Everything in the news and the stock market points to an economic recovery as if a recession was just a myth. But is the recession over? Has this happened before in history? What should you be doing about it?
Join Chris Miles as he exposes the truth of the markets right now and how it compares to the Year 2000.
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Is The Recession Really Over?
You work so hard for your money and you want your money to start working harder for you now. You want that freedom of cashflow now not 30 or 40 years from now, but you want it right now so that you can live that life that you love with those that you choose to love. It’s so much more important than being rich because as you are blessed financially, you can create a life that’s rich by blessing the lives of others. That is a ripple effect that you can create and that’s the ripple effect I’m here to create for you. Thank you for tuning in. Thank you for binging and being a great part of this show.
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I want to talk about the recession that’s over. It was about the start, it was coming, and now it’s over. At least that’s what all the data says. The government keeps coming out with data saying that the unemployment rate is still low as it’s ever been. We have got a GDP that’s still going up. We got inflation that’s still going up.
We have even got guys like Jerome Powell saying, “We expect that there still could be a recession here. There’s still a possibility.” People are saying, “We should have had a recession,” but it didn’t happen. Is it ever going to happen? I want to compare this to another time in history because here’s the problem. Those of us that don’t study history are doomed to repeat it. Granted, past history doesn’t mean that things are going to happen exactly that way, but there is no doubt. I can guarantee it. If you have used any critical thinking at all, something doesn’t smell right now, does it? Something doesn’t seem right.
Those of us that don't study history are doomed to repeat it. Click To TweetThe fact that the market is going up, even when it seems like spending has gone down. Now they will say, “Sometimes well spending seems up this month, but then it’s down.” Is it? How are people doing and why are credit card balances going up? We talked about auto loan defaults and all these things happening that show people depleting savings and maybe we are seeing these people spend money because they feel like somehow some way it will work out, but we also got student loans coming up. We got those coming due here this summer. We have got a lot of things starting to happen that make you wonder what’s going to happen next. We keep seeing inflation. Will the rates keep rising? Will we see a recession happen?
Let’s go into it. Let’s talk about it and I want to compare this to history. Specifically, I want to go back to the year 2000. This was the moment of Y2K. We had the dot-com boom and I’m using this because there are a lot of similarities between then and now. Now this is the time when I became a financial advisor. I was in the middle of that dot-com boom, then bust. That’s when I became a financial advisor.
I witnessed a lot of interesting things during that time that many people will scribe certain events to cause stock markets to drop, but it didn’t. I’m going to show you here what happened and how that might correlate to what we see today. This is a candlestick chart as they call it, from about 1996 through about 2003. I’m sharing this because you go back to the ’90s. The ’90s were awesome.
At the end of ‘94, the S&P was at 459 points. We are now almost ten times that. Now we are almost 30 years later. Now you will see this here. It roars. We get to the end of 1995. It’s already up to 615, so it jumped up 30%. Again, it jumps up and now another 30%. It goes up again. The market keeps going up and away. Now we get to 2000. Now Y2K, there was some scare here about whether is it going to go down or not. We get the stock market. It gets up near 1,500. Y2K doesn’t happen. Even though it goes down a little bit after the year 2000, computers didn’t blow up. We didn’t have this big clock reset for those of you that remember this.
I remember working for a company. They updated the software, hoping that things wouldn’t go back to the year 1900, and it rolled right over to 2000 as it should have. In any case, it dropped for a little bit, but then in March, it skyrocketed. It’s back up. We get up to almost 1,500 points. Right here, nothing seems to be a problem because even if you get to May or April, it goes down a little bit and into May, but still, you go from 1,500 to about 1,420. That’s roughly a 5% or so drop, but it’s not horrible, and then it comes back up. This reminds me of the last spring when you see the stock market. It’s been gradually going up but it hasn’t dropped.
It went up and down but stay within that low 4,000 range in the S&P. It goes through the summer. Everything seems great. Now we know that that’s not the case because in hindsight, the whole Y2K thing, the bubble was bursting. The tech bubble had burst even by that point, but still, people were thinking that tech stocks were okay.
Remember that at this time, the S&P 500 was not as tech-heavy as it is now. Now, you got the top 6 companies attributing for 28% of the movement in the S&P 500. That’s a huge weighted average whereas before we had a lot more variety of sectors and industries here. That’s why even when I was a financial advisor 20-plus years ago, the S&P 500 seemed like a diversified place to be. Not the case anymore because everything is so tech-heavy.
Anyway, it goes up in August 2000. It’s right back up to over 1,500. It seems great, doesn’t it? Watch what happens in September. This is September of 2000, not 2001. This is not September 11th. This is a year prior to that. It starts to drop. It goes drops about 80 points. It’s about a 5% drop. A little tiny drop in October. Seems it’s okay but then it drops again and it was already threatening it.
You can see that the low had hit pretty much about the low of October is pretty much what ended up being low in November as well. It’s hitting right that support. They call it support because it seems like stocks will bounce and hit certain prices. The support level is right around 1,300. It stays the same. It starts to go back up. Maybe we are okay going to 2001 and then February drops again.
Notice by this point, it’s already dropped nearly 300 points. That’s nearly a 20% drop since what had happened there in September going on into February of 2001 then drops again. That recovers a little bit because of that quick drop. It’s going to do that. Notice that this is like the stock market you are watching today. It seems like it might drop but then goes up and it seems like things might be fine.
Remember, right now in 2023, we are still lower than the high in 2021. We are not as bad. We covered some of those losses, but that’s the trick. That’s the same thing that happened in 2000. It started to lose but then it recovered and then it started tanking, and this is what catches people. This is why people hang on too long and the stock market. They see it go up and they think, “My financial advisor says it’s good. The stock market says it’s fine,” and it looks good.
Notice this, the red candles mean that the month is down. Green candles mean it’s up. Few months in a row, June, July, August, and then September. In September, we know it dropped a lot because we had September 11th. Here’s what’s crazy. Many people will blame September 11th on the Y2K recession. It was already dropping even by the time it got to August here.
We already dropped almost 400 points. It was not quite. It was about a 25% drop even by that point of Y2K or by the point of 9/11, and then it drops. After 9/11, look what happens. The next quarter and the next three months, it goes up. It ends the year higher than it was before 9/11 because people went back to work. There was hope and optimism again.
We came together as a country. It was a cool time for those of you that remember that experience. The first part of 2002 seems okay but this is where I experienced this firsthand as a financial advisor. Right about there in March, it comes back up a little bit, and then April, May, June, July, and then all the way to September, it drops down to 815. That low as September 2002 is 700 points lower than the high. It was about a 45% drop from where it was a few years prior. Forty percent loss by that point.
What happened in 2002? Why was that the biggest drop? Enron, WorldCom, and Arthur Andersen, all this stuff where people realized that companies were lying about their numbers. When Enron was cooking their books and we had WorldCom and all these companies going under, the politicians want to step in and start doing senate hearings. They want to know what’s going on and they start auditing a bunch of these companies and the stock market.
As a result, nobody knew if their stock was good or not. People started dumping stocks thinking what if they were lying? What if these numbers aren’t real? That was the worst year. Not because of 9/11 and not because of anything else but because it was the extra Black Swan event here because no one trusted the companies because so many had lied on their books. More things got in order. By 2003, got in there the spring. It started to come back up again.
Remember, it didn’t get back up to where it was at 1,500 until we get to 2007. It’s getting back up over 1,500. We are like, “We are getting back to new all-time highs.” Fall of 2007, what happens? Financial crisis and you can see what happens there and especially as you are going to 2008, hard crash. It recovered a little bit from 2009, but it took until 2013 before it got back up to 1,500 again by the beginning of 2013.
It took about thirteen years to get back to where the market was. Do you see the problem here? If you remember some of these other episodes, I have said many of my clients that had put money in before 2000 or even around the year 2000, watched it tank and then watched it come back up. Most of them had to wait until 2015 before they could finally say, “Now, S&Ps got over 2,000. Now they had broken even,” because the fees were coming out all during those 13 to 15 years. That’s why it took them extra time and the market had to come up higher than it was to be able to do that.
Is that what’s going to happen again? I’m not saying that because if we flash forward to where we are today. We had a high there in 2021. It got up to almost 4,800 and then it came down. Even today, we are right around almost 4,400 points. That’s good. We have seen that. As of the end of June, we are shy of 4,400 right now. What does this mean? How does this apply to now 2023? The problem was that people couldn’t see what was coming.
There were some voices in the wilderness. There were some of those people that believed it, but many people didn’t buy into it. They ended up writing all the way down. As a result of this psychology, people not wanting to lose, they held on and they lost not just money because even when that money came back, they lost time.
Imagine losing fifteen years of your life from where you could have that money out today. What if those people in the year 2000 had pulled their money out and then invested somewhere else like real estate, which was great after the year 2000? Even during the Y2K recession, it was great. Even the financial recession later wasn’t great, but because it got overvalued, it got to that point. It still bounced back. Those values helped much better than they did what the stock market did. We are not teaching people to bank on home values. We want cashflow. That’s the big thing.
That was the one recession where you saw real estate get hammered pretty hard. In most recessions real estate either stays pretty steady or even goes up at times. That’s what we saw with Y2K. Home value still increased during that period of time. Even in the ’90s when there was a recession. The same thing in the ’80s. Real estate still held its value. I’m not saying you are trying to hold value.
In most recessions, real estate either stays pretty steady or even goes up at times. Click To TweetI’m saying if you are looking for anything, what if those people in 2000 took that money, got it out, and invested it differently? Where would they be now? Would they be a lot better off than losing to inflation because those fifteen years then inflation doubles? It took them until today, twenty-plus years later to say, “I finally made my money back to maybe keeping up with inflation. I got a 0% return after inflation?” Is that what you want? Of course not.
The one thing I love about you guys is that you guys get it. You are reading this because you understand it. It doesn’t mean that you are not being pulled in different directions because there are tons of people telling you, “Don’t you dare sell the market. It’s a great time. What if it goes up? You might miss out.”
You might have that fear of missing out, but I can tell you that when it does go down and it will go down, you will not be missing out on that. You will not miss that opportunity. Hopefully, you are not being hurt by that opportunity. You might even say, “I have been tuning in to your show for years. You have been saying don’t be in the market.” I have. I can’t legally give you advice here, but the stock market was overvalued a few years ago in 2020.
It was even overvalued in 2019. That’s why in 2018 and 2019, I thought, “This is the time.” By 2020, it’s going to go down. It started to and then, what happened? Everybody started pumping money in because of what was going on with COVID. They started pumping money into the economy and overinflated that bubble bigger than it already was.
The stock market could easily drop its value to half of where it’s today. The stock market could drop easily to 2,000 once again. I’m not saying it won’t recover after it hits that point. I’m saying it’s easily justifiable the values and everything else. Most traders, even stock traders I have that are friends of mine are hating the year 2023. Why? They hate the fact that their stocks are not a good buy right now. They don’t want to buy it.
Even the charts are telling them not to buy it. Everything is saying, “Don’t buy right now,” yet people are still holding on because there’s that denial. You don’t want to pull your money out just in case the market goes up more. “What if you can recover a little bit more of those losses from 2022? What if I recover a little bit more and get back to where I was? I will then get out.”
That is a trap that everybody gets caught in and that’s usually when the big money or the institutions, the big financial firms will pull their money out and you are left holding the bag and that bag shrinks on you because they pull out the big money. Markets and stocks drop and you are the one left over. I’m here to propose to you that you have another option. You do not have to suffer the same consequences that history has shown time and time again and the stock market is ready for a bigger drop than what it had in 2022. It’s ready for a much bigger drop than that.
The question is, “Do you want to be the one that suffers? Do you want to become another statistic of somebody who had to hold on and hope that their market will bring their money back up again or have to work harder and longer for more years to do that?” Do you want to be like everybody else who is saying, “I got to hang in there? Maybe I will retire at 71 instead of 62 or 65.” That’s your choice. I’m here to present another option that there are better ways to do it. Even in the real estate space right now, there are still better options than what you are seeing and hearing in the media.
Whatever the media is telling you, they are generally wrong. If they tell you don’t do it, that’s usually when I see the opportunity to do it and make more money. That’s what I have learned over the last twenty-plus years of investing. If I do the opposite of what everybody tells me to do, I make money. I do the opposite of the financial advisors. I make money. I do the opposite of the financial talking heads. I make money.
That is the real secret. That is why my voice is very contrarian. That’s why I say something different. I’m not saying you couldn’t lose in real estate because you could. The reality is you might end up picking some crazy dumb operator or somebody who has good intentions but is not a good operator, or maybe they are a charlatan. Maybe there’s somebody that’s a great marketer. They are on all these podcasts saying, “Buy our crap. Buy into our fund or our investment,” and then they go under because they are trying to trick you.
There are all those people out there. That’s why we have a community of people trying to weed that out. Try to find the people that do have integrity that are good operators and who can do that. That doesn’t mean it’s guaranteed but it gives you better odds of success when you know you have the right community of people to trust. People that you can put money with and potentially not just make your money and do something, but maybe make double-digit returns potentially.
There’s a lot of opportunity you could have here where you can keep your money and make more with it versus potentially losing your money with another bubble burst and that bubble is dang big right now. Do you want to be in that place when it bursts? The question is, “Will you be the first one to move or will you be the one that moves last after everybody else decides the bail?” That’s your choice.
I’m not giving you advice here. I’m not telling you to do that. I want you to consider that maybe this could be the time that’s perfect for you. This could be the time that maybe people get tricked into staying in the market too long a little bit and that’s where they lose their future, and I don’t want you to do that. I want you to have a great future ability to say, “Look what my money was able to make me do. I’m so grateful the market made a comeback. Now this money is making better money for me and it’s producing passive income versus 0s and 1s based on whatever the market feels like that day and whatever AI trades and stuff like that happen.”
The key is that you have control. You can put that finger on the button and do whatever you choose to do. Put that back in your control. Don’t let other people control you. You control your money. Be a wise steward of it and make that money work harder for you so you don’t have to work so hard for it. Make it a wonderful and prosperous week. If you have any questions, reach out to us at MoneyRipples.com. Thanks.
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