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oh that's real good hello everyone and Welcome to our Channel Penny lesson we talk about everything Finance from tips on making money and proper investing to news about the different economists and situations affecting the global markets the goal of this channel is not only to teach you how to be more financially responsible but also to teach you how to be more aware of global events so why not just sit back and relax while we tell you what's happening in the finance sphere be sure to subscribe to my channel and hit the notification Bell to be constantly updated on my latest videos remember one penny lesson a day keeps being penniless away eliminate this horrible urge to participate in profit making that appears at the end of each significant bubble do whatever it takes to get rid of the spread of losing out it is challenging to resist it has completed all the everyday actions of a Super Bubble and could begin to deflate at any time it requires a protracted bull market which we enjoyed for 11 years the most prolonged period ever it takes a lot of crazy behavior and we've had some of the most incredible insane conduct ever after a bubble it needs to speed up it achieved that at a rate around three times the bull Market's typical rate the NASDAQ increased more than three times as fast as average after covid last but not least a characteristic of the Super Bubble is that in the end the speculative stocks begin to separate and even when the market has an uptick they begin to decline that started at the start of last year the worst of them all the super duper specs began to decline then they began to plummet and fell in one by one approximately 40 percent of all NASDAQ equities are currently down more than 50 percent as of this writing in late December the S and P reached a record high Nothing in life is inevitable but that is just the beginning of the blast when the specs usually increase quite a bit more than the market decreases as the market increases many of the most speculative equities for 2020 were already declining when the s p Rose by 25 last year the global real estate market is highly competitive the bond market shows that bonds are costly and that interest rates are meager but rather than being about the stock market this is primarily an American issue the rest of the world is simply too expensive in the United States it's frequently pricey and generally not very harmful however we have severe overpricing we're in a somewhat dangerous equities bubble therefore there is a good likelihood that Japan the UK and Australia are among the nations with comparatively low prices if they descend in sympathy they will do much more slowly and most likely recover faster the NASDAQ and spax are the leaders of this U.S bubble which is uncannily comparable to the tech bubble of 2000.
the S and P continued to rise as the specs underperformed the entire year of 2000 the S and P may increase to a new high but not specs therefore I believe that the game has begun and will proceed in the manner of two thousand in the past the stock market has detested inflation price earnings ratios are destroyed this time it didn't inflation began in June of last year Ward through the ceiling and the P ratios kept increasing that had never occurred before price earnings ratios or the the Market's price level are determined by two criteria in our model which date back to 1925 profit margins and inflation are two of them they have been quite effective for instance in 2000 the top of the market had meager inflation and profit margins that set new records worldwide despite having record high profit margins today inflation is still very high if the market had followed the conventional war strategy it should have fallen in the middle of last year it didn't the market is signaling that it ignores inflation in the end it takes the fed's word for it if the market picks up on phrases like temporary fleeting and so on it will ruthlessly lower the price earnings ratios in the End the Fed prefers not to offend the administration in politics inflation is debt the ordinary person observes quantifies and exaggerates it but even without hyperbole it's uncomfortable and difficult politically for the voting pattern as a result the administration is trying everything to reduce inflation as a result it will subtly rely on the FED to take action in my opinion they will undoubtedly move to the firmer end of the range they will make every effort to prevent inflation from setting in I'm also confident that we'll be challenging given how scarce labor is right now and how U.S wage rates will rise over the coming few months controlling inflation becomes exceptionally challenging as a result as a result it will be difficult and the FED will need to boost interest rates significantly if you must own American stocks make sure they are of the highest caliber and financially sound because this might always become a financial crisis as they frequently do non-us stocks and quite a few other nations are generally not that awful if the United States leaves and commodities are expensive Emerging Markets could face some overhang issues at best this would be a mixed blessing for them however they were inexpensive and in the end cheapness typically takes precedence over everything else therefore investing heavily in developing markets some of the less expensive established nations would be far better than doing the same with American stocks it appears to be coming to an end I'm attempting to compose a paper about the end of the golden age for the first 20 years of the 21st century everything was different profit margins were on average 30 percent to 35 percent greater and the PE was on average 50 percent to 60 percent higher than it had been for the previous 50 to 60 years everything seemed to work out companies gained significant political sway capital gains taxis were eliminated and corporations took over most Regulatory Agencies they also went through a golden period with recorded the highest profits every industry is becoming more concentrated and the fangs and other big businesses have the potential to become your monopolies I've always believed that you get what you pay for thus I don't believe in price book especially given how drastically distorted the book has become over the past 20 years as an accounting item in the 1990s and 1970s it served as a reasonably reliable proxy but not anymore I've always believed that the most excellent method to Define value is a dividend discount model which projects earnings into the future and discounts them backed by company quality with high quality companies having a lower discount rate than poor companies and what we almost 40 years ago as we investigated the regression rate by type of company on a company specific basis we attempted to ascertain what regression rate they were likely to experience if they usually acted given their unique traits as a result Microsoft was included in our value portfolio we continued to use it from the 1990s until June 1999.
we began to carve it out we had 12 monthly portions and by June 2000 we were done with it using those models you can see that developing markets are affordable they are roughly as cheap as they have been in one or two earlier instances you are aware that they are pretty good and among that group the absolute price appears to be appealing Emerging Markets are very varied 28 nations are included in the index with China accounting for 40 percent the largest economy in the world China is significantly more significant than the United States and is expanding much more quickly they've already widened the GDP deficit by 10 percent this year alone currently we have a minus four percent to plus six percent GDP Gap and they are working hard to close it according to the IMF they will be responsible for nearly a third of global growth then there is India expanding faster than China before the current epidemic is poised to create a massive economy and is interestingly investing in intellectual property Consulting and deploying actual brain power then there are intriguing risky pots it is the future in a world where the developed world's growth rate has been steadily declining for the past 40 years keep yourself clear of trouble make sure you don't invest in expensive markets or equities instead focus on the value and affordability of what you obtain look around for the cheapest countries and the cheapest equities in those countries wow was that news why not ponder it want to know the latest comment if you want more articles like this this video is just one of many videos on my channel that brings you the latest news about the world of global finance and economics so go hit that subscribe button if you don't miss out on content like these if you enjoyed this video please hit the like button thank you for all your support and I'll see you again next time remember one penny lesson a day keeps being penniless away cheers
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