What's down you guys it's the stock market here and i feel like it's about time. We address a topic. That's come up a lot the other day and that would be the next stock market crash. After all, just days after morgan stanley warned us about a potential 15 correction and goldman sachs predicted, the s p 500 wouldn't be going any higher.

Through 2021., the stock market had its single worst day. Point drop in almost a year. There's now deja vu of another variant, potentially shutting back down the economy and to top it all off, as though things couldn't possibly get any worse. A biblical swarm of mosquitoes is invaded to cape cod town, not to mention some say, we're actually due for a stock market correction which happens on average every 1.87 years.

So, given all of the concern and speculation floating around the internet right now, let's talk about exactly what's going on the likelihood of another stock market correction happening and then what you could do about it so that you're best prepared ahead of time to make the most Of the situation, because i promise you at some point, there will be another stock market crash. We will have more worst days ahead of us and even though it's impossible to time it perfectly. At least you could know what to expect ahead of time so that you're not caught off guard, but before we begin remember that swarm of mosquitoes that i talked about earlier well, a good all-natural mosquito, repellent just so happens to be smashing a like button for the Youtube algorithm: absolutely no scientific data whatsoever backs up these claims, but it certainly can't hurt it helps up my channel tremendously and it costs you the low price of absolutely free. So, thank you guys so much for doing that and with that said, let's begin so in order to understand how to best prepare for something like this.

We really have to define what type of drop we could see because, even though it's really easy to think to yourself, the market is going to zero fire. The fed, buy gold and silver and stock up on that free stock. You can get down below in the description. The chances of you actually losing.

All of your money is rather slim and the reality is not all stock market drops are created, equal, like first, we have what's known as a stock market correction, which is defined as a drop of 10 or more now. Normal volatility throughout the market is extremely common. In fact, since 1920, the s p 500 has, on average, seen a five percent pullback three times a year, so the next time you see the markets down for a week straight like we saw the other day, just know that this happens on a regular basis. It's normal and it's nothing to worry about now.

Market corrections are also extremely common too, like on average, a 10 correction happens every 16 months and throughout the last 20 years a 10 drop has happened 11 times now. If you're anything like me and you like averages, the average drop has so far been 15.6 percent and lasts for 71.6 days now after that number two, we move on to the more serious category and that would be a bear market which is defined as a drop Of at least 20 percent now, according to data, this usually happens every seven to ten years and when it hits it hits pretty hard during a bear. Market stocks drop an average of 33.18 and it falls over a period of 363 days. Now it's really important to mention here that all of these are just averages and just because bear markets tend to fall in that range doesn't mean the next one is going to conform to exactly that.

For example, back in march of 2020, we saw the fastest 30 drop in history since the great depression, and then literally right after that, we saw the quickest recession in history, which lasted just 33 days. So anything can happen plus, depending on how you look at it. Several sectors and stocks are already in a bear market. At the time i'm making this video, for instance, over a dozen renewable energy companies, are down 30 or more from their peak, and that, of course begs the question: how much worse can things get? Well then, introducing to you, the stock market collapse now i'll consider this a drop of more than 40 throughout the entire stock market, and not just one specific sector and throughout the last 120 years.

This has only happened four times once in 1929. Again during the 1970s, then in 2001 and again in 2009., even though 2020 was incredibly close, we didn't hit that 40 mark throughout the entire index, even though some companies were hit especially hard. So, even though a stock market collapse is uncommon, it doesn't mean it's impossible from happening again in our lifetime. So now that you understand the difference between these and how often they happen, we can analyze exactly what's going on now and what you could do to come out ahead profitable now in terms of what we're seeing today and where we might be headed.

These are the reasons the stock market has been going down. It's because you still haven't hit the like button, yet, okay, just kidding for real. There isn't just one reason why the stock market sold off the other day, but instead there's several key points all happening at the exact same time, a leading consumer sentiment to drop to its lowest level in five months now, the first and probably the most common reason Listed everywhere is the resurgence of a new delta illness strain and the fear that might shut back down the economy. Now this isn't really anything new and we've known about the potential risks of this since late april, but now the cases are beginning to go back up.

That's causing the market to react to the possibility of a slower economy, especially since now the new variant is said to make up 83 of all the cases in the us. The second, we have worries about even more inflation like just recently. Inflation was measured at 5.4 percent year over year, which was the largest increase on record in over a decade. Now, even though the federal reserve said that inflation was transitionary due to supply chain shortages, excess demand and measuring from the bottom of the market, not even they were prepared for the numbers that came in and that prompted the evaluation that maybe they're going to have to Raise interest rates a little bit sooner than expected that, of course sends a ripple effect throughout the entire stock market, as investors worry that stimulus could be coming to an end and companies will be on their own, which then leads us to number three potentially lower company Earnings, it's no surprise.

Over the last year, some companies have seen incredible growth, retail investing grew at the fastest pace ever and shockingly business and finance became the fastest growing news category during the pandemic. I think we could all agree that a large portion of that was due to a stock market drop, a countrywide shutdown, a 600 a week, unemployment boost and non-stop stimulus to help keep the economy afloat and because the stock market is always going to be forward thinking, It doesn't care so much about what's going to happen in the next week, but instead what's going to happen in the next year and right now it looks as though investors think things will slow back down now. Fourth, if earnings start slowing down, then company valuations will come into question, and you know what that means. The stock price could go down alongside with it here's the thing.

Obviously, there will always be specific companies which wind up doing incredibly well, regardless of what happens, but on a broad scale. Historically, the market is expensive. For example, we have something called the buffet indicator which measures the market cap to the gdp and, as a few weeks ago, it hit 133 suggesting that stocks were overvalued compared to that metric. Now another metric, known as the price to earnings ratio is also significantly higher than it's been in the past, all of which occurred right before a stock market sell-off.

Now, critics of this say that during a time of record low interest rates, supply chain shortages and a shutdown economy, it makes sense that earnings would be temporarily lower and that would skew this metric out of proportion, but the unknown here is this: how will actual company Earnings grow during a time where the economy gets back to normal, and will that be enough to sustain the current market and then, finally, fifth, we have falling bond yields to put this simply in the overall investing world. We have a yang and a yang - or in this case we have the stock market and the bond market now generally, when bond yields go up. That means that fewer people are buying them. Therefore, they have to pay more to entice investors to buy in, but in this case, bond yields are going down indicating that a lot of investors right now are buying them up and looking for a safe place to store their cash now.

This is certainly not a reason why the stock market is going down, but it is an indication that investor sentiment seems to be to cash out of the markets, play it safe and then wait for a good time to buy back in. However, even though all of this so far seems like doom and gloom and there's certainly points to be made, aware of, there are counter arguments to this. That point to a completely different narrative where the stock market might just be headed even higher. First, jp morgan thinks that a lot of these concerns are overblown and the s p 500 is going to end the year at 4.

600.. These are the first people who correctly predicted that the s p 500 would rise to 4 000 in early 2021, or that it could reach 4 500 by the end of the year, and we got really really close before it started pulling back. They said that slow down fears are premature and that our research suggests the recovery is still an early cycle and gradually transitioning towards mid-cycle, not to mention we're still getting support in terms of free money. The labor market is still growing and the reopening of our economy is not fully priced in plus many reopening stocks are 30 to 50 percent off their recent highs.

So that could be a good opportunity to buy in the second bloomberg reports that a lot of very young people are going to buy the dip in stocks. This is noted by the fact that four other times this year, the s p 500, is closed. Three percent below a historic high and each time it rebounded to another record. They say: there's no shortage of young investors out there sitting on the sidelines, just frothing at the mouth to buy the dip and that's helping keep prices relatively stable.

The managing director at charles schwab also said the dip buyers have stepped in very quickly and bought very quickly, and that's one of the reasons we haven't had a full 10 correction and frankly, i don't think we'll have one this time either. For that reason, now, third inflation could very well be transitionary, like the fed says. That means that once supply chains start working again and the labor market starts easing up, then prices might start coming down and that could alleviate people's concerns about crazy hyperinflation. Now, most likely we're going to have to wait until the end of the year to see how this truly plays out.

But once you look at the charts, as you can see over the last decade, what we're seeing today isn't that much of a concern. If the federal reserve is right and fourth, if the new delta variant turns out to be a stock market overreaction, then the market will adjust back up accordingly right now, the market is mainly driven by uncertainty. When investors have no idea what's going to happen, so they tend to price in the worst possible case scenario, that would mean our economy. Shuts back down goes under further restriction, travel bans are put into effect and our entire global economy slows down, but whether or not that actually happens is yet to be seen so time will tell the national securities marketing strategist believes that the market is going to quickly Shrug off some of these concerns and that, once the risk is out of the way the market will continue forward as usual.

So, even though the market does have a lot working for and a lot working against it, here's what you could do now ahead of time to prepare for whatever happens now to start. I want to make it abundantly clear that no one is able to predict when a stock market crash is going to happen or how severe it's going to be like just this. Last monday, i saw the largest point drop in my account. Ever while the very next day i saw the largest gain in my account ever so guessing the market.

Every week is an absolute fools game and whoever tells you they know what's going to happen with 100 confidence is absolutely lying, so instead, the best thing that you could do is make a plan ahead of time that you could stick to, and in my opinion this Should be that plan first, you should always keep a three to six month emergency fund. I know i sound like a broken record when i say this, but it's true having three to six months worth of expenses saved up in cash at all times is one of the best things you could do if the stock market drops that way, you're not going To need to sell off your investments to pay for your living expenses. In the event, you lose your job, your income slows down or something else unforeseen happens during a crash. It also means that anything above that emergency fund can be invested, and that is where you start making some money the second.

When it comes to making that money, you should also diversify your investments. You should never be too reliant on one sector or a few specific investments for your entire portfolio, because should something happen, you run the risk of losing a significant amount of money rather quickly, the more you spread out your money, the more you could reduce your volatility And risk - and this is what i've done as well - i have 50 of my net worth in real estate 30, spread throughout over 40 individual stocks and index funds 17 in cash and 3 in crypto. Should any one of those markets fall, the others should hopefully make up for it, and if the entire market falls, then i've still got about 17 in cash on the sidelines to buy in and third speaking of buying in just keep buying it. Now, logically, once you have your three to six month emergency fund, there should be nothing stopping you from buying into the market on a consistent basis, and that's it now.

I get it sometimes it's difficult to buy in when the entire market is down two percent. In a day and all of the headlines say that this is the beginning of the end, the crash is going to be worse than 1929 and then you think to yourself. Well, if i just wait a little bit longer, i could buy in a little bit cheaper, but this week is a perfect example of why you can't time the market, while everything recovers within 24 hours, even higher than they once were so every loss out there. Just comes with the opportunity to make significantly more if you keep buying it, then.

Fourth, when it comes to that, don't panic sell. The only reason that you should sell is if you've hit a predetermined price target or if you need that money for a better investment. Otherwise, it's probably best you just leave it alone and keep it in the market plus. The psychology that causes you to sell out of fear is usually the same psychology that prevents you from actually buying at the bottom, because it could always go a little lower.

So instead, statistically it's better just to keep your money invested, then fifth, you should also keep a steady income. The biggest risk that i see with the stock market crash is that, depending on the underlying causes, it could also be associated with a job loss or a reduction in income. Like we've seen a lot throughout the last year. Now an emergency fund could be enough to hold yourself over for three to six months, while, hopefully the market recovers.

But if it doesn't you'll want to make sure to do your best to keep some consistent income at all times and six. If you're extra paranoid just make sure to keep some extra cash on hand now i'll admit, statistically, this is not what you should be doing and investing all of your money as soon as you have. It should give you the highest return, but if you want to play it extra safe and you like the psychological peace of mind of just having some extra cold hard cash sitting there, then it might be worth it. So if you just follow the six really simple outlines pretty much guaranteed to make money in the market.

Regardless of what happens. I say this because, throughout the entire history of the stock market, a 20-year holding period has never once lost money with dividends. Reinvested, that quite literally means that you can invest all of your money at the absolute peak right before the worst drop in history and then not make another single investment after that, and you would still make money, that's how easy it could be if you just make A plan you stick with it and you don't freak out sure it's a different narrative every time and i really enjoy reading about what's going on in the markets and what's causing it to do what it does but long term, the same proven strategies have worked consistently Throughout the last 120 years and that's the data i choose to follow, and even if the most talented investor of our time has trouble beating the s p 500, what does that mean for the rest of us so instead make a plan now stick with it? Don't panic if the market drops keep buying in and then most importantly, above all else, make sure to get your free stock down below in the description, because now it's worth all the way up to 70 and that's pretty much like free money. So with that said, you guys thank you so much for watching.

I really appreciate it as always make sure to destroy the like button. Subscribe button and notification bell also feel free to add me on instagram, i posted 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'm posting there every day i don't post here.

So if you want to see a brand new video for me every single day, make sure to add yourself to that and then make sure to get your free stock down below in the description. If you have not done that already, you may as well do that. Let me know which free stock you get. Thank you so much for watching and until next time,.