Video # 1 How do tariffs work?

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CNBC Explains
iPhones, umbrellas, shoes. These are just some of the common items that make up

the $billion worth of goods that are made here in China.

And are imported here to the United States.

President Trump is unapologetically adding and increasing tariffs

on many imports, prompting retaliation from China and others.

So how do tariffs work, and what do they mean for the economy?

A tariff is a tax on items entering or leaving a country.

The money collected under a tariff is called a duty or a customs duty.

And in the United States those duties are collected by the U.S. Customs and Border Protection.

Last year, U.S. import duties totaled up to $billion. That's % of the total value of all imported goods.

That makes U.S. tariffs among the lowest in the world.

But that doesn't mean every item entering the U.S. is facing a % tariff. There's a huge range.

Some items aren't taxed at all, while others, like shoes, are taxed at around %.

And upping that % to something like or % can cost the makers of these products a lot.

Especially when you consider that % of shoes sold in the U.S. are made overseas.

Let's say I'm buying watches from China to sell at big-box retail stores here in the U.S.

Say each watch costs me $Add in a % tariff to that, and I now have to pay $per watch.

$doesn't sound like much but if my order is watches,

my total cost has now gone from $to $

That % tariff on watches cost me an unexpected $on goods.

So if tariffs cost businesses so much money, why have them in the first place?

Well, there's two main reasons. First they raise money. That revenue goes to the

general fund of the U.S. Treasury, which helps pay for running the government.

Last year, the U.S. collected almost $billion in duties.

Number two, tariffs can help protect some domestic industries from competition abroad.
Think of it this way: if you're charging Made in China more money

that makes Made in America suddenly seem more affordable.

Let's go back to our watch example.

If my manufacturer in China is sending over a batch of watches that cost me $instead of $

I might find a cheaper way to make them here in the U.S. to avoid paying that % tariff.

But my supplies used to make the watch are likely going to need to be imported,

likely, still from China. And those supplies probably will have their own tariffs too.

You can see how this can get complicated.

There's another option.

I could also potentially buy from another country that's not subject to the tariffs

on products from China, like India or Vietnam. That's bad news for China.

But it's not just China that Trump has been after.

When the U.S. president introduced billions of dollars in new tariffs,

countries like Canada and Mexico, as well as the European Union, were quick to react and retaliate.

So why is he kicking up the controversy with America's biggest allies?

Trump says he wants to dramatically reduce the U.S.' trade deficit with other countries.

A trade deficit is the amount by which a country's imports exceed the value of its exports.

Trump is hoping that by introducing drastic tariffs it will reduce the size

of the U.S.' trade deficit, and he's particularly focused on China.

The U.S.-China trade deficit is estimated to be $billion.

He hopes to reduce it to $billion by

So what does all this mean for consumers?

When tariffs are put into effect, the person likely paying for that increase in cost is you and I.

A number of American companies have said increased tariffs will hurt their businesses,

and ultimately they'll have to increase prices for consumers.

In the weeks following Trump's announcement, prices went up on items

ranging from a can of Coke to toilet paper and kitchen towels.

And some companies like Kimberly-Clark, which makes Huggies and Kleenex,

have even lowered their annual forecasts.

And the tariffs could badly hurt Chinese companies and their products too.

Some of the largest items that the U.S. is shipping to China

include things like soybeans, aircraft and electrical machinery.

So, when China retaliated by announcing a % tariff on U.S.-made airplanes.

That was a direct hit to Boeing, and the company's stock price fell on the news.

Boeing is selling planes to China Southern Airlines Group,

which plans to buy more than aircraft in the next three years.

So with higher tariffs on U.S. planes, it could buy a larger share of airplanes from say France's Airbus
instead.

The vast majority of economists surveyed by a Reuters poll said that

import tariffs would do more harm to the U.S. economy than good.

Yet, like most things with President Trump, he's standing his ground,

as governments, companies and consumers scramble to see what's next.

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Video #2 Can Tariffs Actually Work?

Economics Explained

Tariffs have returned to the forefront of economic debate since Donald Trump won the

US election and began using them both as a negotiating threat and a tool to fix a long

list of identified economic problems.

His policy of economic nationalism is nostalgically inspired by the th century when Tariffs

were THE defining trade policy of the United States, a policy that supposedly helped to

keep income tax at zero and protected thriving industries.

So if it worked for the USA once, could it happen again?

It's an idea at the very least worth exploring since it's promising possibility that Tariffs

can create the fiscal wiggle room needed to lower taxes whilst reviving the old industrial

heartland of the world's largest economy.

Even the most pro-global economists will admit that there's certainly reasons to impose

tariffs that make economic sense.

That's why large growing economies like India, Brazil and yes of course even China

still use them fairly heavily.

But the world has changed dramatically since the US last used tariffs with the breadth

and depths of the level being proposed today.

Nowadays, American consumers are accustomed to cheap goods made through complex global

supply chains that depend on low trade barriers.

New tariffs would introduce barriers potentially forcing importing businesses to increase their

prices just to stay profitable.

This would effectively mean that tariffs are just a sneaky way to tax consumers.

Even so, the industrial, employment and strategic benefits of tariffs could still be worth a

potential reduction in consumer purchasing power.

Now of course, recent debate on this issue has been highly politicised.

But at the end of the day, tariffs are simply an economic tool.
Like a spanner, they aren't inherently good or bad.

Need a tighten or loosen bolt, the spanner is very useful.

But if you need to perform brain surgery, maybe consider using something else.

The point is, generalised blanket statements that have been made about tariffs are oversimplified

because they cause different trade-offs in different markets which should be weighed

up to get a sense of the net benefit or the net cost.

This means nuance is key now more than ever.

So as always, we have some questions to answer.

How do tariffs work?

What can we learn about tariffs from chickens and washing machines?

And finally, why might tariffs still be worth it even if they come at an economic cost?

As someone who writes a lot, whether it's scripting videos for economics explained

or drafting important emails, clear and effective communication is critical to my work.

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level up your productivity.

A tariff is a targeted tax on imported goods paid directly by the domestic business that's

importing it.

It's a type of government intervention that falls under the umbrella term of protectionism

or even economic nationalism.

The basic idea is that a tariff on imports makes them more expensive.

As a result of this, domestic production becomes relatively cheaper, so the market replaces

imported goods for domestically produced goods, which fosters investment, employment

and industrial growth in the domestic economy, whilst the government earns itself an additional

source of income.

This is a process known as import substitution industrialization.

Numerous countries throughout history have used tariffs as a means to protect and develop

their industrial base, but there are a few countries whose development story is so fundamentally

linked to the use of tariffs as the United States of America, making its contemporary

image as the quartermaster of global free trade somewhat ironic.

With the second ever piece of legislation passed after the US Constitution was ratified

being about a tariff way back in the Alexander Hamilton of Broadway fame respected

Adam Smith's newly published foundational economic ideas about the power of the invisible

hand of free market trade, but he rejected it as a general rule for developing industry

and building national wealth.

Hamilton knew that as the United States built its institutions and earned political independence,

the country would not gain economic independence from Britain until it developed a manufacturing

base that could produce its own goods as efficiently and competitively.

Europe had already begun its industrial revolution and was producing key goods like steel, textiles,

chemicals, precision instruments and machinery relatively cheaply and on mass.

US industry was behind the curve with less infrastructure, capital and skilled labour.

It couldn't compete with the European producers in the free market, even with the significant

technological barriers to international trade at the time.

And so tariffs were introduced to raise the price of European imports, encouraging entrepreneurs
to set up shop on US soil instead, fostering domestic industrialisation.

The passing of the stronger Tariffs Act continued into the late th century with the average

tariff rate on targeted goods eventually setting above %.

And it worked.

US industries erupted, tariffs made up % of federal income and the US government was

so accustomed to getting its revenue from tariffs that income tax didn't even exist

up until

However, the use of tariffs was hotly disputed at the time, just like it is now.

While industrialisation was concentrated in the North, the higher tariffs indirectly

harmed the agrarian South which suffered from retaliatory European tariffs on their exports

and slave produced goods like cotton, tobacco and sugarcane.

The South relied on these exports as a key source of income.

The Merrill Tariff was an additional grievance for the southern states who were already breaking

away from the Union over the election of Lincoln and his intent to end slavery.

So the debate around tariffs in the US is nothing new.

But fast forward to the end of the Second World War and the US flips the script.

The war was over, its industries had matured and it was ready to begin competing as the

leader of free trade.

Technological advancements in communication and transport made trade much more efficient

and countries began to specialise to benefit from the principles of comparative advantage

and absolute advantage.

It also didn't hurt that every single potential global competitor at the time had been bombed

into rubble.

Free trade was certified as the dominating economic order when the World Trade Organisation

opened in which organised the decades long trend of lower tariffs.

And with this supply chains continue to develop in their complexity to the point where it

becomes common for an end of chain product to have parts from or more different manufacturers

or from different places in the world.

All this time free trade dominated trade policy across the world but this began to be seriously
questioned when the largest advocate of free trade imposed landmark tariffs on its largest

trade partner in

And because of this we actually have pretty strong recent evidence of what the impacts

of tariffs will actually be.

So what can we learn from US tariffs during this period?

Well to do that we have to look at everyone's favourite semi-durable consumer appliance

the washing machine.

A research paper by economists at the US Federal Reserve provided a fairly comprehensive

account of the impact that the tariff had on washing machines.

It found that the businesses who were importing washing machines passed the cost of the tariff

onto consumers through price rises which also created space for domestic producers to follow

suit and increase their prices despite not even paying the tariff.

It gets worse because the price of drys also saw significant price increases, a product

which was not directly subject to a tariff but became collateral damage since the two

goods are often sold together.

Shockingly when taking into account the price increase of domestic washing machines as well

as drys the tariff elasticity of consumer prices was above one.

In layman's terms this means that the additional price burden faced by consumers was larger

than the tariff itself at least in the year or two that followed.

The complete pass through of the tariff onto consumers was also evidenced in reports

from the American Economic Association and the quarterly Journal of Economics.

In effect this meant that tariffs were just a sneakier more convoluted way to tax consumers

without having to actually call it a tax.

In total the -tariffs imposed around $billion worth of indirect taxes on Americans

which amounted to one of the largest tax increases in decades.

Now this part was already pretty well known.

But tariffs could still be worth it if the additional employment created by protecting

domestic industries outweighed the price increases for consumers.

In the case of the washing machine specifically the additional cost of the tariff for consumers
amounted to $billion annually whilst it only brought in an additional $million

worth of government revenue annually.

new jobs were created in the US meaning each job came at a cost to consumers of a

whopping $a year.

This is clearly an inefficient way to create jobs.

It would be way more efficient to simply fund new jobs by introducing a value added

tax of a much smaller amount.

The evidence also suggests that tariffs can damage industry just as well as it can protect

it.

Because it's not just consumers who buy imported goods, it's businesses too.

The washing machine is an end product so it's not the best example for business input but

you know what is, steel.

A % tariff was whacked onto steel imports in and suddenly the plates, sheets, strips,

beams, bars, rods, pipes, billets, blooms and slabs that countless American industries

needed as an input material became more expensive.

This reduced and in some cases eliminated profit margins in key domestic industries

like automotives, construction and machinery triggering layoffs.

So despite the tariff increasing employment in the domestic steel and iron industry, the

tariffs caused a net reduction in manufacturing employment meaning for each new hire in US

steel there were multiple layoffs in other industries.

The net negative effect shows that there's just way more industries on the US which use

steel as an input of production than industries where steel is the output of production.

So in this particular case, tariffs didn't protect from industrial decline, it accelerated

it, at least in the immediate years that followed.

The declining industry also reflects the damaging consequences of retaliatory tariffs imposed

by other countries, the inevitable counter-strike in any trade war.

In light of the tariffs, China imposed a series of their own on the USA, largely

targeting agricultural food products.

This made American agricultural exports more expensive for Chinese companies, reducing
the demand for these products resulting in less revenue to providing income in the agricultural

sector.

The US government prevented mass layoffs by directly paying farmers and purchasing agricultural

products but this came at a hefty price.

$billion was spent on supporting US farmers who were impacted by Chinese tariffs from

to which almost entirely cancelled out the additional $billion the US government

collected on tariffs imposed on China.

So tariffs certainly generate additional revenue but through retaliation they create the need

for more fiscal spending elsewhere so it's like an expensive game of whack-a-mole.

And as a result, tariffs are unlikely to create the dramatic fiscal surplus the US needs to

reach the wholly promised land of lower income taxes.

Now, it's important to note that these studies were only done a year or two after tariffs

came into effect, which means we can only use them reliably to understand the short

run which is clearly bad for consumers and a lot of industries.

But in the long run, factors of production are by definition more flexible so it's

entirely possible that the tariffs could bring more benefits than costs as factors of production

are reallocated towards domestic production, generating investment, employment and growth.

Now fortunately, there are older tariffs where the effects have marinated for decades.

A % tariff is placed on light trucks imported to the US in

Since then, pickup trucks and SUVs have become the highest profit margin vehicles for US

car makers, Ford, General Motors and Stellantis, serving as a lifeline for the US automotive

industry where offshoring and outsourcing was driving industrial decline.

It also paid the way for foreign competitors to invest billions on US soil from the s

to the s with Honda, Toyota, Nissan, Mercedes-Benz and BMW building assembly plans

in the American South to employ tens of thousands.

Tariffs did exactly what it says on the tin, protecting domestic industry and encouraging

long run investment.

But there was also downsides, with essentially only three companies to plan the US light

truck and SUV market, there was much less competition, which reduced pressure to innovate
and increase efficiency.

And here lies the key point.

For tariffs to work, the government must ensure that the protected domestic industry

is competitive enough to prevent complacency and the abuse of market power so that consumers

get a fair deal.

If the government is going to block foreign competition, they need to ensure that there

is adequate domestic competition.

Ultimately, the tariff has meant that even to this day, the US truck and SUV market is

not as fiercely competitive as it could be, and this has hurt consumers through higher

prices and lower quality.

But even if a tariff is appropriately targeted and the market remains competitive, its positive

effect will still be susceptible to sneaky workarounds.

When Mercedes-Benz opened their factory in South Carolina in it was clear that

the SUV tariff had yet again strong armed a foreign producer into investing on US soil.

But it soon became clear that actually, Mercedes-Benz was manufacturing its vans in Germany,
disassembling

the parts into the automotive equivalent of IKEA Flatpak, then shipping it to America

to be reassembled, dodging the % tariff on a technicality.

This is clearly an inefficiency created by the tariff barrier.

In fairness, Mercedes have developed the capabilities of the plant gradually over time, now assembling

the engines and body parts too, but it's an interesting example of the lengths that

producers will go to to avoid tariffs.

Other workarounds can be worse, especially when tariffs are targeted on particular countries.

For example, when the US tariffs landed on China in many companies did move their

manufacturing operations, but not to the US, just to other countries like Vietnam or Mexico

where tariffs did not apply.

It's also possible to avoid tariffs by shipping the product to a middleman country to relabel

and repackage before bringing it into the domestic market.

One is, there's a lot of options for companies to avoid tariffs before they choose the often
more costly option of relocating their manufacturing to the domestic economy.

So there's many moving parts and trade-offs that are sensitive to the tariff specifications,

markets targeted, and countries affected.

Blanket statements about tariffs from all sides of what's become a politically charged

debate ignore this nuance, and herein lies the problem.

Trump has talked a lot about tariffs, but he hasn't been precise on the tariffs he

wants to impose, which makes it very difficult to assess the economic impact.

If he wants to impose universal tariffs on all goods coming into the US, then it seems

like any industrial and fiscal benefits of tariffs would be more than cancelled out

by the damaging combination of higher input costs, inflated consumer prices, and retaliation.

This net negative effect could possibly be long run and certainly short run.

So why would tariffs not benefit the US economy now, when they worked wonders in the th

century?

Well back then, global transport and communication was slow, products were relatively simple,

and domestic labour was cheap.

Now global transport and communication are quick, products are more complex, and domestic

labour is expensive.

The era of free trade has meant that complex products are produced through international

supply chains, where individual manufacturers have become highly specialised and often

made use of heavily subsidised industries, with extremely loose labour regulations in

developing economies.

This makes production efficient and prices low.

The cat's out of the bag so to speak.

It's become prohibitively expensive for many industries to ever return to the US on

mass.

They'd rather dodge the tariff by moving operations to another country, or take the

hit and pass it on to US consumers.

Which would just redistribute money from consumers to the government without necessarily

bringing jobs back to the US, which is the whole point.

Tariffs are still a useful tool to have in a modern economy, but they should be used

precisely instead of bluntly at a universal level, where tariffs will be placed on things

that never were and never can be made in the domestic economy.

And to prevent maximum short term economic shock, tariffs need to be carefully planned

and gradually introduced like Hamilton did, so that the market can prepare and adjust,

instead of threatening huge tariffs which erodes trust and keeps industry leaders

uncertain on their next best move.

But even so, even after all this, it could be argued that there are some markets where

they're necessary, despite the economic costs.

As the globalised world becomes increasingly tense and less stable, countries are less

comfortable with relying on politically misaligned countries for their products.

Reliance is a vulnerability that can be exploited, especially in strategically important sectors

such as semiconductors, energy, vehicles, railroad minerals and food.

If an event broke out that dramatically escalated tensions or even triggered a war, one of the

immediate moves would be to embargo trade with an enemy, which, if not prepared for,

could leave an overexposed economy unable to produce the goods needed to sustain livelihoods

and defence.

We're talking national security and at this point the debate around tariffs becomes

more of a geopolitical concern than an economic one, and for these reasons we've created

a part two for this video on our sister channel Contacts Matters, which explains why global

powers are shifting towards protectionism after decades of free trade and how this links

with rising nationalism and the risk of conflict.

Video # 3

nobody ever gets Rich when the interest

rates are high cuz people can't borrow

money is that what you meant the stock

market going down was the disruption

what other disruption were you alluding

to look you can't really watch the stock

market you have to do what's right

what's up you guys it's grahe here so I

don't usually do this but two weeks ago

I issued a warning to stock market

investors and unfortunately since that

video things have gotten a lot worse

just today the market has seen its worst

drop since Panic usually creates

more panic selling pressure creates more

selling pressure and prices are falling

purely because prices are falling so

similar to my previous video I'd like to

help put into perspective exactly what's

happening why the market is crashing how

things could get worse before they get

better and what you could do about it to

put yourself ahead financially yes I'm

probably going to have to repeat myself

a few times but at least you should

understand the truth about what's

actually going on as soon as you hit the

like button and subscribe if you haven't

done that already that's all I ask for

it helps the channel tremendously and as

a thank you for doing that I will do my

best to read and reply to as many

comments as I can so thanks so much and

also big thank you to incog for

sponsoring this video but more on that

later all right now in terms of why the

Market's crashing as of now we have the

perfect storm starting with tariffs now

here's the thing when it comes to

talking about tariffs so far here's how

they've worked Trump threatens tariffs

by a certain date the market goes down

but eventually starts to recover on the

day tariffs go into effect the market

plunges because no one expected it to

actually go through but to hours

later an agreement is reached that gives

an extension the market goes back up and

then the process repeats itself when

tariffs go back into effect waiting for

another agreement to be reached this

volatility starts to give the impression

that tariffs have simply been used as a

negotiation tool to get more favorable

trade deals within the United States but

the market never actually priced in the

likelihood of them sticking around until

this it's currently scheduled that a %

tariff on steel and aluminum Imports are

set to take effect March th well a

% tariff on Canadian dairy products

could be next along with a tremendously

High tariff on Canadian Lumber shortly

afterwards on top of that what's really

fueling the tariffs is that he said

tariffs may still go up as time goes by

now even though that % Dairy tariff

has largely been debunked as an item

that's not even going to begin going

into effect since they will be allowed a

certain amount of dairy to enter the

United States terar free business owners

are completely puzzled by what to expect

if they to order inventory ahead of time

or if they have to start raising prices

to cover overhead to which Trump

provided no additional information to

make matters worse Canada retaliated by

enacting % tariffs on electricity

Imports to New York Minnesota and

Michigan starting right now and China

SLA back with % tariffs on American

farm products as a result of this

investors are beginning to price in the

likelihood of higher prices lower GDP

recessionary fears and the potential

that things could soon get much much

worse but there's a second reason the

market could be falling that most people

have no idea about and that would be

Trump crashing the market on purpose

first of all it's important to clarify

that this is just a theory but you know

what nothing surprises me anymore so

here's what we know to be fact right now

it's no surprise the government owes a

lot of money the national debt is

currently sitting at over $trillion

and that number is only expected to keep

going higher which is soon going to

cause a lot of problems why well when

you have a debt this large you have to

pay interest on the debt and when

interest rates are at record lows paying

off the debt is very easy like imagine

it to be like a mortgage taking out a

million doll loan at half a percent

interest is as simple as spending $

a year to keep current on your monthly

payments but what happens when interest

rates go up during a time that you're

borrowing a lot more money and you've

only locked in that record low interest

rate for a few years exactly since

interest rates have gone up

significantly the United States is now

spending more money on interest payments

than they are on defense for the first

time ever in history which is massive

and in there's another $

trillion worth of debt that needs to be

refinanced this means they either need

to lock in rates when everything is high

or they need to create a market crash

which causes interest rates to fall and

gives them enough time to lock in

interest rates for the next few years

again even though a lot of this is just

a theory some of it does make a lot of

sense because % of the $trillion

debt needs to be refinanced by June

and if nothing is done that debt is

scheduled to cost % more which is

reported to be

$worth of cost for every $of

Revenue that the United States generates

think about it for Trump this could be a

huge win to refinance the national debt

at a lower interest rate than usual by

forcing the Federal Reserve to lower

interest rates like here are some quotes

that I pulled from Anthony Pompano who's

taken the time to compile some Choice

words by Donald Trump here you go I've

been saying let's get interest rates

down nobody ever gets Rich when the

interest rates are high because people

can't borrow money interest rates are

going down you know what else is going

down Energy's going down I'd love to see

energy go down is that what you meant

the stock market going down was the

disruption what other disruption were

you alluding to look what I have to do

is build a strong country you can't

really watch the stock market if you

look at China they have a -year

perspective we have a quarter we go by

quarters that's true you can't go by

that you have to do what's right all of

this Paints the picture that maybe this

is his way of reducing the cost of the

national debt perhaps he could frame it

in such a way that he's making asset

prices like stocks real estate and

Bitcoin more affordable to middle class

Americans by giving them a to %

discount and if short-term pain is

what's needed then he's willing to get

there by any means necessary although in

terms of how bad things could

potentially get you're going to want to

take a seat although before we go into

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incognit docomo get started today thank

you so much and now let's get back to

the video all right now in terms of how

bad things could potentially get you're

going to want to hear this on a broad

scale there are three different types of

declines that you're going to want to be

made aware of the first is what's known

as a stock market correction that's

defined as a drop of at least % now

it's important to recognize that normal

volatility throughout the Market is

extremely common like since the S&P

has on average seen a % pullback

three times a year so Random

fluctuations happen all the time this is

also somewhat the case with Market

Corrections which have happened on

average every months in fact if

you're like me and you like averages so

far the average stock market correction

has been % and lasts for days

so it's perfectly normal and every

healthy Market sees a regular pullback

from time to time however after that we

move move on to the more serious

category and that would be a bare Market

which is defined of at least a % drop

from the peak and this is where the

NASDAQ might soon be approaching

according to the data this typically

hits every to years and when it

hits unfortunately it hits kind of hard

during a bare Market the stock market

drops on average

% and it falls over a period of

days now it is important to clarify that

these are just averages and it doesn't

mean the next bare Market's going to

fall exactly % and last for exactly a

year for example in we saw the

fastest % drop in history since the

Great Depression and then right after

that we saw the quickest recession in

history which lasted just days so

anything can happen although in terms of

taking it even further from here things

can always get a lot worse and that's

what brings us to a stock market

collapse I would consider this to be a

drop of at least % throughout the

entire market and not just in one sector

like cryptocurrency and over the last

years years this has only ever

happened three times this is why a

market collapse is rather uncommon but

it's not impossible to happen throughout

our lifetimes which is something that

everyone needs to keep in mind but in

terms of what you could do to use this

as an opportunity to come out ahead

profitable here's my take on things

first when it comes to Building Wealth

it's important to recognize that there's

always going to be a reason not to

invest like when I started buying real

estate in the overall Market had

already fallen % and I was buying some

of these properties for cents on the

dollar but I was told to wait because

Shadow inventory was about to be

Unleashed on the market and prices were

about to fall even further but guess

what that shadow inventory never came

the market recovered and I'm so glad I

didn't listen to all the people who told

me not to buy even in early when I

started making videos here on YouTube

there was so many headlines about how

the market could be poised for a crash

or how the market was overvalued but I

just kept dollar cost averaging on a

regular basis and I'm glad I did the

same thing applies to and I'm

sure even today second investing is not

a game I hate to say it but when you

really get down to it investing

shouldn't be fun it should be pretty

boring I know that sounds weird to say

because for me investing is a total

blast and I love it but it's not a sign

of a healthy Market where people are

trying to YOLO their life savings into

whatever is the hottest stock of the day

to try to get a brand new Cyber truck at

a certain point you have to remember if

you are trying to beat the market

average you're either taking a

calculated risk or you're gambling and

the line between the two has gotten

incredibly blurred over these last few

years third overconfidence is going to

destroy your portfolio the moment that

you think you have the entire Market all

figured out you've lost because of that

it's really important to recognize that

the less you know the better you will do

because you're not going to over

complicate things and take unnecessary

risk for gains you never needed in the

first place for example every single

study shows that the best investors of

all time simply buy into an index fund

on a regular basis and hold it for

years this is why dead people often make

the best investors because they don't

touch it they just buy and they hold and

that is what chances are you probably

need to do as well fourth let's face it

a market drop is probably going to be a

lot worse than you expect like you know

when you see a decline so you buy in and

then it drops even further so you buy in

even more and then it keeps falling

until eventually you run out of money

and it keeps falling even more well

generally Market bottom takes place at

Absolute investor capitulation where

people think the economy is forever

finished finished no one is buying in

and people think to themselves that

it'll just continue getting even worse

this was the case back in the worst of

and I'm sure back in even

though I was too young to remember that

one every generation I promise is going

to have their own moment when they think

to themselves that this time is

different and even though it's always

recovered in the past this time today

has never been like anything before and

we're probably all finished that's why I

tend to think that it's reasonable to

expect that things can always get a lot

worse than you expect them to and just

to be prepared for that fifth good

financial habits should be practiced in

both good and bad markets even though

now is certainly a great time to work

some extra hours take on a side hustle

cut back on unnecessary spending and

invest the difference ideally you should

be doing that regardless of where the

stock market trades yes I understand

it's not cool to live frugally and live

below your means when everyone else is

making x Returns on Meme coins but I

promise you if you just stick with it

long term it's going to pay off times

more in the future I guess I've just

seen so many careers come and go so many

businesses go bankrupt out of nowhere

and so many Investments lose value that

I just tend to be overly cautious about

what I do plus six it was found that in

the event we hit a bare Market that half

of the S&P 's strongest days in the

last years occurred during a bare

market and another % of the Market's

best days took place in the first

months of a bull market before it was

clear that a bull market had even begun

this is really important to mention

because if you just miss the best days

of the overall Market your returns drop

substantially and if you stay out of the

market it's even possible to begin

losing money this is why regardless of

what happens to the stock market or how

bad the sell-off gets there's always a

reason to say this time is different

sure the market might continue selling

off much more than we initially expected

or could rebound the next day I have no

idea that's why as long as I'm not

planning to use this money over the next

to years any short-term

fluctuations make no difference

whatsoever it's just an opportunity to

buy in a little cheaper