STOCK MARKET EXPLODES: What You Need to Know
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All right, everybody, welcome. Yeah, it’s one of those buckle up buttercup types days when it comes to the overall financial markets without a doubt. We’re looking at a situation right now where, again, you’ve got markets that are selling off all over the globe and everybody wants to know why. How could this be? How did this happen? How did this occur? Many people are not familiar with what is known as the Japanese
carry trade. Now, what happens is when Japanese rates are very, very low, people borrow in Japanese yen, and then they turn around and they buy in higher yielding markets. Now that trade has been unwinding. People are actually shocked that the Japanese central bank raised rates despite the economic weakness here in the United States. And what you end up is you’re getting a lot of forced selling. And that’s what we’re dealing with at this point in time.
You couple that, what’s going on obviously in the United States with economic numbers that are not surprising to anybody who continues to follow us here. And you go into a risk off mode. Now, when you have highly leveraged situations, it doesn’t make a difference whether it’s stocks, doesn’t make any difference whether it’s real estate, whatever it may be. When it goes in the wrong directions, things escalate quickly. You’re thinking of like Ron Burgundy there. Things that escalated quickly. And that’s what happens
How do you go about handling or playing a situation like this? Not the first time this has happened. It’s not going to be last time it’s happened. Well, I guess it depends on your unique situation. I guess it depends upon what you’ve done as far as your portfolio is concerned. We’re big believers in not losing money. Does that mean that, markets are going down, we’re selling? No. No. You never, ever, ever.
want to be forced to sell something. Again, that’s why all the situations out of control because all these people that are levered up, they’ve got margin calls that they have to make. And when you look at these leveraged situations, things start going out of control. They have to sell. I mean, we pick a stock right now. Let’s pick Apple. lot of news about Apple because Warren Buffett trimmed his position in the company, the stock, I don’t know, is it down?
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10 % or something like that pre -market. Do you have to sell it? Let’s say if you bought it a few weeks ago and it was much higher and it’s down now. Markowski says not to lose money. Well, if you sell right now, you’ve lost money, haven’t you? Again, it’s not a chip. Stocks are not money. They’re underlying ownership in a business.
Why did you buy it in the first place? Anything fundamentally change with Apple whatsoever? No. Nothing’s changed. Everything’s the same. So why would you go out and you’d sell it if nothing is fundamentally changed? Well, because the markets are down. Listen, if you are in a situation where you have to sell because you’re leverable, I guess what? I guess you’re going to have to sell if you decided to buy on margin or you needed that money that you put into Apple to put a down payment on a house.
that’s coming up shortly. That’s insanity. You don’t do that. That’s not what investing is. That’s what speculating is. So no, no. mean, basically right now I’m doing like I normally do. I love buying into weakness. Best time to buy. Best time to buy is to buy into weakness. And as it presents itself to you and you get the opportunity, take advantage of it. Again, don’t be one of the greater fools out there
falls into all of the hype, all of the nonsense when they try to push you. It’s interesting, I’m seven hours ahead right now where I’m located and brought you up doing this timestamp, this podcast, say around close to five o ‘clock in the morning Eastern time. And again, I’m obviously up early. maintain my routine when I go away on vacation and I’m watching, I’m watching on Twitter, I’m watching various
posts, all of the legion of doomsters out there telling everybody the sky is going to fall, the world is going to end, all of this stuff, all in an effort, again, to enhance their book, enhance their position, to get people to do things that they don’t want to do. You’re also getting the people that are involved in politics with that as well, trying to scare everybody, my god, know, everything is going to crash, it’s going to fall apart, and that’s because they want to, to enhance their position.
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Yeah, I don’t know when push comes to shove where things are going to end up over the short term. don’t. But nobody does on Twitter. Nobody does that’s out there. None of these wizards are smart. No, despite what they’re telling you. What you need to do is again, is you have confidence in your overall portfolio, the companies that you own, where they’re going to be again, five, 10, 15, 20, 30 years down the road, and none of this is going to matter.
It’s gonna be forgotten. It’s gonna be, like I said, I think about things, whether it be the Asian financial crisis, long -term capital, I mean, how many things have popped up over the years that were always presented as end of the world events? Yeah, like I said, never been on the end of the world. It only happens one time. The other thing when it comes to, like we talk about, don’t lose money. Well, if you sell into weakness and you don’t have to,
and you’re acting out of fear, you’re going to lose money. Just because your positions are down right now, you don’t have to lose money on them. You can hold them. Novel concept. Watchdog on wallstreet
