The next stock market crash will mean different things for different people
for some it will cause crippling declines in their retirement accounts
while for others it will present an opportunity to acquire all their
favorite stocks at basement bargain prices regardless of how the next stock
market crash will impact your own personal financial situation knowing
when one could happen next is key to preparing accordingly as such in this
video i will share with you seven signs that the stock market is going to crash
and if you're new to the channel then hit the subscribe button below for more
life-changing content sign number one dovish monetary policy when we think of
deaths we often think of birds who have forever been linked with sentiments of
love and affection well i hate to burst your love bubble but in the context of
monetary policy and stock market crashes doves may be synonymous with decline
when monetary policy in a country is dovish it basically means that
policymakers are aiming to keep interest rates low now what usually happens when
interest rates are low if you've been paying attention over the last couple of
years you've probably seen droves of people borrowing money because the
second best thing to free money is cheap money and right now there's lots of it
now this may not seem like a bad thing but as you know nothing good lasts
forever and over time this cheap supply of cash will disappear and this will
push the market towards a crash why is that let me explain you see right now
there are a lot of investors who are using borrow money to prop up their
investing positions however as borrowing becomes more and more expensive as
interest rates rise less and less people will continue to borrow meaning that
they will have less access to capital and as such less stocks will end up
being purchased this contraction in purchasing a lower demand will naturally
cause stock prices to fall and this change in price prompts further selloffs
then you get into a situation where the market can take a turn for the worst
real quick therefore as periods of launchers prevail you should suspect
that the ties will eventually turn and that a market crash is very likely to
take place sign number two market bubbles you've probably never had to
stop before but both as kids and adults we found ourselves amidst bubbles as a
child you probably use blowing bubbles as a form of entertainment however as
you grew older your interactions with bubbles mainly pertain to those in the
financial world we live in well let me tell you that bubbles are definitely
going to be less enjoyable in your adulthood than they were on your youth
because when they get too inflated they are a clear sign that a stock market
crashes on the way now of course historical events are not an exact way
to predict the future but if past bubbles have taught us anything it's
that all good comes with some bad for instance in the mid to late 90s the tech
market was absolutely booming with the nasdaq rising 400 over that time however
as you probably know these glorious times were short-lived with the index
falling 78 from its peak by october of 2002. go ahead and smash the like button
below for all the people who lost money in the early 2000s when around the same
time i was still struggling to learn to tie my own shoes another great example
of a bubble many of us have witnessed came in 2008 with the housing crisis in
the years leading up to the crash many creditors held very relaxed credit
policies and people were buying houses like it was their day job how did they
afford this with the extremely low interest loans that the banks were
offering them of course however as you know nothing in life is free and when
interest rates started to rise people's mortgage payments became more than they
could handle which led to extensive defaults on payments and ultimately a
collapse of the us financial system now if you've been paying attention you
probably noticed that lately we've been seeing headlines indicating that the
market indices have been hitting all-time highs i'm not saying that this
is a surefire sign that the market will crash tomorrow but what goes up must
come down so when things appear to be too good for too long you should start
to move with caution sign number three an extensive bull market have you ever
been going through life and thought to yourself wow life is going great uh oh
this must mean that something bad's about to happen i felt this way from
time to time and i think we start to feel this way more with age because we
come to be more aware that with all good comes some bad and life is definitely
full of surprises well the stock market is the same and unfortunately while we
would all love to see your investments rise in perpetuity this isn't going to
happen now as unfortunate as reality is knowing that bad will precede the good
you experience is key to managing the next market crash in particular
understanding historical bear and bull market cycles is a great place to start
when planning out your own market crash game plan historically speaking the
average bull market lost nearly a thousand days or just around three years
this means that you can use this figure to get a rough idea of how long the good
times should last and ideally can use this time frame as a metric for your own
financial planning now keep in mind that this is just an average figure and that
some bare and bulb markets will be longer than others so this is far from
being an exact science for example we just had a bear market in the winter of
2020 when we saw the stock market take a dip amidst the start of the pandemic so
during february march of 2020 the market took a hefty slide only to re-enter a
bull market a month later in april of 2020. now on average bear markets lost
289 days and as you can see this bear market was much shorter so again history
should only act as a mere guide and not a surefire answer to any of your stock
market crash questions however this is all to say that when times have been
good for extended periods the anticipation of a stock market crash
should start to enter your head and with all the press constantly around the
stock market being blasted at us daily chances are you will have a hard time
missing it now if you're wondering how the hell i know so much about the
history of the stock market is because i just finished taking a great course on
skillshare called stock market fundamentals the course goes over
basically everything there is to know about the stock market and even as a
financially savvy guy found to be extremely useful if this sounds like
something you'd enjoy then go ahead and sign up using your free trial link down
below when you do not only will you be supporting the channel but you'll also
be supporting your own investing progress at the same time which if you
ask me is a win-win sign number four concerning fear and greed index there
are only ever two sentiments that exist in the stock market and they are fear
and greed fortunately you never have to guess which one is prevailing thanks to
a handy tool created by cnn money called the fear and greed index this index
indicates how investors are feeling about the state of the market and as you
can guess when people are fearful their buying frequency declines and when they
are greedy their purchasing ramps up now being in a state of fear of greed is not
inherently bad the trouble is when the index swings from one side to another
particularly when we go from being greedy to being fearful when this takes
place investors who are pumping their money into the market start to hold off
and this decline in demand pushes down prices leading to people selling off and
further price declines therefore if you want to get a gauge on the potential
market crashes keep an eye on the fear and greed index as it may be able to act
as a tool in your market crash preparation toolkit sign number five
rising inflation inflation is a term we've all grown to become aware of
recently because it's also world of finance talks about these days while
this is not exactly the most interesting of financial topics understanding what
inflation is and how it changes impacts the market is key to identifying and
preparing for a stock market crash inflation can be defined as a general
increase in prices and a fall in the purchasing value money it's why when you
go to the grocery store you constantly see workers repricing their inventory
because prices naturally go up over time as i said this is normal and the us
federal reserve aims to keep inflation about two percent but when inflation
starts to climb you need to take notice as inflation rises people tend to become
more fiscally responsible and hold their dollars a little bit closer to their
chest as such
uneducated peers sign number six an inflated buffett indicator when you
think of investing you naturally take a warren buffett so it only makes sense
that this investing magnate has his own metric for gauging the state of the
stock market if you're unfamiliar the buffett indicator is a measure the
valuation of the stock market in its current state the indicator works by
comparing the total value of the us stock market to the u.s gdp when the
indicator yields a result between 75 and 90
buffett says that the market is fairly valued can you take a guess at what the
percentage has been lately try well above 200 percent this means that the
stock market is more than double the valuation it should be based on
buffett's indicator as we talked about earlier when stock prices are inflated
this could only mean one thing the stock market is set to implode as we've seen
numerous times in the past now i will admit that the indicator has been
running hot for a while and things have stayed afloat but again what goes up
must come down so this is all to say that i wouldn't be surprised if we were
in for a correction in the near future sign number seven declining property
sales if you made it this far then i think you deserve to be let in on one of
the less talked about indicators that a stock market crash may be on its way
generally speaking when you start to see a decline in property sales it's time to
take note now what constitutes property sales good question in this context what
i mean is the decline in purchasing of any normally bought personal property
this could be family vehicles boats even houses basically whenever people start
to shy away from buying bigger ticket items it may be a sign that the stock
market isn't for some turbulent times why is that well when people buy these
more expensive goods it typically indicates that people have an optimistic
view of the current financial state of the nation people buy things because
they anticipate that an expanding economy will support their purchase
whether that's in the rise of their portfolio values or raises and
promotions they intend to receive at work however when times are looking less
prosperous people act in reverse when sentiments around the market are
pessimistic people spend less and sell out of the market preferring to keep
their assets in cash when this happens on a larger scale you guessed it a stock
market crash may ensue therefore if you start to see ads on tv of a car salesman
begging you to buy a car or hear rising inventory of your local housing market
it may be an early sign that tough times for the stock market are ahead
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