Should We Invest Now or Wait for a Stock Market Crash – A Quick Review of the US Economy

Hi I’m Jimmy in this video. We’re gonna walk through a quick review of where the US economy stands. We’re using various economic indicators to see if we can objectively gauge where the economy stands. And in theory hopefully this could lead us to making a better investment decision should we invest now. Or should we wait for the stock market to crash which we know will eventually happen. Now I’ve done a few macroeconomic videos recently and I think it could be useful to keep the results of that analysis in the back of our minds for this video. So we’re going to stick our kick off our scorecard with the Federal Reserve injecting capital into the Reaper market. They’ve been doing that on a daily basis. They’ve been doing it for a few weeks now and clearly the fact that they need to do that is a sign of weakness. So we give one point to the Bears because it seems that that might go on for at least a while. OK. One point for the Bears then we did an analysis of the spread between the dividend yield of the S&P 500 and the 30 year Treasury bond yield and impressively we saw that whenever there was a major dip in the spread meaning that the dividend yield of the S&P 500 was relatively high compared to the yield of the 30 year Treasury bond. Well it turned out to be at least a short short term bullish indicator and the market tended to rally at least in the short term whenever there was a dip in the spread. And as we could see with this chart right here well right now the spread is fairly low. And this we have to consider that this could be at least a short term bullish indicator. So we give the bulls one point there. OK then our final sign from a recent video and by the way that links to all of these videos in the description below. If you’re interested in seeing those. OK so a few days ago I did a video titled What will cause the next stock market crash. And in that video we focused on consumer confidence. Now this is a chart of consumer confidence going back the past couple of years and yes consumer confidence in the US is fairly high right now from a broad perspective. Plus there was some jump in the most recent number for consumers confidence numbers. But we’re coming off a low. This was the lowest level since 2016. Now I don’t think that this is a negative sign just yet but I do think it’s important for us to watch because if we consider some of the larger economies in the world well we can see that many of those have been dropping off for a while. So right now a lot a significant amount of pressure is on the US consumer to keep things pushing forward. So far they’re OK but that could turn negative in a hurry. So I think for this one we should make that a neutral point. OK. So what new economic data do we have. Let’s look at manufacturing. So as we could see manufacturing has really been crushed recently. And the way this indicator works is it all revolves around 50 50 is the key level. So when the indicators started falling right here there was still growth in manufacturing but that growth was declining but once it dropped below the 50 level now we’re talking about negative growth. So as we could see it’s dropped below it and it still seems to be declining. So clearly this is a negative sign for the economy and therefore a point for the bears. Now I don’t think it’s terribly surprising that manufacturing will be bad when we consider the pressures of the trade tensions around the world. And in general much of the global economy has begun slowing. So U.S. manufacturing be down being down probably isn’t too surprising. OK. Now let’s jump over to the yield curve or more accurately put the inverted yield curve. So this is an important one. So the inverted yield curve is a fantastic indicator because all U.S. recessions have been preceded by an inverted yield curve. So here’s the basics of how this works. Each dot here represents a different time period. So we have three months two years five years 10 years and then 30 years. So if we invest our money for three months while the three month Treasury would pay us about 2 percent on an annual basis. But if we invest for 10 years. Well right now it would pass about one and a half percent on an annual basis or as of the date of this chart. Clearly this isn’t right because if we’re going to lock up our money for a longer period of time we should get paid we should be compensated for risking our capital for longer. Now this way the yield curve is supposed to look. So the fact that right now short term rates are higher than long term rates is why they call it an inverted yield curve. And like I said nearly every recession has been preceded by an inverted yield curve. Now as you can see here this a yield curve from September 2nd and this is an important day because there were two inversions happening on this day. The first one is here the two year over the 10 year. You can’t really tell but here we go. The 2 year is a little bit higher than the 10 year and then clearly the three month is way higher than the 10 year. So we have to inversions which is two bad signs. The economy right now. But this is September 2nd. So if we fast forward this a bit. Well now we could see that every day up until today. Since September 2nd is actually before that when they first inverted. But since this happened every day the three month yield has been higher than the 10 year. So this brings us to today. And right now we can see that the yield curve is still inverted. So clearly this is a bad sign for the economy. And this point goes to the Bears and this brings us to the main question should we invest now or wait for the stock market to crash. Well when we look at our scorecard we can see that overall things seem quite negative. I believe a ton is riding on the US consumer to continue to keep the very long the very extended bull market going. The Fed is cutting interest rates and they’re likely to keep cutting interest rates. I would expect them to cut at least one more time depending on the news that comes out and that’s supposed to help the economy. I think the trade tensions could continue to put pressure on manufacturing and that could keep pressure on the economy in general. So as far as do we invest now my biggest issue remains timing. Personally I’ve thought that things have looked suspect for a year or two now and then when the S&P had a very bad December I don’t know if you remember last December but they had a really bad December and I was thinking OK here we go. And this is what the S&P 500 has done year to date year to date it’s up almost 19 percent since December thirty first. So if we were spooked about the economy back then we decided to stay out of the stock market well we would have missed this entire run. In fact I’ve heard people talking about an imminent crash in the stock market for three or four years now and over the past three years the stock market is up more than 45 percent. So again the issue remains timing. I personally believe for myself that putting money to work as soon as possible is far better than waiting for the perfect time to put it to work. Now that’s not to say that it shouldn’t be invested in a smart manner. I think that we can invest in things that have historically done well during stock market pullbacks. I’ve got a few videos on that topic if you’re interested but what do you think. Do you think that the stock market crash. Obviously it’s going to crash at some point but do we think that it’s so imminent right now that it makes more sense to sit on the sidelines. I’ve heard I’ve seen in the comments on many of the videos people talking about a time in the market is better than timing the market. And I’m a firm believer in that concept. I think finding good solid investments and sticking with them and holding them for a long time is generally the smartest thing to do. But what do you think. Do you think that we should invest right now despite the fact that there’s a lot of question marks happening in the market please. I mean don’t you think in the
comments below you haven’t done so yet hit the thumbs up. Hit the subscribe button at the bell I can’t say get notifications. Thank you so much for stick with me. The end of the video I really appreciate it. I’ll see you in the next video.

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83 thoughts on “Should We Invest Now or Wait for a Stock Market Crash – A Quick Review of the US Economy

  1. I think the importance is to keep Investing. But at the same time be aware and diversify your investments! Great Review Jimmy!

  2. Yes, I believe the government is on its last leg and the trade war will not help. Thanks for sharing this Jimmy! ?

  3. There is a possibility of recession but it is hard to predict. The magic is to diversify your portfolio as much as possible.

  4. I absolutely cannot believe this channel does not have more subscribers. The way these videos are laid out are very informative and easy to understand.

  5. If a person is nervous about missing out, but dont know what to do, id just say do a little of everything if they can. Some precious metals exposure, some cash, some market exposure. That way theyre hedged a little each way. I wouldnt sit out completely, nor go all in on it going up or down. Whenever things get back to "normal" then change up to a more classical portfolio

  6. Same question i asked myself last yr june & then invested…then asked again during small downturn dec 18 then when i received my money i asked again….since no one knows, i'll invest. What happens…happens. Great vid JIMMMMYYYY !!!!

  7. Personally, I only own ridiculously small positions in value stocks with consistent dividend growth and am sitting on cash until great companies or the right real estate goes on sale. I think a lot for these speculative growth and big tech stocks holding the market up will eventually join the rest of it and even if they don't, new opportunities will always emerge.

  8. In General I find that "Time in the market" is better than "Timing the Market"… But.. now a Crash seems inevitable !

  9. Hi, Thanks for the video, if the Usa crashed who win?.
    Allies and china are down, if Usa goes down, who will be benefited?

  10. I like both time in the market as well as timing the market to add incremental portfolio alpha. As long as time tested leading indicators of the economy are not in a consensus negative view, one should never lose their core long positions (i.e time in the market) and can deploy accumulated cash (from a job, dividends, etc.) and possibly even lever up long on bloodbaths (i.e. timing the market by buying the dip) to take advantage of bull markets. When leading economic indicators turn south, depending on one's age and where they stand relative to their retirement years, it may be advisable to take at least some chips off the table, so timing can become more important after a lifetime of investment accumulation.

  11. I've always invested, as no one knows when the next big crash will happen. So many people were understandably thinking the bull market in 2016 was too crazy/high, and they pulled out.. Many are still sitting on the sidelines. I like a strategy of consistently investing in quality companies (that pay quality dividends) over the long run, including through crashes. Its hard, but it has worked for me. So a logical thing to consider is to invest in areas you think can flourish better if there is a big pullback, as well as hold its own and move forward if we don't have one.

  12. I don't think we will see a major crash in 2019, but I do think we will see multiple recessions across the world in 2020 with a stock-market dip, followed by long-term minimal growth.

  13. great video! My opinion on the current economy situation is that once the "trade wars" settle down, we will still see some growth, specially in the upcoming months, that historically have seen good growth in the markets.

  14. My concern is how far down will the market go. I have stop/limits to minimize the damage. I remember in 2008 that the market lost around 40% in a relatively short time and took YEARS to recover from it.

  15. Just keep investing even when the stocks are down ! But do research on the company so it doesn't crash and burn!

  16. I know these videos are generally directed to the American audience but does anybody know about a way how average people from developing countries are able to legally invest in worldwide stock markets without high fees and commissions?

  17. There are always going to be discounts in the market at any given time, I'm just avoid companies with severely bloated valuations right now but staying mostly invested.

  18. Jimmy, what about maintaining a cash heavy position? Reducing purchases while storing cash? Then you buy the lows, like I've been doing.

  19. “do we wait for the economy to crash WHICH WE KNOW WILL HAPPEN”… do we? How do you know we aren’t in for a very painful 10-20yr+ slow share price slide?

  20. Great video! I think a recession is on the near horizon, but as a long term investor I'm not worried. If anything, I'm excited to pick up some great stocks at a discount, hard to find good deals nowadays. Keep the awesome content coming!

  21. Very good analysis! Greetings from Germany! BUT REALLY and as a comment to one of your last videos on dividend stocks: Forget Abbvie, better buy the european alternatives, especially Novo Nordisk ;-). Just read studies about the difference in the way they solve product problems and stuff like that. AND: They pay over 3% dividend. US does a great job in tech and many other sectors…

  22. The only people who know when the perfect time to invest are those able to rig the market.

    Buy at a fair price and be done with it.

  23. I think it’s smart to wait for a dip and keep averaging down on positions…

    But once you buy, NEVER SELL in bad markets!

  24. If you're buying a stock with a large margin of safety your downside risk is pretty low. The biggest advice is not to buy overvalued companies.

  25. in 1929 the market crashed over night.when you are wake up in the morning and your stock is worth hardly nothing.then people unload their stock at any price.a crash.

  26. I'm not going to invest in ETFs or broad index funds now, but MMM, R, T, VZ, and some other telecom and healthcare and some financial stocks (UBS, STT, HRB) look good now. But NOT investing in SBUX, MSFT, AMZN, or NFLX at these ridiculous levels!

  27. I'm 50 years old and just became unemployed, I can't afford to lose the hundred and sixty thousand in my 401k and the hundred and thirty thousand in my stock brokerage account. I had to pull back because it's just too dangerous. 2008 my 401k was cut in half and I can expect my brokerage account to be the same when it happens again.

  28. No way I would put new money to work now. The market is "19 percent up this year", but don't forget that it dropped 20% late last year. So your comment is a bit misleading. The main rule I follow when investing is to only buy undervalued assets that will not loose value or companies that will not go bankrupt. It is actually better to wait and have the right timing than "time in a market." Once you get it for the right price like Buffet did Coke or MCD, then you hold it (time in a market). Don't confuse apples and oranges. You need to understand the true meaning. I currently have only 25% in stock and REITs, about 10% gold and gold stocks, 50% bonds (up nicely) and the rest in cash ready to short once the party starts. I will start nibbling on quality stocks once we are down 40%.

  29. There's always somewhere in the world where there is a bear market and great stocks to buy

  30. You should recap all these "Invest Now or Wait" videos every few videos. They don't all have the exact same indicators, what does it look like when you line up all the recent indicators?

  31. A recession will happen, be in in 12 mo or 2-3 years. If it does happen, it may not be that bad, a shallow recession if u will. One cannot know, so I'm long all the time. Try to position and hedge to handle any condition, keep some cash available to buy on sale, and just invest through any rough patches, because timing seems like fools game. Jimmy, would still like to see you add Credit Spreads to your indicators. Credit choking off is a huge indicator.

  32. Invest now!…The next 3 to 4 years might be rocky after it calms down we're in for a huge boom upward in 5 to 6 years…reply to this comment in summer 2026 and tell me how accurate I was.

  33. It's always a good time to invest in the stock market. The real question is. What should you NOT invest in. Which industry. Which sector. But over all since no other country can take over america then it's always going to be a great investment

  34. The next crash is caused by the minus loans of Ezb. Euro will double the money in less months may next year and in europe only stupid politicans they will do exactly the oposit they of what they should and the hole eurozone will crash harder then 1929…..

  35. I'm still investing in stocks. But I fear a recession is coming up soon so I've re-balanced my portfolio to include safer stocks.

  36. No one knows like you said, best thing we can do is buy spy, 1 to 3x leverage depending on risk tolerance and keep average down if it crashes.

  37. I honestly believe in "if you build it, they will come" or more appropriately, if enough bloggers and news outlets talk about recessions , it will happen. Its the hype and media that put the fear in us average "joe 6 pack investors" and credit card charging consumers, not some jobs reports that doesn't take account of the fact that most created jobs now a days are no benefit part time ones or that a drop in manufacturing jobs means absolutely nothing since 87% of manufacturing is done overseas. Continue building it and we shall come!

  38. The comment time in the market vs timing the market is partially true. I mean you just can buy companies at any price and say it's going to be time in the market, you have to time the price you pay for the company. I hope we have a pullback because I buy every month no matter if many indicators say we are going into a bear market. BUT WHAT I BUY AND WHAT PRICE I BUY IT FOR IS VERY VERY IMPORTANT. My children only have a small amount monthly to invest and that has made me get them to skip a month due to the quality companies I found share price on a dollar basis was to much for them. Instead I get them to roll the cash to next month. Stay smart and calm buy when the bear roars. Most people get excited in the world when something they want goes on sale but yet when companies go on sale they panic and sell instead of buying.

  39. Question: IF the market is going to crash relatively soon, would it be wise to get out while I’m up and then get back in once things bottom out, in order to catch some possible bargains?

    Thanks as always for your videos.

  40. i have friends that are close to retirement and cant afford another recession. they are not going to stay in much longer

  41. Once trade deal is agreed on and we cut rates to 0, market will have no more drugs to keep it going. I’m buying some gold and looking at undervalued emerging markets.

  42. I definitely think there will be another rate cut by the feds and share the same belief that puting money to work as soon as possible is better than doing nothing. But being wise in our investments could mean better returns and less risk. Great video?

  43. “We know the market will crash” lol. No. No we don’t. People are afraid because of indicators, but the market is actually strong right now. A recession is also not a “crash”. Maybe it will dip, maybe not.

  44. I believe long term investing is great for making money. Personaly I have a lot of money for a student and would rather wait, then go all in. But at the same time I believe there are some times where you sould try to time the market. For example if you invested money in the sp500 in 2000 and waited until 2010 you whould have lost or did not gain any money.

  45. I have to admit I’m a “sideliner” at the moment. I haven’t seen a margin, up or down, that makes me feel there is enough room to make substantial money within all the fluctuation happening. Buying in at record (or near) highs is a good way to lock in a loss. There are other markets besides equities that are safer in this short term, and that’s my choice at this specific time. I know I can’t time the market, but I have no FOMO on a modest rise or a huge dive. I’ll wait and see. As to the specific question, it would be no shock to see a recession in 12 months, but more Importantly I see no indication of significant net upward movement in the next 12 to 24. So if a recessed economy, or even just the inevitable “reversion to the mean,” should occur, that’ll be my cue to jump in.

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