Why No Real Bear Market

SPEAKER_00 0:00

Do you ever look around and think we've got 40 trillion debt? The last time that was happened, you were fighting, you know, my lot. Yeah, I'm jamming. Um, geopolitics is an absolute powder kick. You know, is the war on? Is it off? It's conflict all over the world. We have tariffs, trade wars, supply chain problems. The Fed doesn't know what to do because inflation's going up, you know. The stock market is just propped up essentially by NVIDIA in the hope that AI is gonna work. I mean, all of this debt spiral, geopolitics, concentration risk, all that stuff. Why the heck has the market not crashed? I mean, we haven't seen, yeah, we've seen a little dip. I'm not talking about a 5% dip that recovers in three days. I'm talking about a real sustained, gut-wrenching bear market, you know, 2008 style, which kind of wipes out, you know, 30, 40, 50% of your portfolio and takes years to recover. Why does every single sell-off turn into a buying opportunity within a few days? That's what we're going to answer in this video. And more importantly, what could actually finally break it? Because you want to be important, because you want to be prepared for that too. My name is Felix Preen. This is Winston here. We used to be invest in bankers and economists. And we also founded the GOAT Academy six years ago because I was tired of watching normal people like you and me getting fleeced by the lovely industry. Uh so we've talked about over 20,000 students the last six years. I also co-founded Trade Vision, which helps us stay on top of what's actually going on out there. And when I look at my uh my current workspace in Trade Vision, where I basically track what's important and what's going on, what do I see? I see war, right? I'm tracking critical mineral stocks because the supply chains are changing. I'm watching war and inflation stocks, you know, all that kind of stuff that I didn't used to watch. So I'm going to show you how the system actually operates, not some theory, but the actual anti-crash system. There are four hidden forces in the market right now that prevents a sustained crash so far. There is literally a reason why we keep getting these V-shaped recoveries again and again and again. And I just tracked the SP, for example, here. Let's look at that. And you know, this was the Iran war thing, right? We've exceeded it. I'm very happy to say I bought around about there. Um, but you go back in time, tariff crash, right? You go back a bit further, COVID crash, wherever it was, every single one of them has recovered. And once you understand the four forces, I'm gonna walk you through each one, what it is, how why it works, and most importantly, what breaks it. Because just because something's been happening for a long time doesn't mean it's gonna happen in the future. Very, very important lesson that I learned the hard way as an investor. So, what's the first force? The first force is it's often called the Fed put. Now, what the heck does that mean? Well, we get into that. Force two is the passive money machine, and force three and four we're gonna get into in just a second. So let's dive into what the heck a Fed put is. Okay, Winston's gonna give you the simple version that even golden retrievers can understand. They're actually very smart, very smart. The Fed put is the market's belief that if things get really ugly, the Federal Reserve will step in and save the debt. They're gonna cut rates, they're gonna print money, gonna buy assets, whatever it takes. Now it's not a law, it's just a psychological expectation that's been reinforced every single time the market cracked since 2008.

SPEAKER_01 3:44

I think he might have a tick on his ear. Hang on. And yes, he does. Okay, I'm gonna do something about that.

The Free Wall Street Rulebook

Force Two Passive Buying Pressure

Force Three Trend Following Algorithms

Force Four Options Hedging Flows

What Could Finally Break It

Two Ways To Position Yourself

The Real Risk Is Complacency

SPEAKER_00 3:52

So the Fed is basically a backstop to the market. Ticks, by the way, are not a problem as long as you remove them within sort of, you know, 24 hours. I think was the general golden rule. So we check them twice a day, because it's the tick season. Um, it's a backstop. It's a belief that there is a backstop. And this has been working for 15 years, by the way. Literally 15 years. Now, why does this happen? Why is this expectation there? Because they did it in 2008. They bailed out my banking friends, they really needed it. I mean, some of them, some of them, you know, were considering canceling ski trips. Some of them were considering not going through with the Lamborghini. Real suffering, real hardship for the investment bankers. 2020, obviously, they went absolutely loony in 2020. Um, trillions in money printing, everybody got a check. So we kind of get this system here. But why? I tell you why. Because US household wealth, essentially, except for the primary home, is 47% in stocks. So when the market goes down, everybody feels terrible and everybody stops spending, which means the economy implodes. So they're not just bailing out Wall Street. Household wealth is about 184 billion. A lot of that is obviously in the primary home. But still, about a third of that is literally sitting in stocks. And that's growing very rapidly every single year. So Americans have never been this exposed to the stock market before. Ever in the history of the country. And it's a good thing, to be honest with you, because it's how you generate wealth, unless you do really daft things and sell at the bottom and buy at the top, which is actually what most we are investors too, unfortunately. But we are we're changing that. We're changing that. One student at a time, one viewer at a time. So if the market drops 40%, everybody gets destroyed. Consumer spending falls off a cliff, which triggers a recession, which makes everything worse, stocks go down even further. So the way the Fed looks at this is like, well, we might as well bail them out a minute one, and that way we prevent the worst thing, which would be a recession, and we have to bail it out even more, right? So what's the Fed doing right now as I'm recording this? Well, they're playing it carefully, but they're definitely doing something. So they cut interest rates in late 2025, based on fairly shaky data, if I'm honest with you. And they stopped shredding money, and now they're printing$40 billion of money every single month. But they're going to call it money printing. They don't call it quantitative easing, they call it a technical move to ensure liquidity in the banking system, also known as reserve management purchases, which sounds so technical and so boring that nobody looks at it. But they are pumping money into the system. It sort of puts a flaw under the market. But if they go full like post-COVID lunatic money printer again, inflation is gonna go up. And with what is happening in the world right now, oil prices being high and so on, you know, we're getting inflation problems anyway. And inflation is a real problem. And there's a real possibility we could go into stagflation. I did a podcast on that the other day. It's a real possibility. What's stagflation? Stagflation means inflation and a stagnant economy, right? Not all growth and just high oil prices, which is where we were in the 70s. And yeah, the Fed solved the inflation problem, but they also killed the patient. It caused brutal, brutal recessions. Right? Maybe you remember that, maybe you are you're old enough. But put it down below in the comments how that felt if you were around in the 70s. I wasn't. Winston certainly wasn't. So are you still sitting here patiently? Oh, you are very sweet. You're very sweet. Um, so the Fed put is a real thing. It is very powerful, but it has a kill switch. It can be disabled by inflation. Now, if that's making sense for you, write Fed in the chat down below. Uh be good for me to understand, but it's unmaking making sense for you. And if you want to know, well, how do I actually apply this to my portfolio? How do I actually trade? How do I actually spot the winners, you know, some of the things that some of the stocks that I'm tracking here? Which of these should I be in? Should I be in Nvidia or Microsoft or Tesla or you know, AMD or whatever? There is a rule book that Wall Street uses to make those decisions. They don't make it up on the fly, they don't rely on investment bankers to come up with the right decision because we probably wouldn't. Uh, we're not that bright as a as a species, but they give us a rule book. And I learned that rule book, and I'm gonna give you the rule book. It's free. It'll take you about 17 minutes to learn. I know, pretty specific. It was about four hours. I managed to get it under 17 minutes. Watch it. FelixFriends.org slash get free, because my hope is that it's going to get you free. Yeah, it's literally free. So if you want to bugger off, stop this video right now and go watch it. I would be very, very, very pleased uh that you are learning skills rather than just an explanation here. So what is what is force number 2? Well, it's probably the most important one that people don't really think about. Passive investing, index funds, ETFs, right? They are now literally 60% of all the money out there. In 2010, it was 19%. So we went from 19% all the way to 60% in about 15 years. What does that mean? What it means is every two weeks, tens of millions of Americans, every two weeks, tens of millions of Americans get what? They get a paycheck, right? And a percentage of that paycheck auto-deposits into their 401ks, pension accounts, essentially. And the 401k does what? It automatically buys index funds. No thought, no analysis, no, is the market overvalued? Is it the right time? No, it just buys. Buys at all-time highs, it buys in the middle of a panic, it just buys on autopilot. So think of it like this: say you have a bathtub, you know, one of the old ones with the little feet. It's nice if there are animal claws on the bottom of those feet. I always thought that was a rather nice touch. And then you've got a great big faucet, which brings money into it. That's basically it. Money gets put into this bathtub every single week. So when money flows out down here, you know, you get a bit of a sell-off. Fair, true, happens. But the money flowing in never stops. That's what passive money does to the market. It just creates this constant buying pressure. And it isn't just for one case, uh, there are rebalancing from target date funds and all that kind of stuff. We don't need to get into that too much in detail. It's the same concept. So during a sell-off, during a scare, this bathtub essentially cushions the sell-off because that money is still buying. But again, there is a way to break the bathtub, because the whole thing is dependent on one thing, which is employment, that you have a job. If people have jobs, they contribute to a 401ks. Money flows in, everything works smoothly. But if unemployment goes, say, from you know, 4% to say 7% or 8%, because we get a great big R recession, people don't just stop putting money into the 401ks of the same amount. They start selling. They start liquidating retirement accounts to pay for rent and medical bills and just, you know, survive. So the faucet will slow down, and somebody really cracks something into the drain and really makes it a wider escape for money. And there is an even bigger force that's building there. It's it's you boomers. Any boomers watching, put a boomer or bee in the comments down below. You are the largest generation of investors and you are retiring. So you are stopped flipping from buying to selling. So you're going from putting money into that bathtub to actually taking it out, and that's a pretty significant chunk of money. And I warn you again that this assumption that things are going to continue the way they have for the last 15 years is always a mistake. That's one of the things I learned from my Wall Street mentors, guys who worked in banking for decades, is that a playbook that's been around for a long time can be broken quite easily and quite rapidly. And most people aren't prepared for it, but you will be because you will now truly understand the system. You stick around for the next two rules, and then we look at something that's more like how do we implement it. But what it means for the moment is that stocks can be overvalued because passive flows don't care about what's the stock price. They don't give it. You know, I was going to say something rude. Overvalued used to mean something, right? And now overvalued means, well, no one cares. The biggest buyers of stocks are still buying stocks because the index funds keep buying whatever they're buying. And if you imagine the if you imagine the S ⁇ P 500, which is what most of these index funds are buying, is a box. Right? Now, the big stocks, the biggest stocks out there are taking up, you know, stock one, stock two, stock three, stock four, stock five. And I'm talking here Nvidia, Microsoft, Apple, and so on. The top seven stocks are now 40% of the SP. What does that mean? Well, when your 401k buys stocks, where does it put the money? Well, it puts 40% of the money into the top seven stocks, and then it puts the other sort of half into the other 400 stocks. So which stocks get most of the money? The biggest ones. And that's why the Mark 7 stocks keep growing. It is just purely maths, right? Now I'm going to warn you, the third and the fourth force are a little bit more complicated. They're a little bit more technical. And most people will leave the video at this point because they're going, oh, this is a bit technical, I don't really want to know. But if you actually truly care about your financial outcomes and your retirement and your freedom and everything else, maybe just better sleep, I'd encourage you to stick around. I'm going to break it down in a way that, you know, Winston can understand. Okay, I think I'm being rude to Winston. A 12-year-old can understand. And then that might not offend you, but I think generally it's good if we can explain things in a way that 12-year-olds can understand. The third one is algorithms. A massive chunk of the daily buying and selling in the stock market is done by computers. They're usually called CTAs. And how do these guys work? It doesn't actually matter what they're called, to be honest with you. Just think of them as a fund that's run entirely by a computer. When stocks go up, what do they do? They buy. When stocks go down, what do they do? They sell. Don't give a hoot. They just follow the trend. Now you might be thinking, okay, Felix, if they sell when the market drops, does that not make a crash much worse? Which would be a very good question if you're thinking that. Let me know if you're thinking that, but question in the comments. Well, the truth is, it's a little bit more it's a bit more to it. When the market sells off hard, these computers sell, yes, but the selling exhausts itself. Might be days, maybe a couple of weeks, because they only sell what they own. And once the selling is done and stock market does this and then slows down a little bit, they see that and they go, ah, that's stabilization. We are flipping, we are now buying again. And therefore, as the market goes up, they buy faster and then we recover. It's a mechanical, automated, aggressive system. And it creates buying pressure. One algorithm starts buying, the other algorithm sees it and says, Oh, yeah, they're buying, let's buy more, and you get the snowball effect. Now you made it to number three. If you made it to number three, put three in the in the chat. Number four is the thing that used to make my head hurt. And then I got a very, very good mentor. He was an options market maker, and he explained it to me in kind of plain English. So let me do the same for you because this is actually very, very important. And it's the fourth piece of the puzzle. Just think about essentially hedge funds, they hedge their risk. They don't make money out of the stocks going up or down. They make money out of selling you something that you're paying a little bit more for than it costs them to sell it to you. Confusing, I know. Think about it this way. Um, say I buy this pen from Winston, right? And I pay him 90 cents. So I pay Winston 90 cents. And then he's looking at me right now. I'm getting money. And I then sell it to you, and you pay one dollar for it. So how much did I make? I made 10 cents essentially on the difference of price. It's like I'm a trader. That's what these guys do, that's how they make their money. They don't really give a hoot whether the value of this pen subsequently goes up or down, because they have a way of ensuring their portfolio in an automated fashion. And the way that works is that the way that works, and it's counterintuitive, when the market drops, they buy. They don't have to, they have no choice. It's automated. That's the way it functions. So it dampens the extremes and it slows down the sellers. And then last but definitely not least, it's you. Yes, you, you now are about 20% of the daily stock volume, about a quarter of the market. It's actually quite powerful now. And this phrase by the dip is um what's been quite popular, right, since about COVID, because it's worked and people don't remember it not working. And this whole thesis of conviction and you know, diamond hands and all that kind of stuff is actually very, very, very powerful. But, and this is important, when the Middle East stuff got kicked off, Iran, I'm talking about, people got spooked. And investors didn't buy the dip. And everyone was surprised. Like, why not? These guys were meant to be they're meant to be reliable. What happened to you guys? Go buy the freaking dip. They didn't. So, what I'm saying to you again, because something has been happening since, say, COVID, doesn't mean it has to continue. So, briefly here, these are the things you need to watch out for. The things that could break this present forever-upward trend. And the first is debt. The debt spirals out of control. The bond market is very powerful. That sounds a bit obscure and hard to understand and incredibly dull. I shan't bore you to death with it. But when the bond market says we want more money to buy US government debt, maybe we want 5%, maybe we want 6%, maybe we want 7%. That will crash the stock market. Why? Think about it this way: you buy stocks and you're basically hoping it's gonna go up, right? Now, the bond investor mostly just thinks if I can get 6% in the bond market, I don't take any risk because the government's gonna pay me at the end of the day. Why do I want to own stocks? See what I'm saying? So money flows from stocks into bonds the higher these interest rates go. That's the danger. Now, if they're sitting at 2% or 3% or something, then everybody wants to be in stocks because bonds pay you nothing. So watch out for that. The second part is what I call the inflation crap. If the oil prices stay high, if the Middle East tensions continue, we're gonna get massive inflation. Not just at the pump, but everything is made from oil, plastic. If you're taking Manicare medication, I can almost guarantee it's made from oil. Sounds crazy, yes. Food, what you eat. Does it have fertilizer on the soil? Yeah. If it isn't organic, and again, who checks that? I don't know, then it's gonna have fertilizer made of oil on it. Right? It's got trucked to you, used oil. It got flown to you, it used oil, it got wrapped in some plastic, that's oil. You know, I could go on, I shan't bore you. You can't live without oil. So everything goes up. And what happens when you have high inflation? The Fed loses its power. The Fed can't bail out the economy by lowering interest rates because it would cause more inflation. So therefore, the market tax. Now, the other risk, and we've seen this, we've seen some NVIDIA wobbles, is that the top seven stocks, the mag seven, are 40% of the stock market now. So if something happens, if our belief in the AI revolution takes a breather, normally new innovations, this is what happens. Expectations of new innovations, basically, if you have time and then the actual payoff. Of a new innovation, and you can literally go back to any innovation in the last hundred years or so. What happens? This is perceived payoff, right? People think, oh my God, it's gonna be amazing. AI is gonna solve everything, everything will be incredible, be so cheap to make stuff, there'll be robots everywhere, all the cars will be flying, and you know, the world's gonna be a better place. But let's disagree. And then reality kicks in, and it's like, oh, it's actually gonna take a lot longer than we thought. It's a lot longer than we thought, and the stocks crash. And then what happens is that over time, the actual benefit is much, much, much, much greater than people had anticipated, but it takes much longer. So there is this period for every new innovation we've ever seen. This period here where can I get a pen people could possibly see? This period here where we get a market crash. I don't think it's gonna come tomorrow. I'm not saying the conditions for it are you know more fertile than than than than they they have been, but I'm just saying that it's something we've seen with every single innovation. And then we've got you boomers retiring, right? Very selfish. Work till you drop dead. Isn't that the rule? I say here, 45 and retired, I know very annoying. Um, and then of course, there is always the thing that nobody sees coming, the black swan, right? You're gonna see some YouTube videos on that. And it could be a war, it could be a cyber attack, it could be, you know, a loan investment banker who takes risks that he shouldn't have done because he's incentivized to take them. You know how banking works. You get a bonus at the end of the year, and you get some stock options, and they you get them two years later. So your time frame is two years. So if you can create a massive amount of money for the bank, and you think no one's gonna find out that it was a Ponzi in the next two years, you're gonna take that risk. Because you're gonna get massive bonuses, and everyone's gonna love you, and you're gonna buy a mansion in Connecticut, and you're gonna buy Ferraris, and you're gonna have, you know, 19 mistresses, and by the time it collapses, you're retired and no one cares. And no one's really ever gone to jail for being a banker who's taken too much risk. It's the federal bail you're on. So, how do you position yourself? Two scenarios, two strategies. The system holds, stay invested. Again, I'm not a financial advisor, I'm not a registered investment advisor, right? Winston probably uh probably. Winston, are you a registered financial advisor? Winston, come on here, sit down. You're not a registered financial advisor either, are you? No, he says he's not. Um so we don't give financial advice. We just share with you what we think about the market, we share with you education. And again, if you want to get some real hard education, watch the 17-minute video on Wall Street's rules for buying. It'll apply right now and it'll apply in all these scenarios. Felixfriends.org slash get free. Watch for watch for interest rates, watch for what the Fed's doing. That's very important, and watch inflation. That will be my advice here. The second scenario is stuff breaks. So, what what do we do in a scenario like this where we start to see things break? Well, I'm a big fan of hard assets right now, precious metals, commodities, uh, some diversification. You get diversification actually from some of the big tech stocks and fairness, because they sell a lot to like, you know, other countries with monkey currencies, like the you know, Soviet states of Europe and then in those sort of countries. Um, and say Microsoft or Netflix or someone like that, you have a lot of um victims, sorry, customers in places like Europe. And then there are more advanced things. Insurance. You can buy insurance, you can actually insure your portfolio basically for free. It's a little bit more complicated. You'd have to learn how to manage options, and most of you can't be bothered to do that. Uh so you just have to see other people being insured. But honestly, if you do want to learn, please, please, please watch the video down below. That's why we put it in. Um, I like to be very heavily in stocks, but some of my stocks and some of my investments are more defensive. Gold, cash is not really a great place, but some insurance, silver, and some sectors that would benefit from what the heck's going on. So, one of the things we've been in for the last six months or something were oil and gas services. Sounds really quite boring, but we bought them five months before the war started. And then when the war started, woohoo, did we make some money? Actually, not true. We made money. Let me show you this. People don't really believe this, but it's true. Look, you can look it up if you look from October one, 1 October, to when the war started, I think 2026 February or something like that, the SP Let me use a different colour. The SP did 2%. Basically Bagawall. Oil services did about 48% by memory, uh, did 80%. Coal mining did 40%. Lots of sectors, and I could bore you with more pipeline construction, all these kind of guys. These guys did like 20 times what the market did. And we started investing them in them here. Not because I knew there's a war coming, not because I'm any kind of genius, purely because I could see the money flowing into it. And that's the skill you learn if you watch that little video. That's only 17 minutes long. Um, but again, only probably the 1% will actually take action on that one because most people just don't. Sadly. Sadly, why do people not take action? I don't really understand it. Uh you're you you might you're probably different. If you're different, let me know down below, but different. I'm different. Write that in the comments down below. Um now, if that means you identify as a you know moose, um, keep it to yourself. Okay, we don't care. But honestly, the real danger here is not a crash, it's complacency. Thinking it's gonna continue like this till the end of time because it's done this for as long as you can remember. That is the most dangerous place. And I see a lot of people's portfolios sitting there like that. So you need to understand the mechanics and congratulations you now do understand them deeper than probably 90% of people. Stay flexible, stay a little loose. You want to position for both outcomes. And go and watch the 17-minute video that'll explain to you how did we find those stocks on October 1st that then went up a tremendous amount until the war started, without any hindsight, without knowing anything was going to happen in the Middle East. I actually don't watch news, believe it or not, purely on the basis of money flows. You want to learn that? Check out the link down below and you got some value out of this and you think somebody else might share it with a friend or a golden retriever. All the best.