Hey guys, it's sasha, the stock market is about to officially declare a market crash for the first time since the financial crisis, and it's going to get really really bad or is it well? Yesterday the s p 500 had the fifth biggest daily points: loss in history. Dropping over four percent - and that is not one of the biggest percentage drops ever, but when you go and look further down the table, you notice that just a few days before it dropped another 3.6 percent and a few days before that it dropped another 3.6 percent And a few days before that it dropped another 2.6 percent and a few days before that it dropped another 2.95, and yesterday the s p, 500 closed 18 down year to date and in pre-market trading. It is down another one and a half percent as i'm recording this video, so we're at 19.5 down at the moment, and the consensus is that a market crash happens when the stock market drops by 20. So we are sitting on the edge dangling our feet into the abyss.

Another half a percent down and the market crash becomes official. Maybe it's going to happen before i've had the chance to upload this video. Maybe it's going to have to happen tomorrow. Maybe we're going to have to wait another day or two, maybe we're going to have a death cap bounce and we'll have to wait another week or maybe it'll happen the week after that, the two times the market crashed in the last 40 years that weren't a Flash crash the market went down by over 50 percent, so we are absolutely doomed right.

It is definitely going down and you should probably go and hole up in a bunker and come out only when it all blows over in a couple of years time. The problem with the stock market is that everything seems to be absolutely clear and obvious until it isn't, and everyone on youtube seems to know exactly where the market is going and exactly what it's going to do from here. Except for me, because the one thing that i do know about the stock market is that neither i nor anybody else actually knows where it's headed, no matter how convincing their argument or how much the data they show you to prove. Otherwise.

This point is extremely important because there are a lot of people out there telling you that you have to follow a very specific strategy based on a very specific path that they absolutely do know the market will follow. The advice is getting worse by the day. Some people are telling you to go and sit on piles of cash. Waiting for the bottom do not invest under any circumstances, because you will lose a colossal amount of money.

Others are telling you that it will definitely continue crashing all the way down to 50 or 60 percent, because the whole stock market is horrifically overvalued. So you should absolutely not invest in the next year or two under no circumstances and then there's the other side. That will tell you that we are now at the bottom. Stonks are about to head to the moon, and here is the mind-bending.

Absolutely crazy thing both could be true. You might think that you know, but you don't. On the one hand, inflation is getting a whole lot. Worse.

We've seen inflation in the uk just recently jumped from seven to nine percent. In one month. Us inflation is off the charts. Oil prices are continuing to surge, going even higher in may than they were in april.

Natural gas prices are at the highest level since 2008 and we are going to be in for some pain for a while with those numbers. The fed has only just started, increasing their interest rates and we're probably going to see one of the fastest and won the most painful set of rate increases ever through the next year. China is in the second month of a major lockdown, which is destroying global supply chains, putting massive pressure on the global economy. The russian invasion of ukraine means that we are staring at a global food crisis after the next harvest season see it is incredibly easy to paint a picture of absolute doom and gloom and panic sells newspapers and views on youtube.

So you probably clicked on this thumbnail because you're concerned about what's happening. I am sorry not really, but here is a different way to look at it. You might find this point of view a little bit surprising, but it can be just as convincing hear me out. The market has been dropping for almost five months, so we're not in a flash crash scenario, which has happened twice before, and the stock market has been around for a lot longer than 20 years.

The dot-com crash and the financial crisis were particularly violent crashes, where the stock market overall lost over 50 percent of its value from top to bottom. But if you look further back, if you don't just look at the most recent ones, the typical market crash isn't all that bad on average. In fact, five out of the seven crashes from the second world war to 1980 only went down by between 20 and 30 percent. It is very easy to be swayed by the more recent crashes, because you know we kind of remember them when analyzing today's scenario, but the average stock market crash.

If you look at all of them is not quite as scary, and if we have the kind of stock market crash that happens more often than not, then we're probably pretty close to the bottom already quite an interesting point, but here is something even more interesting. We are sitting right on the edge 19.5 down from the peak, so you think it is pretty much a dead cert. It is a given that we are going to drop more than 20 and once we go there, there is no turning back. We are going gon na, go all the way down we're just half a percentage point away and hey.

Maybe it will, but here is a little study by your danny research, which was published yesterday, and you can see here that very recently, in 2018, when the stock market had wobble, it dropped 19.8 percent. Many new retail investors started investing only after that point, and people in general have kind of forgotten about it kind of ignored it since it happened, but it did happen and it did drop roughly the same amount as what we've just seen so far this year and The interest rates were on the way up at that point much higher than today, hitting 2.4 at the end of 2018, and after dropping 19.8 percent from the beak, the market went and recovered and went on the second biggest bull run in history ever in 2019, 2020 And 2021, interesting back to the study. In 2011, we had another drop of 19.4 percent before the market again miraculously recovered and went on a huge run. In 1998, there was a huge financial crash in asia and russia and the s p, 500 dropped 19.3 and then absolutely exploded afterwards for two years in 1990, the stock market dropped 19.9 and 1990 is a particularly interesting one, because in 1990 a country brutally invaded its Smaller neighbor, the us and other countries helped the smaller neighbor militarily to fend off the invasion as a result of the invasion.

There was a massive oil price shock as the price of oil more than doubled in a short space of time and the fed was actively tightening its monetary policy because inflation began spiking in the second half of the year with cpi, hitting 6.3 percent sound familiar well. The stock market dropped 19.9 during that period and then went up by over 300 in the next 10 years, and there are plenty more cases where the market does this sort of thing where it hits this kind of situation that we're in right now and then does Not crash all the way down and instead rebounds and goes on a huge run. The war in ukraine may resolve there is possible or peter out one way or another in the next few months. The covet crisis in china could well abate, especially as we're now entering the summer season when these things generally go away and global production could get a massive kickstart.

As a result, central banks will keep on raising rates and getting closer to capping out or at least putting some kind of control on inflation and every month that the gap there narrows the market will become more and more certain and the certainty returns. Production is up. Many of the stocks that have lost 50 percent or 80 percent of their value for no good reason whatsoever will suddenly look like massively appealing. Investing propositions and money will then flood back into the stock market.

Hey sounds really plausible right when you put it this way. The us economy and global economy overall is incredibly complex. There are so many different factors in play. There is political issues, there's macroeconomic factors, there's an endless number of things that you need to consider.

There are so many different factors that is absolutely impossible to predict, which of these scenarios will play out, even if you think you know, if you take a step back and really really go and consider the two scenarios that i just talked about. I am betting that they both sound, somewhat convincing with so much data, and so many different things to look at. It is incredibly easy to produce infinite amounts of analysis to prove whichever point you've decided to prove decide on the outcome first and then go and find the data that fits the narrative. But if you're investing for the long term and you're trying to decide what do you do right now, you have two choices.

One! You pick the scenario that you think is going to happen and you play your cards accordingly. If you think the stock market is collapsing, all the way down, you sell everything. You sit on a giant pile of cash waiting to perfectly time the bottom in december, or maybe sometime next year, if you're particularly keen, you might even go and short everything in the process to make even more crazy returns, or you think that the market is definitely Bouncing back up so you better spend every penny. You've got and then spend every penny.

You don't have by borrowing to the max on every single credit card, maybe remortgage your house to the kilter, as some youtubers literally told you to do and then put it all into the stock market, absolutely max leverage as much as possible. And if you guess right, you might get a big payday, maybe make a quick 30 return or something crazy. But if you guess wrong, then you are probably going to be in for losing a giant chunk of your money, if not everything so there's that as a downside, but you do have another choice. You can come to terms that may be like me.

Maybe you don't know what's going to happen because i don't maybe neither of us has a crystal ball and maybe the best strategy that seems to work remarkably well. Every single time is just to keep putting money into the stock market on a regular basis. I don't know every month i know sounds incredibly crazy, because when you do that it is pretty much irrelevant what the stock market does on any given day or in any given month. When you do the math, the returns tend to be about nine to ten percent.

Over the long term, regardless of which way the stock market decides to go, and the best thing about this approach is that you get to win every single month when the stock market goes up, my investments go up great when the stock market goes down. I know that the investments i'm making at that point in time the money i'm putting in at the moment on the way down are going to get disproportionately higher returns. Also great - and i know that a lot of people enjoy posting stupid hate comments below about my particular investments or my particular philosophy, but i literally do not care whatsoever. What the short-term market movements are so save yourself the trouble and go and do something a little more productive.

I don't need to sprint at the start of a marathon. Knowing that you don't know what the market will do is incredibly liberating, and if the daily movements in the market bother, you make you anxious, make you concerned just know that that is a perfectly normal feeling to have. It is understandable. We've all been there, but also know that if you are really affected - and this crash that we are seeing this year is really bothering you then often the best way to battle these feelings is to rethink your perspective and investing approach.

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