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  262. Good video on the theory and technical aspects of interest rate hikes. However, the rate hike is only part of the story and I would argue that the bigger factors affecting the economy, and as a result the markets, are inflation and the war in Ukraine. My takes: 1) The most recent US CPI inflation rate was 8.5% far above the Fed's 2% target. Clearly, the Fed is already far behind the curve on this inflationary cycle and one thing you didn't discuss was the velocity of the rate hikes. Sure, if the Fed only increases rates by .25% at a time then the impact on the market will be less pronounced than if they increased rates at .50% or higher. But then, what happens if the Fed continues dragging its feet and inflation keeps rising? 2) The war in Ukraine is adding more inflationary pressure globally on food and energy prices. Central banks might not be able to mitigate inflation with traditional tools which might lead to a recessionary period regardless of what the central banks do. The question might not be whether we enter an economic downturn but whether we have a crash landing or a soft landing. 3) I believe much of the middle class is being squeezed financially as much as they can handle due to insanely high (overvalued?) housing costs and inflation. Let's face it, a large portion of middle class people can no longer afford to buy a house because housing costs over the past twenty years have far outpaced wages. This means that millions of middle class people are one emergency away from a financial catastrophe which could bring down the entire house of cards down similar to 2008. For perspective, there were 2.3 million foreclosures in 2008. 4) Let's not forget that part of the stock market's gains over the last few years, at least in the USA, are due to Trump's efforts to get re-elected. Remember that Trump passed one of the most comprehensive corporate tax breaks in decades and pressured the Fed to lower rates in 2019 because Trump is a "low interest rate guy." We could argue about how much influence these policies had on the market but its undeniable that they contributed to higher market valuations. 5) During the pandemic we saw governments dump trillions of dollars into the economy. The effect was that the (US) market doubled from 2020 to 2021. If that doesn't scream overvaluation then remember that during the pandemic consumer spending and commercial activity dropped dramatically. In fact, in the US we had two consecutive quarters with negative GDP growth. Some industries got decimated and who knows many many thousands of businesses closed their doors permanently. The Fed estimates that 200 thousand small businesses in the US closed permanently due to the pandemic but the real number likely much higher. In conclusion, I think its very possible that we're sitting on the largest bubble we've experienced since at least 2008. It only takes one segment of the market to pull down the house of cards that the market is currently sitting on. In one scenario, perhaps, we don't have a full blown recession similar to 2008. However, I think its very likely that the (US) market is still very much overvalued and we will enter a recessionary period of some sort within the next 12 months. In pre pandemic 2020 the S&P 500 was at 3,380. Today, almost exactly two years later the S&P500 is at 4,400. This means that the stock market experienced a 33% gain in the middle of a pandemic while commercial activity and consumer spending took a massive nosedive. I would ask how is that possible but we already know the answer. Lastly, let's be honest, if the US goes into a recession we're likely to bring down much of the first world with us due to our global economic influence. We'll see where all this leads but I wouldn't be too optimistic about market performance over the next couple of years.
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  509.  @mr16325  . Then you clearly don't understand what money represents or how its made. Imagine you were a god and you were responsible for a group of people. Then you decide to facilitate trade and commerce for your people. You give everyone equal amounts of money, a fixed amount of money (supply) because, as a god, they are all equal to you. Over time, some people find ways to con others or use loopholes in the system to amass wealth. The problem is that the amount of money is fixed. There aren't extra coins to be issued out. Now, you have poverty because "nice" rich people prefer a system in which they can horde money at the expense of the poor. It doesn't end there of course. Since the rich now have more money than they can spend they decide its a good idea to lend some of that money to the poor but the poor have to pay back with interest. What is interest you ask? Its money that doesn't exist because its outside of the money supply that you, as a god, created. So, essentially, the rich are not only hoarding money but they are ensuring that the poor stay poor because they have to come up with money that doesn't exist in the real world to pay off interest. This is called capitalism and shows that money is just a form of ownership of labor and slavery. But hey, I'm sure your rich friends are the nicest people on earth. After all, why would they not be happy when they can use their money to command others to do anything they want? You welcome for the lesson and tell your rich friends I said hi!
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  716.  @Krawna  . I see. So the top 1% are allowed to take gap years, extended breaks from their careers, and endless vacations while the rest of us support them through our labor but we can't do the same? In fact , you suggest that we should be proud to work endless hours in meaningless jobs. You seem to know a lot. Let me ask you. What is money? Has it ever occurred to you that money is just ownership of labor? Billionaires and millionaires don't own money. They own the labor they can purchase with their money. Billionaires and millionaires are made on the backs of the masses that run their companies but we can't strive to have a balanced life and must dedicate our lives to making the rich even more rich? The fact that the top 1% keep us (the middle class) working 50+ hours a week if we want to save enough pennies to retire at 70+ years old should make you sick to your stomach. But instead, you defend the idea that we (the middle class) should be debt slaves through our entire lives in the form of car loans, mortgages, school loans, medical bills, etc... all so that by the time we retire we can have a small piece of land (if we're lucky) and have a few bucks to pay our bills (which might not be enough). By the time we retire we'll spend our final days like a caged tiger in a zoo that long lost the will to live and is trying to figure out how we got there in the first place. At least a caged tiger has his needs taken care of. We aren't so lucky and there is no guarantee that we'll make it too retirement. The OP had a great point but your false sense of pride blinds you to the extent that you're happy being a debt slave so billionaires and millionaires can live their live to the fullest while you waste away at your job performing meaningless tasks.
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  1626. Tom Lloyd . You misunderstand what I said. I'm about to graduate with degrees in finance and statistics. I also perform financial research directly from Bloomberg terminals, company 10ks and manage my own portfolio year round. I appreciate your advice. But my point is that if you take a look at the financials of TSLA you will see the CEO walking away with over $1 billion of investor and tax payer money while the company struggles. All while Musk parades around from talk show to talk show about colonizing Mars and other absurd non-sense. If we visit Mars in our lifetime it will be done with robots- not humans. How can you honestly say he deserves the billions he will extract from TSLA when the company is not profitable? Where do you think that money comes from?? "Tesla previously has raised more than $4.5 billion in debt and equity offerings over the past six years. Since it raised $226 million in an initial public offering in June 2010, Tesla has gone back to the capital markets several times." http://www.cnbc.com/2016/05/20/tesla-raises-146b-in-stock-sale-at-a-lower-price-than-its-august-2015-sale-ifr.html To top it all off TSLA has no shortage of competitors doing the exact things that TSLA and its subsidiaries are doing. TSLA is a bubble and Musk is a con man. By the time its all done Musk would have profited billions without producing a profit. Its not his money when he is taking $4.5 billion+ from investors and taxpayers. The Wall Street Journal calls TSLA a "tax payer-backed business model" after receiving billions in subsidies. http://www.wsj.com/articles/elon-musks-subsidy-aggregation-1466638430 There is nothing special about Musk or TSLA. Anyone that can't see that Musk is a con man is delusional and should not be involved in investment decisions.
    2
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  2426. In the US there are different types of pensions and they have different levels of risk. A pension from a for-profit company is vastly different from a government pension. A pension from the local government and one from the state or federal level are also very different. Its highly unlikely that a pension from a local government will default but its possible as we learned from the City of Detroit. In that case, pensioners had to make concessions after the city declared bankruptcy. However, in the history of the USA a state has never declared bankruptcy and technically a state can't default on pension liabilities because the state has the ability to raise revenue through taxes. Of course, there is a limit to everything so the truth is that we have no idea what happens when a state defaults. That said, this is a very interesting subject that is largely ignored in the financial world and you could do it justice by putting out a well researched video with examples to discuss pensions and their liabilities. It could be argued that government pensions are insolvent in the long term because politicians make promises that they can't keep and won't be held accountable many years down the road when the pension starts to run out of money to meet liabilities. Pensions are under a lot of pressure to seek investments with a high expected rate of return to meet obligations. Some people believe that pensions are a multi-trillion dollar time bomb in the USA waiting to implode. What happens if a state level pension defaults? How could a multi-trillion pension time bomb in the USA affect the rest of the economy, taxes, pensioners, and our way of life? Should we be fearful? Should pensioners also invest in a defined contribution plan?
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  3164. I was very impressed with your video until you started justifying the out of control increase in home prices over the past few decades. How do you in good conscience justify people working as debt slaves for periods like 30 years at a time (assuming they live in the same home until death) just to put a roof over their heads? You obviously don't understand that debt is a form of slavery and debt comes with the risk of losing the asset to non payment such as when people are between jobs or have some other financial disruption. Even if home prices increase homeowners still have to enter the same market to purchase a home and that $800k equity in your example now becomes debt again!! Then you have another problem, possibly the bigger problem, that new entrants to the market (young people) are priced out of the market because their wages can't support making a mortgage payment for a home valued 8-10 times more than their annual income. The only people that win in a runaway market like the housing market are banks and the wealthy investors that horde homes and land by the millions so the rest of us have to fight for scraps at exorbitant prices. In find your final take on runway housing prices very short sighted. You should cut the "solution" part out of this video and just titled it the history of housing prices because that's the only valuable part of this video. I'm disgusted that you would put so much time into a video like this one all to suggest we should just accept that the majority of people should be content being debt slaves.
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  3406.  @spacelogic101whatif  .So, you think that people were born and chose to live in poverty? Go take an economics course so you learn how micro economics is impacted by macro economics and government policy. People don't have choices when their lives are governed by third parties. You must be living rent free in your parents house if you think that all homeless people choose to be homeless. The median rent in the largest cities in the US is between $3k to $5k. What happened in those cities is the result of large institutions purchasing homes by the thousands to turn a profit and gentrification. Zillow, for example, was using AI to purchase the last home on sale within residential areas to mark up the price and quickly put it back on the market. Zillow literally works against the American public and our government takes no issue with it. Large companies like Amazon and Teslas are subsidized at the cost of the locals which eventually get pushed out every time one of these large companies moves into their area. Look at what's happened to Seattle in recent years as large companies move in and push out the local people. The cost of higher education and healthcare is astronomical. Education is what fuels the economy yet to get a 4 year degree it costs at least $40k but upwards of $100k+ depending on the school and if room and board is included. Cost of higher education has roughly tripled in the last 20 years - read that again. TRIPLED! The median price of a home in the US has doubled over the past twenty years - yes, DOUBLED - at the current price of $400k. The average price of a new car today is $46k. Yet, the median salary in the US has barely moved with median household income at $68k per year. How long do you think it takes the average college educated person to pay a $400k house, a $46k car, upwards of $100k cost of education, healthcare cost, food, and other living expenses? The common person today will spend their entire lives paying off debt so we can have a mediocre lifestyle while the top 1% get filthy rich off the rest of society. If the cost of living is outrageous for educated people what chance do people without a college degree have?? What you call freedom is nothing more than illusion. After all, its not your fault that you're ignorant since real economics is not thought in school. We could also talk about taxation but I'm afraid your brain will explode. Feast your eyes on the links below. This is just the tip of the iceberg. https://howmuch.net/articles/the-cheapest-and-most-expensive-cities-to-rent-an-apartment-us-2021 https://educationdata.org/average-cost-of-college https://fred.stlouisfed.org/series/MSPUS https://www.kbb.com/car-news/average-new-car-sales-price-now-over-46000/#:~:text=Average%20New%20Car%20Sales%20Price%20Now%20Over%20%2446%2C000,-BySean%20Tucker&text=Americans%20paid%20an%20average%20of,higher%20sales%20of%20luxury%20cars. https://www.consumerreports.org/car-pricing-negotiation/average-new-car-price-all-time-high-a4060089312/ https://www.statista.com/statistics/200838/median-household-income-in-the-united-states/
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  5146. Great video! Although you skipped over Puerto Rico entirely. Below is a brief history of Puerto Rico Post Spanish American War. In 1897 the Spanish Queen signed the Autonomy Charter of Puerto Rico granting Puerto Rico its independence and freedom. However, at the end of The Spanish-American War Puerto Ricans the US refused to grant Puerto Rico its indepence and under the Paris Treaty of 1898 the US colonized PR without consulting with PR institutions. During US rule, the US made it ILLEGAL for Puerto Ricans to display their own national flag ("law 53" or "La Ley de Mordaza") and appointed governors until 1948 when Luiz Muñoz Marin became the first democratically elected governor. The US didn't grant Puerto Ricans citizenship until 1917. In 1922 Puerto Ricans were fed up with the US and established the Nationalist Party. Look up Pedro Albizu Campos (Harvard graduate) to learn more about Puerto Rican efforts to win their independence. In 1954 many Puerto Ricans still wanted their independence as 4 Puerto Ricans took up arms in US Capitol Hill (Washington DC) where they unfurled a Puerto Rican flag and opened fire. 5 members of Congress where wounded. There is also the Jones Act which makes it difficult for Puerto Ricans to trade with foreign nations and is partly to blame for Puerto Rico's poor economy. However, to most Puerto Ricans all of this is just history as, today, they have been brainwashed to obey their masters and accept their fate. That's Puerto Rican history post Spanish American War in a nutshell.
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  6271.  @davidwebb2318  . I don't think you and I have the same definition of "extremely wealthy" when the median salary in the USA is about $60-$65k. Most teenagers and people in their early twenties aren't making near that much so building "extreme wealth" with their mediocre salaries isn't realistic. The only think that we can agree on is that time is important when it comes to investing. But if you opened your mind for just a moment you'd realize life is never simple. There is no reason why someone can't invest in a retirement account while they invest in themselves to learn new skills and find multiple ways to grow their wealth. Its hard to believe that you worked in high finance for 33 years and think that the best way to built wealth is by spending a lifetime doing meaningless work while making others rich. I bet you also think slavery is a very efficient way for slave owners to build wealth. Your entire argument is one massive contraction to the idea of using money/finance itself to build wealth other than to sit idle while life passes by. For the last time, there is more than one way to build wealth. Retirement accounts are just one component and quite frankly for most Americans its akin to slavery in exchange for peanuts. Your rant about taxes has nothing to do with my argument. You may have 33 years of experience as a finance professional but I have several years as a finance professional as well working in various capacities within the asset management industry. I hope anyone reading your comments realizes how outdated your views are. Good day!
    1
  6272. 1
  6273.  @davidwebb2318  . After 33 years doing finance you're still clueless. Essentially, you think that poor people are poor by choice. Maybe you should have taken some economic and social college courses to understand that the vast majority of poor people and lower middle class by extension are born into poverty and are not poor by choice. But , this conversation is about lifting oneself out of poverty and becoming financially independent. Your idea of becoming financially independent is to slave away for an entire lifetime and make other people rich. You clearly believe in a caste system where everyone should know their place in society and accept their reality. You clearly believe slavery is an effective way for slave owners to become wealthy. For anyone reading this, don't waste your entire life making other people rich. Becoming financially independent is about taking risks. Everyone has the opportunity to learn new skills and use those skills to grow their wealth. I know people from all walks of life that successfully took a chance to grow their wealth. What these financially educated clowns won't admit is that the vast majority of their clients are financially illiterate because they didn't build their wealth by managing retirement accounts. Most wealthy clients are business owners and they prefer to let the finance nerds worry about market fluctuations while they spend their weekends in fancy resorts as they travel the world. If you want to waste away your life in a stale office while you make other people rich then so be it. For those who want more out of life learn new skills and find a way to work for yourself. There is no one size fits all and not all ventures require millions of dollars in capital. Its been a good chat old man and your recommendation that every should slave away is pure nonsense. Good day!
    1
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