hey everybody welcome to my channel and welcome back to my subscribers this is where we talk about money saving and turning your hard-earned cash into wealth building assets this is bald guy money i am bald guy let's talk money today our topic is the impending stock market crash i hear everybody talking about especially this guy somebody who really inspired me in my 20s robert kiyosaki he's really calling for a major crash and what we're going to talk about is simple i'm going to talk about some hard


truths regarding the stock market some key metrics as well as where the smart money is going to go to seek refuge once the crash happens or as i call it a correction is this financial advice i hope you all said no because no it's not financial advice this is educational if anything and no matter what you're invested in you absolutely need to watch this video to the very end and as a favor to me please hit the like button show some support for the channel it really helps me reach more people the


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about positivity and lifting people up okay so if you saw my last video i talked about a real deal on the stock market and that is alibaba go back and check it out if you haven't seen it yet but in that video i showed some pretty sobering statistics about the stock market that motivated me to make this video because i really think you all need to be aware of what is going to happen and that specifically covered the the p e ratio analysis that i did of the market versus the average since 1950


and that analysis actually made me dig down deeper into a few other metrics and i'm going to share that all with you in this video so as a reminder for you all the pe ratio is calculated by dividing the price per share by the annual earnings per share and what this basically shows is how investors value a company versus their earnings so a high p e ratio usually indicates a company is overvalued and the reverse is true a low p e ratio usually indicates that a stock price is low relative to its earnings and there


are exceptions but really very few and and this is a basic indicator that you know anybody who's entry level into investing probably should learn a bit about now uh now i want to show you this uh please bring up the first visual okay so when benchmarking historic performance versus where we are today we see that the p e ratio of the s p 500 is currently 71 percent higher today versus its average since 1950. and this is a major concern for me because of the way stock market cycles have performed over the last 20 years as


a result of the way bureaucrats are managing the world economy fueling major booms which are followed by major busts now there's a lot to unpack there but let's start from what the consequences are first and then i will explain why it's happening so let's pull up the next image so when people look at the stock market they see this an amazing run-up that has paid for champagne-fueled wild nights on wall street as well as many retirement funds if you look a bit closer though you will


also see a couple pretty strong market corrections caused by the dot-com boom at the turn of the century and then the housing bubble in 2008 and you may wonder we have been running up the stock market pretty high we have to be overdue for a correction right and my answer to that is an unequivocal yes but how close we are to experiencing the correction and uh will it be the world's largest correction as robert kiyosaki says i have the answers right here so pull up the next graphic okay here you can see the average p e ratio


of the market since its inception why i like looking at this metric is because it accounts better for inflation as rising prices should partially offset a run up in stock price better illustrating how over or undervalued a company is or in this case the s p 500 when we take the 2028 crashes into consideration we can see here major spikes in the market's p e ratio which were unsustainable and resulted in the crashes we know today but what's worth looking at is that today's average p e ratio is


much lower than that of the previous crashes and i have a theory as to why while making this video i went onto the google machine and typed in record earnings and the results i got were absolutely stunning do it yourself really because you'll be shocked at just how many companies are experiencing either record high profits record high earnings it was really astounding and despite a massive run-up in the stock market let's pull up the next graph we're not yet seeing those numbers translate into insane p e ratios because


of how much prices and earnings themselves are running up due to what i see as unprecedented levels of inflation and that is directly caused by the massive increase in the money supply we are experiencing right now so what are the implications of that here they are number one the stock market is overvalued right now nobody can really argue that as all experts agree that there is a correction event coming because of the high value of the stock market number two the stock market at least from my point of view is not as


overvalued as it was in 2000 or in 2008 and the reason for that is because of the high inflation we are experiencing right now which is driving up the costs of goods and services meaning that company valuations although high are somehow more or less justified because of the increased earnings they're experiencing driven by inflation now again i'm not saying that it's 100 justified but it's more justified than they were for example in 2000 or 2008. the third point is that from my point of


view as a result of that analysis we can expect about a 25 pullback when the market finally crashes or as i call it corrects and the last point is that i don't expect the biggest crash in history as robert kiyosaki is expecting because the inflation rate has been so high recently that again the valuations of the company although not fully justified are more justifiable than they were in 2000 or 2008 and just to be perfectly transparent on that third assumption that i made that the stock market will pull back


approximately 25 well i i just want to show you exactly why i'm thinking that so pull up this chart okay so as you can see before the massive run up that happened basically let's call it during c19 times we had um a pretty healthy what i would say p e ratio of the on the market of about 25 and my assumption is that that is probably a good equilibrium point that we will pull back to and that is where from 33.54 if we pull back to the 25 level that will result in about a 25 correction in the price of stocks


so now that we know what i think is going to happen let's briefly cover why it's happening and what to expect once the crash or correction actually happens so the first thing i want to highlight is that for major banking institutions the price of borrowing money is basically zero it's free money and this is a major problem that is contributing to the situation we have right now pull up the chart on the federal fund rate okay there it is so as you can see the federal fund rate is and has been near zero


since about 2008 since the housing bubble but we know there's no such thing as a free lunch and the major consequence that this particular policy is having on the market is that people are not able to earn money anymore on savings accounts or on bonds specifically treasury bonds which actually used to be a pretty good bet if you wanted to invest your money somewhere safe in order to beat inflation and basically those things don't exist anymore so what are people forced to do as a result well of course they're


forced to invest in the stock market and they park their money in the stock market seeking returns that can beat inflation now are low interest rates forcing people to invest in the stock market is that a policy that's done by design to push money into the stock market well i personally tend to think it is considering the fact that wall street has a very big lobby in washington however i don't have any proof to back that up so what i can say with absolute confidence is whether or not it's intentional it is


100 leading to this boom and bust cycle that i was mentioning earlier and that we've basically been experiencing since 2000 and and when the bust happens and we've seen this time and again the smart investors seek what we call safe havens and i've mentioned this before but the two assets i'm really counting on to benefit from this crash or correction are gold and bitcoin and i think a lot of investors will liquidate at least portions of their investments and equities and put their money into gold


and bitcoin uh and with the equity uh the equities market valued at over basically 100 trillion dollars that means that there's going to be a lot of money seeking refuge in relatively smaller markets uh bitcoin being about a trillion dollar market cap and gold being about a 10 trillion dollar market cap and when all of that money and i'm not saying it's going to be the whole value of the of of the hundreds of trillions of dollars that are invested in equities but it is going to be a significant


amount and what i expect is that the prices of those two things are going to increase they're going to increase very sharply and it's going to happen within a very short amount of time so basically what i really want to get out and get this message across is that this is this whole video this is a message basically for index investors people who buy the s p 500 index i really just want to say do some research on this topic make sure you're hedged against the coming correction and make sure you're taking advantage of


opportunities out there specifically uh looking into the potential of increases in the price of gold or bitcoin in addition to that even if it's not buying those two particular things maybe parking some money on the side taking some profits now and being able to take advantage of better prices that are probably going to be right around the corner once the correction happens that's it for me please check in the description for the links to all my data sources please drop me a like and a comment if you have


something to say you can always count on me to respond to your comments and as always i wish you happiness i wish you all success i do hope to see you in the next one ciao