Hi everyone.
Welcome to today's video. On today's video, I'm going to speak
about when the markets are going to crash. Now, this is not a prediction video. I'm going to show you macro data and going to explain it to you systematically why
the markets might take a while to crash from this point and why there
is so much fuss being created. This is an important
video for two reasons. Number one is that you might be
sitting on a lot of profits.. You have made
like 30% profits, all that stuff. Should or I book some profits. This is question one. Question two is that you might be
sitting on a lot of IDle money. Idle money means you're just not able
to understand where to put new money. This is a challenge that
you might be facing. So this video will help you give
some resolution to these two points. I might do some stock-specific
commentary also. Now, the reason for making
this video is very simple. I run a community called as Wisdom Hatch. Now, this is India's biggest
community of investors right now. Every day, I keep on getting the
question, Akshat, you know what? There is an economist
called as Harry Dent.. That market is going to correct badly. Even like, 2008, recession,. And 98% crash, InVIDIA,
and 92% drop, Nasdaq. So it's the bubble of all bubbles
have been formed, all this stuff. So it's okay. So, so, so, so, so, sophisticated
investors pick up points of Mr. Warren Buffet, and this is what Mr. Warren Buffet is doing, that Mr. Buffet is sitting on record cash. He has sold some of his positions on Apple, and he's sitting on cash
pile of nearing $200 billion. Okay, so just the back
in problem, problem. Nvidia and Warren Buffett
are holding cash right now. Now, if you read these type of headlines,
you will panic, you will sell your stocks, you will go away, and that
might not be very intelligent. Now, why am I saying it. For this, you need to take a look at this nifty chart, and it's
called de facto samajana. What is the meaning of de facto? De facto means
practically samajna, this point. This is an important radical
point that I'm making. Many of you might not agree with it, but this is the beauty of investing, that if
you see logic in things that other people are not seeing, then chances of you
making more money is much higher. If you actually take a look from this
year, this is year 2000, roughly., one could argue that markets
have been in a bull run. Now, what is the meaning?
Technical meaning of bull run? Bull run simply means that the markets
have given a breakout of above 20 %. This is how we define bull run. And bear run means, from
its top by more than 20 %. Now, this technical definition, because there are times during this phase
when markets have gone down 40, 50 %,. This was the COVID crash, 40, 50 %.
Here, 66 %. Here, 40 odd, 50 odd %. Here, 20 odd % plus. So all these phases Second is, yes, markets have gone down in
phase one, two, and three. But again, if you zoom out and
take a look at this entire chart,. Now, the point that I'm trying to make is
that see, there are two set of audiences. The first set of Second is that we
will keep on timing the market.. Second is that people who will de facto
understand this chart, understand the reason why there has
been somewhat of a secular bull run. In the last 25 odd year, market
has not really gone down. There have never been a phase of five
years or more where you put in some money, even in bulk, and lost
that money, so to say. So that has not been the case. Please remember this. This is a second more important point. The conclusion being that at this
juncture, you might be again taking a look at this chart, that market
is at an all-time high.. See, the The chances are that you might lose more money by waiting
for a market correction. Then you will lose money, at least on a five-year basis, if you just
simply choose to invest right now. Now, this is not a push that you should or
shouldn't because that comes out at your portfolio construction stage, which I'll
not be able to comment, but I'm just trying to show you some
useful picture here. So this is literally point number one. Now let me explain four
or five more points. And what I will do is that I will just quickly help you understand
the history of market crashes. So this is a very good chart, and this will help you understand
and see this picture more. So again, let's go back to
this phase, this entire phase. Now this is,
one could argue, one of the best performing asset classes
in the last how many years. In the US, this has been
performing since 1950. So this is absolute crazy. Yes, there was this phase, this
was a substantial sideways phase. This was the 1960s to 1980s. But in the 1980s, there has never been a phase where people have lost money
in US stock market by investing. Now, India is a long history in India of the stock market, so I
can't do this analysis. But there is a very strong correlation between US's stock market
and India's stock market. That is not a US market.
It is in US. It is in India as well. India is somewhat contingent on US dollar. Now, almost 60 to 80%, depending on how
you are seeing it, almost that level of world trade happens in
US dollar denomination. So there is a very, very strong correlation between the US Stock
Market and India's stock market. The first point of note down, that
the stock market has become a rocket for last how many years, at
least for the last 40 years. Now, if this is the singular
bet that you're taking. I'm like 30 years old right now. Let me paint a picture for 40, 50 years. Then what should I really think about? And how should I process this information? Because I see so much gloom and gloom. What data points should I look at? See, there are two levels of
information that you need to see. Number one, whenever you are reading this
type of news, that Warren Buffett has sold his portfolio, this, that stuff, at least
go and check what he is actually doing. This is his overall
portfolio and overall AUM. Aum means that how big was his portfolio
as per different quarters. 2022, the data we're looking at,
you are sitting on $363 billion.. That's the simple point. Now, this is point one. But people are creating
That's not necessary panic. People just process that
in a very irrational way. That what exactly is it that Mr. Warren Buffett is doing? So he has something called as cash positions, and he has something called
as AUM, which I just showed you. His AUM has barely shrunk by 5, 7%
from its peak in 2022. He is building up this cash position.
There is nothing wrong. So what he is doing is that he is building
something called as Opportunity Money. Opportunity. Now, this is very important in
order to explore opportunities. Now, what is the meaning
of exploring opportunities? For example, here's a post
that I had done on Tarsons. Now, Tarsons started to give a run up. It became like a rocket. In a day, it gave very good run-up. Similarly, I had posted about this, about DeltaCorp, and in one day,
it gave very good run-up. These were all opportunities. These type of opportunities keep
on coming out in the market. If you have cash sitting on the sidelines,
you can always deploy this cash into these type of opportunities and
make some quick gains. So this is the first utility
of having a cash portfolio. What people confuse is people confused, you know what, Warren Buffett, I'm
not in a stock market portfolio. Aum, he has sold and he's out of the market so much money, and he has
converted all that money into cash. He's not doing that. This is the advance point
that you need to understand. And in order to understand all these things, you have to educate
yourself about the stock market. I do run courses in case you are a
beginner, in case you are an intermediate player, you will benefit a
lot by joining those courses. In case you guys are interested, I'm
putting the links in the description box. Do definitely check it out. The third key point that I'm making
here is called as Reinvestment Risk. Meaning of Reinvestment Risk. You are sitting on roughly 40% gains and you
are thinking, I will pull out my profits. So you book 40% profits or 40-lack profit.
Great. Awesome.
Congratulations. What will you do with this money? Now you'll say, Okay, fine. I have these three, four options. Number one is that I can do FDs. Number two, I can go to real
estate and I can get in loans. I will go and buy debt. Debt means that I will
go and invest in bonds. Number 4, I will go and buy gold. Or number 5, I will go and buy BTC
or Bitcoin, something like this. Now, what is the issue here? If we look at these reinvestment options in India, what is it
that you have to think? Number 1 point is that if you are actually going to FDs in 2024, what
is happening with FDs? The inflation in the economy is like this. Fd rates have barely grown like this. Now, you can keep on arguing with me, you know what, WPI inflation, CPI
inflation, the 5, 6% is that stuff. And the FD rates are giving me 7, 7.
5%. How you speak about your
segmental inflation. Segmental inflation is the inflation
that you deal with at your level. For example, if you're living in Delhi, Mumbai, Gurgao, you are paying like
20, 20% rise in your kid's school fee. Segmental inflation for you is not
like 4, 5%, it is much higher.. It's not going to go much. I'm not dissing on FDs. Fds serve a purpose. But to grow your wealth, they
are not serving a purpose. Second key point, you
will go to real estate. Now, I'm a proponent of real estate. I love buying real estate. But the real estate buying should make sense if you are able to
scout very good properties. And real estate is. Technically, if you are a white money person, how much long term
capital gains will you pay here? Well, you will pay 20% long term capital gains on real estate,
which is absolute crazy. In equity, it's only 10%. So you have 40,000, here, real estate,
it does not make much sense. What about debt? There used to be a inverse
cycle between debt and equity. Like equity, It used to come to equities. So one could argue that debt used
to act as a hedge against equities. Now that relationship
is completely broken. Now, why has it been broken? So for that, I will quickly comment on
a topic called as yield Curve Inversion. Now, yield curve inversion. Now, yield curve inversion, this is the
difference between your two-year bond returns and 10-year
bond returns, so to say. Two-year, this is short-term debt. Ten-year, this is long-term debt. Usually, relationship is when you are depositing money on long-term basis,
you should get a higher rate of return. If
you're depositing money for a short-term rate, then you should get
like lower-term return, 6%. This spread needs to be there and this
spread needs to be positive, the difference between long
term and short term. Yield Curve Inversion means that the debt
market has been broken down to such an extent and it has been skewed to such
an extent that is a long term debt. People are not trusting it. And as a result, the spread between these two things has almost come down to zero,
and in some cases, it has become negative. Now, very interesting data here that it became negative here, it became
negative here after 2020.. But why 2008 this became negative
and 2020 it became negative? Because debt market has been killed. What do I mean by debt
market has been killed? For example, if you invest in corporate
debt, usually, HNI, FII, DII, they invest. Why? Because the ticket size
of debt used to be high. If you either invest via mutual funds
or you pick a higher quantum of debt. I'm just putting that number, arbitrary number, but this number
used to be very high. Now what has happened is
that democratization of debt. What is democratization? It's because of the simple reason, this instrument, systematically is
being killed, unnecessarily. Because the middle-class person who
can't afford a house, what do we do? We need to spend the
money on the middle-class. We take the REITs.. If you actually understand it sensibly from an economics principle
perspective, it makes no sense. Reets, I can show you. Where a house should be worth 4
crores, but reits can be a real estate. Now the party that is running
this reets will now sell it to. Now, if you are investing in these crazy items, you are, of course,
going to lose money. Bottom line, without getting into the economics behind it too much,
debt has been systematically killed. Real estate has been
systematically killed due to what? Due to excessive taxation. So now,. So see, FDs are not beating inflation. Real estate is not a tradable instrument. It has low liquidity.
It's good. There is no problem in real estate. Not rates, two very, very good asset. In fact, one of my primary movers in the last one year, it has given me
180% gains in the last one year. But in India, can you
systematically buy BTC? Not really.
What about gold? Gold may be a lot of money. There is again no point or
not much point going here. You can find my views to be radical. Honestly, my goal is to give
you rational, sensible data. World changes. People who do not change become
dinosaurs and they get disrupted. And a lot of people are going to
get disrupted in the next few years. So having macro analysis
skills, understanding it. I spent crazy amount of time studying the
world, studying the world of economics, personally visiting a lot of countries
now, studying, meeting a lot of rich people, understanding their
viewpoint of investing. I get to do this by running my hedge fund. It has opened a lot of doors for me in order to analyze the
markets, all that stuff. And I try to bring that But where will you take it? This This is the primary problem
that investors right now are facing. I've been having this
conversation with a lot of H&Is.. We have been watching your videos, we have
been speaking with you, all that stuff. But what do we do? We started It is like 10 crores. Now it is like 14 crores,
something like this. What do we do?
Should we book profits? What is it that we should be doing? Okay, very simple words.
We should follow Mr. Warren Buffett. Have some opportunity cash which you can
deploy when opportunities come and add that same time, do do not
go undervalued on equities. Equities should still be a
significant portion of your portfolio. I am not pulling it out. When we clearly see that there is a
massive euphoria, then of course, there can be a deep correction, and
then we can somewhat time it. But right now is not the
phase of timing that. We are not in that euphoric phase. And I've been one of the very few analysts who has been saying it for the
last two, two and a half years.. I mean, YouTube, they're getting
a lot of videos on all that stuff. When crash was going on, no one had the
courage to make these type of videos. Anyways, coming back to the topic, and there are final two, three
points that I will tell you. See, point number one is that you
should be ready for minor corrections. Now, what is the meaning
of minor corrections? I'm going to show you. I have at least been four or five times. What should you do when
you find minor corrections? This is very important. This is where my community
comes into the picture because. I was there through the entire day
guiding my community, what to do, etc. If you are a serious investor, I would still suggest definitely
go check out my community. You will learn a lot. Basically, you have that cash component. This is where you should use it. You should not be panicking.. It will still grow like this only.
Why? Because the debt on the
world is increasing. In fact, I will show you
one quick graph also here. This has to do with government expenses. Here are government interest repayments. It is this type of money, 1997. This, exponentially. People think that stock market returns are directly proportional to
the strength of the economy. Economy is going to tatters. It's not doing anything much. In fact, at one point in time, on a
five-year basis, Zimbabwe's stock market was the best performing
stock market in the world. Zimbabwe's economy is not a turrum,
it's really doing all that stuff. But people don't want to
understand all these facts. So anyways, coming back to the topic, see,
basically, divide your portfolio into two. The first part of your portfolio,
it should be in the stock market. Do not go equity light. Now, it really depends. For example, personally speaking, most
65, 70% of my networth is in equities. How much ever you want to invest. On top of that, what I'm doing right
now is that I'm building a cash bucket. Like Mr. Warren Buffet, I'm going to put that money
to use when there is for 10% correction. And these type of minor
corrections will happen. Now, when will they happen? But if you just wait, you will definitely
get these 10, 10% opportunities. So the split that I'm using is that, Hey,
I'm trying to create, let's say, if I have one CR in the market, then
I would at least have 20 Ls as my cash bucket because then I can take
advantages of these type of phases. This is literally point one. Point two has to do with the
concept of diversification. Since the day I have started my YouTube channel, I have been a firm
advocate of diversification. People keep on asking me,. For example, I purchased HDFC Bank. I have a lot of faith on HDFC Bank. What can I do?
Numbers are good. Everything is good.
Everyone understands. No one is panicking by holding HDFC Bank. On the flip side, I had purchased Aawas. It has given massive run-up. Hdfc, AMC, it has given crazy run-up. Zomato, DoubleSight, B-Zada, ho gya. Equitas, Jio Small Finance, Punj National Bank, Meta, 250% run-up
and all that stuff. You basically buy a bunch of stocks. You allocate your money into... Some stocks will work,
some stocks will not work. That's how investing world operates. If people are telling you otherwise,
they're just You will keep on acting on all those
recommendations and you'll go bonkers. You just have to pick your set of 30, 40 stocks, be well diversified
in that, and that's it. And have a faith, even when
things are not running. For example, right now
is HDFC Bank running?. Now, happy faces. A lot of you might be smiling. But see, in the last one, one
and a half year, it has not run. It's not as if it's
fundamentally bad stock. You pick fundamentally good
things, you stick by it. That's the concept of diversification. Now, if you're on a big portfolio,
definitely diversify into something like real estate, definitely diversify
into something like BTC. All these are good, good assets.. Now, third key point, SIP versus
bulk buying. Now, I am becoming a more and more
proponent of bulk buying over SIP. And they will keep on doing this. They had done this here also,
and they are doing it here also. Markets will be managed. It's becoming more and more
manipulative, so to say. So what I would rather do is
that I would buy opportunities. So these are opportunity points to buy. I would not go crazy here when
the markets are hitting there. If there is a breakdown of a. So then that is what I would do. So final key point that, hey, still always
go back to that point of reinvestment. Don't keep on waiting for a market crash because crash, I don't
know when it will be. For example, if it was in
2008, 2020, it would have been. Government just simply printed
money, took the markets up. Within 2008, it took me 3, 4 years. 2020, 2021, it was all time high. So it's like absolute crazy. So that is where we are. These are five, six points
that you should know. I hope that this made sense. If it did, do press the like
button and I'll see you soon.