# Stagflation Leading into a Bear Market? Prepare! ## Метаданные - **Канал:** Adam Khoo - **YouTube:** https://www.youtube.com/watch?v=UJEK9zj_wG8 ## Содержание ### [0:00](https://www.youtube.com/watch?v=UJEK9zj_wG8) Segment 1 (00:00 - 05:00) The Middle East war spinning out of control and all prices doubling in a short period of time. The scary headlines are coming back. And now the new scary headline is stackflation. Yeah. So what's stackflation? Stackflation is when we have got little or no economic growth together with inflation and that's scaring many investors to sell. So the market has been coming down. Market's down about 5% from its peak. So increasingly I've been getting questions from students um could stackflation lead to a recession could it lead to a bare market should I panic and sell right now well before you panic and sell let's take a look at recent times when we had the same fear the same stackflation narrative so this narrative uh started actually uh back in 2022 16th July uh Bloomberg article said what's stackflation and why Is it such a worry now? Right there. And then uh on the 10th of August 2023, again, stackflation was back in the news. Is not the 1970s, but stackflation is back in the picture. So again, stackflation here, and then April 25th, 2024, fears about stackflation are mounting in the US. It's every central banker's worst nightmare. Freddy Krueger's back. And then on the 1st of April 2025, right there, specflation sparks new fears for the US economy. So this speclation narrative is nothing new. They kind of like put it out there every few months. Now if you take a look at a chart, does this news in any way help us to predict where the stock market will be in the next 3 months, in the next 6 12 months? Absolutely not. You can see that the moment they talk about stackflation here, the market rallies immediately. It's got nothing to do with the article, you know. Then here, you know, they say stackflation is appearing. Yep. Sure. Market goes down for uh a couple for a month or so and a market rallies all the way back up. Stackflation over there, a market goes down for maybe about one or two months, rallies back up. So that's why I keep saying that news headlines by themselves are actually quite meaningless in helping us to make investment decisions. But then again the next question is but oil prices historically have led to recessions. Could this spike in oil price indeed lead to a recession? Maybe not. But let's take a look at the facts. So sure indeed all spikes in the past have led to recessions and bare markets historically but under three scenarios. Number one, all had to spike more than 50 to 100% above their average price and stayed there for at least 9 to 12 months. Then the oil price spike was enough to bleed into the real economy to cause a recession. Now, so far, have oil prices gone up more than 50%. Well, it did, but it didn't sustain that. It just stayed there for a few days and came back down. So right now all prices are about 45% above their average and it's been there for about a month. So it's got to stay above 50% for at least 9 to 12 months for it to do real damage to the economy. So we are not there yet. Yeah. Not only did oil prices have to go up and stay high in past recession scenarios, but the economy had to be already weak and the oil price was basically a thing that tipped it over. So currently is the economy weak in the US? Well, if you read the recent news on Friday, the US economy is growing at a slower pace. The growth is slowing down. In fact, fourth quarter GDP was just revised down to just 0. 7%. But you could say that it was a short-term impact because of the U government shutdown last year. Now the good news is that quarter 1 GDP this year based on the Atlanta Fed GP GDP now is tracking at 2. 7%. So for now the US economy looks like it's okay for now. Number three, whenever an oil price spike led to recession, there was a third thing that had to happen when it happened, which was the Federal Reserve at the time had to raise interest rates aggressively to kill inflation and that caused the bare market in recession. So, could it happen again? Now, again, we don't know. We can't predict. But with uh Kevin Walsh coming in as a new Fed chair and with Trump as president, I think the odds of a very big spike back up in interest rates is pretty low. For now, I would say that the risk of a recession happening is still pretty low. But what if it does happen? What if we do get another recession? As an investor, how can we use this ### [5:00](https://www.youtube.com/watch?v=UJEK9zj_wG8&t=300s) Segment 2 (05:00 - 10:00) information to time our exits and our entries in the market? Answer is we cannot. In fact, I'm going to prove to you why economic data, whe is it inflation or interest rates or GDP, is completely useless in timing the markets. Let's study the last 20 years. And in the last 20 years, there have been actually two recessions. The first is the great financial crisis and the second is more recent, the coid9 recession. The great financial crisis started in December 2007. But by the time they announced that we are in a recession, it was 12 months later, which was December the 1st, 2028, and the recession ended June 2009. But by the time they said that the recession was over, when the official data was out, it was September 20th, 2010, which was 15 months after it officially ended. So the trouble with all economic data is that it is lagging information. the moment by the time you get the data that event has really passed a few months ago. Let's see what this looked like on the charts. So again the market peaked over here that was the peak of the market and that was the bottom of the market. The market dropped about 56%. Now like I said earlier on the recession started here in December 2007 but you wouldn't know it because by the time the data came out and they officially announced that we are in a recession that came in December 2008 which was 12 months later which means that by the time you read that it's a recession you are already here. So if you read there is a recession and you sell your stocks what's happening you are actually selling here after the market has already dropped more than 50%. And then the recession ended here June 2009. But you wouldn't know that. You only know that when they gave the data when the data came out. By the time the data confirmed that recession is over, the news comes out that recession is over. It was 20th September 2010 which was 15 months after it was actually over. So by the time you read the good news and you bought stocks here, what would have happened? you would have essentially sold near the bottom and by the time you buy back you would have bought back much higher and that's why reading economic data whether is it yield curve interest rates GDP it's a horrible timing tool now then you may ask so is there a better timing tool that is more of a leading indicator rather than such a lagging indicator or at least a coincident indicator the answer is yes and I'm going to show it to you in a short while but not just yet so just hold on and I'm going to give you another example of the more recent recession that we went through which was a COVID crash. So let's go to that COVID recession that we went through about 6 years ago. My god, it's already been 6 years. Time flies, right? Okay. So this was the COVID pandemic and again the recession started February 2020 right there. But would you know, you wouldn't know because by the time they announced that we are in a recession, by the time the data came out that GDP had contracted, it was 8 June 2020, which was 4 months after the fact. So by the time you read the news that we're in the recession, GDP has contracted, you would have sold here. Think about it, right? Market was there, market dropped like 50%. went up, you read is a recession and you have sold it over here. Quite stupid. By the time they tell you the recession had started, the bare market was here and gone. In fact, a lot of people made the mistake of selling there thinking that we were going to go into a protracted depression. Now, when did the recession actually end? The recession actually ended here, April 2020. But again, you wouldn't know that because by the time the data came out that confirmed the recession was over was 15 months later, 19th July 2011. At this time they tell you that hey recession is over. Economy is recovering and imagine you would if you bought back when you saw that good news you would have ended selling here and buying back even higher. So you can see that every time you read economic news, it always causes you to sell and buy back higher. And that's why in the long run, that totally reduces your performance in a market. And you can't beat the S&P 500. Instead of looking at economic data, which is again completely useless, a better way to identify potential downtrends and bare markets and to identify potential bull markets and uptrends, it's better to look at what we call price action. because price always um leads economic data. And this is not something new. I've been teaching this ### [10:00](https://www.youtube.com/watch?v=UJEK9zj_wG8&t=600s) Segment 3 (10:00 - 15:00) for over 20 years in my wealth academy investing master class. And I actually shared it to the public over 10 years ago. If you have not watched it, go check out this video. This video came out as you can see uh over 10 years ago. And it's where I teach this technique called the 50 simple moving average crossover technique. And I'm going to review this technique to show you how this can be a better tool to identify bare markets and bull markets. This technique in identifying uptrends and downtrends, you can either use it on the daily time frame, daily candle time frame or the weekly candle time frame. So if you watch my previous video, I applied it on the daily candle time frame where I used the 50 and the 150 day simple moving average. So since I'm using weekly candles here, I will use the weekly time frame. So remember a 50-day is equivalent to a 10 week because one week has got five trading days and 150day moving average is equivalent to a 30week moving average. So in other words, I can either use this or this. Since I'm looking at weekly candles, I will use a 10 and 30 simple moving average. Let me put the two moving averages into the charts. Um, I already pre-saved it. So that we are 10 and 30 simple moving average over there. Boom. There we are. So the blue line is the 10 week simple moving average and the green line is the 30WE simple moving average. So how does this work? Very simple. Whenever the 10 is above the 30, which means whenever the blue line is above the green line, we are in a bull market. We are on an uptrend. But when the blue line crosses below the green line and the two lines slope downwards, they must slope downwards. Then we are in a correction which could potentially lead to a bare market. Not 100% but potentially So let's take a look at how it works over here. Here you can see the blue line is above the green line. So this is clearly a bull market. This is clearly an uptrend. Now over here the blue line crosses below the green line, right? But this is not a downtrend. correction. Why? Because although the blue crosses below the green line, but the green line has not sloped down. The green line is still sloping up. So this is not considered a downtrend pattern. But over here you can see that the blue line once again crosses below the green line and the slope changes. The blue line is sloping down. The green So this over here is a confirmation of a downtrend which is a correction that could potentially lead to a bare market. So this could be a signal to sell. This would sell out of the market. Right? And then the market goes down. Now over here you can see the blue line crosses back above the green line. But is this an uptrend signal? Is this a bull market signal? No. Why? Because the green line is still sloping down. For it to be a new bull market, both lines have to slope up. Remember the slope is more important than just the crossover. The slope has to follow through the crossover. Now over here you can see that the blue line crossed back above the green line and the blue line is sloping up. The green So this confirms the new uptrend. bull market. So one could actually buy back into the market over here. So this technique this allows you to get out here and buy back at a lower price. So this is more useful than just reading the economic data that is always too late, that's always lagging. Could this have also been used during the com crash which was a couple of years earlier? Yeah. Let's scroll and let's look at the com crash. So this was the dot crash as you can see. And would this technique have gotten you out a bit earlier? Yeah. So let's take a look. Right. So again, notice that over here the blue line is above the green line. So this is an uptrend. This is a confirmed bare uh bull market sorry. Right now over here the blue line crossed below the green line but the green line is sloping up. So no downtrend no correction. Same thing here. Blue line crosses below green line but green line still sloping up. Over here this is the difference. Blue line crosses below green line. Blue line sloping down. Green line sloping out. That is a downtrend confirmation. This is a confirmed correction that could lead to a bare market. And indeed this led to the eventual bare market all the way down. So let's see where would you ### [15:00](https://www.youtube.com/watch?v=UJEK9zj_wG8&t=900s) Segment 4 (15:00 - 20:00) have re-entered based on this uh crossover technique. So you'd have gotten out there. You have sold over there and market went down went down went up. Now how about here? You can see that the blue line crossed above the green line, right? But the green line is sloping down. So that is not an uptrend signal. Now and then how about here? Here blue line crosses above green line again but again green line still sloping down so that is also not an uptrend signal. Now over here blue line crosses above green line but both lines are sloping up. Blue line sloping up, green line sloping up. So this is a confirmed bull market. new uptrend. So this could be a time to buy back into the markets. So again, get out here, buy back lower, and get in, get in here to catch the new bull market up right now. So you may say, Adam, this is great, right? With this, I can get out at the start of a bare market, get in bull market. So do I use this all the time? The answer is no. I don't use it all the time. Why? Remember, whatever technique you use, there are always pros and cons. So, the good thing about this technique is that it gets you out at the start of a protracted bare market and gets you back in only when the boom market starts a few months later. But the trouble is that not every correction leads to a bare market. In fact, I can tell you that four out of five corrections don't lead to a bare market. So the correction could the downtrend could last for just a few months and go back up again. And in those scenarios by getting out of the market using this technique you probably have to get back into the market at a slightly higher price. And so this causes a lot of whipsaw. And let me give you an example of uh during this period right. So if you use this technique what would have happened uh you have said hey this is a downtrend blue cross below green sloping down blue sloping down and you would have sold here right? You have sold here and then the blue cross back above the green blue slope up green slope up and you would have bought back over here. So this would have caused you to sell here and buy back here and then you missed out on some of these gains over here. Same thing over here. You can see blue cross below the green line and sloping down. That would have caused you to sell uh sell somewhere here and then a blue crossing back above the green line sloping up and you would have bought it back somewhere over here. So again you sold here and bought back here. So many times if the downtrend doesn't lead to a bare market, you end up selling here, buying higher, selling here, buying higher. So in the long term eats into your profits and lowers your long-term returns. So when people ask me what is better to just buy and hold through the ups and downs or to get out, get in, get out, get in using the trend following technique. Now from my research I have found that over the long run over 10 20 30 years the answer is it doesn't make a difference really in other words if you simply buy and hold through all the bare markets versus jumping out and jumping in assuming you jump out and jump in at the best timing the end result it's about the same. But the problem with most people when they try to time the market they may misread the price action. So they jump out too late or they jump back in too late and by doing so they end up with a much worse return than simply buying and holding. So I hope that has been useful to you. So the answer is yes you can time the market using price action using technical analysis but you must know when to use it and when not to use it. It is useful for protracted bare markets. But many times in a bull market by getting out and getting in during short corrections, it will eat into your returns. For example, if you take a look at the correction last year during Trump's uh liberation day trade war, uh the market dropped, right? And if you had followed again this technique, you can see the blue cross below the green sloping down. it would have caused you to sell here and the blue cross back over the green and end up buying here. So again selling and buying back higher and again missing out on those gains. That is the risk of trying to get out and get back into the markets. If it is not a bare market you end up paying a higher price. Where are we right now? Right now we are here. So you can see that we are in a small pullback uh about 5% from the high. So we are not yet even in a correction. A correction is when the market drops at least 10% from the ### [20:00](https://www.youtube.com/watch?v=UJEK9zj_wG8&t=1200s) Segment 5 (20:00 - 20:00) high. That is when the blue line will start to cross below the green line. That has not happened yet. We are still nowhere near a correction or a bare market. So thank you for listening and as always subscribe for the next video. If you want to catch my latest videos, click on the subscribe button right now. Click on the bell so you get instant notifications once I upload my latest video. If you want to check out my online courses, go on to piranhaprofits. com where you're going to learn how to invest and how to trade the financial markets and create an income from all around the world. If you want to join my live Wealth Academy program, go on to wealthacademy global. com and find out more about how you can learn investing and trading live online. This is Adam Coup and may the markets be with --- *Источник: https://ekstraktznaniy.ru/video/44952*