. The plunge was sparked by a jump in u.s inflation, the fear, a bigger hike in interest rates. The only remedy in the run-up to the dot-com crash pre-revenue companies that had never earned a single dollar would suddenly have billion dollar valuations, losing huge amounts of money. Every single quarter was the mark of a successful.com business.

Retail investors flooded the market in record numbers investing their money into unprofitable stocks based on hyped valuations. A record 915 companies went public in 1999 and 2000, taking advantage of easy money being thrown at anything related to technology between september 1999 and july 2000. Insiders at dot-com companies cashed out 43 billion dollars by selling their shares, but it was okay, because share-based compensation is exactly how successful companies attract top talent and four months after the s p, 500 peaked. On the 1st of september 2000, it went to lose 16 of its value, and that was just a start, because the stock market would go on dropping for another 21 months after that losing a total of 51 by october 2002..

The stock market crash in 2022 has remarkable similarities with what we saw 20 years ago. The stock market is falling and tech stocks are leading the way, many losing 70 80 or even 90 percent of their share price. In just a few months, the number of people invested in the stock market is at an all-time high after a big run-up. In the last couple of years, we have the apes sinking, hedge funds, as greed is driving more and more people into higher risk.

Gambles first is playing the short squeeze game against wall street with stocks like gamestop and amc, where the share price becomes entirely decoupled from the company's fundamentals, then we have the biggest pyramid scheme in history, as young investors have tripped over each other to invest in the Latest meme token, with completely pointless crypto, created by a random guy in his mom's basement, becoming worth billions of dollars. Despite having absolutely no utility or purpose, we got to a stage where people would spend hundreds of thousands of dollars on jpegs of monkeys wearing funny hats, and the most astounding thing about all of this is that people talked about investing in all these things. Investing in nfts with a straight face, without so much of a niggle at the back of their mind that something was badly wrong. The average major stock market crash in the last hundred years took a year and a half to reach the bottom from the previous peak, and we are currently only about four months into this one.

So far like with every market crash, we get the red days when investors watch their share, prices go from bad to worse, and then we have massive rebounds for seemingly no apparent reason like we had last week, like we had the week before when stocks magically grow By 10, for no apparent reason - and the worst thing about a typical slow market crash - is that the worst bit of the crash comes towards the end. If you think it's bad in the first few months, if you think it's bad now, you just wait until the market really loses it and begins spiraling down to wherever the bottom is later on and as the markets continue dropping week after week, panic sets in, and Investors suddenly start having itchy fingers. Many will sell out of their positions because they want to wait until the market drops all the way they want to time it to perfection. Others will continue to proclaim that the stocks are massively overvalued even after everything's lost 80 percent of its value, and suddenly the outlook is pretty grim.

This is the moment that we are in right now. The stock market is dropping into a dark hole with seemingly no bottom. Inflation is still sitting at 40-year highs and the russian invasion of ukraine. China, locking the country down because of covet and the global supply chain issues mean that this could get a whole lot worse.

Interest rates only just started increasing recently after sitting at zero and will likely to continue increasing, faster and faster over the next two years, putting more pressure on companies with large debt burdens and on public spending and as the purse strings tighten, we may well go and Hit a recession, maybe even a double dip recession, with an initial gdp drop, followed by job losses and a decline in productivity, speculative investments will continue to crash. We will continue hearing more stories about people who invested their life savings into the latest. Flavor of cryptocurrency lose absolutely everything in a matter of minutes. People will continue to pull their money out of a market converting paper losses into real ones, because panic and fear are incredibly powerful feelings.

These feelings trump any other human emotion, because they are key to our survival. This is how we develop when things go south. It is panic and fear that makes you act quickly to get yourself out. It is natural, the same voices that told you that stocks are going to the moon four months ago will now tell you the exact opposite people advocating the benefits of long-term.

Investing very quickly become short-term traders trying to quickly recoup their losses by gambling in high-risk place. The stock market volatility is intensifying. It is now strangely normal to see some of the largest companies in the world fall or gain over 10 percent in just one trading day - and this is the point where something really important happens: feelings become more important than fundamentals. Fear trumps, dcf models.

Panic throws quarterly reports and numbers out of the window. Many company valuations before this crash were priced on huge amounts of hype. Don't get me wrong. Company valuations in many cases, were detached from the fundamentals, but as the market crash takes hold and as stocks get sold off in a hysteria of overreaction, the exact same thing happens in reverse.

You will have companies trading at impossibly low valuations because nobody dares catch a falling knife. Ten times price to sales was cheap five months ago, but three times price to sales on exactly the same company is seen as expensive. Today - and this is where unique opportunities come about, that can be once in a lifetime moments for investors making money, because if you mute the noise from the media, if you ignore unqualified opinions, different kinds of personal viewpoints, you can see something very stark through the red Haze of panic, not all companies that have lost 70 of their value in this market crash will survive. In fact, the likelihood is that many of them, far more than some people, expect, will not the way back up for the share price, for the stock is going to be very long and painful after losing 70 in value, a stock needs to grow by 230 percent.

To make it back to break even and a low share price means it is harder for companies to raise funds. It is harder for them to bring in new talent. It creates a whole lot of headache and even the best companies that did survive. The dot-com crash took many years to bounce back to their pre-crash valuations and between now and that point of break even in the future, there are going to be a heck of a lot of bumps.

I don't know what exactly they're going to be like. I didn't know that russia was going to invade ukraine or that the whole world would go and shut down because of a virus. But i do know that there will be hurdles to get over and when you've just lost a lot of money in your investments. It is extremely tempting to look for a magic shortcut to make it back quickly.

Maybe you should sell and wait until the prices drop. Another 50 percent and then buy back in to double your money. Maybe you should short some stocks while everything is falling or maybe you should start learning technical analysis so that you can perfectly time the random swings in the stock market and make ten or a hundred, or maybe one thousand percent per day, and it is perfectly normal. As a reaction, it is the typical gambler's fallacy where we think the past events somehow make future events more or less likely, but this only leads to even bigger losses as people throw more money at high-risk gambles today to try to make up for their losses.

From yesterday, the one thing that really does stand out in this situation is that, among the pile of rubble that used to be the most popular tech and innovation stocks, there will be some gems, because in a time of panic, it doesn't matter what the fundamentals say. It doesn't matter what the numbers are, everything gets thrown out and the good stuff will be in the same heap of trash as the bad. There will be businesses in that discarded, pile of junk that have phenomenal numbers and amazing prospects. There will be companies with valuations that are so ridiculous.

You will be triple checking your calculations, because the upside will look plain stupid. I remember working in capital, one the big u.s bank during the financial crash, when the share price collapsed by over 90 percent to single digits as panic hit wall street in february 2009, that's 14 times less than the share price is today, and amazon has grown in Value by tens of thousands of percent since dropping to five dollars during the dot-com crash, the time when everyone has lost their marbles and panicking is the best time to act, and it is far easier said than done, because at that point everyone will tell you not To act because everyone is driven by fear and sure valuations could in fact drop further chances are. You will not be buying in at the bottom, regardless of how hard you try and when you buy. But when you see major foundational discrepancies between sensible valuations and panic driven sales, when you see dollars being sold to you on the market for 20 cents, it can be a bad idea to let greed push you to weight and try to squeeze that a little bit Extra try to time the bottom, because you are far more likely to miss the bottom and lose value.

Instead, many grow stocks are already trading at incredible discounts, putting their share price back several years, despite their businesses growing several times. During that period, more mature companies tend to sell off later in the cycle, so there is every chance that we are going to continue having stock sales for some time. Yet, as this market crash develops, and at this point, when many investors are pulling out of the market, there will be others who will be buying up stocks at peak fair prices and in 10 or 20 years time. Some of these stocks will be worth 5 or 10 or even 20 times their current value and the same people who are panic selling everything at peak fear will be very quick to point out how lucky you are for having had the audacity to buy stocks during A market crash when people quote warren buffett, they often miss out one word from his most famous quote, and the problem is that that one word is the most important one in the sentence, because in his 1986 letter to berkshire hathaway shareholders and in some of the Later ones that repeat the same quote, buffett wrote we simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.

The word only is crucial, because there is one time and one time only when you need to act. If you want to succeed and that time is when everyone is panicking and throwing their toys out of the pram, you.