If I told you, we're on the edge of a recession.
Dip, after dip, after dip.
And then gave you a look inside my businesses.
It's costing me more than ever to get hold of.
That would lead me to retracing my steps
during the 2008 financial crisis.
It was a huge shock to the system
when the crisis hit in 2008.
Allowing us to find out
whether this is a spiraling nightmare
or the financial opportunity of a lifetime.
Hi, guys, it's Mark.
So you're an investor
and you're on a mission to find the best place
to put your money and increase it over time.
Where are you putting it?
Well, things aren't looking good.
This is how rocky the stock market was
in the first quarter of 2022.
Dip, after dip, after dip.
It's like being on a roller coaster, only less exciting.
This is actually the worst start to the stock market
in more than 80 years.
But that's just a graph.
What this really represents is thousands of people,
just like you and me,
having their investments battered.
Almost every stock is down,
which means every day we're just staring at a sea of red,
hoping that things will go back
to the days of positive returns.
So maybe the stock market isn't the best option
for your money; however,
neither is keeping all your money in your bank account
as we're facing extremely high levels of inflation.
The government says this is at 8.5%,
but in all honesty, I think it's much higher.
On top of this, Putin has decided to invade Ukraine,
leading to a devastating war
and a squeeze on global supply chains.
This has a side effect of making certain commodities,
like oil, more expensive,
meaning filling up your car
is hitting your wallet like never before.
This is causing you to have less money
that is quickly becoming even less valuable by the second.
This pressure on finances has brought
to the surface a common fear of a looming recession,
and it's fast becoming a reality.
For the first three months of this year,
economists assumed we would grow by 1.1%.
But what actually happened was far worse.
We saw a 1.4% decline,
which means we are halfway towards a recession.
This means if you put money into stocks, Bitcoin,
and even your bank account,
you're probably gonna lose money at the moment.
Honestly, I can see why you would think
that this mission to find the best investment is pointless
as you seem to be just throwing your money away.
This thinking has led
to a general loss of interest in the space,
but could this be the perfect opportunity
for you to make your millions?
Let's take a closer look.
- The stock market is now down 21%.
- Worst day on Wall Street since the crash of 1987.
- The most serious recession in decades.
- We're now down 43%.
(dramatic music) (keys clacking)
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Now let's get back to the video.
As a business owner, I'm one of the first people
to feel the effects of a coming recession.
I remember seeing the signs in 2008.
People were starved of access to finance, businesses failed,
and job losses soared.
My businesses source raw materials from abroad,
deal with foreign factories,
and distribute in shops as well as the internet.
This gives me a unique perspective
on supply chains and customer demand,
which could be early indicators
of a coming financial collapse.
Sure, you could look at indicators
like the Consumer Price Index,
but these are heavily influenced by governments,
and it's very easy for them
to manipulate the figures and lie to us.
However, one thing they don't have control over
is my businesses,
so let's look at how I was affected in 2008
and compare them to the problems I'm facing now.
By doing this, we should be able to get a better idea
of the true financial situation we're facing.
So let's follow the journey of this model plane
that was designed by me and is sold all over the country.
(keys clacking)
So all the products we buy start
in the form of raw materials,
and it's exactly the same for my model aircraft
as we use plastic, wood, and also electronic components.
So knowing how raw materials of price is important
as it has a direct impact on our wallets.
When the 2008 financial crisis hit,
the manufacturing sector suffered severe consequences.
Industries such as machinery, metals,
and transportation equipment had huge drops
in customer orders by up to 42% within a single year.
As supply and demand have an inverse relationship,
this meant that the cost of my raw materials
actually decreased in 2008 as they were eager to sell
to anyone that had the money to buy.
However, in 2022,
the raw materials market is under considerable strain.
It's costing me more than ever
to get hold of the raw materials
that are required to produce my products.
This is because market demand is still high,
and when this is coupled with reduced supply,
this continues to keep material prices
at rates never previously seen globally.
One of the raw materials I require
to make this model aircraft is balsa wood.
The issue is it's in extremely high demand,
and one of the contributing factors
is that it's being used in wind turbines.
It's even got to the stage when I've had to put my customers
on a three-month waiting list.
This is just one example of how increased raw material cost
is impacting the everyday person.
(keys clacking)
So once the product has been produced,
it actually has to get to me,
and this is where supply chains come into play.
Now that our everyday products come from all over the world,
supply chains affect us more than ever.
On the run up to 2008,
things were going great and economy was booming.
During times like this,
factories really ramp up their manufacturing capacity
by investing in more equipment, facilities,
and workers in order to meet the demand.
This leads to supply chains accelerating,
costly transport being accepted,
and large batches being produced
because the goods will be sold at some stage.
It was a huge shock to the system
when the crisis hit in 2008,
and supply chains had to totally reevaluate
their business models due to the lack of demand.
Nobody seemed to have any money,
which led to shrinking customer orders,
increasing competition,
and a decrease in margin for the manufacturing industry.
However, 2022 is completely different.
This is because of the pandemic.
We saw a complete slowdown in our actual supply chains,
and they're still not back to full capacity.
This means that demand far outweighs supply;
therefore, shipping this product
and many others from China is getting more expensive.
Ships that used to take four weeks are now taking six.
A big reason for this decrease in speed
is the rising oil prices
as container ships can save up to 25% of their fuel cost
just by going slower.
The last container I got
into my warehouse cost me $17,000 to ship,
which is absolutely insane
as pre-pandemic, it cost me $4,500.
That was the best price I ever got though.
(keys clacking)
Once this product reaches me,
it has to be handled by my warehouse team.
This, obviously, has a lot of costs involved with it.
During times of recession,
most businesses are looking to cut costs,
and this is when people lose their jobs.
In 2008, I was mostly concerned with my rent prices.
This is when I made the decision
to buy all the buildings my businesses now operate from
so I no longer have to worry
about landlords increasing my rent
and squeezing my profit margins.
In 2022, I am even more focused on cutting costs.
Recently, I changed all my light into LED
so I can save on increasing electricity costs.
I've also implemented automatic lighting,
so the lights aren't left on unnecessarily.
As more people lose their jobs due to cuts,
this causes the economy to grind to a halt
as people have less money to spend.
That brings us onto the final trip for this product,
and that's when someone buys it and takes it home.
This can happen in-store or via the internet.
When less people are buying products, it decreases the GDP,
which pushes us into a recession
if growth is negative for two quarters in a row.
In 2008, well, 2010 is when it really impacted me,
demand was extremely reduced
due to most people being low on cash.
Whereas, now it seems like people have more money
but supply chain issues and worries about the recession
are causing the main problems.
I have huge demand for products I can't get
but lower demand for products I have.
So as we can clearly see, history is not repeating itself.
This recession seems like something
completely different than before.
But the real question is,
is there an opportunity for you to profit?
Well, I've got some good news and some bad news
about whether or not this is the financial opportunity
you've been waiting for.
The good news is history has shown
that the US stock market recovers after a decline,
and investors that have stayed in the market
for the long term have benefited the most
from the recoveries.
It's a bit like in February and March 2020
when the pandemic first got real.
Imagine selling here, right at the bottom
for fear of what was to come,
only to have the price rebound
and saw to new heights in the space of only a few months.
I'm like a squirrel during market declines,
grabbing as many acorns as I can
and hoarding them through the winter
as buying low is where the real money is made.
And let's be honest,
the recession doesn't always mean a decline
in the stock market.
You can't time the market, but index fund investing
and picking the right defensive companies
has always been a great strategy that I've used in the past.
Now the bad news is, historically,
the stock market takes anywhere from six months to two years
to recover from a recession,
which really isn't good for psychology
when investing consistently.
This could also impact you more than most
if you're on the verge of retirement
and can't weather two years of no returns.
And let's not forget,
not every company makes a swift recovery
and some never bounce back at all.
Overall, I think job security is really important
to ensure a constant reliable income.
Extending your emergency fund from three to six months,
or maybe even more, should stop you
from having to sell your investments at a loss
should you hit financial difficulties.
I've personally tweaked
my investment strategy ever so slightly
to include more recession-proof businesses and industries,
as well as consistently investing into index funds.
Investments like crypto
just don't have enough historical data surrounding them
to make an educated guess
on how they'll hold up during a recession.
But Bitcoin and other crypto coins
have been closely following stocks lately
and could follow a similar course.
When buying crypto, make sure to use the FTX app
as they give you free crypto on every trade over $10,
which is really helpful at the moment, that's for sure.
So I'm gonna leave the next video right up there,
but don't click on it just yet.
Make sure to subscribe if you wanna grow your wealth, okay?
I'll see you over there.