Today we’re discussing The Everything Bubble, why stocks and real estate are reaching all time highs, and how to invest in 2021 – Enjoy! Add me on Instagram: GPStephan
When this began: March 15th, 2020.
This was the day the Federal Reserve lowered their Benchmark Interest rates down to 0% in an effort to boost the economy. But there were unintended consequences of doing this:
Now, this benefits the stock market in two completely different ways – one for the business itself, and two…for the investor. Businesses are now able to borrow money at an incredibly affordable rate, which allows them to re-invest BACK into their own long term growth with very little risk. Investors are able to borrow more money to invest, and that’s a big push of leveraged money into the stock market that pushes prices higher. The Stimulus Package also gives more optimism for an opening economy to get back to normal.
When interest rates were reduced down to almost 0%, it fueled a HOME-BUYING SHOPPING SPREE because – as mortgages rates drop – the amount of home you can afford goes UP. A shortage of inventory also boosted prices even further, mixed in with mortgage forbearance that held some homeowners from selling.
BITCOIN just recently hit ITS BRAND NEW ALL TIME HIGH at the EXACT SAME TIME, pushing past a $1 trillion dollar market cap…and hitting $60,000 a few days ago.Trading cards are flying off the shelves, Pokemon cards keep getting more expensive, luxury car sales are booming….and, at this point, it’s almost like wealth investors are SO FLUSH WITH CASH, that they’re looking for ANYWHERE THEY CAN TO POSSIBLY STORE IT.
In terms of The Everything Bubble:
Pretty much, every single year…for almost 20 years….people have been calling for “The Everything Bubble” to finally pop…and, if you had listened to this back when these talks first started surfacing…you would have missed out on the best bull market, ever, in history.
The reality is – if you believe in something strong enough, you WILL find evidence to support that claim. If you believe we’re in a stock market bubble, guaranteed you can find data to back it up – if you believe we’re UNDERVALUED and will continue going up higher, also guaranteed you can find metrics to that prove that to be right. As for what’s REALLY going to happen…that’s yet to be seen…but, one thing is absolutely for sure: no one know’s what’s going to happen, there are too many variables that we simply can’t plan ahead of time for…and, instead, it’s best not to wait for things that may or may not happen.
Instead, I take the approach that – more often than not, the market goes up more than it goes down. If it does go down, I’ll make sure to keep some extra cash on hand to hold me over, I’ll keep buying in – and I’ll plan to hold through it. I’ll make sure I diversify as much as I can, and that’s probably the best approach I can take. I won’t time everything correctly, but I won’t miss out on bull markets, either…and long term, I’ll average into the markets.
So, whether or not we’re in a bubble is somewhat pointless…if we ARE, the FED has the power to keep it going indefinitely. If we’re NOT…then I’m better off investing consistently, regardless of where the market is. That’s not to say you should be completely oblivious to what you’re buying…but, be reasonable, keep an emergency fund, buy consistently, and that’s the best we can do….as well as smash the like button for the YouTube algorithm.
*Some of the links and other products that appear on this video are from companies which Graham Stephan will earn an affiliate commission or referral bonus. Graham Stephan is part of an affiliate network and receives compensation for sending traffic to partner sites. The content in this video is accurate as of the posting date. Some of the offers mentioned may no longer be available.
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