Oh, there is blood in the streets folks. We haven't seen a sell-off like this since like October and September. We had huge drops today. the Dow Jones down more than 1.75 percent, the S P down almost 2.45 but the Nasdaq Oh ouch folks down 3.52 percent.

Just totally getting hammered like a jackrabbit. Our fear index was up over 20 just today alone. And yes, while we as traders love dips because they're great opportunities to snap up good deals, the truth is that it's just as important to understand why the stock market dips so that you can understand how long these dips take. And in this video, we're going to be talking about why this drop is occurring, how long this drop is going to take, and then an action plan on how you can exploit this.

And the only thing that I ask in return is that you hit that ravishing like button and also don't forget to subscribe. Okay, so first, why is the market taking such a big breath? What is the whole crux of this? Well, in a nutshell, it's because the economy is looking too optimistic too quickly. An economy that is too optimistic too quickly is a huge problem because we printed tons of money during the pandemic and have mostly gotten away with it because despite record printing of money, the actual circulation of money in our economy dropped dramatically. People were scared people were losing their jobs, They wanted to keep money stashed away.

They were trying to save a bigger portion of their income because they're worried that they wouldn't have that income a couple months down the line. Personal savings rates increased more than fourfold as the pandemic broke out, and though it has dropped since, it still remains at record highs. and because of the saving on both an institutional and personal level. Well, now we have trillions of dollars waiting on the sidelines and much more to come once we pass the next stimulus.

But Charlie spending is good for companies. Why would spending be bad for companies? Well, spending is good for companies. Well, the problem is that we created a lot of dollars out of thin air, and the pandemic artificially created the situation where tons of people are saving money at a rate that they never had before. That means that you have an unprecedented amount of money going into the economy all at once.

So while inflation was kept down over the last year, if it all goes in at once, you're going to see record levels of inflation. At least that's what investors are really scared of right now. At the end of the day, you can print as much money as you want and you won't get inflation unless it starts circulating. If you have 10 in an economy, and then you print another 10, you double the supply of money, but you hide those new printed dollars under the mattress.

You don't get inflation because it's not moving around, it's not circulating. You still only have 10 circulating in the economy, but if people in mass at the same time feel confident to take those 10 out of the mattress and then go through it in the economy, well, then you get a huge problem. Inflation gets too out of hand. Then the Federal Reserve has to step in and say, okay, we are going to raise interest rates dramatically.

When you raise interest rates, what you're doing is, you're artificially restricting the economy. You're saying this is booming too much. I want it to go down. In order to stem inflation, they'd have to step in and probably overstep in order to really curtail inflation.

And that might be fine if stocks were trading cheaply, But you combine that with stocks being at their record highs and you get a situation where investors are panicking. Stocks love the idea of a strong economy and a strong bounce in the economy, but they don't like the idea of an economy overheating because they're worried about interest rates. The thing is, overall, we didn't see money move around very quickly in the economy during the pandemic, and thus inflation stayed down dramatically despite the Us printing more and more money. But because the inflation rate stayed low and under the Fed's expectations, that meant that they could go and say, okay, we're going to keep interest rates low as well.

We're going to keep lowering them and then we're going to keep them at that floor. That way they're low enough to help us get out of the pandemic and help our economy along. But also, if they're not causing inflation, then there's no harm in the immediate future when you have low interest rates. of course, that means that it's cheaper to take out a loan to buy a house, a car, credit card, consumer debt is cheaper.

even margin to buy stocks is cheaper. but again, just tying this all together. They were able to do this because inflation stayed low during economic contractions. People don't like to spend money that's double.

So during a pandemic where people are worried about their income, people, oh, I'm uncertain. I don't know what's going to happen. I don't want to spend money. I'm going to save more of my income.

And that's why you saw record savings rates. But all that money that was saved is now sitting on the sidelines and people are worried that it's going to come all at once into the economy. and you're going to see record levels of inflation that the Fed can't help but raise interest rates to curtail. And while the Fed has stated over and over again that they won't raise interest rates in the near future, and that inflation isn't an immediate concern, the market still doesn't trust that.

And it doesn't trust that a booming economy wouldn't lead to out-of-hand inflation. Personally, I think the time scale and concern of this right now is completely overblown. and I don't think that this is actually going to take for long. I think this is a short-term panic and you're going to see a bounce, but eventually the printing that we did during the pandemic will catch up to us.

But what is the mechanism that made all this happen? Like why did this start People Just all of a sudden decided that interest rates were going to go up. That all this stuff is going to be a problem. Why didn't they decide this two weeks ago? Well, the mechanism is bond rates. When long-term bond yields are rising.

These are seen as an indicator of where the market sees interest rates going. Because if you have a 10-year bond rate and it's starting to pick up, they're like, okay, well, it looks like the market is factoring in a lot of inflation down the line and that creates sort of a self-fulfilling prophecy where more people are worried about inflation and intervention in the market. Funny thing is, we made videos back at the beginning of the pandemic talking about the Fed's policies and how they're going to be lowering interest rates which is the reverse of what's happening now. And the market didn't like that either because they're like oh my god, they're lowering interest rates.

This is going to get real real bad. They must think we're in for a huge sheet show Thing is these fears don't actually have to be correct. If enough people think they're correct, then it'll become a self-fulfilling prophecy and you'll see a huge sell-off. So this is sort of creating this whole environment that we're in.

and you're also seeing a little bit of cycling from tech into other sectors because people, like I said, they're like, oh, inflation concerns my money might be better off in recovery place and that's why we cover all the different plays on this channel. But we've been here many, many times. I've come on here so many times. I've made so many: why the market drop today or why the market's correcting videos.

We've all been together for many different market cycles and they always pass and they always give us many good opportunities. Okay, so the next question is, then, well, Charlie is the correction over or are we in for a bigger storm? First off, my thought process is, hopefully we get more cooling off. I'm a huge proponent of the market taking frequent and regular breaths. Why? Because it allows us to buy the dips frequently getting good deals and it takes away a lot of the tension that would come with a much much stronger, all-at-once sell-off What we don't want is a market that just never takes a breath and then you get like a 70 sell-off What we want are frequent 10 to 20 dips, then bounces back within a reasonable time span.

That way people that are interested in getting a good deal can go and get a good deal and then ride that market cycle. So hopefully we get some more selling off. But in terms of what I actually think is going to happen, well, obviously we aren't sidekicks and I don't have a crystal ball. But let me just raise a few points if you look at the context of the chart.

on the last 180 days, well, we've seen maybe 10 panics, and while this latest one wasn't extremely out of the ordinary, even in the last 180 days, this was the deepest and it broke even below the previous panic's low. And I think the worrisome thing here is that it was a little bit premeditated. We had some days of cooling off, and then we had an acceleration downward. Yeah, that's something that's a little bit freaky to see because it's like, hey, the market was feeling out of correction and then it decided to just go ahead and do it.

But when you break out the year chart on this context, what we have seen is really just a speckle, a speckle of a push back on an insane year-long run. We had a much worse market freak out back in September and October, and the heat was turned up a lot a lot hotter during those periods. A lot of the plays that we talked about were down, like drastic, drastic amounts in September and October. A lot of the people that were interested in the stock market during the early days of the coveted recovery because everything was going up and up and up.

A lot of them quit then. and if you look at all the stock trading youtube channels including mine, all of the views dove 70 Because when everything's selling off, people are like, hey, wait a second. I don't actually like the stock market. It sells off.

Sometimes I don't want it to sell off, I just want it to go up every day. But the truth is, the stock market isn't easy money, so you always have to have those cycles. But even though September and October sell-offs, those were really nothing. If you pull up the three-year period, this is really just a very small breath in comparison to how much we're up, and despite many other examples in the last year of corrections that were even more than this one, well, they too faded away into the extreme uptrend.

Obviously, there's a lot of precedent for the market to crash even more. But the point is that if you thought that the market was going to crash every time it sold off, you would have been wrong, because 90 of the time it didn't actually more than 90 in the last 20 years. There's only like a couple instances where you had a sustained sell-off, and all the other times it recovered very quickly. And the bigger instances usually in recessions, the dot-com bubble 2008, and uh, even covet.

The covet crashed to a little extent. Those took longer to recover, but they all recovered. especially the coven one. that one recovered real fast.

Does that mean we'll never have a crash that results in equities being 50 down and takes years and years and years to recover? Obviously not. That could always happen, but more often than not that doesn't happen. So my point is, folks, don't be not worried about a crash. A crash is inevitable at some point, but it is not inevitable at every point.

And if you look throughout history, if you buy good plays at good prices, you can write the strength during the crash, get a good entry price, and then you find almost every single dip during the last couple of years would have been very profitable for you. Does that mean that it will continue to be profitable? No. At some point you're going to get a crash that is more sustaining a bigger picture. Some of you guys are looking at me and you're like, well, yeah, I see that the overall market's only down a couple percent.

I see that tech is only down 3.54 and like 8 on the week. But some of the growth stocks that everybody likes, they're down huge. So you're probably thinking if I don't know if the market's going to crash, how do I decide whether it makes sense to buy the dip now or buy the dip if it keeps dipping? Well, I think at the end of the day, it's a balancing act. You want to make sure that you're buying stocks that you feel are undervalued in any market condition.

So during bull markets I told you guys, make sure that you value things and don't go overboard with evaluations. Let me give an example. Let's say that you have a random stock. We'll call this the Charlie Stock.

Let's say that you think Charlie stock is worth 100 and then it dips to 50 and you're like, okay, well I'm going to buy the dip because this is worth 100 and you buy it at 50 and then it goes to 40.. well, you still got a good deal at 50. it's just that now it's cheaper because the market panicked more. So you buy it at 40, you average down, and then eventually when it hits your price target, you got a great deal at both 50 and 40..

That being said, if you're playing with high growth stocks, you're gonna have to deal with a lot of pullbacks. That's the nature of playing with growth stocks. You have that high potential for reward, but you also have that volatility and you have to stomach it. You have to make sure that you've done your due diligence so that you don't panic, sell, or that you have the correct strategy to employ and actually take advantage of these.

Sure, you always have to have reasonable expectations and understand that at some point these are going to take longer to come back. but if you're buying them at good deals, you have a clear plan. You shouldn't have to worry too much. I think the bigger difficulty is deciding if you want to take long-term trades or short-term trades.

If you're taking short-term trades, you're doing more day trading swing trading. We have a large focus on that as well. During crashes and volatility, you focus on plays like Uv Uvxy. We talked about this on Sunday and Monday.

I believe. when fear goes up, you buy Uvxy. when fear goes down, you buy its inverse Svxy. Anyways, folks, if you have any questions, feel free to reach out to us below or join us in zip trader circle wondering what broker to trade these stocks on.

We'd like to send new traders over to Weeble. A lot of the big moves happen in the pre-market in the after hours. so if you're not trading on Weeble or another broker that has pre-market and after hours trading, well, you're going to be left in the lurch. Which that's not good.

You'll get two free stocks if you sign up with Weeble below. If you'd like to learn how to trade, we do offer Ziptraderu. Ziptraderu will give you everything you need to know to learn how to trade, including our price targets, our daily morning briefing, our step-by-step lessons, and my ravishing face. Which I think it's all about my ravishing face.

Am I right? I'm not right. But anyways, folks that caps off the video, I'll see you in the next one.