Many keep asking us, “Should we stay in the stock market? Is the bear marker over? Is it going to come back up soon?” Our answer: “You ain’t seen nothin’ yet!” Chris Miles discusses how low the stock market can still go. He explores different valuations experts use to determine market trends and tackles the alarming decision to make the federal funds rate surpass the current inflation levels. Chris also explains how to protect your money, the right time to pull it out of the market, and if you should just wait for everything to regain momentum.
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Is the Bear Market Over?
One more show that’s for you. It’s for those who work so hard for your money and you want your money to work harder for you right now. You want that freedom and cashflow, not 30 or 40 billion years from now, but right now, so you live that life that you love with those that you love. It’s just not about getting rich, it’s about creating a rich life because as you’re blessed financially, you can create a greater ripple effect through the lives of others.
Thank you for being here. Thank you for binging and sharing. For those of you that have gone and reached out to us, we had an amazing September. We have so many of you that we can do massive stuff for you. I appreciate the big response we had from people, especially with that little birthday promotion where I was able to give a bonus meeting for those that signed up. It was such an amazing thing. Thank you for reaching out to us. As a reminder, if you have questions, you can reach out to us at MoneyRipples.com.
The question and concerns that I tend to see from a lot of these people I had reached out to over the last month were about the stock market. Are we at the bottom? It seems like we are. Is it going to come back? That’s a great question. Is the bear market over? Is the stock going to start coming back up again and rebounding? Even though this is late September 2022, the answer is no. I can guarantee that in my future, which is when you’re reading, the answer is going to be we’re still in the bear market and still got a lot of room to go.
The one question people are saying is, “Wait a minute, but how low can it go? Are we pretty close to the bottom?” If you’re a financial advisor, you’re already telling people, “Stay in it. Keep dollar cost averaging because you’re buying on sale.” “If it were on sale dollar cost averaging, should I have not listened to you when the market was hitting all-time highs in 2021? I should have stopped buying and then saved up all my money for it before it hit whatever low you claim it’s going to be right now.”
No, that doesn’t work. Dollar-cost averaging is a joke. I taught that as a financial advisor. I can tell you that does not work. The reason they teach that to you is that they don’t want you to second guess, and there’s some truth to that. If you’re the person that tries to jump into the market when it’s hot and then you jump out when it’s not, you’ve already missed the boat and you’re going to have bad timing.
That’s the one way that financial advisors are correct. The way that they’re incorrect is that it’s not always a good time to buy. In fact, the time to buy is when nobody wants to buy and the time to get out of the market is when everybody is telling you it is still okay to buy. That’s right now. I’m not claiming you guys should sell off anything. I’m not saying you should sell off your stock market, your stocks, your mutual funds, or anything of that nature, but if you think it’s going to go down lower, you might want to look at ways to preserve what you have and wait for it to go lower. If you want to get in, maybe do that.
If you think the stock market will go much lower, you might want to look at ways to preserve what you have. Click To TweetStock Trading Expertise
Many of you guys know that I was a financial advisor before. What you may not know is I was also a stock trader. I taught and trained about 200 people on how to trade stocks and options. I had done that myself. In fact, I was even doing that towards the end of my financial advisor days and even a little bit over when I was starting to teach people about getting out of the rat race. I was doing that for a few years.
It was interesting the things I learned about stock trading, that’s different than what they teach you as a financial advisor. I’m going to come from that perspective because I’ve had a lot of you guys, especially those of you on Instagram or even on YouTube from time to time. Some of these little trolls say, “Chris, the S&P500 is the safest most diversified asset in the ‘world.’” I had somebody claim this.
That’s the most ignorant statement I’ve ever heard, I don’t know what it is. First off, I didn’t know this guy was the world authority. That’s pretty impressive. Secondly, this person’s coming off saying it’s the most diversified and the safest. First off, there are so many safer assets than mutual funds. He was saying the S&P500 to be exact. S&P500 is not safe and it’s not even conservative. It’s not low risk and on top of that, it’s not diversified. They might say 500 companies, but it’s the same asset class. You want to look at diversifying your assets by other asset classes that are not in the stock market or affected by the stock market. That was ridiculous.
Most of you guys get this. It’s the weird trolls that have nothing else to do with their time and like to put comments on this, but I want to address them specifically because there’s a part of their voice that’s also in your head. It’s what the mainstream says. If you follow the mainstream, you will lose. Mainstream sucks. Mainstream people are broke. Mainstream people don’t become financially free. Mainstream people won’t become financially independent by 2030 like you can be. This is not going to happen for these people ever. They’re full of BS and crap. It’s totally brown.
Bear Market Valuations
I’m going to share with you an article by Motley Fool here. This is written by Sean Williams, Where will The Bear Market Bottom?. He talks about two valuation-based indicators offering a clear range. Now, understand Motley Fool, if you’re following any of these places, you’d be seeing some ads like Stock Advisor, also a Motley Fool service. You should buy that. It’s what they want you to do, buy stocks. If you ever want to know what these guys promote, look at who’s advertising their thing. Notice they lay stock picks. They want you in the stock market.
They might tell you that you can short stocks, but this one is coming from how do we know what the bottom is of this bear market because that’s what everybody wants to know when they’re trading, when is the bottom or when’s the cheap money happening? He uses two different valuations. The first one is using what’s called a Forward PE. PE is priced to earnings ratio. The price of the stock is divided by their earnings per share and they come up with a number. The lower the number, the better. The more undervalued it is. The higher the number, the more overvalued it is.
Sean Williams, as he starts this thing off before we talk about that Forward PE ratio, he talks about, “Officially, we have no clue.” He’s saying we have no clue where the bear market bottom is. Best honest answer that he’s had. Now, he’s talking about, “Here are some calculations you can use.” The Forward PE as he says, “Consistently if you look for the bottom, it’s between 13 and 14.” That’s where they find their bottom. Their claim is that the PE ratio has been high. It says, “As of September 21st, 2022, it’s 15.9 higher than the 13 and 14.”
He says, “Based on that the bear market bottom, the S&P500 is at 3,647,” which might be higher or lower depending on when you’re reading this. “It could be anywhere from about 3,100 to 3,300 on the upside.” What he is saying is even where it is now, that could still go down a little bit lower. That means even from where I am at 3,647, going down another 500 points is like losing another 15% after you’ve already lost over 20%. That means you’re losing a total of about 35% or 1/3 of your money before you finally get a recovery.
Remember, when the market goes down, it goes down pretty hard and fast, then recovers more slowly. It doesn’t come back up hard and fast. It doesn’t do a V-shape. It’s more like a weird check mark. Now, he did say that this is not always perfect. He talks about the S&P500 Shiller ratio, which shows 28.9. They used a little bit different valuation.
When the stock market goes down, it goes down pretty hard and fast, then recovers more slowly. It doesn't do a V-shape but more of a weird check mark. Click To TweetThe Shiller says that the bottom is supposed to be about 2,900 to 3,300. On the big upside 3,300, but this one could be as low as 2,900. Meaning you lose about 40% total from the height of the beginning of 2022. Either of these valuations, they’re saying, “The market bottom around 3,000. Give or take.” That’s what they say.
Using PE ratios, it’s not a good indicator. I used to put weight into that, but over time I realized that wasn’t the case. I used to use things like PEG ratios where it’s price divided by earnings, divided by five-year growth estimates. Here’s the problem I saw recently, one of the financial pundits out there said, “Market valuations are based on this 50X multiplier because of lower interest rates. If interest rates keep increasing into this territory that they’re going into right now, we have to re-evaluate what valuations are becoming.”
The problem with price earnings, they usually take the past twelve months, and then they try to project a little bit of the future as well. Because of higher interest rates, the future projected growth of those companies goes down that shifts, and changes everything. That means devaluation. Even when they say that the PE ratio is 13 to 14, remember that these things adjust along the way. This author, Sean Williams, does acknowledge this in that article. He does say here in Motley Fool, “It can adjust depending on what happens in the future.” None of us can predict the future. One more reason why not to gamble your money into the stock market.
That’s amazing. How many of you get so upset when I say gamble? They’re like, “It’s not gambling. It’s not like going to Vegas. Over time, it goes up.” Over a twenty-year period, the market has always been higher. There have been some fifteen-year periods, not so much, but they always say twenty-year periods at least they’ve gone higher. We get that, but many of you don’t want to wait twenty-plus years to make your money back or get a little bit of growth. You need a massive amount of growth now, tomorrow, next year, and the year after that to even have hope of financial freedom.
These people tell you, “The market’s safe. It’s a great place to be. It always goes up.” They don’t realize that they’re trapping you in a place where you’re not going to make enough. The truth is you will not make enough money in the stock market. It has not done that return. Answering many of you, especially those that are the trolls, the truth is that the market isn’t a safe place to be. It isn’t very diversified. That’s why you can lose money on it.
If it were diversified, you wouldn’t lose money. If it were truly diversified, you would have some up, and some down, but you would overall still make some money. That’s not the case here. You can lose a lot of your money and some of you have already lost too much of your money and you’re holding on because you don’t want to lose more. I’m here to tell you, you hold on, you’re not going to lose more as a bear market goes down farther, but you’re also going to lose in the sense that you’ve lost time, your most precious commodity when that money could be doing something better in these other alternative investments that we talk about.
Someone will say, “Real estate investing is risky.” That’s because you’re an idiot, sorry. If you believe real estate investing is risky, either 1) You’re ignorant or 2) It’s because you don’t want to look into it, or maybe you’re a gambler anyways and do dumb stuff. Either, you’re ignorant, you don’t know that there are better options, or two you don’t want to know because you get some self-interest in it.
Maybe you’re a financial advisor posing to be someone who thinks that the stock market’s the way to go because you want their money to go in with you. This is why we don’t offer a fund ourselves. This is why we don’t sell any investments ourselves. That’s the very purpose to not be swayed by our own self-interest because people got it whether they like to admit it or not.
I’m self-interested the teach you this stuff. One, because you get your results, but two, when you get better results, that makes us look better. What does that do? It gets more social proof that more people want to do this over and over because the truth shall set you free. The problem is the truth is not being taught. Not by the majority. The majority is teaching you how to remain broke your entire life, not to how to do it differently.
Let me show you what I see in the market. Those are the PE ratios, but the ratios are dumb. They can be flexed. Here’s what I look at and this is based on my stock trading days. You look at trend lines or how things ebb and flow. One thing I learned as a stock trader is that there tend to be patterns. It’s no different here. When you’re looking at the stock market, there tend to be patterns.
Studying The Trend Line
This is what I see with S&P500. I have this chart going back to the Great Depression from the 1930s. Notice, there’s this line that’s called a Trendline. What happens is that as time goes on, the market does go up and it tends to bounce off of certain points. There are different things called Support Lines and Resistance. There are these two tops that hit about the same point and that’s called resistance. When they hit that same point right around 1,500 on the S&P, that’s a point where it becomes like this little top, but it also becomes a bottom eventually where it doesn’t go below that down the road.
There are tops and bottoms. Imagine these invisible floors as you’re climbing up through a building. Here’s where we are now. We’ve come down. This is as of September 27th. We’re about 3,647 is where the market closed. These might be more or less depending on when you’re reading this. Notice that we’re pretty far above this trendline. In fact, the trendline right now is about 1,700.
Over the years, it tends to bounce on it. It might take decades before it bounces. In the ‘70s, it bounced all along like a little bouncy ball like it was in the singalongs back in the 1970s, but then it took off and even in Y2K. It hits the floor right in the Great Recession in March 2009. It was low before it came back and bounced up. This was also when my wife bought mutual funds right about that same time, making lots more money in the market because she bought at the right time. Some of you might’ve done this and then it took off and it’s been overvalued ever since, and then that’s normal. It’s normal for it to want to correct and pull back.
It may not pull back all the way. It may pull back part of the way like it has done in other times where you see it pull back and then go up again. That could happen. If it doesn’t pull back all the way, what can often happen is what you see in the 1960s. In 1965, it hits up right around 100. Notice it doesn’t get much over 100 the entire time. It stays right around there. Even into the ‘70s. It wasn’t until we got into the 1980s. Even then, it wasn’t until the ‘82 that we started to see it take off. It took seventeen years before we got past that little height, then it hit right around 1965.
Understand that sometimes you can get stuck like people in the ‘60s and the ‘70s did before things took off. This is why the stock market wasn’t as popular during that time because what money would make there? You make more in a CD that used to be higher interest rates back then. Long story short, this can pull back. I don’t think it’ll pull back all the way to 1,700 because the truth is the line keeps going up. It’s going to meet in the middle. If it does go all the way down, it could go down as low as 2,000.
They’re predicting 2,900 or 3,000 as the bottom, my prediction is it could go as low as 2,000. It may not and continue to bounce up before it comes down and then a harder crash later. That should concern you because that trendline still doesn’t even hit where it should be like we’re talking until 2034. Twelve years from now the trendline is right where it should be. That’s after you have already lost about 20% of your money. You could possibly lose over 50% total from the height that we saw at the beginning of 2022.
Why You Should Be Concerned?
That’s not the only thing that should concern you. The other thing that should concern you is what’s happening. It came out in the last meeting here in September that the Feds announced as part of the stuff that had been glossed over by many investors or even by the media that Jerome Powell, the Fed President, said he wants Federal Funds Rate, which is now 3.25%, to surpass whatever the current inflation levels are.
Right now, the inflation level is showing 8.3% that they’re reporting. We know it’s higher, but they’re reporting 8.3%. He’s at 3.25%. He’s 5% below where current inflation is. What he’s saying is he’s going to raise these interest rates until at least it surpasses aggressively. Maybe inflation will start coming down gradually. They might meet in the middle somewhere, but it’s very possible he could be raising rates 2%, 3%, or 4% more than what they are currently. That should concern you because that’s already making money expensive, makes it harder, and contracts the economy. He even admitted himself saying the average American and some small businesses pretty much be in pain and suffering. They already are acknowledging that.
It’s going to be much worse than that because if they’re acknowledging that, there’s a problem. They’re already aggressively going for it and they tend to swing the pendulum too far to where they overdo it and then it throws us into a recession and possibly depression. They then try to come back and undo it and lower interest rates to see if they can get things spurred up again, but already it’s happened. There’s a lag effect and they’re trying to watch it, but the truth is they swing the pendulum too far.
This is going to affect almost everybody. If you’ve got money in the market, you should be concerned because, in the bear market, they hate this. It’s not just the US. Other countries are having issues too. Globally, we’re looking pretty nice right now. The dollar is stronger than it’s ever been. That’s not good news for the US because that means that things are going to start outsourcing outside of the US. This means we start importing a lot more than we export because why do we want to pay top dollar for stuff that’s more expensive?
They might help other countries but don’t count on it. There is so much turmoil going on, especially in Europe and everywhere else. There’s so much going on now it will be creating ripple effects across each other to where we’re going to have this major contraction right now. Economically, this is going to be the worst time for the average American, but the best time for those that are educated and those that are looking for opportunities. Many people are afraid to hold cash because of inflation. This is the best time to have cash. Cash right now is your friend, especially if you can buy real assets that benefited from inflation.
We talk about those. We talk about real estate and oil and gas. A lot of these things are being benefited. By the way, oil and gas, mark my word after November, prices will come back up because they got the votes that they wanted and the truth is they’re dipping into our reserves like crazy. Our US Reserves are getting low, and it’s not a good thing. We’re going to start seeing prices going back up again, at least for the oil, and the stock market tank. It’s not going to be pretty.
The thing you got to do is make sure you are not the casualty here. You don’t become the victim of this because it’s not for you to become the victim. This is for you to come out triumphant and victorious. You can do that if you start doing the opposite of what everybody in the media tells you. I hate to say it, but we’re like a broken record, aren’t we? We’re saying it again and again. I’m saying this because I’m truly emphasizing that you need to question everything.
Even though there are some faithful readers here, many of you have been listening to my advice and predictions, watching them come true, and then doing nothing about it. The ones that I’m happy about are those that say, “I could see what you’re saying. I took action and it saved me a lot of money.” I have had those people too that said, “I would’ve lost over $200,000 and I kept my money in the market.”
I’m not saying again that you guys sell. I’m not legally making any recommendations because the truth is that you might be doing different stuff. I talked to somebody that says, “I’ve been shorting the market,” meaning he’s selling at the high point and then you buy at a lower point, so you do it in reverse order. It seems weird, but you can bet on the downswings and make money. He’s been doing that, making bank last a little while. I say, “Good job. Way to go. Keep it up if you want to keep it up. Don’t count on it for financial freedom,” but if he’s going to take advantage of it, like using an index that goes up when the markets go down, he’s doing great.
There are ways to do it, but for the most part, you’re not going to see people doing that thing. Even the people that tell me S&P500 is the best thing are not trading stocks. They’re putting their money in mutual funds and letting it sit there. They’re saying, “I’m going to hold on to it.” In fact, if I turn a blind eye, it’s going to be good. This is the same thing that husbands do in their marriages, isn’t it? Sorry wives, I don’t mean to discriminate. You might be doing it too, but it’s not uncommon for husbands to turn a blind eye to what’s going on in the family. They’re saying, “I’m happy. I’m good,” and then their spouse leaves them.
It could be the same thing with your kids. If you could turn a blind eye to your kids, “Don’t worry about them. Hopefully, it all turns out.” They then wonder why the kids end up screwed up. Don’t you think that happens with money too? Turn a blind eye to it, “I don’t watch it. Tell me when it comes back up. Don’t let me watch it. This is a scary movie.” This is how you lose money and it happens every time. Most people will end up selling at the very market bottom. Don’t do what the majority of people do. The dumb money right now hasn’t left the market.
Here’s another key factor and why it’s going to go much lower. The bigger investors, the hedge funds, and people that have portfolios, they’ve already started to sell off their stocks. They already know what’s coming. The retail investors, as of now, in late September have not sold off anything. The dumb money has already gone in. I mentioned that last year in 2021. Dumb money was going into crypto and the stock market, and we’ve seen the effects of it that it has gone down, but the dumb money hasn’t sold yet like in crypto.
What Big Investors Are Doing
Most people haven’t sold all their crypto yet. The people that have already missed out or hold on to their crypto hoping maybe it will come back. I sold mine in March at height when I realized it was being price-controlled. I sold my crypto because I had some to play or gamble with, and not to make money off of, but I made some pretty good money on that deal. I also got out when people were saying go in.
People aren’t saying get out of the market right now. They’re saying, “Hold on.” The majority of Americans or the retail investors they call it have not pulled their money out yet. That’s why there’s so much more room to go on the stock market. Question is, are you going to be the person that finally says after all the normal money and dumb money come out then saying, “I’m going to sell now.”
You got this little bit left to say, “Chris, now what do we do with it?” Are you going to do that or say I can capitalize on what’s going on now? Maybe I can move my money and protect it. I want to keep it in the market or in the same place or I don’t do real estate investing. I keep it there and move it to a money market or somewhere that’s safe and certain, so at least I don’t lose money while it goes down.
If it hits this great low, maybe it bounced on that. Maybe the S&P goes down to 2,000. I might be putting money into the market. Again, not enough to try to make a lot of money on, but enough to say I can gamble this and I don’t care. I probably would because I again watch those trends and I don’t mind doing that as I did with Bitcoin when it got down below $6,000 when bought it. After a crash from its $20,000 high and then sold when it was up around $50,000. You made money off that.
It’s the same thing with the market. I might do it too. Again, I’m not giving recommendations, but the people that act now before everybody else says to do something are the people that win. When you wait for everybody else or the masses to do it, that’s when you take the m off the masses and that’s what you become. That’s where you look like one and look like the masses. You don’t want to do that. You don’t want to get caught with your pants down. You want to be the person that gets out early and people will look back and say, “That was awesome. I can’t believe you did that. How did you know?” “It’s because I listened to good smart people.”
I’m not saying I won’t be wrong. I’m not saying I’m Nostradamus. In fact, I’ve made many wrong predictions before, but I do know when the market feels crazy and when there’s more room to go, it generally does. Take it for its worth. You can figure out whatever you’re going to do with this opinion piece that I’m giving here, but the choice is still up to you.
What are you going to do about it? Could you be using this money in better places? Could you be using this money to help you create cashflow and passive income now versus waiting because you don’t want to lose 20% of your money as you’re holding on hoping that it’ll come back to where it was? Although history says that even when it does finally hit the bottom, which could be at least a year or so from now, it bounces up, and you finally say, “I just got to wait.” It then bounces up slowly and then you’re waiting five-plus years before you finally say, “I got my money back.”
The problem is you did not get your time back. You lost five years. You could have been doubling or doing better with all your money. That’s the thing you lose out on. That’s what time does to you. If you have any questions, reach out to us at MoneyRipples.com. Is the bear market over? Heck, no. It’s got plenty of room to go. What are you going to do about it? That choice is yours. Make it a great prosperous week.