The Next Stock Market Crash (How To Profit)

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THE CHANCE OF A STOCK MARKET DROP:

-Stock Market Correction: A 10% - 19.9% Decline
First, normal volatility throughout the markets is extremely common; since 1920, the SP500 has (on average) seen a 5% pullback 3x per year.

Market Corrections are also fairly common - on average, a 10% correction happens every 16 months, and throughout the last 20 years, a 10% drop has happened 11 times.

-The Bear Market: A 20% - 39.9% Decline
According to data, this typically occurs every 7-10 years - and when this happens, stocks drop an average of 33% over a period of 363 days.

-The Stock Market Collapse: More than 40% Decline Throughout The Index
Throughout the last 120 years, this has only happened 4 times. Once in 1929, again during the 1970s, and again in 2009.

THE CHANCE OF A STOCK MARKET DROP IN 2024:
The economist John Hussman makes the argument that non-financial stocks are trading at levels that haven’t been seen since 1929 and 2001. Because of that, he believes that “These levels indicate the S&P 500 is likely to return around -5% annualized over the next 12 years.”

David Rosenberg also believes there’s truth to the claims that stocks are poised to fall, saying "Just like the clown at the circus who keeps blowing up the balloon, at some point, that balloon is going to pop." As he explains, “The S&P 500 is up 32% in the past 12 months while corporate profits rose just 4% in the fourth quarter, meaning that the vast majority of those gains clearly can't be attributed to improvements in earnings results.” Instead, the market is simply going higher for three main reasons: A better-than-feared economy, significant jumps in earnings estimates, and the expectations of lower rates - that’s it.

HOW TO PREPARE IN THE FUTURE:

- Keep a 3-6 Month Cash Savings
That way, you won’t need to sell investments to pay for your living expenses in the event you lose your job, your income slows down, or something unforeseen comes up while the market is low.

- Diversify your investments.  
The more you spread out your money, the more you reduce your risk and volatility.

- Continue The Long Term Plan of DCA
Studies show that the best thing you can do is just stick to the plan, keep buying, and do nothing long-term. Historically, even though a bear market might temporarily lose you an average of 33% - a BULL MARKET has seen an average gain of 158%, and it lasts almost 5 times longer, at 1742 days.

- Don't Panic Sell
Over the last 20 years, a $10,000 investment in the SP500 would have grown to $64,000 if you just kept the money invested. However, if you missed the best 10 days (over 20 years) your return would diminish down to $29,000.

- Keep Consistent Income
An cash fund could hold you over 3-6 months while, hopefully, the market recovers - but, if it doesn’t, you want to make sure you have some consistent income to either continue buying in or paying your living expenses so you don’t touch those investments and sell when you don’t have to. 

- Only Invest Long Term
A few years is not long enough to ensure that you’ll actually make money, so - the shorter your investment timeframe is - the less likely you should be invested in something that could drop in price.

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*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. This is not investment advice.

[ktube]

It's impossible for someone to become wealthy suddenly. A valuable lesson I've picked up from billionaires is to always invest in a diverse range of securities and to put in background effort, even if we usually just see the final product. I intend to profit from the approximately $200k that I want to put in stocks this year.

[maiadazz]

I recently sold some of my long-term position and currently sitting on about 250k, do you think Nvidia is a good buy right now or I have I missed out on a crucial buy period, any good stock recommendation on great performing stocks will be appreciated.

[nicolasbenson]

I feel investors should be focusing on under-the-radar stocks, and considering the current rollercoaster nature of the stock market, Because 35% of my $270k portfolio comprises of plummeting stocks which were once revered and i don't know where to go here out of devastation.

[SloanJane-xpkr]

My biggest irk with ETFs is the lack of optimization;changes in any given stock in the ETF can drag your portfolio down. While dividends can provide immediate income, the true power lies in the compounding effect over many years. But in general, I think the stock market isn't showing any sign of slowdown and I'm still looking for companies to make additions to my $350K portfolio, to boost performance. Here for ideas...

[NicholasBall]

Transfer of wealth usually occur during market crash, so the more stocks drop, the more I buy, in the meanwhile I'm just focused on making better investments and earning more as recession fear increases, apparently there are strategies to 3x gains in this present market cos I read of someone that pulled a profit of $350k within 6months, and it would really help if you could make a video covering these strategies.

[Farmwald]

I agree that many people are considering NVDA as the "Stock of the year." However, I'm curious about which stocks could potentially become the next Nvidia in terms of growth over the next decade. I've allocated $200k for investment, aiming to retire comfortably.

[tonysilke]

My expectation for 2024 is that markets starts to broaden out more, ” what if the interest rates go up? i have a ton of questions....can I safely invest $220k? What should I do differently?

[KieferRomer]

I’d say at this point, you gotta have cash on the side and exposure so that you don’t completely fumble during bearish times, just to come out with nothing but buying bags too high later on. Not a financial advisor, just my two cents of advice.

[LiquidityOcelot]

Crashes and bubbles are persistent features of financial markets and are exacerbated by narratives. The narrative is always different but something’s don’t tend to change, most notably, returns after crashes are more often positive than negative and new paradigm bubbles tend to have disappointing returns.

[AmithKaury]

To profit, I feel investors should be focusing on under-the-radar stocks, and considering the current rollercoaster nature of the stock market, Because 35% of my $270k portfolio comprises of plummeting stocks which were once revered and i don't know where to go here out of devastation.

[Imepime]

Bro been saying this every year since 2020

[Mrshuster]

The entire discourse surrounding "reverse" market crashes (in the stock and real estate markets) essentially argues that inflation is far from over and that we may actually encounter "hyperinflation" soon along with rising rates of poverty nationwide or a historical economic depression. These are the extreme circumstances that, in the majority of the cases I've seen, have resulted in reverse market crashes. Although I don't really see anything that drastic approaching, you never know.

[brianwhitehawker]

I was advised to diversify my portfolio among several assets such as stocks and bonds since this can protect my portfolio for retirement. I'm seeking to invest $200K across markets but don't know where to start.

[A_francis]

What I don’t understand is, on one hand we are told the stock market will crash and yet on the other we are told ways of investing in the stock market. Oxymoron or paradox? I'm considering investing over $300k, but I'm uncertain about risk mitigation strategies.

[geraldt]

Market highs can sometimes be followed by corrections, but predicting the timing and extent of it is challenging. I've heard some analysts talk about a 'massive' correction. It makes me wonder if it's time to adjust my $2M portfolios or maybe even consider some defensive investments.

[phyllissong]

Wow, really puts things into perspective! It's comforting to know that despite the ups and downs, the market has a way of bouncing back over time. Keeping that long-term view is key.

[PortfolioPodigy-uedg]

Thank you for the great content graham, fully agree with the cash on the side for emergencies in or out of the market. It would be nice to hear more about other markets that act as a hedge. I will be trying to cover this soon.

[shanemacey]

Let me sum it up. Just DCA in to total market ETF's, done.

[maxt]

What might be a YouTube video idea is to actually show an example of dollar cost averaging into a fund- actually demonstrate how that monthly investing purchases more of the fund's units during a fall. The maths of it all. Nobody covers this!
The value investing mindset that would inspire- making index investors *wish* for a market fall- would be the perfect antidote to market crash fears and mindless assets reallocation.
As always, this was a great video with very solid advice, Graham. Thank you!

[spdog]

I was able to put this mindset into practice in 2020 and 2022 and continue to buy and actually buy extra during the bear markets. I will continue to do this!