Defaulting on our debt: What it means for the Stock Market
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All right, are we headed for a stock market crash due to the debt ceiling? How shall I put this crash? Define crash. I’ll define crash 20 percent to downside, not just a bear market. We move violently to the downside 20 percent. That was most certainly be a crash. Is it possible? Absolutely. Frickin’ lutely it is. Without a doubt.
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What do I do? What do I do? Oh, my God. We only got a few days left. Should I run? Should I hide? Sell all my stocks, buy a bunker? No, no, don’t don’t don’t do any of that. People, let’s let’s play it this way. So what if it does? What so what if it does? So what again, it’s it’s happened before we go back to that way, they hold that whole drama that took place back in in 2000.
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And with the markets sold off then, I think we were down a decent amount. And there was not even in essence a default there, came up close to the deadline. I think there was like two days was the issue back then. And again, a lot of volatility. Markets went down, but guess what? They recouped. Again, we’re seeing, and I would expect
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it to be a bit of a stock market water torture moving forward, 1% to the downside. You’re going to constantly see this, but as we approach it, yeah, market most certainly could sell off. And, you know, I’m here to tell you, people, you have to play it properly. You do. Again, I every single time that there’s a market sell off, we take advantage of it for our clients. But I also know the flip side as well.
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because not only there are existing clients, but then after the fact, I get in all of the people that screwed up, tried to guess what was gonna happen next and lost a fortune during periods like this, did silly things with their money. Hey, again, a 20% correction to the downside, absolutely in the cards. If you can’t handle it, meaning that you’re in a position where you need to be selling
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your portfolio on a regular basis to pay bills, you’re doing it wrong now. Okay. You need to have a buffer when it comes to your portfolio. If you need cash, it just is what it is. And everybody’s different regards the size of that buffer, but it needs to be done. You need to have cash and cash equivalents. Again, you know, you’ve got other experts here. All right, stock market could go down as much as 45%.
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That again, plausible. Yeah, I’ll be tell you the occasion that could happen. That’s if we actually really start defaulting on our debt, but that it’s not legal. I mean, it’s it’s just not there’s more than enough tax revenue coming in. We went over this yesterday on the podcast. So I mean, that scenario presents itself. But again, how could it be we have, you know, the Treasury Secretary
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has to make allowances for where the money needs to go, needs to prioritize spending. That’s Janet Yellen’s job. She’s going to have to do that. The thing I want to talk about when it came to the debt ceiling debate is our nation’s credit rating. There’s been a couple stories talking about whether the major rating companies, S&P, Moody’s, Fitch, they downgrade us and that could stick for a period of time. Listen.
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I don’t have a great deal of respect for the rating agencies after what they did in 2008-2009. They’re not truly rating agencies. They’re paid for by whoever they’re rating. It’s like paying somebody, you’re paying somebody to be a judge on you in a beauty contest. Are we going to become an out looking beautiful? That’s what happened in 2008-2009. I do believe the…
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decline in our nation’s credit rating back in the 2011 situation, I think that that was politics, in essence, bought and paid for by the Obama administration at that point in time. I believe that. I believe that to be the case. They are the ones that told the rating agencies, you’re going to need to put some pressure on Republicans and do this. John Kerry on all the programs out there talking about how awful this is and look what Republicans did. So again,
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This is playing a part into some of these stories. Do I look nervous? Possible sell off market 20%.
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And that’s again, we understand how to navigate storms, corrections, debt ceilings, hype cycles, great recessions, real estate bubbles. It’s what we do. It’s what we do. And again, everyone’s situation is unique and different. Everybody out there concerned about this. Bear it in mind. Continue to dollar cost average, continue to pay yourself every single month. And
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You’re going to come out of this one smelling like roses, just like every other sell off. Watchdog on wallstreet.com.