the US Stock Market seems to keep going

up relentlessly every single day AI

related stocks like Nvidia like palena

and even arm which is very overvalued

keeps making new highs the economy seems

to be doing so well and that is

precisely why you have to prepare for

coming

[Music]

correction so it sure feels great being

an investor in the last couple of months

as the stock market uh goes up almost in

a straight line with very small

pullbacks in fact every day the higher

the stock market goes the smarter you

feel about yourself now before you get

too complacent and think that you're the

Nick's investing genius who's better

than Warren Buffett let me bring you

down to earth first of all let's

understand why is the stock market going

up this year well one reason is because

it's the US election year and US

election years tend to be bullish years

not only that but this year we happen to

be in the second year of the new boom

Market that started in October 2022 now

typically the second year of a boom

Market tends to be bullish as well going

back to 1932 there were 14 p uh bare

markets that turned into boo markets now

if you look at all those instances 13

out of 14 of the second of the boom

Market was positive so that's a

93% probability of this year being

bullish with an average gain of 11% now

it's not just about election years or

second year of boo markets the stock

market is going up for one very simple

reason because the economy is doing very

very well better than expected and

corporate earnings are doing better than

expected let's take a quick look so

again US GDP has really really uh

exceeded people's expectations you can

see that uh last year uh This Is Us real

GDP that means after counting for INF

inflation it was positive for the last 1

2 3 4 five quarters in fact quarter 4

2023 came in at 3.3% GDP and quarter 1

2024 currently is tracking at 3.4% GDP

growth rate that is really really

phenomenal given the fact that the FED

has raised interest rates at the fastest

rate in the last 40 years the US economy

is still very very strong and just

recently a few days ago we had a

blockbuster us jobs report that turns

the Slowdown narrative on its head so

people who are saying that the economy

is slowing down there a recession this

us jobs report is saying no what

recession what slowdown us job growth

came in payroll growth came in at

353,000 new jobs created in January

which is a new record high way above the

185,000 new jobs that was expected so it

was a blow out now not only that not

only is the the economy growing and new

jobs are created but inflation is coming

down it's like The Best of Both Worlds

right so we had the pce uh index which

is a fed's preferred inflation index

growing at 2.6% year on-ear in December

and core pce inflation on a six-month

annualized basis came in at 1.9% in

December which is already below the

fed's inflation Target so this is what

we call a perfect economy or a goldilux

economy where the economy is growing but

not too hot just nice now not only that

but the stock market has been supported

by earnings coming in much better than

expected not all companies of course uh

produce very good earnings only the high

quality companies for example my

favorite which is one of the largest

stocks in my portfolio Amazon Amazon

came up with blowout earnings and we had

that very nice Gap up in the stock price

and then we had meta as well that came

out blowout earnings one of my uh

biggest positions in my portfolio also

blowout earnings and of course most

recently just two days ago palen here my

favorite speculative growth stock boom

up 40% in just 3 days and that

contributed to the major increase in my

portfolio value you can see over here

yep meta pener Amazon asml also blow

earnings service now block earnings

Microsoft blond earnings and growing the

portfolio value to $3.8 million Us in

this portfolio and my second portfolio

$3.9 million us now again bear in mind

not all companies have been reporting

very good earnings only the select high

quality companies many of them which are

involved in AI in fact if you take a

look at the other S&P 500 companies they

are reporting has been so so uh so far

72% of SNP company companies have beaten

their earnings per share estimates for

quarter 4

2020 uh3 now that may seem high but it

is not it is actually below the 5year

average of 77% of stocks beating

estimates and below the 10e average of

74% so this is why it's so important to

learn how to pick only the highest

quality stocks that represent the top 1%

of stocks in the market so it looks like

everything is doing well the economy is

really strong and the stock market looks

like it can't come down keeps going up

and if you go into my chat groups you

can see many of my students are giving

high fives every day yes you know we've

made so much money I'm so good I'm so

smart and those who just join our chat

group will feel oh I missed out I came

in late I should have bought in earlier

on should I now buy the stocks right now

before they go higher and then you hear

people who are out there in the streets

who have not been investing they

suddenly get interested in investing hey

should I now buy Nvidia should I buy arm

should I buy meta

now from my experience whenever I see

these signs it usually means a

correction is coming it's Times Like

These I keep telling my students don't

be complacent don't think that the

market can only go up it has to go down

once in a while and it's healthy it's

like breathing you can't breathe out

forever you have to breathe in before

breathing out again now statistically if

you take a look at this chart you can

see how often does the stock market drop

5% or more it happens on average three

times a year so you can bet that this

year the market will drop at least three

times for 5% and that that's the overall

Market but if you hold on to you know uh

higher price stocks they may drop more

than 5% they may drop you know 10 or 15

or 20% Which is normal which is expected

which is healthy okay and about once a

year the market will drop 10% and again

if the Market drops 10% your tax stocks

my tax stocks may drop 25% it is normal

it will happen Okay and of course once

every three years the market will drop

15% which I don't think it would this

year because it already happened and

once in six years the market will drop

more than 20% there's a bare market and

that's when you know tax stocks may drop

like 30 40 50% so that happened in 2022

so we over that but I think this year we

will have at least three times the

market Market drops 3% oh sorry 5% and

one of those times the market dropping

more than 10% so I tell you all these

not not to scare you I'm not a doomsday

pawn star but to remind you of the

realities of investing whenever you feel

too comfortable or too happy in the

stock market the market will give you

one tight slap to remind you who's the

boss sounds like my wife I'm just

kidding now of course the first question

you would ask would be when is the

correction coming the answer is I don't

know no one knows no one can predict it

happens when you least expect it now if

you recall in my couple of videos ago I

kind of like used Fibonacci to kind of

like guess where's the top right well it

went past that top so if you recall I

used my Fibonacci projection tool this

is the S&P 500 weekly candles and I said

okay that's the A to B wve and there a

seawave so where's the 100 100%

Fibonacci projection mark

it was here 4,9 so I said that could be

the top right that could be the top uh

before it corrects down but it blew

above that top so that again goes to

show you that you can use all these

Elliot waves and Fibonacci but it's not

100% right it could go beyond that it

can go for short no one knows okay now

where's the next Target based on this

Fibonacci extension is the 1.618 target

so could the market go all the way up

there

to let's see see what level is this to a

5,4 before it it goes down you know well

everything is possible but I I doubt it

I I doubt it's going to go all the way

up there okay so my guess is that it's

going to you know kind of like top

somewhere around here pretty soon and

again I I can't predict for certain but

here are a few interesting statistics

since 1928 the most bearish period of

the year is actually the second half

of February now right now we're still in

the first half of February first half of

February historically has been a bullish

period but come the second half of

February after the 15th of February then

uh the market tends to get very very

bearish now again so that could be a

clue you know second half we get that

sell off so this is one interesting

chart the other chart comes from funr

and I showed this before this is the S&P

composite uh returns in all the past

election years because this year is the

election year okay and if you take an

average of all the election years since

1950 uh you get this kind of like Gray

Line over there and based on this Gray

Line over here you can see uh we tend to

have again a uh pullback a correction

somewhere in the first quarter of the

year and then in the um September to

October period now this year is an

election year after after a previous

year that gained more than 10% so in the

past you would see something like this

blue line play out in such years and

again based on this you can see uh the

market tends to Peak somewhere in mid

February and then it corrects all the

way down where it Bottoms in mid-march

so that's the first possible correction

of the Year major correction of the year

and the second major correction of the

year would be again uh starting from mid

September all the way to the bottom in

late October before we get that uh

rarely uh during the election so whether

who is winning the election really

doesn't matter Democrat Republican

Market tends to RAR right after the

election now second question is of

course how do you prepare for the

correction are you saying Adam that I

should you know sell everything right

here and then let it drop 5 10% and buy

it all back well you can do that there's

nothing wrong with that but as I've said

before for my core Investments for my

long-term investments in Amazon meta

Microsoft I'm not going to do that I'm

I'm not going to sell uh even though I

expect it to drop and uh buy back later

on so why don't I do that because for

these Investments I'm taking a long-term

view I'm looking at where you'll be in 5

10 15 20 years I know it's going to be a

lot High I'm going for multiple fold

returns so even if the stock price drops

5 10 or even 15 % in the short term I

don't really care because I'm focused on

the long term and of course the risk of

trying to

sell and buy back lower is that you

can't always time it perfectly no one

can buy or no one can sell the absolute

top and buy at the absolute bottom and

the risk is of course as I've said

before you sell for example Amazon let's

look at Amazon right here for

example by the way Amazon is still

undervalued even though it's run up

quite a bit and so uh I'm not willing to

sell it because it's undervalued and I

think that Amazon still will multiply

many fold over the years and of course

the risk is yeah what if I sell Amazon

and it keeps going up which you could

and then I get left behind and even if

it drops later

on all right even if it drops later on

it may not drop excuse me it may not

drop uh

enough uh so if I sell over here it may

not drop enough to where I sold and I

have to end up buying it back at a

higher price and so that reduces my

performance as a long-term investor and

of course the other risk could be you

know after I sell Amazon it could go

down right but then when do I buy it

back I may say okay let's buy it back

when it hits this 50 moving average but

and I'm waiting there to buy back but

sometimes it may not exactly bounce

there it may drop here and I'm ready to

buy but before I buy it runs up again

and I end up you know uh the stock goes

off without me and I want to buy it back

I have to buy it back at a much higher

price so I've experienced that over the

last uh 15 20 25 years and that's why

for my core Investments I just stay

invested and and I don't get out now of

course for my short-term trading which a

different story because for short-term

trades once it goes up to my Target

price I just take profit and then I just

wait for the price to drop again and

then I enter a new long position but if

the price has really gone up a lot I

will take profit I will not at new long

positions because then uh you've got a

very bad risk to return profile for a

short-term trade so if you say Adam if

you're not going to sell and then buy it

back again what kind of preparation are

you talking about well the main

preparation I'm talking about for an

investor is psychological preparation so

let me explain so what I find is that

many many investors their emotions are

tied to the equity in the account so

when the account goes up by 10 20 50,000

,000 they feel good about it when it

drops 10 20 50,000 they feel bad about

it so it's no way to live your life so

one of the things I've learned as an

investor is to be emotionally

detached from the value the market value

of my investments in my portfolio so

even if my portfolio goes up 200,000 in

one day which has happened many times I

don't feel happy that there's no emotion

tip to it's like okay all right but at

the same time there are certain days

when the market corrects and my

portfolio on that day is down like

100,000

200,000 again I don't feel bad I don't

feel lousy I'm totally emotionally

detached to it so let me give you an

example right now one of my portfolios

the current market value is $3.9 million

us and a lot of people they would think

that oh this is my money okay and that

is not good psychologically because it

will not go up in a straight line it

will go through ups and downs and when

the market corrects and that 3.9 million

goes down by 5 10% you're going to feel

very bad like oh I lost that money I I

lost 100,000 I lost 300,000 and I should

have sold at the top I should you know

it messes you up psychologically so to

me what I do is I look at this 3.9

million and in my mind I tell myself

that this is not really mine right

because it could go up and down you know

but I know that in three five 10 years

this will compound to 10 20 15 20

million right so I'm focused on the

long-term Target and not emotionally

attached to this exact value because

think about it like I said in any given

year the market will drop 5% at least

three times on average so what's 5% of

3.9 million well roughly it'll be about

let's see I'm not very good at Mental

Math right 5% of 3.9 million is about

195,000 or about 200 Grand so I know

that you know this will drop by at least

200 grand three times this year here and

you know I if I keep thinking of this

figure I'm going to feel bad I lost 200

Grand I lost that and most of the time

the stocks that I own if the market

drops 5% my stocks may drop 10% because

they are higher beta stocks so I I I

have to psychologically prepare myself

that this will drop in market value by

about

$400,000 on certain days all right and

and the trick is is to depat the market

value from the intrinsic value of the

business so that even if the market

value drops 10% I don't feel like I lost

400 Grand because to me it's just the

market value that that will bounce back

up again in a while right but I focus on

the intrinsic value of the business when

I focus on the intrinsic value of the

business and that that intrinsic value

keeps rising over time that I know I'll

keep getting richer and richer over the

years then short-terms drop shortterm

drops don't bother me all right and

that's the main lesson I want to get

across to you so that's the first

preparation now the second preparation

is

preparing what to add when the market

drops again I don't know exactly when

it's going to drop but when it drops

right when the market

drops uh from let's go to the S&P 500

again when it drops uh in the next

couple of months whether it drops here

or or it drops here then you got to have

a plan what are you going to buy buy

okay so I already have a plan of exactly

what I'm going to buy what I'm going to

buy more of of my existing companies and

what are some new companies I want to

add to my portfolio now if you want to

know some of this I'll cover it in part

two of this video so subscribe and look

out for part two now you may say but

Adam when the market drops in order to

buy more you need to have more cash yes

that's the point so remember that as an

investor you need to always put in more

cash into your Investments every single

year the whole point of Building Wealth

is to spend less than you earn every

year so every year you have got savings

to keep putting into the market

investing is not a Sprint is a marathon

that lasts for decades where you keep

putting into your savings and compound

your wealth now some of you may say but

Adam what if I have no income I've got

no more cash coming in uh whatever I've

invested is all I have and for some

reason reason you don't have any more

cash coming in then I've got nothing to

buy then when the market corrects so in

that case should I sell some things now

and in those cases I would say yes if if

you are currently fully invested and

you've got no more cash coming in and

you want to add some great companies

you're thinking about doing the

correction then in that scenario it

would make sense to sell some of the

stocks that you have that are

overvalued and over extended way above

their moving averages yeah start to uh

scale out of the positions right now you

can always pick the top right so you

want to sell as long as uh it's

overextended sell and raise some cash in

your portfolio so maybe in your

portfolio you could raise up to I don't

know three five even 10% in cash and

then when we get those Corrections in

the year then you redeploy those that

cash into better companies that are more

undervalued all right so that concludes

this video but there's a part two to it

where I'll share more about what I plan

to add when the market corrects down

what are the sectors that I think will

possibly outperform this year in 2024

thank you and I'll see you in the next

video if you want to catch my latest

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online this is Adam coup and may the

markets be with you