Hey guys, it's sasha, the s. P 500 is down 5.3 percent in the last two business days since friday, the nasdaq 100 is 6.9 down and bitcoin has just crashed by 14.5. Over the same time period. I made a video just two weeks ago, where i said that a combination of different effects may lead to a drop in the markets, and it looks like that drop has now arrived, but how far down will it go? Are we going to have a 10 correction? Is the market going to continue crashing over the next few days? Is it gon na get much worse than this? Well, let's discuss it, and let's talk about some of the reasons behind why it's happening now.

There are a lot of reasons for why this is happening, but the biggest one and the most important one is probably the most obvious and at the same time the least discussed go look at what the markets have been doing since march 2020. We have had one off if not the biggest bull run in history. It is bigger than the bull run we had after the financial crash. It is bigger than the big bull run in the 80s and it's even bigger than the 1954 to 1955 bull run.

Stocks have gone up so much that if you just put in your money into the s p 500, you don't have to pick any stocks at the end of march last year. You would be 84 up as of the end of last week, that is bonkers. That is a ridiculous rate of return, as physics unfortunately teaches us, what goes up eventually will come down, and so the markets can't really be growing at 80 per year, every single year, year and year out. So eventually, some kind of correction or some kind of downturn kind of had to happen, but there have been a number of recent signs that have added to this expectation.

Two weeks ago, we have heard rumors that have now come through, as fact because we've seen the law being proposed, joe biden is trying to pass a bill that will double the rate of capital gains tax for the richest americans. These also just happen to be the people that own a huge chunk of all of these different companies in the markets. So this is a big effect if you're a rich american and you can go and sell your stocks that you've owned for a decade or two or even maybe longer this financial year instead of next financial year and save 20 percent on your gains in the process. Wouldn't you go and do that and sure, even if this play out the likelihood, this is only going to be a short-term impact, because those same people will eventually go and rebuy back into the stock market because that's how it works.

And if you look at history, that is exactly what they've done in previous times, when the tax rates increased dramatically as well, because at the end of the day, what else are you going to be doing with that amount of money? Now then, we have another impact. That is really important and it is inflation. Inflation has been hovering on the horizon and it is a really big killer when it comes to today's stock market, probably more so than at any point in the past, and that's a really important thing to remember some of the biggest companies in the stock market. Today, some of the biggest companies on the planet are big tech stocks with very high p e ratios and very high expectations of growth at some point in the future.

This means that if inflation rises and the value of these stocks plummets, because earnings in future years are discounted to arrive at what the effective value of those earnings is today. So if you earn some money at a point in the future, because you could have that money sitting in any other type of investment or asset or just in bonds or in whatever you could be making some other amounts of money elsewhere. And you have to account for that fact. So if inflation goes up the discount rate, the rate at which you discount future earnings will also go up.

So if you have a company like tesla, where the value is really not at all, based on the revenues of the profits today, because they are pretty much negligible, but the revenue potential in 10 years time. This is a really big deal because, if tesla, for example, was to have a profit of, let's say, make up a number 100 billion dollars in 2031. If you discount that at 10 per year to today's value, then you get 34.9 billion just doing it over a 10-year period. But if you increase the discount rate to say 12, then that same value drops to 27.9 billion.

So if you are basing evaluation of those numbers, then your target share prices just collapsed by 20, so because almost all of the big companies in the nasdaq and so much of the s p 500 is made up of these tech firms. The future potential is the key driver of their value, and inflation is really bad for their share price. And yesterday the us bureau of labor statistics published the latest updates to the cpi. The consumer price index.

Analysts were expecting somewhere between 3.5 to maybe 3.8, but the numbers came out way higher the all items index increased at 4.2 percent. That is the largest increase according to themselves, since the financial crisis, if you exclude food and energy, then 0.9 rise in inflation in april is the highest since 1982., so these are really quite unprecedented numbers, so inflation has gone up much more than people expected and many Are thinking that perhaps it's going to stick around for a little while, and that means that there is a likelihood that interest rates, bond yields and all of that stuff will also be going up, and that means that tech stocks are going to be losing their value. Well, that's the theory anyway, but then we have the whole new big wide world of crypto, which is where a whole new generation of people seem to prefer to keep their money instead of traditional types of investments, the amount of hype and the amount of money. That is sitting a cryptocurrency is staggering and when you consider the fact that the most stable by far the biggest and by far the best known one can drop by 15 just because tesla stops accepting it.

There are some really important things to think about: elon musk, literally just posted a short tweet last night and boom bitcoin went down like a lead balloon. Although everyone has heard and seen the words that say, crypto is volatile and you need to take care and you need to make sure that you don't invest money that you can't afford to lose. I know that everyone says that i'm not exactly sure whether everyone actually fully understands what the real implications of those statements are. What happens if regulation begins to catch up with crypto? What happens if the authorities decide that creating meaningless tokens for the pure sake of pump and dump schemes or growing them as a ponzi scheme, or anything else like that is not really conducive to benefiting the economy in any way whatsoever? Sure i do personally see huge benefits and huge potential for using blockchain technology.

There are massive use cases that could develop and improve the world for the better, but creating thousands of new coins with ridiculous names that serve absolutely no purpose whatsoever. In my opinion, there's not part of that huge set of benefits. Now, as i'm filming this, the pre-market fund, the regular stock market has opened, and it is looking bleak. Tesla is down 2.7 to 573 dollars, apple is down to 122 dollars and square is hovering at just over 200.

Almost everything in the stock market is red again, so it looks like this drop is continuing. So if you're a long-term investor like me, then this could be an opportunity to buy stocks at great prices. That may never be this low again, but it is really very difficult to know how far further this will fall and how long is going to stay down for, as with everything when things go, this volatile so do the risks and the level of risks increase dramatically. So make sure that you careful out there make sure that you go and do your own research and make sure that you don't do things that you won't want to look back on in the future.

Thank you so much for watching. I really really appreciate it and, as always i'll see you guys later, you.