hey this is Tom Nash and after a very painful few days the markets have started to show slight signs of recovery and now everybody's wondering the same thing is this the end of the pain should we start deploying Capital again should we start buying again now CNBC invited on Tom Lee to answer that specific question I think a lot of this depends on whether Financial conditions in the US start to tighten you know meaning like do Market seize up but with interest rates falling um you know the consumer still in pretty good shape I think on the other side of this it'll look like a growth scare the two years is signaling that the FED is behind um because two-year yields have fallen further but it does seem like as we look back a lot more this is because of the surprise hike from Japan and the the the sort of knock on effects from there if that is the primary source of the reaction I know it's going to be tumultuous for markets but for the US economy it's not necessarily bad news and I think that's why we can balance well you know markets don't like surprise I mean Friday's jobs report was disappointing that means markets are waiting until August payrolls report which is not for four more weeks uh to to really know but I I would say to me it still seems like July even as a bad a report it was it's more of an aberration almost a record number of people that were having temporary layoffs and people who weren't working due to bad weather and Texas had a big spike in jobless claims so it does look like the hurricane had some effect although the BLS said there was no effect the last time the vix was at this level was April 2020 so for an investor that tells us kind of where we are which is we know markets are nervous and they have to unwind but it's not been a bad time to be thinking that there is an big opportunity on the other side because once the vix starts to calm down and markets have already corrected we know that there's opportunity the the vixs may not have a ceiling because we know next couple days there's also some geopolitical events on the horizon and Israel and in Iran and you know we got politics here I mean that's escalating some people think well that's going to turn into a nightmare this week today I tomorrow I mean we don't want to so I think that's why it's all coming to a head this week I mean to me it's it's a very important week because we know it's hard to catch a falling knife as you're pointing support levels are being broken but mortgage rates are falling the consumer in pretty good shape and you know the job market I think it's very unlikely if the knife is falling and you want you're you like catching falling knives I know you so the question is at what point do you catch said knife I spent a lot of time talking to Mark Newar technical strategist over the weekend and I think that there is a reprieve coming this week like who knows it could even be today right we could open down huge and then after 11:00 a.m. we could reverse higher but I kind of agree with Joe that this is still August and I think that markets traction really doesn't come back till October so between now and October it's maybe a range-bound market at best but there'll still be opportunity so no matter if you like Tom Lee or not one thing is for certain he has never flip-flopped while other so-called experts as you've seen in the past few days have gone from being extra bullish then all of a sudden they were bearish 24 hours later they're bullish again Tom Lee has never changed his position because he's an analytical guy he bases what he says not on emotions not on predictions on hard data and his data didn't change and for that I give him a lot of respect now he also talks about the fact that what we've seen over that Monday crazy selloff has nothing to do with the structural issues of the US economy he basically says look guys what happened on Monday was mainly fueled because of what happened in Japan the bank of Japan decided to increase rates all of a sudden after being literally in 0% for a long time and a lot of traders that were carrying this out this car trade which is basically a getrich quake scheme where they were borrowing in Yen for 0% buying dollars and then buying equities these guys got caught in the middle and basically had to liquidate everything to try and stay afloat causing a massive selloff in the market basically what Tomley is saying is look whether this thing is Unwound fully or we have a few more days of paying it doesn't really matter because this Japan carry trade however long it continues has nothing to do with the structural issues of the US economy and the US Stock Market and eventually it's going to blow over whether it takes a few days or a few weeks it doesn't matter longterm this is not going to have an effect on the US economy and as a derivative on the US Stock Market and I agree with him the other thing he says is like look guys he's still bullish and the reason he's still bullish because none of his fundamentals has changed Tomy is bullish because he basically says look the FED is going to cut rates in September that's certain but what Tomy is saying in this clip is basically it's going to depend on the state of the economy we've talked about it in previous videos multiple times and I showed you that the state of the economy is the most critical part in What happens after the First Rate cut after a prol long period of elevated rates if the economy is good then a rate cut boost the economy and boost the stock market almost every time but if the economy is already broken the rate cut doesn't really help and the stock market usually doesn't do so well so what Tommy is saying when he says pay attention to the macro he basically says that what's going to determine where we go from here isn't about the FED anymore because the FED will clearly reduce uh rates in September and by the way Tom says he should have reduced P that is in July and that was a mistake but that's water on the bridge what Tommy is saying is like look the rate is certain the only question is the economy now Tomley basically says something that I completely agree with he says look guys at the end of the day the macro data is not bad whether you think we are in bad times tough times rough times whatever that may be that's fine but the macro doesn't lie when you have 2.8% GDP growth when you have 3% inflation and 4.3% unemployment and consumer spending basically going up quarter of quarter these are not recessionary num numbers no matter how hard life is this is not recessionary so the chances of us hitting a recession over the next few months with these sort of numbers is very slim and in that specific scenario reducing rates is going to boost the economy and boost the stock market accordingly and he says there's a lot of opportunities that are going to come up in this market what I think he means is what he said multiple times in previous interviews which is this small caps the Russell 2000 stocks the iwm index basically that index has been la in the S&P 500 for a year and a half about 40% lag and that index is going to be most benefited from reduced rates while other companies in the s&p500 the Mac 7 they're pretty much agnostic to interest rates well they're slightly sensitive but not that much the small caps are Uber sensitive to interest rates and once we understand that the FED is going to start cutting rates well what's going to happen is the small caps will benefit mostly from it a lot more than the max 7 and what he says is nothing has changed we're still expecting a 40% increase in the max 7 by the end of the year especially with interest rates coming down with the economy being decent and this massive lag that was created between the small caps and the rest of the market the other thing he says is look geopolitics is a mess but basically when was geopolitics not a mess when you look at the past 80 years we had Wars craziness just the other day we had Bangladesh basically go through a revolution like craziness in geopolitics has always been the case not buying stocks because of geopolitical uncertainty has never panned out as a as a good strategy and I think that's what he's saying here and I agree I mean there's a lot of uncertainty but when was geopolitics fine and cool the other thing he says is when to re-enter basically that's the key Point here he talks about look the rest of this year is going to pan out like this he says look August was never a great month for stocks right it always kind of been shaky maybe sideways maybe there are some opportunities in August for sure but he says look the best months of the year usually come in October November December starting from October so what he's saying is be patient things may be sideways for another month month and a half but at the end of the day October is when we're going to start seeing that bullish Spike it's not going to happen in the summer months when everybody's on vacation a lot of geopolitical uncertainty a lot of craziness so what he's saying he's like look guys just chill chill chill wait till October November this is where the bullishness is going to come in there's no rush now at the end of the day I think we learned some valuable lessons over the past few days and I'm going to kind of recap them in no particular order and the lessons are very simple number one for you know first and foremost number one ignore mainstream media mainstream media is an expert at creating panic and basically making you a a see things much more crazy than they are basically giving you a lot of emotional activity a lot of triggers and that's going to push you to bad decisions so just ignore what mainstream media is pushing whatever narrative take what you want from main media take the important stuff but ignore all this noise number two don't use leverage and don't use money you can't lose in the stock market if you spend money in this in this in this environment essentially that money needs to go to rent or stuff that you need to spend on every day putting it in the stock market is not a good idea if you need to borrow money to invest that's not a good idea because as you've seen over the past few days you might get you know forced to sale because you're in leverage position no leverage no money you can't afford to lose right away and of course as system is super important the process is super important what my students have been doing over the past few days when things were selling off is just dollar cross averaging into weakness at Double the pace than there were dollar cost averaging the days before we have a system we have a discipline we have a process we trust it if you just randomly buying and selling stuff that's not a good strategy you have to have a process and a system my students understand it and hopefully by the time you finish watching that video and you join our community on Discord discord.gg Nomes which is free to join you'll have that system in place as well now there are spots in the academy left at the end of the video I'm going to open up another two spots you can join in but until September 1st the academy is pretty much locked since I don't know how many Academy lessons I can do from out here in Thailand until September 1st so by September 1st we'll have much more spots but for the next few weeks two more spots and that's it because people keep been asking about it h the next thing you need is accountability if you're going to do something that requires discipline you need accountability Partners the way you do in the gym right find a friend somebody you you can trust and have an accountability body basically not trading not doing stupid stuff uh just remaining in the DCA position somebody to hold your hand sometimes and sometimes you have to hold their hand number five I think at this point you have to have a 10year horizon this is just this Market is such a volatile mess in the short term but if you you know zoom out any good investment over the course of 10 years it's impossible to lose money and of course last but not least you have to pick good businesses your due diligence process must be perfect because if you pick good businesses over the course of the next 10 years it's impossible to lose money unless some craziness happens but usually doesn't it's that simple now look about 25 years ago Jeff basis had to issue a shareholders letter back in 2000 when Amazon stock dropped 80% and he wrote in that letter something very simple he said look guys I know it sucks I know it hurts but you know the business is doing better than ever so if the business is doing better than ever but the stock just dropped 80% I think it's a buying opportunity that's literally what he said in that letter in case you're wondering from that point on until now the stock has 40x 40x it has done a lot of money and it has made a lot of millionaires 40 times on your money in 25 years it's not bad at the end of the day look think about it what happened on Monday is pretty much that Warren Buffett example where he talks about oh like imagine two people own a Jon farms and one farmer and the other Farmer they speak every morning and then every morning one of the farmers offers the other to buy his farm from him and some days is annoyed and pissed off and just absolutely crazy and he says look I'll buy your farm at onethird of the price kind of laugh it off but you continue with your day and if someday comes in said look I'll pay double for your farm or three times your farm maybe that's time to sell that's how you think about the stock market it's the same thing if some crazies are willing to sell you Microsoft Google paler and Tesla at 20% less sure you might consider that but that doesn't mean you have to be freaked out because some crazies think that these companies are now 20% less valuable than they were just a few days before since 1980 basically what happened on Monday is a guaranteed moneymaking machine since 1980 the S&P 500 dropping 5% or more gives you a 6% return over the next three months and then 84% of the time it's also positive so basically we just dropped 10% off the top 80 84% of the time in history that done history since 1980 that guarantees that you're positive and the average is 6% over 90 days it's not bad look the NASDAQ the max 7 the semis all of them are discounts right now you just have to choose and pick which ones you want to DCA into but there's a lot of opportunities in this market think about it this way if your average portfolio right now is $75,000 I I know some of you have $300,000 some of you may have $3,000 portfolio it doesn't matter the average is about $75,000 right and you invest $750 every month and let's say that your average portfolio performance is about 15% per year and you look at 10 years forward so in 10 years that 75,000 turns to 500,000 do you really care about what happens on Monday or Tuesday or Wednesday or any other crazy day who cares who cares who cares it's not that's important it's basically irrelevant you're looking at a 10year perspective that you know you're going from 75k to 500k in just 10 years come on that's simple that's easy that's not that's Nob brain the other I want you to pay attention to is you have to understand which kind of sport you're playing here look if you're running the 100 meter dash that's one thing that's trading that's all about the first 10 seconds and that I know nothing about if you're running the marathon that's a completely different strategy if you try to run a marathon like a 100 m Dash Runner you're going to lose and vice versa so over here in this channel we are long-term investors and that requires patience that requires balls and that requires discipline and process that's all as simple as that just decide which sport you want to play now to be honest I know some Traders active traders who make a lot of money I know a few but all of them without exception have dedicated their life to trading all they do all day long is trade research trade research they have a system and they're obsessed with it and that's all they do if you got a job you got a family and you're not going to be a full-time 100% nut case who just trades all day and obsesses about data and information it's not your game they're going to beat you they're going to beat you and they're going to make money that's why 90% of Traders lose money and 10% make money because the work is actually very hard long-term investing it's easy all you do is invest in good companies your dollar cost average every single month and you just do nothing for 10 years simple as that that's all I got for you today I'll see you the next one