[00:01] usually don't make these kinds of videos, but someone has to say this. As unpopular as it is to talk about, I'm genuinely concerned for a lot of investors right now because I've noticed so many people have convinced themselves
[00:15] that the stock market is just easy money right now and that every single dip is just another buying opportunity. But the problem is that eventually there is going to be a downturn that lasts so long that an entire generation of
[00:28] investors is going to start wondering whether or not the market is ever going to come back. And this isn't some crazy hypothetical either. In fact, most the stock market saw negative returns from 1929 through the 1950s, again from
[00:45] 1966 to 1982, and most recently from 1997 through 2009. That is why I think it's crucial to understand exactly how these cycles work, how to recognize the warning signs before they become obvious, and then most importantly, how
[01:00] you could prepare going forward. Because if the market sees a negative or flat return for the next 5, 10, or 15 years, you don't want to be forced to completely change your strategy at the worst possible time. Although, before we
[01:13] start, it is never the worst possible time to hit the like button and already. I'm not a fan of repeatedly asking for it either, but it does help tremendously. And as a thank you for doing that, I will pin the funniest
[01:26] comment I get at the top of the video. Thanks so much and also big thank you to but more on that later. All right, so in terms of where we are right now in the market cycle and why so many people are dangerously convinced that stocks only
[01:39] go up, we got to talk about the bull market. For those unaware, this current bull market started in late 2022. And since then, the S&P 500 has produced since then, the S&P 500 has produced more than 129% return. Meaning, if you
[01:52] bought the very bottom, which just so happens to be exactly when I posted this video, you would have more than doubled your money in 4 years. On top of that, any dips along the way have been bought almost instantly. Like, remember back in
[02:05] April of 2025 when the market freaked out over tariffs? Well, from that low in April until today, you would have made another 60%. Not to mention, buying the dip today seems to be turning into a reflex at this point. Like, according to
[02:20] Citadel Securities, on days when the S&P 500 falls, retail investors have been their normal daily amount compared to just 1.4 times on the up days. Even crazier is that in July of this year, there wasn't a single day where retail
[02:35] investors were net sellers on Citadel's platform. Not one. And honestly, why would they? Like, since 2009, the S&P 500 has returned about 14.8%
[02:47] compared to the long-term average of just over 11%. However, as good as that seems, here's the part that almost everybody misses. Buying the dip only works when the stock market recovers. And historically, that doesn't always
[02:59] happen. Sometimes you buy the dip and it keeps falling, and then you wait for years while the market does nothing but go down. And that leads us to the lost decade. So here's the thing. A lost decade isn't some imaginary madeup worst
[03:13] case scenario. It is a real stretch of time where the stock market goes absolutely nowhere for more than 10 years. And as uncomfortable as that might be to talk about, it's already happened in the United States multiple
[03:26] times, starting with number one, the 1920s Great Depression. When it comes to this, the market peaked in September of 1929, and it took more than 25 years until late 1954 just to get back to that same level. This means if somebody
[03:41] bought at the very top in their late30s, they had to wait until almost retirement age just for that investment to break even. And oddly enough, we are seeing a lot of articles today about how we're seeing a repeat of the roaring 20s
[03:54] almost exactly a hundred years later. By the way, I think that's got to be its own dedicated video because when you get into the similarities between the 1920s and 100 years later today, it's pretty creepy. But I'll save that for another
[04:06] video because we also got number second, the 1970s. At this point, the Dow hit nearly a thousand in 1966 and then it stalled for 16 years. But what makes this one so much worse is that inflation nearly tripled prices on everything. So
[04:23] when you adjust the stock market to inflation, the Dow's real decline for more than a decade was about 74%. And finally, we have number three, the early 2000s. Now, this is the one that people actually call the lost decade because if
[04:36] you invested $10,000 in the S&P 500 on January 1st, 2000, you would have about $9,000 10 years later, including dividends. And the NASDAQ did even
[04:48] worse. It took 15 years, 1 month, and 13 days just to get back to its previous high. Now, even though this might sound like unnecessary fear-mongering, I get stuff when everything's on the up and up and everyone's making money. But the
[05:03] last time we saw a lost decade was about 20 years ago, which means if you've invested your money at any point over the last 15 years, you've become accustomed to returns that historically are really quite remarkable. Like,
[05:15] believe it or not, stocks have never become more popular than they are right now. And at the end of last year, a record 33% of all American wealth was basically at this moment in time, everyone is all in on stocks. Margin
[05:30] debt is at the highest it's been as people leverage themselves even further into the markets. And even though that works great when prices keep going higher, that's not guaranteed to keep happening indefinitely without a few
[05:42] bumps along the way. So, in terms of what the experts say is most likely going to happen next and my own thoughts moving forward, here's what you came when it comes to the markets, most people spend the majority of their time
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[07:34] and use the code graham at checkout. Again, all the information is down below Now, let's get back to the video. All right, so in terms of what's most likely to look out for, and then most importantly, how you could prepare going
[07:48] forward, we need to talk about the market trap. Now, just to be clear, I'm not going to pretend I know what's going to happen or that I'm suggesting a lost decade is going to come up in the immediate future, but I do think it's
[08:00] then you could come to your own conclusion. So, to begin with this, let's start with the bare case. Believe it or not, right now some of the biggest firms in the world are not very optimistic. Like Vanguard expects US
[08:14] stocks to return just 4 to 5% a year over the next 5 to 10 years. And Goldman Sachs was even more blunt. Like back in October of 2024, they forecasted just 3% a year for the S&P 500 over the next decade with about a 72% chance that
[08:29] stocks would do worse than Treasury bonds. Of course, to be fair, a year later, Goldman wound up raising their forecast to 6.5% a year with a range forecast to 6.5% a year with a range anywhere from 3 to 10%. But GMO strongly
[08:41] disagrees with this, forecasting that the economy will see negative 6% real returns for US large caps over the next 7 years. However, on the other end, the bull case is just as convincing. Like in May, Deutsche Bank and Morgan Stanley
[08:55] raised their year-end target for the S&P 500 to 8,000 with Jardini Research even higher at 8,300, mainly because they expect S&P 500 earnings to grow by 24%. Plus, there is a record 8 trillion sitting in money market funds, which in
[09:10] theory could eventually flow back into stocks. On top of that, historically, this bull market that we're currently in really isn't that old. Like when you look back since World War II, the average bull market has lasted about 5.6
[09:24] years with an increase of 167%. Well, this on the other hand is about four years old with a gain of about 129%. So, who's right when it comes to this? Honestly, I have no idea. But I will never forget when I started doing real
[09:37] estate in 2008, watching the markets collapse, watching housing prices drop by 26%. And remembering that no one wanted to invest. In fact, for a while,
[09:49] cash was the best performing asset. But oddly enough, that turned out to be the opportunity because when everyone was into real estate, there wasn't much upside. But when no one wanted to touch it, I was able to get $350,000 homes for
[10:03] $60,000 that today are worth eight times more. And that's what made me realize that the exact moment that no one wants to invest is usually the best time to invest. I also remember back in 2020 when the markets crashed so quickly and
[10:19] everyone was talking like it was going to be the end of the world. But instead, the S&P 500 finished the year at a record price right as I made this video explaining that riches were made in recessions. This also happened again in
[10:32] 2022 where the markets were supposedly over. Jeremy Granthm called it a super bubble and warned that the S&P 500 could fall to around 2500. And that October, Bloomberg Economics put the chance of a recession within 12 months at 100%.
[10:47] Well, wouldn't you know it, that forecast came out on October 17th, just 5 days after the bull market started. All of this goes to show you that if the smartest people in the world can't predict what's going to happen next,
[11:00] only assume that at some point in the future, the music is going to stop. And make it through, it all depends on the interesting about the lost decade. It was only lost if you owned one thing.
[11:16] Like from 2000 to 2009, a dollar in the S&P 500 turned into 90. But US government bonds nearly doubled. A dollar in gold turned into nearly $4. And even a simple mix of 60/40 stocks
[11:30] and bonds finished the decade with a modest gain. That's why to me it is so important that you don't hold all of your eggs in one basket. Starting with number one, own more than US stocks. Remember, the 10 biggest companies now
[11:43] make up about 39% of the entire index. So just buying the S&P 500 is not nearly as diversified as it used to be. And is a perfect example of this over the last year. International stocks have returned about 32% compared to roughly 18% for
[11:59] the S&P 500. This was the first time the US was beaten since 2022, which leads us to second, invest in safety. Right now, Treasury bonds are paying some of the highest amounts we've seen in more than 20 years at roughly 5.3%.
[12:14] Which is insane. So, it makes sense to have a small portion of your portfolio into something safe so that if the market falls, you have something to fall back on that's also paying you a pretty good yield. Which then leads to number
[12:26] three. Keep buying and don't sell. I know this one's really boring advice, but it's the most important because JP Morgan found that if you had invested Morgan found that if you had invested $10,000 in the S&P 500 from 2005 to
[12:39] $10,000 in the S&P 500 from 2005 to 2024, you'd have about $71,000. But if you missed just the top 10 best trading days, that return falls to trading days, that return falls to $32,000. And seven of those best 10 days
[12:51] occurred during some of the worst days. Plus, if it makes you feel any better, in the decade after the last decade, on average, the stock market triples, which is why it is so important to keep buying and make sure you don't sell. And
[13:03] finally, we have number four. Be optimistically cautious. For me, this just comes down to three rules. Size your investments so that you don't get scared off by a drop. Treat your emotions almost like a contrarian
[13:15] signal. And then keep buying and ignore the noise with money that you're okay with watching go down in value. Like my thought here is that usually when something, it's usually not a good time to buy. But when everyone says it's
[13:29] awful and it's going to keep going down and everyone's panicking, usually that's of my own thoughts and what I am doing from this point forward, here's what you with you. I'm not going to pretend I know what's going to happen next because
[13:43] I don't and neither does anyone else. But I do tend to believe that really only one of two things is going to happen. Either valuations are going to increase and we eventually grow into these prices, meaning the bull market
[13:56] continues, or valuations come down and we might see a relatively flat stock market like we did in the mid2000s. Personally, I wouldn't bet against the remain expensive and keep going higher for a very long time. In fact, in the
[14:10] 1990s, the market was expensive by the cape ratio and it still managed to double. But I do get worried when I see people going all in on stocks with assumption that we're going to keep making 10 to 15% a year. And those
[14:26] people, I think, unfortunately are going to be in for a very rude awakening. right now is a really good time to think about being diversified. I'm talking about investing in not just US stocks,
[14:38] not just the S&P 500, but adding in international allocations, maybe some bonds, maybe a good high yield savings account, maybe some gold, maybe some real estate exposure, maybe a collectible or two. And that way, if
[14:51] something falls, you have something else to fall back on. And hey, you know what? If the market keeps going up higher, great. But if not, then you won't be forced to sell at the worst possible time because the only way to make it
[15:03] through a lost decade is to make sure you're able to survive it. Oh, and by Speaking of investing and diversification, if you want to see my own portfolio, exactly what I'm invested in and how it's doing on a day-to-day
[15:16] basis, go ahead and add me on Blossom Social. It's a website that was created, believe it or not, by a subscriber who reached out, told me about it. I really like it and I posted my portfolio in there. You can see how I'm doing
[15:29] compared to like Caleb Hammer and it's totally free. It cost you nothing. The Go ahead and add me on that. You can see everything I'm doing there. Thank you so everything I'm doing there. Thank you so much and until next