in the past few months we've been inundated with news on historically high inflation potential
stock market bubbles and impending market crashes and i don't know about you but it makes me wonder
what 2022 is going to bring for us in the stock market and our investments is it going to be
another great year like 2021 or is it going to be stale and flat like it was in 2018 well i'm not
gonna waste your time in today's video i'm gonna come right forward and say it i think this year
we're gonna see a little bit of a dip coming up in this next quarter of about negative six percent on
the stock market and in today's video i'm going to share with you the reasons why this may happen
what you could do to safeguard yourself and a few other cool tips for your investment future
so of course what's leading my thoughts to this pullback is all stemming from inflation after the
pandemic it seems every month the consumer pricing index continues to report higher
and higher inflation with now seven percent reported in december 2021 as you can see
right here on tradingeconomics.com and fun fact this is actually the highest inflation has been
since 1982. now when inflation starts going up to record highs that it hasn't seen since 1982
the federal reserve has some tricks up its sleeve to control that inflation now there's many ways
i can do this but the primary one we're going to focus on for the purpose of today's video
and your future investments is the one related to how much credit is available in the market
for you and i to borrow now as the fed prepares to raise interest rates for the first time since 2018
here's what we can expect first mortgage interest rates are gonna go back up likely rising about
3.75 according to bank rate the highest since may 2020. you can see here that as of january
12th we're already starting to see an increase of the fixed mortgage interest rates rising up from
that impressive 2.5 percent low in 2021 hats off to you if you were able to refinance your mortgage
with that low of a rate now the second one is credit card interest rates could get back up to
about the 16 range we're looking right around 16.3 percent now when they rise up the interest rates
that helps because less people borrow money and then they can control inflation but the problem
with that is it can indeed slow economic growth for not just the purpose of maybe you don't go
out and buy stuff on your credit card more often it's also because companies may kind of hold off
on taking that loan out for their next economic advancement and when that happens typically things
get a little bit shaky in the stock market and right here in this part of the video is where
we can get to to expect where our investments may go as the interest rates rise there's a likely 70
chance that the first rate hike will come in march 2022 this chart right here provided by i capital
in bloomberg looks at periods of past rate hikes now this data does go back as far as 1994 but it
leaves out 1999 to 2000 due to the tech bubble now as you can see on the chart right here you
can see three months after the first hike which could come as early as march 2022 you can see
the nasdaq going down as low as six percent based on all the historical data so if history repeats
itself which it often does we may see a dip even from two percent all the way down to six percent
in the stock market and then if you look over here on the far right the 12 months after the
first hike look at that six percent three percent nine percent and ten percent up so the real key is
make sure that you manage your immersions when it comes down to what's going to be potentially a
rocky couple months ahead now there are two people that suffer during these periods of time number
one the emotional investor you know the people that get very scared every time they see red
in the market and then they sell for a loss and they cut their losses and they continue to repeat
that hamster wheel of just losing money that's the first type of people we got to take care of those
emotional investors i hope that's not you but if it is listen up because i got some tips for you
number two we have the new investors maybe this is the first time you got into the stock market
and you decide to invest in like february 2022 where you decide to invest maybe in the last cycle
in february 2018 and then immediately there after that next month you just see everything go down
down down and you're like wait a second i thought stock market investment meant that my portfolio
was going to rise over time what is this all about why all of a sudden is everything going negative
i don't understand i think this whole thing is a scam so i've been there before and i felt the
same way but here's what i would recommend before you start pulling out your money for a loss the
first thing we got to realize is this is to be expected rate hikes need to happen they need
to control inflation and in order to do so that impacts the stock market so if we look at history
and we know this is going to happen we shouldn't be scared if this happens in the future even if
it goes below six percent if we see a nine percent ten percent uh even a twelve percent dip which oh
my god that would suck but if it does we gotta be okay with that and be emotionally charged up and
ready for it so if you are an emotional investor start thinking now okay this is gonna happen
how can i take advantage of this to come out looking great on the other side if you're new
just continue to learn new stuff about the stock market know that this stuff happens no on top of
that if they do raise the rate in march we're going to see some volatility and at the same
time we have yet another quadruple witching day which happens on the third friday of march what
that means is we have a variety of different options expiring on that day and that always
brings the market down just a little bit so that on top of a rate hike it's just something to be
ready for and be prepared for now remember the goal here and the one that i focus on the most is
long-term investing i don't really care what happens in the first month the first three
months or even the next year i care what happens in the next 10 years and if you look ahead at the
10 years the market always seems to go up and it's always gone up since the early days before you
and i were even born and i don't care how old you are i'm going all the way back so knowing
that this is about to happen how can we brace ourselves well the very first thing and a lot
of times people that are new in the stock market don't quite understand this so i think it's really
good to actually focus on a little bit of basic knowledge now let's say you have company abc
or it's etf abc whatever the name of the stock or the investment that we're going to buy into is abc
right there okay now what we want to do is we want to buy i don't know maybe one time investment or
we're going to invest a little bit every single month over the next couple months every time we
buy into abc depending on what the stock price is we earn those shares so let's say right now the
stock price as of today for abc is ten dollars and we say you know what i got twenty dollars
i'm gonna invest twenty dollars into abc so therefore you get a total of two shares you earn
two shares now what people forget is that if all of a sudden you know ten dollars times two shares
equals twenty dollars so you have twenty dollars invested in abc and what people tend to forget
is the fact that if this starts pulling back and let's say it goes back and the stock price is now
all the way down to five dollars it is literally fifty percent down on its original price five
dollars times two equals you only have ten dollars now invested and a lot of people think oh my gosh
this is terrible and they don't realize this right here two shares remember you own two shares of abc
no matter what happens you own two shares and the point of the matter is keep on top of that keep
on top of the fact that you got two shares you actually own those no matter what the price is
if this literally goes down to two zero dollars it's doubtful but if it does you would have zero
dollars but you would still earn two shares so then if it goes back up from zero dollars or
50 cents all the way up to let's say 500 a share remember you still own two shares and as long as
you don't sell those two shares you now got a thousand dollars always focus on what you own i
own two shares of abc and i'm proud of it i don't care what the price is i earn two shares i trust
and believe in abc i'm gonna earn it for like 10 years and then someday i might retire on you know
not two shares but eventually you know what my investments are that's what i'm focused on my two
shares don't forget that the other thing that i talk about a lot on the channel is dollar cost
averaging otherwise known as dca and you can do this as well with something like abc so let's
go back to this this is ten dollars a share and i'm going to buy one share on january 1st okay
january 1st i buy one share and now my balance is ten dollars and then on february 1st i'm gonna buy
another share now one plus one equals two so now in february i earned two shares but because the
price is now five dollars my average cost for abc will only be seven dollars and fifty cents
ten plus five divided by two shares equals seven dollars and fifty cents which basically means
i invested fifteen dollars into abc yes i did lose some money but i still own my two shares
but as soon as this comes up from five dollars up to 750 or more i'm actually going to show positive
in my overall portfolio holding of abc why is that because of dollar cost averaging i got videos on
that explaining it in more detail here on the channel i'll link them down in the description
below that you can check out those videos after this one if you want to learn more about dollar
cost averaging but even if you say you know what i just want to stick with the shares that i owned
and i don't want a dollar cost average that's okay too let's take a look here at the overall s p 500.
if you would have invested right here in 2018 right before the last little dip i'm not going
to use 20 20 because that's kind of easy i want to kind of explain it to the rate hikes not to a
pandemic crash but here in 2018 you buy right here on this high it's january 26 2018 and you decide
to buy into the s p 500 but what happens then over the next couple months is look you're in the red
in fact in march of 2018 you're down what is that eight percent you're down eight percent on
your money and it just kind of goes on and goes on but if you would have just held on and just
held on and held on and you're thinking long term not short term look what happens you start going
green in fact in the period between january 2018 to january 2020 you're up 12 percent now of course
right after that comes the market crash of the pandemic now you're down again but now look where
you're at today you're up well over 62 percent and that's the power of hodl hotel otherwise known
as hold on for dear life so if you're not dollar cost averaging just hurdle and that's why i always
recommend never invest money that you need your goal here is to put money away and let it alone
let it grow it's kind of like you know you plant a seed out in the backyard and you want that to
grow into a large oak tree well in three days you don't come out and you don't look at the tree and
say you know what you're not a large oak tree yet you're only a little twig in the yard i'm going to
cut my losses dig this thing up from the yard and maybe throw it over the fence into the neighbor's
yard no you don't want to do that right you gotta you know that the oak tree is gonna take some time
let the thing sit now it might be weathered you know let's say there's a big rainstorm and it gets
a little bit like sick looking for a little while but then eventually you keep taking care of it and
you let the thing grow and then over a period of time you got a beautiful oak tree in your backyard
versus throwing it into your neighbor's yard and what if he's like you know what
somebody threw this like random twig in my yard i'm gonna plant this and see what happens well now
you have to look over the fence and admire your neighbor's awesome oak tree while you're stuck
with a barren land that's the whole point of stock market investing get it in let it alone
now i gotta end with my youtube portfolio if you're not aware i did an earlier video at the
beginning of 2022 and we talked a little bit about my upcoming youtube portfolio something relatable
what i wanted to do is i'm going to take five dollars every single day that the market is open
i'm going to invest it in an s p 500 index fund v-o-o it's a vanguard fund and then i'm gonna take
another five dollars every single day and invested into cryptocurrency you guys voted on ethereum
so here's where we stand right now now there's a couple things to keep an eye on when it comes
down to this overall chart that i'm tracking so far of course right now i am down on both
and this also talks to you know set it and forget it five dollars a day or in this case ten dollars
a day five going into each options i'm just letting it alone and what's really cool guys
at the end of this year we're gonna look back on this and see if it grew or not
and i'm gonna leave it in there forever that's the goal of the youtube portfolio
i'm only doing five dollars because i want to make it relatable anybody can find five dollars a day
just think about what could you cut out of your budget that you could find five dollars or ten
dollars a day and invest it and that's how you get started sure you're not going to grow
millions overnight but it's a start and that's what counts so right here you can see that uh
everything that's in gray over here on the s p 500 stock are the days that the stock market is closed
so what i do is on that monday following i invest a little bit more with ethereum i did some really
goofy things you can see there's some gray the cryptocurrency market never closes it's open 24
7 but the problem with it was i was getting hit with some fees that i didn't want to deal with
i found a way to get around that and now ever since january 13th i am investing five dollars
every single day into ethereum like i wanted to in the beginning i had to do this weekly thing
it messed up the numbers it messed up the math and i was like wait i got to find a way around
these fees and i finally did so right here we are so we're down about 13 right now on
my profit and loss for ethereum and down about a dollar 78 on vo it's gonna be really cool
as we get to the end of this year of 2022 to see where we land was this video helpful if it
was drop me a comment down below check out this video next and we'll see you on the next video