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So just a few days ago on this youtube channel i posted a video on why i believe there’s a better chance we’re gonna have a recession in 2020 then we don’t have a recession in 2020 which is the first time in my adult life i have ever thought that and this video freaked out a lot of people because i’m usually a very optimistic person i don’t usually have negative
Thoughts about the market in general and i’ve never ever once ever thought going into the next year that basically there was a better chance of having a recession than not so it’s kind of a big deal it’s not like i’m just someone that you know predicts oh we’re gonna have a you know recession next year like some people do they they say every single year we’re
Gonna have a recession and then eventually they’re right right i’m not definitely not one of those people this is the first time you know in 2020 that i’ve ever thought is a better chance we’ll actually have one in that video i went into detail on that okay but a lot of people are saying well jeremy you believe that why not sell off all your stocks right now okay
And this is such a deeper subject in and what it seems okay as with all things in finance it’s a lot more complicated than just an easy answer okay so if we look here i want to start out here looking at the five worst one-year performances in the history of the s&p 500 right and if we look at anything in the modern history basically 1970s and over we’re gonna
See 2008 was the worst sp500 year ever as far as performance went down thirty eight and a half percent 1974 was the second worst year down nearly 30 percent 2002 was the third worst year in the history of sp500 down over 23% in 1973 was the fourth worst year in the history of the sp500 down over 17 percent now for some context in 2018 the s&p 500 was down a
Little more than 6% a lot of people got destroyed in 2018 so imagine you know a market that’s down 15% 20% 30% obviously it would get a lot worse out there so what i want to look at here is what years did we have recessions during some of those worse smp 500 years okay so 2008 obviously was the great recession which was arguably the worst economic climate we’ve had
Since probably the great depression the whole banking system in the united states of america nearly failed 700 billion plus dollar tarp and how to come out like it was an absolute disaster and it took several years just to kind of get the economy back on the right tracks okay so obviously 2008 the worst-performing year in the history of the s&p 500 it kind of
Makes sense okay it was it was a bad time okay 1974 that was a year the s&p 500 is down nearly 30 percent was that a recessionary year well yes okay this covers not only the horrible year in 1973 but also the horrible year in 1974 it was a very deep recession at that time they called a stagflation where basically there was high unemployment and there was high
Inflation all at the same time and so that explains why 1974 in 1973 were such negative years two horrible years back-to-back negative seventeen percent negative thirty percent like that is awful okay and then if we look at 2002 which was the third worst year in the history of the s&p 500 down over 23% we’re gonna find that there were a lot of different things
At play in in the early 2000s okay the some people argue well there wasn’t technically a recession because there was no two consecutive quarters of negative growth we had a lot of negative things going on right first off there was a september 11th attacks obviously that’s probably the most dramatic day since pearl harbor in the united states of america that just
Affected the whole economy very negative the whole mindset are rounded okay we’re also coming off of the tech bubble which popped in 2000 that was a huge negative situation for the markets in general then you had the war in afghanistan which started in 2001 you obviously had us leading up into a lot of people thinking we were have iraq war sure enough we did going
Into 2003 so if you look at 2002 why that was such a negative year wasn’t just because the economy was kind of weakening it was kind of just you know a blog economy but we had a lot of external events going on that basically affected the market in a very negative way and took the sentiment into a very negative place okay so that kind of makes them so needless to say
If you have a recession especially a pretty big one the stock market’s gonna fall quite a bit okay so here’s my opinion if a recession hits in 2020 we’re gonna see the stock markets fall somewhere between 15% and 30% 15% is kind of the best-case scenario and around 30% in my opinion is around the worst-case scenario if we actually do see a recession in 2020 which
Is my opinion where there’s a better chance we’ll see one in 2020 then not see one in 2020 okay and here’s the thing okay a lot of people are dreaming about you know the markets falling and wishing the markets will fall you know a 40 percent type move like we had in 2008 and that i can say pretty much dream on why is a situation like that that pretty unrealistic
A lot of people think an old man i hope the market falls like 50 percent 60 percent 70 percent and in my opinion kind of dream on why okay well one the government wouldn’t allow it they were just oh you know ramp up quantitative easing again start printing money just buy assets like crazy that’s what the fed would end up doing okay that’s just one reason another
Reason is there’s a lot of people sitting on a lot of cash right now kind of prepping for if something does happen an asset prices go down quite a bit okay you look at warren buffett for example they got well over a hundred billion dollars just sitting around in cash right now okay gary vaynerchuk he’s been he’s not been on record for years now basically saying he’s
Just sitting on cass and it has been sitting on cash never been catalyst fund managers and businessmen who have just been having money on the sidelines sitting on the sidelines saying hey we’re gonna wait out for the next one to come but here’s what happens you know all these people with all this money on the sidelines right all sudden prices throw do start going
Down well guess what they’re gonna start buying and buying and buying assets whether we’re talking real estate stocks and bonds anything across the board because they have a lot of money to deploy prices are going to be weighed down they’re gonna buy in and things are going to go up very quickly even if you look at what happened in the 2008 recession rate which was
Arguably the worst we had in a long long time the banking system was a disaster even in that one we still had the markets bounced back in a very quick amount of time here’s a chart i’m showing you which basically starts at the beginning of january 2008 and it goes through the end of 2009 about a two-year span all right we’re see the markets just fell off a cliff
From sp 500 you know 1400 plus – the next thing you know in a very quick amount of time it was under 700 but then you look and also you know eight nine months later the sp 500 goes from you under 700 to 1100 in a in a snap of a finger and that’s what happens when you have the market go down in a substantial way like that you have a lot of people who are already kind
Of planning on it or maybe had cash ready okay and they say okay we’re who win start going down we’re going to buy buy buy buy buy and in a very quick amount of time the assets just start rising again you have government step in with quantitative easing say hey we’re going to buy assets you have them niether which pushes a lot more money into the markets and it’s
Just this is just what happens ok so everybody that’s hoping the markets go down 50% or 60% i just say probably dream on in that situation because it’s very unrealistic if we do ever drop in 2020 and we’re probably looking at a 15 to 30% okay that’s something to take into account and also you know if you look at the worst year ever in the history of the sp500 which
Was 2008 we got to remember that was an unprecedented unprecedented time where banks had gotten completely out of control okay there was a tarp bailout playing which was 700 billion a lot of people didn’t even favor that because i said oh my gosh we’re gonna move towards socialism with this whole plan and things like that right that was an unprecedented situation
In the history of america pretty much and in my opinion next recession or is a whole banking system gonna feel like that no well bank’s gonna hurt will everybody get hurt absolutely everybody will get hurt but if you’re if you’re thinking oh my gosh we’re gonna get we’re gonna be a 2008 situation i just think that’s a hard thing to predict okay so here are my goals
For if we’re looking at where do i want to be january 1st 2020 as far as financially goes here my goals okay i want to be 50/50 okay 50% stocks and 50% cash now this is assuming something very big this is assuming the dow is 25,000 plus okay and this is assuming the s&p 500 is 2,700 plus if the market started to fall in a major major way in 2019 i would probably
Start buying assets okay and into 2020 that’s a that’s a you know things happen even faster okay let’s say you know at the end of 2019 things start to disintegrate we actually start going into a recession in u.s. i’d probably start buying some assets there here and there okay but assuming the markets are where they’re at today or higher than they are today as of
Recording this video i want to be somewhere around 50/50 cash 50 you know and i’ll have a hedge position essentially where let’s say nothing happens in 2020 economy just booms or the economy’s just doing decent okay and the markets do decent well i got a still a significant portion of my net worth in stocks but if something does happen and things get ugly i’m gonna
Have a substantial cash position that i’m ready by assets like crazy okay and here’s kind of my thoughts okay this is a picture of a guy in the california gold rush right so you got your pan and you’re waiting on the river right you’re trying to get your last few chunks of gold to come out right and there’s a chance you could get a few last chunks of gold to go
Down the river but the problem is here has been a million other people that have already been sifting through that gold for years now and the chances you’re even going to get any chunks are you’re gonna get you know maybe a few chunks it’s a very small percentage and that’s kind of my view on the stock market assets in general right now you’re kind of toward the
Tail end and could you get a few more chunks could you get another 10% out of them to the stock market or 20% gain out of stock market it’s possible but when you look at the downside risk the downside risk could actually be much more substantial than that so that’s just kind of my opinion on the markets right now when you kind of look at full employment right now
When you kind of look at you know the stock market’s being at near all-time highs right now when you kind of look at as being in the credit cycle toward the end maybe seventh eighth maybe even getting close to the ninth inning of this game right so in my opinion that’s why i’m going more heavy cash than i’ve ever been most years when i enter them i’m probably 10 to
20 percent cash ok there’s been times i’ve been up to 30 percent cash but most years i’m 10 to 20 percent cash i plan on going into 2020 assuming the markets haven’t already crashed or something like that i plan on going in with around 50 percent cash so in terms of selling off all your stocks or something i think you have to have a really strong conviction that
You know it’s the end of the game or something like that in my opinion i just like to have my position hedge i got a significant portion of money in stocks but i’m also building a significant portion of cash right now ready to deploy if you know everything plays out the way i think it probably will or there’s a better chance of it playing out which is a recession
Coming in 2020 then not a recession guys so that’s my opinion on that and that’s why i’m making those moves and you know absolutely if there is a recession in 2020 expect the markets to fall they will fall but in my opinion probably see somewhere around a 15 to 30 percent fall in the markets if we do have a recession which is a big if you know i could be wrong and
Everything’s you know cope aesthetic and you know we grow and grow and grow and that’s great but eventually the bells are gonna toll guys but anyways let me know what moves you or make it out there in the market down there in that comment section i would love to hear from you guys as always make sure you hit a thumbs up if you enjoyed this today thank you for watching have a great day
Transcribed from video
Should You Sell All Your Stocks in the Stock Market Now?! By Financial Education
