The Federal Reserve just announced they would be buying an unlimited amount of junk and corporate bonds - here’s what this means for the stock market and your money. Enjoy! Add me on Instagram: GPStephan
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This all starts here, on March 23rd, when the Federal Reserve announced that they would purchase UNLIMITED assets in order to support the market…and, literally SINCE that day…the stock market has slowly, but surely, began to climb back to life.
https://www.cnbc.com/2020/03/23/fed-announces-a-slew-of-new-programs-to-help-markets-including-open-ended-asset-purchases.html
When companies need debt to stay afloat or expand, they’ll borrow it through issuing bonds. Now, TECHNICALLY - when the FED does this - they’re giving out loans that will still need to be paid back, but because they control the interest rate that they loan money at - they can “Essentially” give these cities, states, and business interest free loans - and the HOPE is that, that money will help everyone stay afloat - and then, when times are good, it’ll get paid back. I
But where this gets unusual is that - NOW - the FED is going to be buying CORPORATE BONDS, which is another word for - they’re lending money to COMPANIES, not just states and cities…and, even more alarming - they’re buying JUNK BONDS, which is another word for saying - they’re giving companies money, which have a riskier likelihood that they won’t be able to repay those loans back.
At the end of the day, whether it’s intended or not…when the FED goes on a shopping spree for Junk Bonds, it’s INEVITABLY going to translate into high stock prices alongside with it. When struggling companies get really attractive, cheap financing…that’s positive…and, positive news for companies equates to a higher stock market. .
Since the Federal Reserve has an infinite supply of money, they can afford to do this as long as necessary - and my guess is that they’re hoping that’s enough to get the ball rolling, and then once we’re in the clear - those companies can HOPEFULLY begin to repay back their debts.
The RISK with this is that there’s absolutely NO MORE market discovery, where companies are naturally left to fail…and, since the federal reserve has no collateral with the money they loan…they’re at the mercy of the company for actually paying them back. If that doesn’t happen…too bad, it’ll be absorbed into our national debt and things will continue on as normal.
The other concern is that, when we get SO accustomed to 0% interest rates, free money, and unlimited loans…it becomes hard to actually be self sufficient after that. Arguably, prices adjust according based on 0% interest loans…so, when one day interest rates are no longer 0%…if that ever happens, valuations will have to come down accordingly, and that’s a risky move.
We’re definitely in interesting times now - and, honestly, who knows what’s going to happen. If this keeps up, stocks might absolutely continue rising for the foreseeable future…so, it’s probably in all of our best interest to continue dollar cost averaging in the markets, diversifying as much as we can, and always smashing the like button for the algorithm.
Ryan Scribner video: https://youtu.be/VnyE2QPeiDQ
For business or one-on-one real estate investing/real estate agent consulting inquiries, you can reach me at GrahamStephanBusiness @gmail.com
*Some of the links and other products that appear on this video are from companies which Graham Stephan will earn an affiliate commission or referral bonus. Graham Stephan is part of an affiliate network and receives compensation for sending traffic to partner sites. The content in this video is accurate as of the posting date. Some of the offers mentioned may no longer be available.

By Stock Chat

where the coffee is hot and so is the chat

26 thoughts on “The fed just bailed out the stock market”
  1. Avataaar/Circle Created with python_avatars Felix Wagner says:

    🙌VENTURING, into the trading world without the help of a PROFESSIONAL, trader and expecting profit is like turning water into wine you would need a miracle, that's why I trade with Mrs Rhonda lynn, her skills set exceptional🤝

  2. Avataaar/Circle Created with python_avatars Connor Fellin says:

    I like uvxy to short the impending market crash

  3. Avataaar/Circle Created with python_avatars JAC says:

    This is literally the market boom right know
    Artificially making the market attractive by a money loosing, stock pumping hedge fund. That looses billions of dollars on purpose to drive up prices.

  4. Avataaar/Circle Created with python_avatars Betty Scruggs says:

    Traders can try all the strategies they see on YouTube. But I can tell for a fact most will still lose money due to improper knowledge on how the liquidity providers manipulate the stock charts, that is why the importance of investing with a good broker can not be over emphasized.

  5. Avataaar/Circle Created with python_avatars EvanSolo says:

    Do a quick google search for ECOM BAZZOID someone posted your courses Graham

  6. Avataaar/Circle Created with python_avatars Piyush Keshri says:

    Do a quick google search for ECOM BAZZOID someone posted your courses Graham

  7. Avataaar/Circle Created with python_avatars Chu Kim says:

    But we do know what is going to happen with all this insanity. The whole economic system in the USA will collapse, and is in the process of doing so now. You cant have a fake stock market forever.

  8. Avataaar/Circle Created with python_avatars mrs psychokitties says:

    Your telling people to lose their butts by dollar cost averaging into the stock market now?! This is the time that you get out of the market and watch it come crashing down, your a fool to think otherwise. Gold and silver is where you need to be right now, your advice is leading people off a cliff…idiot.

  9. Avataaar/Circle Created with python_avatars mrs psychokitties says:

    The federal reserve is MANIPULATING the stock market…they are MANIPULATING stock prices!!! This is legal?

  10. Avataaar/Circle Created with python_avatars Cryshel Whitehead says:

    Great job explaining this! I learned a lot!

  11. Avataaar/Circle Created with python_avatars Rosalie Thomson says:

    The fed is buying junk bonds but nobody is helping landlords. Something stinks about this. Could it be that 50% of landlords are mom and pop with up to 3 properties?

  12. Avataaar/Circle Created with python_avatars Nutty History says:

    Good luck for 3 years if you click the acorn, you won’t regret it

  13. Avataaar/Circle Created with python_avatars Shannon S says:

    1929, 2008, 2020. Capitalism doesn't work. People are so afraid of socialism like it's a dirty word. Well, guess what? Those multi-billion dollar corporations are continually getting free handouts on our tax-dollar backs. Nuff said.

  14. Avataaar/Circle Created with python_avatars Spin Mouth says:

    Hey, poor people, struggling to pay your mortgage? Real estate investor would love to steal your equity position by allowing you to sell at a 40% loss on your equity, just sign right here ________.

  15. Avataaar/Circle Created with python_avatars Spin Mouth says:

    Capitalism for the poor and corporate socialism for the rich. Yep all is well…

  16. Avataaar/Circle Created with python_avatars Daniel Montiel says:

    when they ask to smash the like button i automatically press the dislike button.

  17. Avataaar/Circle Created with python_avatars Billionaire-Landlord says:

    Too many damn ads!!!!!! I won’t be hitting the “like” button until these damn ads go away!!!!

  18. Avataaar/Circle Created with python_avatars amazing hannure says:

    Ok, so socialism is bad when it' for regular people, but perfectly fine for the large corporations.

  19. Avataaar/Circle Created with python_avatars TheCrnic says:

    Or it would be like US politicians not being able to take foreign money for their campaigns, so the own a foundation that pays them. The foreign money is given to the foundation, then the foundation pays the politician. Cough* Clinton Foundation

  20. Avataaar/Circle Created with python_avatars Koko Yepes says:

    My portfolio has also grown tremendously these past 2years courtesy of Francis Martins my financial broker.

  21. Avataaar/Circle Created with python_avatars Marcelino Ribón says:

    Smashing the like button

  22. Avataaar/Circle Created with python_avatars Ash2theB says:

    The stock market is just gambling. I knew when the FED starting pushing money into the stock market it's 2008 all over again, Inflation here we come Venezuela, Russia, Greece, Hello, we can't learn from your mistakes or history.

  23. Avataaar/Circle Created with python_avatars Generic1995 type tingz says:

    Money printer go brrrrrrrrrrrrr

  24. Avataaar/Circle Created with python_avatars Carla Ramirez says:

    Hello gram! Hope you’re doing great I’m just getting to watch some of your recent videos

  25. Avataaar/Circle Created with python_avatars Kristopher Gastelum says:

    Am I the only one who HAS NOT GOTTEN ANY MONEY?

  26. Avataaar/Circle Created with python_avatars Future Forage says:

    Is it me or did Mark Moss cover the exact same content as this video a few days after Graham posted this, in a video with the SAME EXACT title? 🤔

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