Hey guys, it's sasha, the s. P 500 index is 11 down in february compared to its peak. Just a few weeks ago, tesla stock is 35 down from its heights last november. A very strong wage growth in january means that the fed is looking to start hiking interest rates soon from there historically low levels.

Although economists are still not expecting any particularly sharp increases in interest rates, with only a few moderate increases baked in during the course of this year, and of course, oil prices have risen fast recently, which is adding even more pressure to this economy. Except this is not february 2022. This is february 2016.. Each of these headlines is from february 2016..

The stock market went through a correction with stocks dumping in value. Since november, analysts were throwing their toys out of the pram. People were selling stocks grey stocks, including companies like tesla, were getting completely smashed, losing 30 to 60 percent of their value. Sound familiar and a lot of people would tell you that a market crash is definitely coming, but instead the s p 500, more than doubled.

Since that point, going on, one of the biggest bull runs in stock market history, and i know that some clever sparks will point out in the comments that there are some differences between 2016 and 2022.. Well, no, in 2016, we didn't have a free, investing platform where you could go and buy stocks without paying any fees whatsoever like lightyear, who are the sponsors of today's video light year, only launched at the end of last year and are the only investing app in Uk, where you can go and buy us stocks completely 100 for free and like every other, investing platform, there are no foreign exchange fees for up to three thousand pounds per month. So if you're, not a paper-handing flip-flopping weenie baby, but instead you are a serious investor who buys the dip light here? Is the cheapest way to go and buy the dip in the uk? You can get a 10 bonus from light year. If you use my link in the description to sign up so feel free to go and collect that ten dollars on top of the platform being free, if you want to try it out now, seeing as media and everyone else on, youtube is selling the worst possible View on what the next couple of years in the stock market will look like.

Let me share a different perspective, just to be clear. I am not here pretending that i know which way the stock market is going to go. I don't know if it'll go up or down, because i don't have magical powers of predicting the future, unlike some other youtubers. What i do have, though, is analytics and statistics that say, selling stocks that have already lost over 50 percent of their value is idiotic and statistically an incredibly bad decision, unless, of course, the stocks that you had in the first place were absolute garbage, and you didn't Actually do any proper valuation on them, but here is a look on the stock market that might just surprise you and make you think a little different.

First, let's talk about rising rates, because people often say that rising interest rates are an immediate guarantee that stock valuations are going to collapse. Now i really don't know who first came up with this completely baseless theory, but everyone else is just repeating it like some kind of definite mantra, mainly because they don't really know what is or what isn't actually true or correct. We currently have interest rates that are way way way below any level that we have historically seen as being normal. It is unprecedented, and that means two things.

First, the way the economy has been managed over the last 20 years is entirely different to anything that we have seen before. So drawing direct inference from events of the 1980s or 1970s needs a giant dollop of salt with it. Of course we have no other version of history to compare to. So it's all we've got to go on, but the point is that the starting point now is in many ways so incredibly different to the situations we have seen before.

That comparisons are relatively meaningless and anecdotal. Now the interest rate was above four percent before the big inflation spike even started pushing towards 1980 under 1980. That capped at interest rates above 20 and the stock market was already battered, having been decimated in 1973 and was already 55 down from that previous point. So by all accounts, the economy and stock market today are an entirely different place, but then look at some of the periods where interest rates began actually going up 2016 to 2019, we had a massive bull run in the stock market, like we've never seen before 2004-2006.

We had a bull run in the stock market 1994 to 1995. We had a bull run in the stock market. You get the point and then you look at the s. P 500 chart over time as well, and people who understand absolutely nothing about mass of the stock market will go and draw stupid lines on that chart because they learned how to draw a line through two points in first grade it's admirable and then they go.

Oh look, i drew a line and the stock market has hit my completely arbitrary, meaningless line. Therefore, the stock market is definitely going to fall and the fall is going to be really big because look, i can draw another line through two different arbitrary points that i picked, because they perfectly match my made of theory. So it's going to fall all the way back to about two and a half thousand points. The problem is that these lines mean absolutely nothing imagine if you flip a coin and it lands heads twice in a row.

The economic theory here says that, of course, the coin is going to land heads again the next time. Because look, you have two data points, and that proves everything. If you had a chart, we can infer some actual trend because there were a hundred peaks that really clearly followed the same pattern. Sure maybe there'll be something interesting to look at, but two data points does not make a statistically relevant sample for anything now.

Look here is the sort of trend that a lot of people are saying is definitely going to happen, but i can go and draw you a completely different trend that looks more like this and to me two just look equally as plausible as each other or i Could draw you a trendline that loosely follows the average of the stock market so hey, maybe we're all going to be bazillionaires in just 10 years time and remember. We had a flash crash in march 2020, which completely ruins any technical analysis arguments as well, because we've only ever had one other case where two recessions happen within a two-year period, and normally the gap between recessions is quite long and those recessions with the two-year gap Happen at the peak of the 1980 inflation crisis and in its aftermath in 1981.. So you might argue that hey, we have inflation coming soon, so we maybe have an inflation crisis. So maybe we're going to have a recession on the back of that as well.

But then look at that spike in 1980 and you notice that inflation actually took a whole six years to get from the rate of about seven percent that we've got today to its peak of just below 15 percent. So if you make that argument, i presume you're then also saying that there were. We are a good few years away from that peak and at the recession that follows. You can't just go and pick the bits that match your narrative.

If you're using this as definitive proof, the truth is, it hasn't been all that long since the last major downturn, because the financial crisis and the dot-com bubble were one very long downturn in the stock market. When you zoom out far enough, because remember that statistic saying that if you invested your money just before the bubble burst and the dot-com crash, it would take you 14 years to break even well. There was something very similar in the 1970s and 80s, and that happened about 30 years before the dot-com crash, and then there was another massive drop, starting with the great depression that was going through all the way to the post second world war period, and that was About 40 years before the inflationary bear market in the 1970s, and you would argue that the stock market was pretty immature when you begin looking at 100 years ago or earlier so comparisons, there are probably somewhat pointless. So looking at it through this lens, you would argue that we are probably 10 to 20 years away from the next sustained crash, and actually the rate of growth in the stock market over the last 10 years is not as sharp as what we saw between previous Market drops when you look at it through this zoomed out log scale graph and the last three times we had a major long-term crash.

The market jumped by an order of magnitude on this log scale, going from an index of 100 in the 1930s to a thousand. In 1970s to 10 000 in a calm crash, and in this particular chart it is a little bit out of date. But if you drew inferences here in the same way, you would argue that we have a very long way to go until the next big sustain drop and the market is going to multiply several times over before we get there. Just remember that neither this chart nor any other chart proves anything.

This is a bit like a debate at school. You can put me on the ball team and i will go and structure the most ridiculously optimistic, robust argument that you have ever seen. As for why? The stock market is definitely going to explode over the next 10 years. A bit like some of the points that i mentioned in this video.

But then i could just as easily do the exact opposite and present you with an incredibly pessimistic negative view of why the stock market is definitely going to collapse. It's really easy. I've worked as an analyst in banks for long enough to know how to fit data. To an argument, so i'm not here to tell you the stock market will definitely go one way or another.

I am here to tell you and equip you with the information and the tools that you need to make your own investing decisions and please do not make any rash radical, investing decisions, because you heard some guy on youtube. Sell you the panic story. If you found this video useful, please don't forget to smash the like button for the youtube algorithm. Thank you so much for watching.

I really really appreciate it and, as always i'll see you guys later, you.