Stock Market Crash 2018 ?!? Let's look at the facts.... // recession coming collapse imminent 2019 2017 usa UVXY TVIX VXX VIX XIV SVXY VIXY SPY QQQ DIA DJIA TLT IWM david moadel
welcome to looking at the markets with
David Modell market crashed 2018 will it
happen will it not happen well I'm not
in the business of predicting and so I'm
not gonna give you a definitive answer
but I can give you my best guess based
on the facts so let's start with a quote
this is attributed to John Maynard
Keynes in English economist the markets
can stay irrational longer than you can
stay solvent think about the people
who've been shorting the market since
2009 how have they been doing so far
well not too well all right yes
the market is expensive but it can stay
expensive month after month year after
year and if you're shorting the market
it can stay too high or irrationally
high continuously until you run out of
money and go broke and we don't want
that all right
and so I'm gonna make a case that
shorting a market that is expensive is
just a recipe for disaster all right so
let's look at some facts here all right
this is from The Wall Street Journal
dot-com and we've got the p/e ratio of
the major indexes and I'm gonna focus on
the S&P 500 as a proxy for the US
markets as a whole all right so
according to The Wall Street Journal on
this page the current P ratio of the S&P
500 is about twenty four and a half all
right and then we'll take a look at
another source this is multiple com
they've got the current sp500 p/e ratio
as you know between 25 and 26 and then
Barron's calm this page here has the S&P
500 p/e ratio currently at almost 25 so
you know 20 whatever 24 25 26 yeah
they're all I don't know which ones
exactly right but they're all a little
bit higher than I'd like it to be but
it's not exactly bubble territory
necessarily either it's not like it was
in the year 2000 or 2008
when p/e ratios were out of control
valuations were way too high the markets
were very expensive and you know it's
okay for stocks to be expensive as long
as the earnings or profits are also very
robust all right but you know right
before these market crashes you tend to
see not only very expensive stock prices
but also earnings that just aren't that
great all right and so you get very very
high p/e ratios high prices for stocks
and low or you know just not not very
high earnings not high enough to justify
the high stock prices so the p/e ratios
right now in the sp500 generally are
yeah a little on the high side but you
know I don't remember this doesn't feel
like I remember it it felt like back in
the year 2000 and 2008 and if you were
investing back then I think you know
what I'm talking about I think you know
what what kind of euphoria people felt
back then right now the the market is
going up yeah but it's not parabolic
it's not going up like a rocket ship
it's just kind of going up gently over
time it's not like it's going up 20
percent every year or even 15 percent
every year it might end up going up 15
percent in the year 2017 but it has not
been doing that every single year in
fact in the year 2015 the market was
pretty much flat in fact I think it was
actually negative a little bit if I
recall correctly all right so it took a
breather a couple of years ago let's
take a look at market breadth all right
is there broad participation in these
new all-time highs that we're seeing in
the markets in other words is it just a
small handful of stocks carrying the
sp500 to new all-time highs or are there
a large number of stocks participating
across multiple sectors well this is
from stock charts calm this is a chart
show this is a weekly chart each
candlestick represents one week showing
the S&P 500 percent of stocks in the S&P
fell
500 above their 200-day moving average
and as you can see look at that there
has an interesting double bottom here
but you know it's chopping around but
it's you know it's not really really
really low like it was back in let's say
October November December 2016 January
February 2017 you know it's not low like
it was here it's actually you know
pretty close to the top at least from
the past couple years so that means
there is reasonably broad participation
not super bored not super broad
participation but you know enough and
there are enough stocks above their
200-day moving average in the S&P 500 to
make me feel at least right now that
there is reasonable participation among
stocks in the S&P 500's notches and not
it's not just a handful of Amazon's and
Google's or whatever carrying the entire
markets all right
and besides even if we do feel that the
market is too expansive what are you
gonna do about it what are you gonna do
about it you're gonna buy what are you
gonna buy you vxy here's you vxy okay
here it is here's how you vxy has
performed for people who held on to it
all right look at that
start it up here down down down down
down just continuously down all right so
what what are you gonna buy and hold
this this thing really this thing that's
lost 99.99 percent of its value in the
last few years here's another one T VIX
there it is
T VIX similar chart look at that
people who bought it and held it have
pretty much gone broke they've lost
ninety nine point seventy nine percent
of the value of their investments it
just goes down and down and down so even
if you did think that market crash is
going to happen in 2018 whoo
what do you really what are you gonna do
about it what can you do about it what's
a reasonable investment to make you
gonna short the market you're gonna buy
you VX Y T VIX you're gonna short the
sp500 again how has that worked out for
people who've been doing that not too
well all right so my answer to the
question of
the market going to crash in 2018 I
doubt it
I really doubt I don't know but I'm not
into making predictions but I doubt it I
don't see any serious red flags I see an
expensive market but again let's go back
to the quote the market can remain
irrationally expensive longer than you
can stay solvent okay an irrational
market can outlast your brokerage
account believe me if you plan on going
short the market all right and even more
importantly even if there were a reason
to believe that the market is likely to
crash in the year 2018 what do you gonna
do about it there's no product out there
that you can use to really safely short
the market for any length of time more
than a few days or maybe a few weeks but
to hold a product like that for months
and months is in my opinion not a great
idea so even if you did believe that the
markets going to crash in 2018 I don't
think there's much you can do about that
except maybe hold cash that's about the
best you can do and I don't necessarily
recommend that either I think it's best
to be you know invested in something
better than nothing because due to the
forces of inflation holding cash is for
holding cash for months and months and
years it's not a great investment either
because the dollar is being devalued
your dollars are losing about three
percent per year of their value due to
inflation so look into other ideas
besides shorting the market that's my
opinion and I'm sticking with it at
least for now all right if you have
questions if you'd like some help
putting together a trading or investing
plan you can contact me at any time my
name is David Modell my email address is
David Modell at gmail.com I hope you I
hope it gave you things to think about
with this and you know I really
appreciate if you would leave a thumbs
up for this video leave comments and
please subscribe to my youtube channel
if you haven't done that already thanks
a lot I really appreciate it and I'll
talk to you again soon
