A 100 years ago, investing was accessible to the elite, to people who had fortunes and
connections.
Wealth wasn't something you could create or build but rather inherit.
If you would come from a wealthy family, you had the opportunity to trade, buy land and
expand your business but if you didn't, your chances to get out of poverty were slim, to
say the least.
In fact, the only source of passive income was the interest where you could lend your
money to the nobility who would use it to wage wars, conquer more land and then force
these people to pay taxes in order to pay you back.
That's how the Rothschild family built their fortune.
The king will pay as much interest as you want because his kingdom and reputation are
at risk, so interests on these loans were beyond your imagination, but the king did
not care because the peasants will pay astronomical taxes at the end of the day to pay off that
debt.
However, that changed with the introduction of the stock market.
Businesses could break down the company into little pieces and sell it to the general public,
and as the company grew and expanded, the businesses shared its profit with its shareholders.
Not a single industry created more millionaires or billionaires than the stock market.
Some people have mastered the stock market so deeply that they have created a fortune
of 100 billion dollars (Warren Buffett).
In fact, every company that wants to grow and compete with a multinational corporation
has to list itself on the stock market through an IPO.
Of Course, the stock market carries its risks as well.
If you bet your money on the wrong stock, you might lose your hard-earned capital.
Take a look at what happened to GameStop.
People lost a fortune investing in GameStop.
But that's just one example.
Those who invested in the stock market prior to the dot com crash lost almost all of their
money.
Amazons stock price, for example, fell from 107 dollars to as little as 7 dollars, and
if it hadn't secured funding right before the crash, it could have gone bankrupt, and
all those people who invested hundreds of millions of dollars into it would have lost
their fortunes and Bezos wouldn't have flown to space in 2021.
The same happened in 2008 when the housing crash collapsed, so it's not only important
to invest in the right company but also invest at the right time.
If you have invested in February 2020, you would have lost at least 30 percent of your
money by Mach, but if you had invested in march 2020, by now, you would have doubled
your money.
So let's find out why wall street believes that the economy has peaked?
How is that going to impact the stock market?
And why millennials should stop buying stocks?
We will answer all of these questions and many more but before we do that, give this
video a thumbs up, and here is a little disclaimer.
This is not financial advice, and everything that's said in this video is for educational
and entertainment purposes.
This Bloomberg article claims that the economy has reached its full potential, and it's getting
ready to decline.
There is something called an economic cycle.
The economy starts by expansion.
It grows pretty fast, businesses hire more people, wages rise, and people spending goes
up, but that doesn't continue forever.
At some point, the economy reaches full employment, wages stop rising, and additional spending
causes higher inflation.
That's when you know that the economy is not growing anymore.
The Fed raises interest rates and limits the inflow of cash into the economy in order to
keep inflation under control.
Businesses and people start spending less and less, and the economy prepares for a crisis.
After the 2008 crash, the Fed lowered interest rates to stimulate growth, but in 2017, once
the economy reached its peak, the Fed started raising rates.
By 2019, interest rates reached an all-time high of 2.5 percent.
The US started a trade war, and the pandemic was the final punch that drove the economy
down into a recession.
Ideally, we should have followed the exact same path.
The Fed lowers rates, injects trillions into the economy, the economy takes a few years
to recover, stabilizes for another few years, and another crisis should not happen in the
next 5 to 10 years at least.
But things didn't go as planned.
The nature of the last crisis was quite different from previous crises, so the only way the
Fed saw its way out of the crisis is by injecting more money into the economy than it ever had.
Surprise!
Surprise, it worked!
In fact, it grew the economy so fast that the SP500 grew by a larger percentage from
march 2020 to July 2021 than it did from 2014 to March 2020, which is what led many wall
street investors to believe that we might have reached the peak.
But that's not all.
The Fed perfectly knew that if it's going to increase the money supply by 25 percent
in a single year, it will have to get that money out of the economy once we are out of
the crises in order to prevent high inflation.
Keep in mind that one of the main reasons why the US dollar is the dominant currency
is because its stable.
60 percent of global currency reserves are held in US dollar because t he world believes
that its the most stable and transparent currency, its United States's golden treasure and the
Fed will do everything to keep it that way.
Does that mean you should not invest and wait until everything crashes?
Well, it's not as simple as that.
First of all, it's really difficult to time the market and impossible to predict the future.
We can make as many predictions as we want, but only time will tell what the future is
holding for us.
If you are a long-term investor, you shouldn't care about what Wall Street is saying, but
if you are a trader and need to show huge gains quarter to quarter, that's something
to worry about.
But the reason why millennials should stop investing is that the combination of stimulus
checks, lockdown, and an astronomical rise of the stock market has led to a new form
of gambling.
Millennials started buying stocks not because behind them stands really great, strong, profitable
companies but rather because it's a popular stock since everyone is buying that stock
on social media as a way to get rich quickly.
In fact, some people actually did make a lot of money out of them.
But the vast majority lost.
When GameStop stock price for example was trading at 300 or 400 or 450 dollars.
Remember, people were paying real money to buy the stock at that price.
The demand is what kept the price increasing.
But when it fell to 40 dollars, most of these people lost their investments, and even now,
the stock is trading at around 180 dollars.
You might say that it was because broker apps prevented retail investing from buying the
stock, and that's true.
But let's take another example, AMC or Dogecoin.
Dogecoin is not a stock, but people are investing in it for the exact same reason.
Most retail investors bought it, hoping that they will get rich quickly.
People love the idea of getting rich quickly.
That's why gambling is so popular.
Every year, Americans spend 40 billion on gambling, but when casinos were closed down
due to the lockdown, people turned to stocks.
Of course stocks are not gambling machines because behind every stock there is a company
but if you invest without studying that company, analyzing financial statements, or doing your
fundamentals, then you're gambling.
By the way, if you want to learn all of that, then you can check out my Course on skillshare,
which is simple, straightforward, and fully animated.
It doesn't matter whether you are beginning or already an investor.
You ill find this Course helpful.
The first 500 people to click on the link in the description will get 2 weeks of skillshare
premium and will be able to watch the Course for free.
At the end of the course, there will be an assignment that you will have to complete,
which I will personally check and provide you with feedback.
The problem is that when the market is booming, everything is growing, including junk stocks
or junk assets.
So when you throw your money into these unstable assets and make some money, that encourages
you to trade more and invest more money, but like everything else, whatever rises will
eventually fall especially if it's a risky asset.
Let me ask you a question, are you ready to hold these investments for the next 5 to 10
years?
Probably not because today it's a popular meme stock but tomorrow, something else will
be a popular meme stock, so you are eventually basing your strategy on luck, and luck is
not a strategy.
It's alright to trade and gamble on some of these stocks, but if you are doing that, in
fact, you should be prepared to lose all of that money! if a stock or an asset can grow
by 100 percent overnight, then it also can go to zero overnight.
That's simply a fact whether you like it or not.
Don't let your emotions get in the way of your investing decisions.
Feeling lucky because you invested in the right stock is an amazing feeling.
But it also can destroy you.
Investing is a long-term game and behind every company stands a real company that sells real
products, real services and the world of business is brutal.
Try starting a business, and then you will understand that.
Either base your investment decision on facts and proper analysis or don't bet the money
you are not ready to lose because that's how gambling works.
For every person who makes a million dollars, a few hundred thousand people lose.
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I have created specifically for you that has our most popular videos on business, investing,
and the stock market that can potentially change your life.
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Thanks for watching and until next.