Let’s discuss exactly why your favorite stocks have sold off, what’s going on behind the scenes, and how the stock market rotation may very well have begun to happen as interest rates start going up…Enjoy! Add me on Instagram: GPStephan
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Last week, investors began to worry because the INTEREST RATES on the treasury yield began going up…and, they see that as a BIG WARNING SIGN that inflation might start to increase, interest rates are getting more expensive, and borrowing is NOT going to be as easy as it was throughout all of last year.
Throughout the last few decades, INFLATION has actually been going down…and the FED has consistently been unable to reach their 2% annual inflation target, despite actively trying to CREATE inflation.
WELL…as more people are getting back to work…investors are spooked that…wait a second…there might be inflation…and here’s what The Federal Reserve said:
The first point was that, because inflation is measured in year-over-year periods, in March…it’s going to show HIGHER inflation than normal. Like, just took at this 10-year chart here:
https://fred.stlouisfed.org/series/T10YIE
Long term overall…inflation is going down…and, on a year by year basis, it’s looking okay. But, if we start the year over year beginning at the BOTTOM of the market…exactly one year later, it’s going to show a substantial amount of inflation, ONLY BECAUSE we’re measuring from the lowest point, and that’s deceiving.
He also said: we might see a SURGE of TEMPORARY inflation as people finally leave their house and go on all of those trips that they’ve been putting off, or go out to all the dinners they’ve missed out on over the last year…but, that’s just TEMPORARY and it’s nothing to worry about.
Right now is CERTAINLY a really strange time, where good news for the ECONOMY is bad news for the MARKET…but, you know what they say…the stock market is not the economy…and that’s been REALLY evident here. But, in terms of where we go after this…we need to talk about “The Great Rotation.”
This is the term used when investors ROTATE their money from GROWTH STOCKS, which benefit from low interest rates…and into RECOVERY AND VALUE STOCKS, which benefit from CURRENT cashflow and the economy re-opening.
The reason for this is the the stock market is FORWARD THINKING - meaning, we don’t value a company based on what it’s doing TODAY - but, instead, what we THINK it’s going to be doing in the future. But, as interest rates go up, those bonds compete with stocks - driving down the price, because higher interest rates eat away at future profits.
So, overall…here’s what you just need to know: The stock market is reacting to positive economic data, which just means that interest rates might go up SOONER than expected. That will lower stock values, and that will slow growth because borrowing gets more expensive.
HOWEVER…the stock market, as we all know, it’s entirely rational. GENERALLY, people over-react to good news, and over-react to bad news, with the reality being somewhere in the middle. During a sell off, it’s probably going to drop more than it really should - and that’s probably a good time to buy.
Just remember - last year, the BEST time to buy was when EVERYONE thought the market was doomed forever and it wasn’t coming back…you have to ask yourself NOW: are people over-reacting? Did anything fundamentally change about the companies you’re investing in? If not - why panic? If you were gambling, on the other hand - take a close look at what you’re able to tolerate, and then make adjustments accordingly - but, if you’re investing in long term, sound companies - don’t worry, keep buying, and keep smashing the like button for the YouTube algorithm.
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.

What's up, graham, it's guys here, so we did it. We broke the stock market. I've tried turning it off and on i've been on hold with customer service, but it won't stop going down all right just kidding, but for anyone who's investing in the stock market over the last week. No surprise it has been a roller coaster of a ride, even though i'm a huge proponent of buying the dip after a while, you have to ask yourself which dip should i buy because they've been getting progressively worse in the last week, stocks have seen their worst Drop since before elections in october text dogs have sold off more than 10 to 20, and, as of today, the nasdaq and tech stocks are officially in a correction after what just happened, because in terms of what's going on right now, this video is a lot more Detailed than just the stock market sold off because prices go too high, too high is bad, and instead there are some fundamental worries about the state of the stock market that you should be made aware of, because this will impact both your money and your investments over The next few months, so let's talk about exactly why your favorite stocks have begun selling off, what's going on behind the scenes that you should be made aware of, and how the stock market rotation may very well have just begun.

Now that interest rates have started going up, but before we go into a deep dive of exactly what's going on and how you can use this to make money, i just got a small favor to ask. This is the like button and, as you can see, there's a problem in that it has not been smashed yet which helps up my channel tremendously and helps out with the youtube algorithm i'll. Even do it with you. First, you got ta hover the cursor over the thumbs up button, and then you got ta, take a step back and then destroy it.

Doing that's totally free and it's almost as easy as getting your two free stocks down below in the description, because weeble is gon na, be giving you two free stocks worth all the way up to 1850. But you know what i've rambled long enough and now, let's get into the video all of this began about a year ago, and the federal reserve lowered their benchmark interest rates all the way down to zero percent to help stimulate the economy. Now it's really important to understand that the federal reserve can't just go and say hey guys, so today we decided we're gon na lower interest rates by one percent. Oh no, save the applause guys! No! No! No! Thank you, but instead the federal reserve manipulates pricing by buying what's called treasuries and no, unfortunately, it's not as cool as this type of treasure, but i'll try to make it kind of cool and here's how it works and trust me just listen through to this, because I do have a point with all of this: it's gon na start all making some sense.

Just you got ta understand this. Basically, when the u.s wants to go and print more money, they can't just go and walk over to their money printer and then turn it on and then create cash out of thin air. Instead, what they gon na do is they issue? What's called a treasury, which is basically just an iou to borrow money, here's my very bad cartoon of how this works. The u.s first asks for an iou and they say they'll pay.
You back a certain amount of interest. Let's call it one dollar the fed. Could then go and buy those us treasuries, basically just loaning money to the united states, and then the u.s gets that money and they have to pay it back to themselves. It's kind of like a margin account where you could borrow against your own portfolio and then money magically appears, except this is with the us dollar.

But as we all know, borrowing money is never free and these treasuries have to pay out a bit of interest. This interest rate that you see right here is dictated by supply and demand. So the more people that want to buy these treasuries, the less interest they have to pay to attract a buyer, but the fewer people that want to buy them the more interest they have to pay to make it worth it for someone to invest in them. So when the fed wants to go and lower interest rates, all they got to do is go and buy up all the short-term treasuries.

They drive up the price that lowers the yield and that, in turn, translates to lower interest rates, although once you understand how all of this works on a really basic level, we could start to make some sense over what just happened and why. The stock market is having a worse tantrum than my cat ramsay. When i try to pet his belly last week, investors began to panic, as the interest rate on treasury yields started going up, and they see that as a big red warning sign that inflation might start to increase interest rates are getting more expensive and borrowing is not Going to be as free or as easy as it once was throughout all of last year, the reason for this is that these long-term treasury yields, like i mentioned, are dictated by supply and demand. The fewer investors want to buy these the higher the interest rates need to go to entice people to go and actually buy them, and, as you can see, interest rates here have been going higher because fewer investors see this as a good store of value and the Biggest reason for that is inflation as weird as this is to say the economy is starting to look as though it's recovering, and that has investors scared.

I swear this is totally backward stuff, but if our economy doesn't do well, the stock market goes up because interest rates stay low and once our economy is actually doing better, the stock market goes down because they're afraid interest rates are going to go up and if You think that doesn't make any sense whatsoever. Just listen. Employers are beginning to rehire again, people are starting to spend more money and investors are bracing themselves for inflation. Well, if investors believe that inflation is going to be more than two percent, why on earth would they go and buy a two percent bond which would lose all of its value to inflation? The answer to that is, they wouldn't do that, and they are not doing that.
This then, does two things number one. As these interest rates go up, it makes the stock market look less appealing in comparison and two as interest rates go up, it means borrowing. Money is more expensive and that hurts growth in the stock market. Growth stocks like ev tech and solar, have really benefited during a time where interest rates are near zero but as borrowing money gets more expensive, the valuation of those companies has to go down.

Even cash flowing companies get hit because, as the cost of borrowing goes up, their net profit goes down. So in an effort to address these concerns, the money printer himself or jerome powell spoke about his plans and what he's doing but uh, he ended up making things a whole lot worse see. Investors were previously under the assumption that, no matter what anyone says there was not going to be any inflation with our current technology manufacturing is actually getting less expensive. It doesn't cost 70 000 to go and buy a home computer anymore flat screen tvs, don't need to cost five thousand dollars, so the price of everyday items is actually becoming more affordable and that's leading people to start saving more money.

That's why every time jerome powell reiterates that he's going to try to create long term two percent inflation. Every investor is like yeah sure, whatever you've been saying that for a while, now we'll believe it when we see it well, as more people are getting back to work, investors now are spooked that wait a second. There might actually start to be some inflation and here's. What the fed had to say, the first point that was mentioned was that, because inflation is measured on a year-over-year basis in march of this year, it's probably going to look a lot worse than it actually is like just look at this 10-year chart right here, long-term Overall, inflation is going down and on a year-over-year basis, it's looking okay, but if we measure the year-over-year inflation beginning at the bottom of the market exactly a year ago today, it's going to show a substantial amount of inflation only because we're measuring from the lowest point And that's deceiving, he says, that's normal, it's to be expected and not to panic.

When inflation comes out as being really high this month, he also says we might see a surge of temporary inflation as people finally go and take the trips they've been postponing over the last year, but he wants to make it very clear. All of that is just temporary and long term. It's going to even out to that two percent, so in other words, to simplify it even further. The expectation is that most likely, we will see some inflation, but it's just temporary.

It's nothing to worry about, and because of that, the fed is not planning to do anything about it. However, what all the investors hoped for was that he would instead say wow. The bond yields are going up way too high over here, and that means interest rates. Might start to go up and that's happening all too soon, so we're gon na start to buy all the bonds over here to help bring the price down and keep interest rates as low as possible.
Now this was actually done over a decade ago through a strategy called operation twist as the feds sold these bonds and bought these bonds, causing the long-term rates to go down. Since that impacts, nearly everything from mortgage rates and loans to companies. But because no word was mentioned of doing this, the market expectation now is that inflation is going to start going up. Interest rates are going to go up too soon, and that is going to hurt the stock market plain and simple.

To add on to this even further meet kevin also brought up a really good point: that a policy which allowed banks to pretty much keep zero reserves is about to expire on march 31st. The tldr version of this is that in march of 2020, banks were allowed to keep less reserves so that they could spend more money and loan it out to help stimulate the economy, but on march 31 2021, if that option is not extended, banks would have to Go and sell off their treasuries to come up with that cash reserve and in doing so that would raise the treasury yield beyond where we are today. Now it's yet to be seen, what's going to be done about this, if anything, but it's certainly something to keep an eye on, and that is expected to be addressed sometime over the next week. Right now is certainly a very strange time where good news for the economy is actually bad news for the stock market, but you know what they say: the stock market is not the economy, but in terms of where we go from here, we got ta talk about The great rotation - this is a term used when investors rotate their money out of growth, stocks which benefit from low interest rates and into recovery stocks which benefit from the economy.

Opening back up. It would be kind of like selling zoom for simon property group or selling tesla to buy exxon overall. This already has started happening, as investors are preparing for the economy to open back up again, and so in many ways. This might continue to happen over the next few months.

The reason for this is because the stock market is very much forward thinking, meaning we don't care about what's going on today, but instead, where we project it to be in the future. Now, when the best performing stocks have been innovative tech companies, we value them on the potential that they might be in the future at zero percent interest rates. But as interest rates go up, those bonds compete with stocks, thereby driving the price down long term value and recovery stocks, on the other hand, tend to be a little bit more resilient to this. That's because they're valued on current cash flow or in terms of what they're actually making today and for many that's seen as a safer investment short term.
Even though long term, the innovative tech companies might end up taking over. This is also possibly not the best news for real estate either, which saw mortgage interest rates rise above 3 for the first time since last year. That means as interest rates go up. Borrowing to buy a house gets more expensive and because of that, the price of real estate might finally begin to soften now, even though this might seem like really good news for home buyers, it's kind of bittersweet.

On the one hand, if prices go down, you save money in the purchase price, but if interest rates go up, you end up paying more money in the loan, so it might not quite end up saving you money, but if demand slows down overall, then that might Be a good opportunity for you, as a buyer, to finally get in the market. So, overall here's what you need to know the stock market is reacting to positive economic data, which just means that interest rates may go up sooner than expected. However, the stock market, as we all know, is not entirely rational. Generally speaking, people overreact to good news and they overreact to bad news with the real value lying somewhere in the middle.

During a widespread sell-off like this, it's probably going to drop more than it should, and that would be a good buying opportunity for you there's a chance that inflation never comes. All of this is overblown interest rates, stay low and stocks end up going back up after seeing a drop like this, there's also a chance that the fed extends some of these measures to keep interest rates low and just calm everybody down. This isn't necessarily something i would panic sell from, because, honestly anything could happen. This whole video is really just meant for you to understand exactly how the market works and why it's doing what it is.

As for myself, i've been buying consistently every single day whether the market is up or whether it's down i'm still keeping enough cash on the sidelines. So i don't just buy the dip, and then i have nothing left to buy the next dip. If there is one but overall i do see this as a good buying opportunity and even if the markets keep going down way further than where we are today long term. It really doesn't make any difference to me, and i just see this as an extended black friday sale.

Just remember the best time to buy last year was when everyone thought the market was doomed forever and was never coming back, and you have to ask yourself now: are people overreacting? Did anything fundamentally change about the companies you're investing in? If the answer to that is no, then why are you panicking now? On the other hand, if you were gambling on speculative investments with money you cannot afford to lose, then i do think it's worth it to take a step back and just reevaluate your risk tolerance and why you're invested in the companies that you are, but if you're Investing in the overall market in sound companies long term it doesn't matter just keep, buying, keep holding, keep smashing the like button for the youtube algorithm and make sure to get your two free stocks down below in the description. So with that said, you guys thank you. So much for watching, i really appreciate it as always make sure to destroy the subscribe button like button and notification bell also feel free to add me on instagram posts are pretty much daily, so if you want to be a part of it, there feel free to Add me there, as in the 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 guys want those two free stocks use, the link down below in the description and weeble is going to be giving you two free stocks when you deposit a hundred dollars on the platform and those stocks, are potentially worth all the way up to 1. 850, so it's pretty much free money, if you guys, like free money, use that link down below, let me know which free stocks you get. Thank you so much for watching and until next time.

By Stock Chat

where the coffee is hot and so is the chat

26 thoughts on “The stock market just flipped”
  1. Avataaar/Circle Created with python_avatars Andreas Hallow says:

    One thing I always have at the back of my head is the Rockefeller's advice on how to earn during times like this; while others are panicking and selling or holding, just go a different route and invest right now, there's no better time.

  2. Avataaar/Circle Created with python_avatars Southern Born Senders says:

    Intro idea: What's up guys, Graham here, if you could, launch a cryptocurrency and name it Graham Stephan, then infiltrate Tesla and then pitch the currency to Mr.Musk so he post about it on Twitter which really would help spread the good word for my channel.

  3. Avataaar/Circle Created with python_avatars Anthonyq Colosimo says:

    How much of the correction is just due to the natural correction occurring in the news cycle just spinning it

  4. Avataaar/Circle Created with python_avatars Jason Miller says:

    Sounds like we should sell some bond etf puts? Nice video, but wish it was broke down into small bites!

  5. Avataaar/Circle Created with python_avatars OG Reggie B says:

    SPACE AGE TRADER'S ALERT 📢 WEBULL AND YOUTUBE FOLLOWERS

    AAPL, MSFT, TSLA, GOOGL, & AMZN

    USA STOCKMARKET IS SELLING
    AND
    EUROPE STOCKMARKET IS BUYING
    RIGHT NOW

    Peace ✌
    OG Reggie B
    THE ROBINHOOD OF TRADERS

  6. Avataaar/Circle Created with python_avatars epicwarding says:

    remember the bitcoin crash few years back? what do you think about the new bitcoin boom

  7. Avataaar/Circle Created with python_avatars Ted Otis says:

    That car is flipping all over the place. Totally distracting. How can that really make sense as a backdrop?

  8. Avataaar/Circle Created with python_avatars Ricky Zimmer says:

    Can you do "Day in the life of…" of yourself? (stock routines, where you get your research, etc)

  9. Avataaar/Circle Created with python_avatars joel backwood says:

    In investing, many times, risk is high at higher prices and low at lower prices. I have often disliked a stock at 100, liked at 50, loved at 20. If data improvement has led to lower prices, your risk has actually decreased.

  10. Avataaar/Circle Created with python_avatars Diana C Jackson says:

    Thanks for this video. Speaking of forex trading, it's the best business in the world right now I know a couple of friends whose  make a whole a lot of more weekly trading the finicial market.

  11. Avataaar/Circle Created with python_avatars Diana C Jackson says:

    Thanks for this video. Speaking of forex trading, it's the best business in the world right now I know a couple of friends whose  make a whole a lot of more weekly trading the finicial market.

  12. Avataaar/Circle Created with python_avatars Larry IW says:

    Nice but why are you schmoozing with kevin about buying individual stocks buying stocks like tesla that have p/es of infinity.Index index index.The recovery trade ? The collapse of the meme/Cathy Woods stock when 20 somethings get out of their pj's following every minute of the stock market with kevin and crew day trading their stimulus check and unemployment check money from their parents basement. They go back to work and if they have money left become long term investors and not speculators.Good time to buy apt rental buildings with dirt cheap financing

  13. Avataaar/Circle Created with python_avatars Ana Noriega says:

    I Just decided to start buying stocks, does anyone know if it's better to buy now or wait?

  14. Avataaar/Circle Created with python_avatars ZipTrader says:

    Absolutely right, few years back I recorded series of losses, it's a good thing that I can now make a tangible profits in the market with a sensible investing routine even when it seem difficult and nearly impossible.

  15. Avataaar/Circle Created with python_avatars Alex M says:

    Central bank buying government bonds and debt monetizing isnt the only way the fed can affect rates… lowering the overnight rates to drive nominal rates to near 0 will result in a negative real rate which makes it easier for them to repay debts

  16. Avataaar/Circle Created with python_avatars J says:

    "too high is bad" lol i like it. Thanks for the laughs Graham

  17. Avataaar/Circle Created with python_avatars Chris Giggleman says:

    I've been enjoying your videos so I decided to actually sign in to YouTube so I can subscribe to your channel. I also smashed the like button for you.

  18. Avataaar/Circle Created with python_avatars Oliver Harry says:

    I have seen so many people on YouTube talking about a particular person they trade and invest with ,please don’t fall for that anymore if you want to go into anything investment cryptocurrency forex mining or anything investment do that with a company platform not an individual that someone will come up here and talk about

  19. Avataaar/Circle Created with python_avatars Geroy says:

    "This is a like button" lmao. Great video man, very well made and spoken. Easiest sub and like button of my life.

  20. Avataaar/Circle Created with python_avatars Anderson Sarah says:

    Bitcoin is the most profitable investment online if only you trade with a professional expert or broker.

  21. Avataaar/Circle Created with python_avatars OG Reggie B says:

    SPACE AGE TRADER'S ALERT 📢 WEBULL AND YOUTUBE FOLLOWERS

    FROM THE ROYALE PALACE, TO THE NYC STOCKMARKET, COLOR ISSUES ARE REAL.

    OG-RB
    THE ROBINHOOD OF TRADERS

  22. Avataaar/Circle Created with python_avatars Lloyd Campbell says:

    Did you say what's up Graham it's guys here on your intro? 😂

  23. Avataaar/Circle Created with python_avatars Collins Terry says:

    The stock market has several benefits and detriment,So it is advisable for investors to be cautious with decisions. You should understand the basis of trading and do your research to acquire profitable trading results

  24. Avataaar/Circle Created with python_avatars Donovan says:

    Anyone else notice Graham said "What's up Graham, it's guys here " in his intro?

  25. Avataaar/Circle Created with python_avatars Bud Light says:

    I feel like I just got a four year degree in stock market theology in under 15 minutes! Thank you, Graham!! You are the bomb!!!

  26. Avataaar/Circle Created with python_avatars OG Reggie B says:

    SPACE AGE TRADER'S ALERT 📢 WEBULL AND YOUTUBE FOLLOWERS

    NYC Wallstreet Stockmarket is a scam 😒

    RAN BY AN OPPRESSIVE GROUP OF THIEVES
    WITH A LONG HISTORY IN THE BUSINESS.

    BEWARE WITH YOUR MONEY 💰

    OG-RB
    THE ROBINHOOD OF TRADERS

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