Okay folks, so in this short video, I want to explain whether or not it makes sense to move your money out of this market immediately. As you know, my goal in all of our videos has always been to share data, my opinion on that data, and my overall outlook in hopes that you'll formulate your own opinion and will be better off because of it. Whether or not you agree with what I say in this video, I hope that I'm able to achieve that goal. So first, why even ask the question? Why even ask that dirty s' word? the cell word? Well, in a few sentences for folks who haven't been tuning in for a while, while the reason it makes sense, it has made sense to ask that dreaded cell question is because the Fed's low interest rate policy has pumped up multiples on company earnings to insane highs due to 40 years of lowering interest rates and a couple decades of unprecedented asset purchases At the same time, where fiscal stimulus largely from coveted spending programs passed in the last couple of years has pumped up the earnings on these same companies to all-time highs at an all-time record pace.

But due to four decade high inflation and the ending of these coveted spending programs, well, unfortunately the reckoning has come and now the Fed is attempting to drain the vast seas of capital. So depending on how stubborn inflation is and how far the Fed has to go in reaction to that inflation, well, the sell-off may barely have even begun. and unfortunately, this is already a statistically significant situation. This is the worst first half year since 1970, the last time that we had similar problems, and there is no way to know for certain when the Fed is going to reverse policy or how far this is going to go because even the Fed themselves have admitted as much and they've already changed course and policy trajectory several times.

So that is why this is a legitimate question to ask. And here's another question to ask yourself when looking at the overall context. So on January 24th, a couple weeks after the all-time high was hit, I made a video titled this Is Where We Bought Them and I presented three possible scenarios for where a bottom would be based on data that we had available to us at that time. Now, each of my scenarios projected an economic cooldown, an earnings recession, or at least a rapid earnings contraction, but had different inflationary trends and different Fed reactions which dictated where the market would bottom and then rally from.

I'm going to gloss over each of these scenarios: the best case scenario, the mid case scenario, and the worst case scenario, and I want you to ask yourself which one does it sound like we're most likely in? The best case scenario I had was earnings guidance and then actual growth slowed dramatically in Q1 Q2, and Q3 supply chains come under control and excess inventory fills the market year over year. Growth looks terrible, but supply chain healing and lower consumer demand causes inflationary pressures to drop to a normalized range that the Fed can stomach. The Fed is then satisfied so it doesn't have to raise rates as much, and all of a sudden you can eventually get a pause and maybe even a reverse. of course, boom.

By late Q3 or Q4 of 2022, you get a massive bounce. Mid-case scenario was basically the same thing, but inflation was a lot more stubborn and persistent and entrenched. The economy slows dramatically, companies have a widespread earnings contraction, but these problems last for longer and inflation stays stubborn throughout most of the summer and then towards the end of the year. But then as Q4 rolls around or even Q1 of 2023, all of a sudden, you finally see inflation picking down and the Fed puts its foot on the brake and eventually most likely reverses policy to be a little bit more easy.

This results in a bottom sometime at the end of 2022 or early 2023, and then a massive bull rally. Now here is the big bad boy. My worst case scenario at the time was earnings guidance, and the actual growth slowed dramatically dramatically. In Q1 Through Q3, economic growth drops year over year and looks horrible.

Horrible. Recessionary contractionary at minimum, companies slow customer outreach and hiring drops off heavily as they preserve capital. Meanwhile, and this is key essential, supply chain issues reaccelerate. So back then we were told, hey, supply chains were going to get significantly better throughout the rest of the year.

This was the Fed's policy trajectory. This was Goldman Sachs. This was almost all of the major banks. Okay, well, hey, supply chains are going to get much better throughout the year.

In this worst case scenario, supply chains actually get even worse. and despite lower consumer demand and perhaps cheaper imports because the Us Dollar is getting devalued less quickly than the other currencies. Well, despite all those things, inflation continues to prevail and continues to get out of control by mid-year at which case the Fed now is in a situation where it has to bludgeon the economy at the same time it's already doing poorly. This likely would lead to a substantial increase in unemployment and further exaggeration of issues in consumer demand.

Now, the situation we were in in January was already looking back, but the possible causes to tip this over into a worst case scenario were and included new variant surges, Ukraine invasion, anything that causes some sort of supply chain devastation that further destroys the supply chain and makes it so that even if demand goes down, you still get stubborn pricing pressures. Okay, so now as of today we have started Q3. Which scenario of the three do you think that we're most likely in right now? Well, we've started the slowdowns and got its downgrades. Companies the last eight weeks, especially have been slowing their customer outreach and hiring has been dropping off heavily As they preserve capital.

You're seeing companies say I don't want to invest in trying to advertise in this economy to get customers that have like no money to spend on anything that's not gas related. You're seeing companies say I don't want to invest in expanding my hiring in a situation where we're going into a massive, massive tightening cycle. I don't want to invest in that. This is ridiculous.

Profit margins are getting crunched already. I'm not going to invest in growing more when I can't even really make much money with what I'm doing now. Companies trying to preserve capital one hundred percent. Even Tesla has been trying to preserve capital.

They just can their damn autopilot team. Meanwhile, supply chain issues, of course, are still accelerating and getting far worse. Consumer demand has just barely started slowing if you adjust for inflation, and by the time the Fed has to actually bludgeon the economy, it's going to already be doing very, very poorly. And the Fed is just going to be accelerating that trend.

Obviously, we got surges in China causing massive lockdowns in the second largest economy. We got the Ukraine invasion destroying the supply chain for dozens of globally important commodities, and then we have a bunch of doofuses that run western countries saying basically, you know what we're going to stand up and we're not going to produce any more of these commodities To fix this problem, Let's just keep paying increased prices. So now in my view, we are in this worst case scenario bucket and we're deep in it. We're deep in this bucket and there's no shovel and we're like these little miniature gnomes that are just drowning in a bucket.

Folks, if you haven't been tuning in and you want a detailed breakdown of my thought process on this market and the data that we're seeing, that leads me to this conclusion: Check out any of the videos that I made in the last 14 days. The more fire that is in the thumbnail, the more dire the situation is. Okay, Great. So that begs the question of this video.

If we are in this weird middle ground where we are essentially barreling towards an economic catastrophe and the market is simply waiting for the Fed to reverse course for the market to bottom and then eventually bounce, well, what the hell do you do with your capital right now? If the Fed can reverse course any time between the next couple of quarters to the next couple of years, there's certainly dire implications to that and huge differences in result. So again, the question is, what do you do with your capital during this kind of market environment? Common logic says buy when there's fear in the street and sell when there's fear in the sheets. But the truth is that just blindly buying dips and having a black and white strategy rarely makes any sense unless you have a very, very long term dimerizing. So I want to give you my investment rules and at least the way that I'm looking at it, You have to understand that everybody that's watching this video is going to have a different perspective, has different goals, has a different situation, different cost, entry prices, so on, and so forth.

So these are just my investment rules and my opinion on what to do in the situation. Number One: Sell every dollar of investments that you need within the next 16 to 24 months. And if you need to do this, make sure to start with the lowest conviction stocks and then work your way through stats show again and again that retail investors invest with money that they can't afford to lose and need within the next couple of months. And thus when you get a big market correction or a crash, they make very very emotional decisions.

They sell at the worst possible time, they don't commit to their original plan and so forth. So so my rule with this is do Not let that happen to you If you need money in the next 16 to 24 months. It makes sense to sell the hell out. Number two, close out 100 of your margin positions.

I am not a fan of investing for the long term on margin. it just does not make sense. Margin is fine for short-term traders if they have the capital elsewhere and they're using it for allocation purposes or they need it for short selling or some sort of options maneuver. That's totally fine if you do it responsibly.

Point is, though, when it comes down to a recession, a prolonged recession, and a situation like refacing, I don't believe there is a single stretch of room for any sort of long-term investment margin position. Most common one I see is with Tesla. I have so many stores of people who have leveraged themselves in long-term positions on Tesla that your head would spin. I think Tesla's going to be great over the long, long long term, but it can go down a lot more before that happens and you can get sold out way before they even open up another factory.

Number three: Examine the original plan and reason you bought a stock in the first place. If you bought a stock because you believed in the company for the long term and you liked the price when you bought it, Is there anything that is going to stop that company from fulfilling your original plan? If not, you owe it to yourself to say why am I not going to follow through on what I told myself I was going to do Ask yourself the question: Is my company going to fulfill my original plan? Even folks who bought Amazon back before 2000 had to ask this question if they bought Amazon because they were bullish on the e-commerce space and thought Amazon would be a leader within it. Well, Amazon was down 95 and half of the analysts were saying that it was gonna go bankrupt. Number Four: Sell every investment that does not have the capital to survive a prolonged procession.

I said something similar to this a couple weeks ago and a lot of folks said in the comment section charlie, that's terrible advice. You should always recommend diamond handing folks. Diamond handing only works if you're holding a diamond. If you're holding poop from your neighbor's beagle, that's not going to end Pretty if your company cannot survive a one-year recession minimum with the capital they have on their balance sheet, the expenses, the financing they can get, or the income they can generate during a recession.

Well, this rule says sell it in ziptraderu. We have a full price target list of all of our high conviction long-term plants. Every single one of them. From the high Conviction mega Caps to the smaller growth stocks, every single one of them has enough capital to make it through a foreseeable recession.

If they're careful, we've downgraded or completely removed conviction in any stock that has not made the cut. Number Five dollar cost average slowly into stocks that are able to grow despite the recession. This is important if you're in a company that has its progress halted on a business scale because of a recession, and it's surviving on mostly it's cash reserves alone. Okay, fine, if it can survive the recession with the cash reserves and their expense management fine.

But if it is just surviving on cash reserves alone and you don't have tip top conviction in it, I would not buy more. I would just hold it in a recession. It is easy to separate the best from the rest because the best of the best companies are going to continue to grow during the recession and continue to make progress. maybe not quarter over quarter, but definitely when you look at the overall trend.

So if your high conviction stock is showing proof of concept and is making progress during a recession, I would say dollar cost average into it throughout the recession. If it's simply just surviving, I would say just hold it. Don't add more because this could be very very prolonged. Number Six, Buy the dip more aggressively on the biggest red days.

For companies that you have the highest conviction in your top tier favorite three or four names that you believe in more than you believe in gravity in bear markets, these stocks are your best friends. You want to make sure that you're buying them on their most aggressive down days and people are in total fear mode over them and then finally accept that at the end of the day timing is impossible. We can look at whatever data we want we could project. We can go and do a couple cartwheels, but timing is still going to be impossible, right? Like I've said, the Fed policy trajectory itself dictates a lot of what the market does and the people at the Fed.

They don't even know what they're going to do in the future. So when it comes to your investments, the only thing that you can do is your best and look at what has worked historically and try to make logical decisions Based on that. Investing in the stock market is always going to be to some extent a leap of faith and optimism. Just because the stock market went up the last 100 years, just because the U.s market did very very well and the economy did very, very well over the last 100 years, doesn't mean the next 100 years is going to be fantastic, Doesn't even mean the next 10 years is going to be fantastic.

But if you are somebody who is optimistic in the future of this stock market, this economy, and really the global economy too, then I think it is reasonable to say that over time if you pick the right assets, you're gonna make money or you will just simply own nothing and be happy. Now, what about short-term trades? Charlie, short-term trades are, of course less market-dependent But here's the thing. in a market like this: short-term trades are even more cut throat than usual, so you need to make a entry and exit plan with an assumption that you will need a fast exit, an Fda approval, an earnings expectation beat, a buyout rumor, a squeezer, a trend trade like a Monkey Pox trade or a Roe v Wade contraceptive trend trade, some sort of cancellation of dilution, Whatever the catalyst is. Whatever the catalyst is, you have to operate under the assumption that the cycle is going to last a lot shorter than it usually does.

We've seen so many catalysts like those that have run 100 plus percent in the last couple of months alone, and what happens afterwards? Every single time they drop and they drop dramatically. Sometimes they eat up the entire catalyst. So you have to number one, make a plan with an assumption that you will need a fast exit. Look at where the door is before you enter the damn position.

You need to be able to take profits quickly and cut losses even quicker. Charlie. What does that mean in practice? Well, you have to protect yourself. Your take profit points should be lower than they usually are.

Your stop losses or exit points should be higher than they usually are. Charlie That sounds boring. It's just too protective. I don't like using protection.

You just don't feel the same rush. Charlie. I trust myself to pull out when the time comes. Now folks, you need to have an exit plan and it needs to be even more careful these days in more ways than one.

And then number four. You need to be choosy. if the setup does not scream, trade Me. If it's not such an apparent setup that just screams at you and jumps off the screen, Avoid it.

We have tons of content in Ziptraderu and on the channel that talks about elevating and deprecating factors that could lead you to take a position or lead you to avoid a position. The point is, be spoiled with your setups. You know it's actually pretty funny, but there are numerous studies dating back decades that show that women make significantly better traitors than men. Why is that? Well, it's because women are more choosy.

They have no problems saying no because they have standards they are not throwing themselves at every opportunity they see. They are not overconfident, and their pullout game is much stronger. With men, it is the complete opposite. Now, I don't know if there are other areas in life where that sounds like a familiar trend, but the point is, for the guys watching this, there's a lot that can be learned from the female traders and our female viewers.

Anyways, folks that caps off the video, have a great Fourth of July weekend. The market is closed on Monday. If you want to get 50 off Ziptrader you and get lifetime access for the reduced one-time fee, make sure to type in coupon code America 50 before then. And if you want up to 10 free stocks plus one share of Lucid when you sign up and deposit with Moomoo a great trading app down below.

make sure to check that out as well. Pretty good deal folks. I like free stocks even though the stocks may lose half their value the way this market's headed. Have a good one folks and I'll see you in the next video.