What's up you guys, it's graham here, so normally people celebrate with champagne, but i am celebrating today with iced coffee now for sale, bankrollcoffee.com, because the last week the stock market indexes have hit yet another all-time high. We've hit brand new records after the announcement of a brand new trillion dollar infrastructure package, interest rates are still the lowest they've ever been in history, and the economy is beginning to reopen. So things are looking really good right wrong. During the same time, the stock market is rallying higher and higher.

The famed big short investor michael bury, is warning that we're currently in one of the largest speculative market bubbles in history, and that the mother of all crashes is coming soon with losses the size of countries caused by over leverage with cryptocurrency in the stock market. The rich dad poor dad author robert kiyosaki also mirrors the same sentiment cautioning that we'll see the greatest crash in world history while another wildly popular threat on reddit theorizes. That 2008 never really happened. It was just extended, so we got ta talk about exactly what these warnings are.

What's going to cause this to happen, what we could look out for as investors when all of this can unfold and then, finally, most importantly from all of this, how you could use this information to make as much money as possible, because i will say i took These headlines extremely seriously - and i did a lot of research to figure out if there's any merit to what they're saying or if it's a whole bunch of, but before we go into this topic. I want to address everybody who says that i beg for likes bite begging for likes, please. I am on my knees, begging you to smash the like button for the youtube algorithm and if you help me out i'll, show you a quick video of my reef aquarium at the end of the video. So thank you guys so much and also big.

Thank you to wealthfront for sponsoring this video, but more on that later, all right. So first we got ta talk about michael bury. He was the investor who correctly predicted the 2008 housing market collapsed years in advance and subsequently made 750 million dollars. He was featured by christian bale in the movie, the big short, and he has a history of making rather lofty ridiculous predictions and then being right.

For example, earlier in the year he did the unthinkable and shorted tesla stock when it was trading at nearly nine hundred dollars. A share warning elon musk that he should capitalize on the momentum and he was right within a few months. Tesla had fallen over 35 and michael bury made a lot of money. He also predicted post-reopening inflation last year.

That, of course, you guessed. It is happening right now, not to mention after bitcoin skyrocketing rise in march, when it was over. Fifty thousand dollars. Michael bury warned that it was unsustainable and to prepare for a correction.

Well, he was right about that too, even though he says he's also in favor of bitcoin plus throughout his eight years of managing a hedge fund, cyan capital managed to outperform the s p 500. In every single year, including outsized, returns during the dot-com crash, with, of course, the exception of 2007, which, as we all know, was the lead up to the 2008 real estate collapse, where he then made his investors a 138 return on their money. Overall, his net return during those eight years is a whopping 472 percent versus the s. P.

500's, measly 5.2 return. So let's talk about exactly what he's saying now in terms of the mother of all crashes, alongside with the fact that he says we're in the greatest speculative bubble of all time, he starts off by saying that people always ask me what is going on in the Markets, it is simple greatest speculative bubble of all time in all things by two orders of magnitude which, for anyone who doesn't follow, two orders of magnitude is equivalent to a hundred. So, depending on the context, he could mean that the market is a hundred times over leveraged, which might start to make some sense after this tweet here. The problem with hashtag crypto is in most things is the leverage.

If you don't know how much leverage is in crypto, you don't know anything about crypto, no matter how much you think you know now. This was actually further discussed by cnbc, who legitimately mentioned that some investors were using a hundred times, leverage on bitcoin, and that has the power to completely collapse the markets, if things start trending downwards, and everyone starts cashing out at the exact same time, mark cuban even Seconds this by warning that leverage will cause the markets to go up faster than expected, but when they de-leverage and cash out, the forced liquidations will cause prices to fall faster than expected, and all of it as right now is largely deregulated. But michael bury goes on to say that all the hypes last speculation is doing is drawing in retail before the mother of all crashes, hashtag fomo parabolas, don't resolve sideways. When crypto falls from trillions or meme stocks fall from tens of billions.

Hashtag main street losses will approach the size of countries, history, ain't changed and finally, earlier in the year, michael bury was warning that the stock market was dancing on a knife's edge. He says that rampant speculation and widespread betting with borrowed money has driven the stock market to the brink of collapse, and he ends all of that. By saying that people say i didn't warn last time i did, but no one listened. So i warned this time and still no one listens, but i will have proof i warrant so with all of that.

Out of the way, let's talk about how likely this is to happen, whether or not it's something actually worth worrying about, and even if it does collapse, what you could do about it to make money, but really quick before we talk about that, i want to say A huge thank you to our video sponsor wealthfront. For those not aware wealthfront is an automated investing platform that utilizes software to find the optimal portfolio to grow your money long term. Like here's the thing when it comes to investing, you don't have to feel like you're riding a roller coaster of momentum stocks and you don't have to feel like you're out of control. Instead, there are decades of data out there, showing you that investing in a globally diversified portfolio of low-cost index funds is one of the best ways to put your savings to work, and even though it sounds confusing, it's really not well front makes investing easy, affordable and Accessible, no matter what your knowledge of finance is, the setup process is also incredibly simple.

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So now, let's talk about that greatest speculative bubble of all time, and in order to do that, it's really important to understand what defines a bubble in the first place. A bubble begins to form when there's a gathering acceleration in price for an asset that far outstrips that asset's intrinsic value and that's when we start running into the first problem when we have a stock market today, that's driven by monetary policy, future expectation and demand that Far outweighs supply, it's nearly impossible to know something's intrinsic value and for anyone investing in anything there's a certain level of calculated speculation that goes into that decision. So, instead, if we just rephrase this, as is the stock market historically overvalued and going to crash, that makes it a lot easier for us to analyze and to do that, we should look at previous bubbles to see how we compare today. The first one, of course, would be the famous market crash of 1929..

This all started in the early 1920s when loose monetary policy allowed pretty much anyone to borrow money for the sole purpose of speculating it in the stock market, because stonks just kept going up. However, once the stock market showed the slightest glimpse of vulnerability, people started cashing out everything and withdrawing their money and cash from the banks for fear that the banks would soon be going out of business. But the problem is that banks had lent out all of their money and didn't have enough cash on hand to give back to people who wanted to cash out, and that, of course, led to the stock market dropping 83 over 2.8 years and the stock market didn't Fully recover until 25 years later, but in terms of the fundamentals, though, how does that compare with today? Well, if we look at the shiller price to earnings ratio, we could see that in 1929 it was sitting about 30, which is high, but still relatively normal. In fact, if we look at the same metric today, we're sitting at 37, which yes is a lot higher than 1929 but tech companies which currently leave the market traded a much higher multiplier and during a bear market, businesses typically see less earnings which boosts that number.

Even higher, however, if we look at the cyclically adjusted price to earnings ratio, we could also see that we're just beyond the same level that we were in 1929 suggesting that perhaps valuations are extended beyond where they should be. So when we go and compare all of this side by side, i mean sure it does look like we're a bit over inflated, but we have monetary policies in place today that did not exist back in the 1920s tech valuations have also historically been higher than earnings, While they use a lot of that revenue to grow and even though there's plenty of borrowed money out there, interest rates are still very low to justify it. But then we have one of the most common bubbles that everyone compares us to today, and that would be japan's real estate and stock market bubble of the 1980s, which, still to this day, is trading below what it used to for japan. This was caused by low interest rates which filled rampant speculation across the stock and real estate market in 1980s, driving prices significantly beyond, where they should be and into 100.

This is a bubble territory. In fact, their government became so worried about a bubble that they raised interest rates to prevent asset prices from rising any further and very soon after that collapsed. The entire market, causing everything to drop about 60 percent. The biggest problem with this was that, in response to rising interest rates and falling prices, investors began hoarding their cash and with less consumer demand, prices fell even further.

That caused a very vicious cycle where the more prices fell, the more investors held onto cash, which caused prices to fall even further. The result today is a japanese stock market that is lower today than it was 30 years ago, and the biggest concern with that is that the united states could see something similar. However, japan's economy is also fundamentally different from the united states. That would make it very unlikely for that scenario to happen here.

We could also see the magnitude of their bubble when we compare it with our dot-com bubble, which was only half the size of what they saw. If we applied the same metrics today with japan's stock market back in the 1980s, the s p 500 would be trading at about 9 000.. Now, after that, speaking of the dot-com bubble, we got ta talk about the dot-com bubble. This was caused by a frenzy of speculation over brand new internet-related companies, because the internet was gon na, be the future.

Well, that was unsustainable, because the majority of those companies didn't actually make any money, so they eventually collapsed, wiping out most of their value and if you were invested in tech stocks during that time, you would have lost on average 78 now in terms of comparing the Metrics, though, today our tech prices are much more in line with profits, they're very cash heavy and the p e ratio for tech is significantly less than what it was in 1999. and lastly, we got the 2008 great financial crisis. This happened when banks lent out way too much money to people who weren't qualified, who used that money to go and buy real estate, who drove those real estate prices to the moon and then when they couldn't sustain those payments they began defaulting. Those defaults went back on the bank, people then began losing their homes left and right.

The entire market fell 50 and then the federal reserve came in and bailed everyone out, which of course then leads us to today. Now, of course, we have articles warning about the everything bubble, while household net worth exceeds the nominal gdp, so is there actually truth to what michael bury is talking about? Well, not exactly so fast i mean michael bury is an extremely talented investor. Who's been right. Quite a few times, but not everything he says, pans out as expected, for example, in 2017 he said we were headed for an imminent crash and so far since then, the s p 500 has doubled in price.

Then again, in 2019, he called index fund investing a bubble. That's because, when you're investing in index funds you're investing in a big basket of stocks, that means anything within that basket. Gets your money and the more money it gets. The higher the price goes.

So if everyone just keeps investing all of their money into these stock baskets those stocks will continue to see money flowing into them, just because they're lucky enough to be in the basket and not so much because of their actual performance. However, this was a topic i extensively researched about two years ago, because i have a lot of my money in index funds and from all of the data i found, it was shown that adding a stock to an index has no permanent effect on the price. In fact, it was studied that the stock's premium for being added to an index completely wore off after two months, usually returning to the same price before it was ever introduced. And overall studies have shown that stocks added to an index do not see any superior performance.

In demand over stocks, which were not traded within an index not to mention if there are any market inefficiencies where index funds are driving up the price that would leave more room for actively managed funds to outperform by buying up smaller stocks and so far that has Not happened on a large scale and, finally, most recently in april of 2020, he warned that the stock market crash will get much worse, which in hindsight has turned out to be pretty much the bottom of the market and since then we're up another 40 percent. I say this not to try to discredit michael bury, but just to give you the context that stock market predictions are so dependent on so many variables that could change by the day, really making it impossible to give you any indication of where the market might be Headed here's the thing for anyone who's, making a prediction in today's environment: there are so many changes happening all at once that no one could see coming. We have no idea how these policies will continue to adapt and change, and that makes it impossible to take these predictions too. Literally chances are, if you listen to all of these doomsday theories, you would be sitting on the sidelines for years or even decades, missing out on some of the best times in the stock market.

Sure you would have missed some of the drops along the way, but overall, historically, the stock market has continued to trend upwards and when some of the wealthiest investors out there have the approach of buy consistently and hold it makes you realize that none of this white Noise matters and you should just carry on as usual now as for my own opinion, for whatever that's worth, i do have concerns that things are getting a little bit ahead of themselves like skyrocketing real estate. Prices to me seem unsustainable at that current pace and while i certainly don't anticipate a crash happening, there's so many artificial factors and shortages that are leading us to the most expensive housing market ever, but that doesn't mean it can't or won't continue going higher. So i'm not going to bet against it and if a good deal comes along, i'm all for it same thing also applies to the stock market. It's very obvious that it's fueled right now by a surplus of money, low interest rates and the enthusiasm to invest, but that doesn't mean it can't continue to go even higher.

Now the cryptocurrency market, as michael bury warns, is probably the biggest unknown here, because we have no idea exactly how much leverage exists in that market. For example, even though cnbc reports that some people are trading with a hundred to one leverage who's to say that lending platforms aren't doing the exact same thing except on a larger scale, it's still too early to tell if and when anything might ever happen with that. But just be careful plus, even if the market does crash, unless you're within a few years of retirement chances are that's just a good time to keep buying even more so you shouldn't fear a crash instead embrace it and use it as an opportunity to buy everything. You missed out on in march of 2020, if it happens, and then, most importantly, you could use it as a way to smash like button for the youtube algorithm.

So with that said, you guys thank you so much for watching. I really appreciate it as always make sure to subscribe and hit the notification bell also feel free to add me on instagram, i post it pretty much daily. So if you want to be a part of it, there feel free to add me there. As my second channel.

The gram stefan show i post there every single day - i'm not posting here. So if you want to see a brand new video for me every single day, make sure to add yourself to that. And lastly, if you want to completely free stock worth all the way up to 70 use, the link down below in the description and public is going to give you a free stock for signing out plus when you deposit 100, on the platform you'll be entered for A totally free chance to win a free share of tesla by july 12th, so, if you're interested the link to that is down below in the description. Thank you guys so much for watching and until next time and as promised, here's the reef aquarium is a thank you for liking, the video we got everything right here and then right down below.

We have all the equipment before the cabinetry gets built top shelf aquatics provided a lot of the coral that you see here, along with a few local reef, aquarium enthusiasts, who are kind enough to give me small pieces like this little frog spawn right here, then i Got a lot of the hard corals growing on top of this rock right here, and then we got this really cool green toadstool here. So thanks so much for watching and if you want more reef aquarium stuff. Just let me know down below in the comments.