So, here's a market update. Last

Wednesday on the 22nd of March, the

FOMC, Federal Reserve, raised the

benchmark Fed funds rate by another 25

basis points like everyone expected.

But, what the Fed chair, Powell, said

was pretty interesting. In his speech,

he literally said that the Fed was

expecting a recession this year. In

fact, they want a recession this year.

He couldn't say want, but that's what he

really meant. Why?

Now, in his speech, he said that

um they expect the US to eke out a .4%

expansion this year. Now, let me say

this, that's okay, right? .4% that's

growing, right? Now,

here's what's interesting. If you take a

look at the GDP now uh figures, you can

see that as of quarter one this year,

GDP

is 3.2% for quarter one.

So, if quarter one is 3.2%,

that means for the rest of the year to

end up at .4%,

they need the next three quarters to be

negative. So, the Fed is literally

projecting a 2.8% contraction for the

next three quarters, which is basically

a recession. So, what should you do as

an investor or as a trader? Is it time

to turn bearish and sell, sell, sell,

sell, sell?

Let's find out in this video.

Are you bullish or are you bearish? I

get this question all the time. Now, in

the market, you always find that there

are some people who are always bullish,

and there are some people who are always

bearish.

And people who are always bullish, you

will always find reasons and evidence to

support your bullish claims. You only

see what you want to see.

Same thing, if you're bearish, you only

will look at stuff that confirms your

bearish thesis.

So, I think it's important to look at

both arguments, right? Which I always

do. So, let's look at all the bearish

reasons and let's look at all the

bullish reasons. And at the end of the

day, you know, you make a decision. Do

you want to be bullish or bearish? So,

let's begin with the bearish reasons.

Now, you can't get more bearish than

this guy, Jeremy Grantham. So, he just

came out to say again that brace for the

S&P 500 to plunge 50% from here and a

painful recession to strike as the

everything bubble burst. Now, he's been

bearish for many, many years, but he's

saying, "I'm really bearish right now."

Okay, be really careful at the

predictions made by all these experts

and gurus because

on one hand, they're saying, you know,

be you know, bearish, it's going to

collapse. But on the other hand,

remember that these guys are buying

stocks as well. If you take a look at

the recent quarter, you can see that

Jeremy Grantham, his um

fund, GMO LLC, he's he's been buying

like crazy, right? He's been adding lots

and lots of shares from 3M to Activision

Activision Blizzard to Alphabet to to

Amazon, right? I mean, guy's buying up a

spree, okay? So, again, be very, very

careful. Just because someone says it's

going to crash, uh doesn't mean they're

selling. They could be buying as well,

all right? So, let's run through all the

reasons why uh we could be bearish right

now. Now, of course, the main reason is

because every mother, father, son is

expecting a recession. I mean, that's

Fed themselves, the captains,

the engineers of this economy are

saying, "We want a recession. We're

going to have a recession, okay?"

They're saying it themselves.

And Bloomberg Economics

now sees a 75% chance of recession in

the third quarter

and projects unemployment to move up to

5% in 2024, okay?

Now, is the market pricing in a

recession? Now, here's what's really

interesting. There are certain parts of

the market that the way it's moving,

it's anticipating a recession. For

example, the oil market. Have you seen

what's happening to the oil market? Oil

has been collapsing. So, this is the oil

futures.

And you can see that in the last couple

of days, I mean, oil has really been

down a lot

uh last couple of months, right? But oil

really plunged

in the last few weeks. Look at that. Oil

really plunged. And so, when you see oil

prices collapsing, that is the market

anticipating a slowdown of demand, a

slowdown in economic activity, and hence

a recession, right? Now, the other thing

that you may have noticed is that the

10-year Treasury yield has really

collapsed as well. I mean, the 10-year

yield was like really strong, and then

last couple of days again, the 10-year

yield has dropped, and it's now at its

lows

uh for the last Well, the lows for the

year at least, right?

So, what does this really mean?

So, remember that the 10-year yield

moves opposite of 10-year Treasury bond

prices. So, when the 10-year yield goes

down, that means the bond prices are

going up. So, why is this happening?

It's because a lot of people are buying

bonds. They are buying 10-year Treasury

bonds. So, as they are buying these

bonds, the bond price goes up, and the

yield comes down.

So, why do people buy long-term bonds?

Because they are afraid of a recession.

That's right. So, in in anticipation

that they're going to have a recession,

economy's going to slow down, they buy

bonds to kind of like lock in their

money. So, it's like, all right, safe,

right? So, this is

uh a pricing in of a potential recession

as well.

Then, of course, you have another reason

to be bearish, which is the the yield

curve. This has been talked about for

many, many months. This is nothing new.

So, the yield curve is we're going to

inversion of the yield curve when the

short-term 3-month Treasury yield goes

above the 10-year Treasury yield, you're

going to inverted yield curve. That is

always

anticipated recessions. Now, what people

fail to realize realize is that it's not

the yield curve inversion

that then leads to a recession. It's the

inversion and reinversion

which I've talked about before. So,

again, over here you can see this is the

10-year

uh Treasury yield minus the 3-year

Treasury yield, yeah? And let's go back

and let's look at the last um few

recessions based on this. So, you can

see the yield curve inverted here. Now,

when it goes below zero,

that's called inversion, right? So, it

goes below zero and then when it

reinverts back above zero, then you get

recession, which is in gray. Same thing

over here. Goes below zero, yield curve

inverts, and then reinverts,

recession, right? And same thing over

here.

Uh goes below zero, reinverts, and

inverts again, reinverts, recession.

So, now we have got this yield curve

inversion that has been happening for a

few months. And again, people are saying

that it's the deepest inversion in

history. Indeed, it's like, "Oh my god,

all the way down." It's really, really

inverted, right?

But, it has not reinverted yet. So,

based on history, if you want to follow

this model, you need the yield curve to

uninvert to get back above zero and then

boom, recession will follow. That's

That's not happened yet. But again,

people

are bearish because they see that

inversion happening in the first place.

Now,

the other reason to be bearish is

because of what's happening in the bank

crisis. Now, a lot of people Now, not a

lot of people, some people are concerned

that this bank crisis will have a

contagion effect, lead to another great

financial crisis.

I don't think that many people are

seeing that happen because it's a very

isolated case and many of the big banks

are very, very well capitalized. So, I

think that's not the issue. But, the

concern right now is because banks are

under a lot of stress, what will they

do? Banks will now tighten their lending

standards. They won't lend as easily as

before. So, once banks kind of like pull

back and not lend too much, what does

that mean? That means consumers can't

borrow easily anymore.

And their consumer spending may drop

because they can't borrow easily, right?

Same Same thing with companies. If

companies can't get loans easily, uh

they can't expand easily. They can't

grow their business. They can't hire

people. And all this leads to what we

call a credit crunch. And a credit

crunch indeed leads to a recession. So,

what you want to look at is you want to

look at

are loans still growing? So, for

example, you can see historically

whenever you have got, you know, loans

loan growth beginning to roll over, you

get a recessionary period, right? Loan

growth

rolling over. So, right now, loan growth

still looks strong, but there's fears

that this is going to start to roll over

because of this possible credit crunch

happening. Has not happened yet, but

that's what people are watching. So,

again, if you want to be bearish, there

are many reasons to be bearish. All

together about five reasons to be

bearish. Now, at the same time, are

there many reasons to be bullish? Yes,

there are.

So, let's take a look. So, the first

reason to be bullish is that if you look

at the technical price action on the

charts, it's holding up really well.

Now, what's really interesting is that

despite,

you know, four banks collapsing in the

month of March, despite the FOMC raising

interest rates, and the Fed saying that

we're going to be recession, the bloody

market didn't really go down. The S&P

500 is hardly unchanged in March.

And the Nasdaq is up 7.8%

I mean what the heck? All right, so if

you think about it, the market's holding

up really well, which is

a very bullish thing. So at the end of

the day, you got to look at a chart. You

got to look at a price action to see

what the market has already priced it.

So starting with the S&P 500, you can

see that it remains on an uptrend.

And again, people say are you sure it's

an uptrend? Are you sure? Now again,

this is not something subjective, it's

something objective. Look at the price

action.

I said on the 15th of January that we

are in a new uptrend because the

50-moving average

in blue crossed above the 150-moving

average in green. So whenever you have

the 50 crossing above the 150 and they

start sloping up, that is an uptrend

signal and that has led to a bull market

historically 90% of the time. Not 100%,

but 90% of the time. There's always that

10% that it it could still fail, right?

You never know. So as of now, even with

all those, you know, bank collapses and

all that, hey, the 50-moving average is

still above the 150. So until the 50

gets back below the 150,

it looks like the uptrend is still

there. Although it looks like it's a bit

choppy in the last couple of days. And

again, if you take a look at the price

action,

what do you see from the lows? You see

uh this wave up, this wave down, you see

this wave up, you see this wave down.

And right now it's kind of like, you

know, consolidating here. So you see

higher highs,

higher lows. So that's the definition of

an uptrend.

Now again, could the uptrend reverse

into a downtrend? Of course, it can.

But you can't predict it until it

happens. So as of now, this uptrend

looks like it's still holding. And um

right now the market has traded back

above the 200-day moving average. We had

it kind of like go below the 200-day for

a few days, and people say, "Oh, we are

dead. It's a bear market." But, it went

back above the 200-day moving average.

So, for now,

uh it still looks constructive, if you

will. Now, what's really interesting is

that if you look at the Nasdaq, my god,

the Nasdaq you can't deny has been

pretty bullish.

Has been pretty bullish, okay? So,

again,

uh for the Nasdaq, you can see clearly

we have got

you have got higher highs

and higher lows. You see this

uptrend

price action.

Um

the Nasdaq is trading quite far above

the 200-day moving average. In fact, the

200-day moving average looks like it's

it's beginning to flatten and slope up,

which would confirm the uptrend on the

Nasdaq as well, and confirm you know, 9

out of 10, it's a bull market, right?

And the 50-moving average is above the

150-moving average. Although, the 150 is

sloping down, so I'm not uh calling the

uptrend yet until I get at least a 200

sloping up, and the or the 150 sloping

up. I find it quite entertaining

sometimes to read the comments by

bearish traders on Twitter sometimes,

where they say, "It doesn't make sense.

The banks are collapsing, and there's a

recession coming. Why is the market

going up? The market's rigged. It

doesn't make sense. My puts are all

gone."

And see, what they don't realize is that

you can't make money by reading news,

and you can't predict the market by

reading news. And the reason is very

simple. If you read that a recession is

coming, you're not the only one who has

this information. Everyone who reads has

this information, and everyone expects a

recession to happen. Now, here's the

thing. If everyone expects something to

happen,

uh and everyone expects the market to go

down,

the market has already priced in this

information. In In other words, everyone

who wanted to sell,

they have already sold. So, the market

has already priced it in. So, you you

can't expect the market to go down on

something that people already know

about. The market can only go down based

on something that happens that no one

expects. And that's the interesting

thing about the market. When everyone

expects the market to go down, it

usually doesn't go down. It usually goes

up. The market has to go opposite of

what everyone thinks. When everyone

thinks the market is not going to go

down, that's when it goes down. Same

thing with recessions. I've gone through

so many recessions over my last 30-year

career. And

most of the time when everyone expects a

recession to happen, the funny thing is

that it doesn't always happen because

when you expect something to happen,

subconsciously, you will start to do

things that

cause the recession to happen.

And a recession happens when it is least

expected. And that's just the way the

market is. And that's why I keep telling

people that reading news is purely for

entertainment. It should never be used

to anticipate or predict where the

market is going. What you should do is

to look at the current price action.

What does the price action tell you? If

the market is making higher highs and

higher lows, the trend is up until the

trend reverses. If the trend makes lower

highs and lower lows, the 50 crosses

below the 150, then yeah, then you

anticipate it going down based on the

price action. Now, besides strong price

action, history also tells us that this

year will likely would be bullish. I've

mentioned this earlier this year that we

are in the third year of the US

presidential cycle, which is the

pre-election year, which is 2023. Now,

historically, this year has been the

most bullish of all the four years in

the US presidential cycle. On average,

you can see that the S&P 500 has gained

16% um the Dow 16% and the Nasdaq 28%.

And whenever this year has come after

bearish year, it has been even more

bullish. So again, if you want to be

bullish, there are many evidence to

support your thesis as well.

Another uh supporting evidence for

bullishness is the fact that right now

there are record levels of cash

on the sidelines both for retail

investors as well as institutional

investors. In other words, if you look

at retail investors

a lot of them have already sold out of

the market and they're sitting on a lot

of cash in money market accounts. So for

example, you can see over here money

market funds

have reached a record 5.1 trillion

dollars. 5.1 trillion dollars, so

there's a lot of cash in money market

funds that have been pulled out from the

stock markets and and other markets like

like crypto for example. And we take a

look at the uh two-week change in money

market fund assets

it has spiked 238 billion in the last

two weeks. And this is the highest

in a very long time. The only time this

was exceeded was during the COVID crash,

but this current uh spike has exceeded

even the financial crisis and even the

dot-com crash.

Now, what does this mean? This means

that for a lot of investors, retail

investors, they are very bearish. In

fact, this was a recent sentiment uh

survey from the uh AAII and you can see

that, yep, close to 50% of market

participants are bearish. They expect

the market to go down in the next couple

of months and very few are bullish. All

right? Now, how about institutions, fund

managers? Same thing. Most fund managers

are very bearish. They are very

bearishly positioned in the market. So,

most of them are holding a lot of cash.

Right? Cash is the highest holding right

now. They're holding onto the cash. No,

I'm scared, right? And US equities are

at a huge negative position right now.

So, why is this bullish? Because

remember that this information is a

contrarian indicator. When most people

are bearish, market goes the opposite.

Market tends to go opposite of what most

people expect. When most people are

bullish, market goes the other way. So,

why does this happen? This is the

reason. Remember, if most people are

bearish, like they are right now, what

does it mean? That means they have

already sold.

They've already gotten out of the

market. So, if they've gotten out of the

market, that means that there's a lot of

cash on the sidelines.

So, the moment the market goes up a bit,

all this cash floods in, that will push

the market even higher.

Now, the opposite is true. If everyone

is bullish, that means everyone has

re-bought. If everyone has bought,

there's no one else to buy, right?

There's no more cash left. And when

there's no one left to buy, that's when

the market comes down. So, that's why

it's always the opposite.

I like to use this analogy. So, the

stock market is like a car

going up a hill.

As the car goes up the hill, more and

more people get on the car. They climb

in the car, right? It's like more and

more people are buying and getting into

the market. So, everyone's getting on

the car, but once everyone gets in the

car, the car is too heavy, what happens?

It can't go up anymore, and it starts to

roll over. And as the car rolls over,

people get thrown out of the car. People

start to sell. And once most people get

thrown out of the car, and the car is

light again, then the car can go back

up. So, that's the analogy that we use

when we see extreme bearish sentiment.

Everyone who wanted to sell, they've

already sold. A lot of cash out there,

uh so there's no one left to sell, but

there's a lot of people to buy once they

see a shift, that's when cash comes in,

that's when the market can go higher.

The next reason to be bullish is that

the Fed is slightly done with their rate

hikes. In other words, the market is

pricing in the fact that they're not

going to raise interest rates anymore,

even though Fed chair said they're going

to raise

again, but the market's saying, "Nah."

All right, so if you take a look at the

probability tool, uh you can see that

right now the current Fed funds rate is

4.75%

to 5% range, and the

probability projection for the next

meeting, which is in May, is

the same, right? So, in other words, the

market is pricing in a 69% probability

that they're not going to hike anymore.

All right, but there's still a 30%

chance they may, but most people are

saying they're not, okay? And if you

take a look at the uh Fed's dot plot,

you can see that the one in white is

what we're looking for. The one in white

is what the market is pricing in the Fed

fund futures. So, they're projecting

that right now we're at 4.75,

which is somewhere over here. They're

projecting that not only is the Fed

going to not raise anymore, but they're

projecting that the Fed's going to cut

rates

uh down to here and down in 2024 and

2025.

So, that's why that's why technology

stocks like Apple, Nvidia, and Nasdaq

has been rallying.

Because remember that the main thing

that caused these tech stocks to come

down in the last year has been the Fed

raising interest rates.

But now that the market is kind of like

pricing in that the Fed will not raise

rates anymore, that's why tech has been

rallying, and that's why tech has been

one of the uh best performers this year

so far.

Now, we Well, I said earlier on that the

10-year yield going down

was a bearish thing, right? Because

10-year yield going down means people

buying bonds because they anticipate a

recession. But here's the funny thing,

there are two sides to every coin. So,

on one hand you can say it's bearish,

but on the other hand you can also SAY

IT'S BULLISH. OKAY, WHY? ALL RIGHT, WHY

IS THIS BULLISH?

Because remember that what has caused

the banks to get stressed? What caused

Silicon Valley Bank to have all those

unrealized losses? Was the 10-year yield

went up, their bonds lost money. But now

that the 10-year yield is going down,

bond prices going up, these banks now

their unrealized losses are being

reduced. And so, as this goes down,

ironically, the banks' balance sheet are

getting stronger.

Right? And ironically, as this goes

down,

uh there's less

pressure on

on stocks, right? Because the the

interest rates come down, stocks can go

up even more. So, may some of you may

say, "I'm confused now. So, are we

bullish or bearish? TELL ME, I'M

CONFUSED." SO, here's the point. The

point is

there are two sides to every coin. And

again, if you want to be bearish, there

are five great reasons to be bearish.

If you want to be bullish, there are

also five great reasons to be bullish.

So, at the end of the day, what's the

right thing to do as an investor or as a

trader? The right thing to do is to

ignore all this news and to ignore all

the predictions. All these and

predictions are purely for entertainment

purposes.

The greatest investors in the world,

Charlie Munger, Warren Buffett, Peter

Lynch, they don't allow all these

predictions on macroeconomics to

influence their investment decisions.

Your decisions to buy or sell stocks is

purely based on the fundamentals of the

individual companies. And as long as the

companies are great companies, as long

as the companies are undervalued, you

hold these companies. You let them

compound over time. and sure in the

short term, you will have volatility,

you will go up and down, but over time,

you will see your wealth compound many,

many fold. Now, of course, there's

always an overwhelming temptation that

but if there's a recession coming, if

there's a chance of a recession, a

chance of a

worse crash, shouldn't I I sell and get

out and get back in later? You know,

many people are tempted to do that. And

the danger with doing that is that if

you get off the markets and it doesn't

go down, and it keeps going up,

um you will not be in the markets. And

even if it does go down, you say, "Ah,

it's going down, right? I was right."

But then, you never know when to buy

back. And before you buy back, it may

reverse and go even higher because you

always think that the next day will be

lower.

And I've showed some of you this that

um time in the markets as an investor is

more important than timing the markets

because if you try to time the markets,

to try to avoid the bad days,

it's very, very difficult to do. It's

It's the most impossible to know exactly

when the the bad days are, the the big

down days. But a lot of people by trying

to avoid the bad days, they end up

avoiding the good days as well. In other

words, they're not there when the market

has strong rebounds, when the market has

very strong days. And so, in the end,

over time, they underperform the market.

That's why in the long run, if you just

hold the S&P 500,

you're getting about 10% a year on

average if you don't do anything.

But the average investor only gets like

three or four percent. Why? Because they

keep jumping in and out, and they miss

miss those good days, or they pay a lot

of fees to fund managers who jump up in

and out for them, right? Now, again, if

you're like me and my students, we hold

great businesses, the best companies in

the world, the top 1%. You're getting

more than 10% a year, you're getting 15,

20% a year on average over the long run.

So, it's about staying in the markets

and staying

on track with your investment plan.

Again, remember that

from 1980 to 2020, it's 40 years, right?

Over a 40-year period, if you happen to

miss just 5 days in 40 years, you can

see that your returns fall by 38%.

And if you miss the best 10 days in 40

years,

uh you get 56% less returns. You miss

the best 30 days, you're down 84%. You

miss the best 50 days, you might as well

don't invest at all because you're down

93%. So, how confident are you that you

can get off the market and get back in

and not miss those 5 days in 40 years,

right? And that's 40 years. How about

missing one great day

a year or in 3 years? It's really

detrimental, yeah? Now, for some of you,

if you still want to time the markets,

say, "Oh, I still want to time the

markets." Then, look at the price

action. Look at the price action, right?

So, for now, like I said, the market is

still on an uptrend. Your 50 is above

the 150, got higher highs, higher lows.

As long as that's happening, it pays to

still stay long in the markets.

But, if that reverses down, if we see

the 50 crossing back below the 150,

uh the 200 sloping down, price making

lower highs and lower lows, and you want

to start to buy put options, short the

market, get out, and try to get back in

later, yeah, you can do that as well, of

course. So, hope this has been useful.

Uh I mean, the market's be with you, and

I'll see you guys in the next video. If

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This is Adam Khoo, and may the markets

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