The Stock Market is Downtrending! This is Why!
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Today, I have decided to make this video to show how volatile the stock market has been and to explain why the stock market has dropped lately and especially today. Nasdaq, dow, and S&P 500 have all been down today. Many of you have been waiting for the stock market to dip but is this downward move a cause for concern or an opportunity for everyone? Is it possible to find a great deal in this stock market or are stocks overvalued?
I will do go in depth about where to potentially find stocks to buy in the stock market now. Hopefully you can take advantage of this stock market dip. Let me know what you think in the comments, enjoy!
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What goes if you haven’t already noticed the stock market has begun to start downtrending The s&p 500 is down more than 7% in September. So far, the Dow has lost 5.5%. The Nasdaq composite has tumbled almost 10% month to date and has re entered correction territory.
The tech heavy composite is now down more than 11% from its all time high set on September 2. Okay, I’m recording this video. I think it’s September 21. Today, all right, this np 500 Meanwhile, fell back toward the flatline for 2020.
As we can see below there, the s&p 500 in September has just been you know, pretty much downtrending when this type of market right, I’m recording this while the market is still open. So we’ll see what the market close that here today. I mean, the market has been jumping all around.
I’ve seen it down like 800 you know, something points at one point today I’ve seen it down as low as like 400 points today. As of right now the Dow is down 777 points here today. s&p 500 is down over 2% NASDAQ’s down about 1.3%. So the least bad of the punch.
This was put that way the European markets last night. We’re all down, down, down, down. And I blame all of this on Nicola stock okay. 100% it is Nicola stock fall. I’m just kidding. Okay. I’m just kidding. All right. But seriously, why is the stock market downtrending?
All of a sudden, okay, why are stocks Olson starting to go down? What should we do about this? That’s what we’re going to cover in this video here today. I hope I do a good job explaining everything that’s going on here. Exactly what we’re looking at are stocks a deal now are they not a deal, all those sorts of things.
So hope you guys enjoy today’s video. As always, if you don’t mind, smash that thumbs up button that helps YouTube channel out in a massive way. And I appreciate each and every one of you that do that.
Also, if you want the opportunity to learn directly from me, you want to take stock market investing super serious, you want to apply and try to get in my private group. If you want to go ahead and do that.
And you think that’s a step you want to take, go ahead and fill out an application and we’ll get back to you. All right, that’s gonna be first link in the description down there. Where I want to start out with this video here today is looking at big tech, a big tech has kind of been the face of the market comeback for the most part, okay, outside of a few different stocks.
I test the stock, right zoom stock, and some of those, those have kind of also been the face of the market coming back. But these big tech giants, these have, you know, been the stocks that a lot of big funds have piled into retail investors have piled into, and it sent their stock prices up and up and up and a lot of the stock has doubled in a matter of you know, four or five months span, right.
And we see they’re all down, you know, pretty big again here today, right? Amazon’s down to the two plus percent here today. Google’s down almost 3%. The FBI is down two and a half percent Mr. softies down apples down everything’s down as far as big tech goes and it’s not like these stocks are just falling today.
These stocks have been falling since basically right around September 2. Essentially they all reached their all time highs right around the very beginning like the first day or two of September and since then, they’ve been falling and falling and falling so many people are wondering this.
Okay, why is this going on? Amazon stock look at it topped out right at the very beginning of September over 30 $500 a share. And ever since then it has been dropping and dropping and dropping here today. You can pick Amazon shares up for 2800 and some change. Okay.
The stock is lost about $700 a share in a matter of three weeks roughly Okay, Google McDougal stock guess what it reached an all time high rate at the same exact time over 17 $100 a share. And ever since then it’s lost about $300 per share since that time period in the past three weeks. Okay.
That be Guess what? It also hit it all time high, the same time as Amazon and Google pin. Since then, it obviously has been downtrending downtrend to get topped out over $300. And now here today, it’s $246 a share. Mr. Softee hit an all time high at the same exact time over you know, $230 Plus, right, ever since then it’s lost over $30 per share.
It’s $198 here today, all right, and Apple hit an all time high at the same exact time as all these other stocks at over $135 a share. And ever since then, it has been down and down and down for Apple stock. Okay. Now before you get super excited over this.
I know a lot of people you know, a lot of you guys love deals and I love deals in the stock market as well. Okay. But before you get super excited over the fact that a lot of these stocks have dropped a lot recently. Okay. Let me show you something. Okay. Let me show you a few things.
But let’s start out with this one. Okay. What I want to do is I want to take a six month look at the stocks, okay, we just looked at what’s basically happened over the past month. What if we look over the past six months? All right, look at Amazon stock.
This was a stock that if you go back six months ago, this was a stock that was under $2,000 a share. Matter of fact, it was around I think 18 $100 a share if you go back about six months ago, okay, so yeah, it has come down. Definitely. From its all time high, but you know, relatively speaking, it’s still up a lot, right? From 18 $100 a share roughly to $2,800 a share.
It’s still up $1,000 a share in the past five, six months. Okay. If we look at Google stock, same exact situation, obviously not as crazy of a upward move, but still up quite considerably, right. It was 11 $100 back six months ago.
Yeah, it’s 1400 here today, which is definitely lower than the 1700 it was, but it’s still 1400 still up over $300 a share in the matter of what, you know, six months, the FBI knows the stock that was around $160.06 months ago here today.
It’s 245. Yeah, it’s down quite a bit from 300. But it’s also up a ton in the past six months. Mr. Softee, this was $140 stock six months ago. It’s $198 here today right down from all time high but you know, it’s still up a lot in Apple look at this one.
This was around $60 a share even I think it was a little under $60 a share if you go back exactly six months ago, and here today it’s $106 that is still a massive move upward there so big tech definitely equals better deals than you were getting three weeks ago there’s no doubt about that. Right?
You’re getting a $700 discount Amazon stock versus if you bought it three weeks ago right? You’re getting a discount Apple Google you know FB almost every stock out there big tech especially where you know as we’re speaking about right now, they’re better deals and you got three weeks ago, but they’re still not really cheap.
Okay, they’re not really cheap. Let me show you some more in depth things here. Okay, let’s look at forward peas which are very important for huge public companies. Which all these big tex have pretty much the biggest of the big companies we just spoke about okay? And four P’s super important for these companies.
Okay, revenue growth very important for these companies as well. And you know, everything’s important for these companies but I can just say from experience it’s all about revenue growth and four P’s and kind of where those are trading out when it comes to big dog companies.
Okay, so let’s look at those Apple apples trading here today at a four p by the way for Pease basically looking at the next 12 months of profits coming in versus where your market caps out. Okay. And apples trading at right now for pa 27 I can tell you for Apple stock that is high there’s just no other way cutting Okay.
That is a high metric for Apple stock. Apple stock usually trades at four Pease under 20. Okay, and you know, sometimes even under 15 if you can get Apple for a really good price. I mean apples at 27. Yeah, it’s cheaper than it was obviously, you know, a few weeks ago, but man, it’s still not cheap.
I will say that Mr. Softee is training for P of 31. Mr. Softee SM growth forward in the future as Apple does. But is it that much growth, Mr. Softee should be trading at a forward p in the mid 20s?
In my opinion around 2524 that’s more appropriate for Microsoft decayed 31 is definitely a bit rich, Google McDougal, this one I would say is not bad. I wouldn’t say it’s necessarily the cheapest stock in the world, but it’s not bad.
Okay, it’s trading just under 27. Now, if you look at something like Google, they’re gonna have way more growth in terms of revenue and profits expect over the next five years and somebody like an apple in the trading a little more a slightly more cheaper than apple. Okay? So something like Google McDougal, I’ll say, you know, it’s not bad. Okay?
that B is pretty good. Okay, this one is trades at a Ford P of under 24. And when you think about a stock like this, I mean, this is a stock that revenues should grow 1520 plus percent for years and years and years to go in the future profit should take back off in 2021. And moving forward. So you know, a 24 that’s actually a pretty, pretty respectable there on the FBI.
I have seen it in times in the past cheaper than this, but I will say it’s, it’s definitely toward the cheaper range, okay, Amazon, it’s at 57. Now, Amazon’s always gonna trade rich, because it’s always that company that, you know, it’s like, they can turn on the profitability whenever they want to, and that’s what Wall Street believes.
That’s what investors believe. So Amazon’s always gonna trade way rich compared to all these other four companies, but it’s at a 57 I mean, you know, that’s kind of what you should expect from Amazon anything in the 40s to 50s I wouldn’t call it cheap here. But I also wouldn’t call it you know, insanely expensive here.
And so that’s kind of what we’re looking at for these stocks. Some of them are decent values, some of them pretty good values and some of them just still even after they fall a lot still aren’t good values Let’s be quite honest.
Okay. In what we have been in is a brutal I mean, an absolute brutal five month bull market and it can mess up your mind really bad and I’ll explain this and you might think, a brutal bull bull market like what you know, it’s only a brutal bear market right now. Okay. Brutal bear market. If you’re buyer stocks, and you’re a long term investor, that’s great news for you.
Okay, you’re gonna get to pick up a lot of great socks for really cheap market that just almost goes up every day like we were in for five months. That’s brutal. Because if you’re somebody that’s wants to invest more and buying the stocks, it gets hard because every day It seems like stocks are going up and up and up.
Okay. And so what this leads to essentially is a stock market has a slight pullback, okay, let’s say the market pulls back 3% 5%, something like that. It also retail investors, which are the average Joe’s, they want to pile in these stocks, they want to go all in them.
Because oh my gosh, stocks only go up almost every single day. And here they dropped here today. So let me go all in, let me put every dollar I have in the market here today. And that’s usually just a bad thing. And that happens when you’re in a brutal bull market, like we have been very recently any type of dip at all in stocks, people are like.
I got to get the money, and I got to get the money. And it’s just that’s what happens. Because you’re so used to stocks going up almost every single day that you will rush to buy stocks, because my gosh, if I don’t get all in today, then it could be a lot higher tomorrow. Okay, that’s never, that’s never a good approach. Okay.
And why is this? Well look at what’s happened with these stocks, Amazon went from 1800 to 30 505 months, Apple went from $56 to $135. In five months, Tesla went from $100 to $500. In five months, zoom went from $138 to $463. In six months, right? So everybody’s like, I kind of call it Pro.
I mean, I kind of get to market as fast as possible, as much money as possible. Because he stocks see the big double up, triple up, quadruple up super, super fast. So happens in a in a brutal bull market, essentially.
And it leads you to think, Oh my gosh, I’ve got to invest everything as fast as possible. And if I don’t, it’s going to lead to me just missing out on all the games. And I will say speaking from experience.
I’ve been in this market for 12 years now. Okay, I have seen definitely some incredibly strong bull markets, some big corrections, and I’ve even seen, you know, a couple of stock market crashes now. Okay.
I can tell you from experience a disciplined approach is always best in the stock market, a disciplined approach, by the way if I didn’t spell disciplined, right, you know, roast me in the comments.
Okay, I am one of the worst spellers in the world. I literally think so. Okay, I’m horrible. I know about stocks. I know about money. Okay. I know about business, but man spelling. It’s rough. Okay. But neither say a disciplined approach is always best. always buy stocks, in increments, okay.
And I don’t even know if I spelled increments, right. Okay. always buy in increments never go all in a stock at one time. Most stocks I buy, I buy them three to seven times, meaning I will start a position and then I’ll buy more, and then I’ll buy more.
And then I’ll buy more and then I’ll buy more. And then judge I say sometimes like literally up to like seven times, I will buy a stock. I’ve even done that up to 10 times before. Let’s say I invest in a stock it goes down a little bit.
And I buy a little more than it goes down a little bit more than the whole market falls as a correction something like that. I’ll buy more and more and more all in increments rather than going all in in one never go all in and one day just because the market pulls back a little bit.
And it’s definitely a trap. Some investors have gotten caught into Amazon felpham 3500, something to 3300. And also investors felt like they had to go all in Amazon because oh my gosh, it is like the best deal ever because it fell $200 a share and it’s like now it’s 20 $800 a share and you got no money on the sidelines because you went all in the other day, right?
That’s just not the way you want to play. That’s that’s just not discipline, always be discipline. Okay. I want to show you some reports here that I look at on a weekly basis. Okay, this is out of Yardeni research these folks over there doing some of the best research around four P’s metrics where we’re at in the stock market in general.
Now, this was done on September 18. So they’re one trading day behind Today’s the 21st of September. So the one trading day behind the markets down big tear today. So imagine all these are little little lower.
Okay, let’s just put it that way. All these valuations are a little lower, but they’re one trading day behind obviously, the here today, the Dow is now down 707 points, once again, we’ll see what that that ends up. But as I’m prepping this video, it’s a it’s a very red day, let’s just put it that way, it will likely be a very red day. Okay. A
nd so what we’re looking at here, here’s where I want to start. This is looking at s&p 500. Large caps K, four p e ratios. I mean, guys, we’re still on real high. Okay. There’s no doubt about it. We’re still by far and away the highest we have been in the past 15 years, roughly.
I mean, there’s no time period in past 15 years. And this is this is for peace. Okay, this is looking at the next 12 months, not looking at the past 12 months in those Roni Ronna quarters where you thought it may have to be shut down and things like that.
This is assuming the economy is open over the next year. And we’re just trading very, very rich for anything large cap related. Why? Because all the investment funds, all the big investors, they’ve been piling those stocks as safe havens, okay.
That’s what they’ve been doing. s&p 400, mid caps, they are high but they are much better. Okay. And imagine that line will be a little bit lower after today. Okay. We’re at least kind of in where we should be when it comes to mid caps. Not as many investors have been wanting to buy mid caps and small caps because they’ve been scared.
So the money has been flooding to the large caps, the companies that have all the access to capital in the world, those huge big tech dogs like we spoke about right. And so a lot of people have forgotten about the mid caps and mid caps.
The valuations are much more attractive than the large caps Okay, this small capsules look at the s&p 600 small caps high, There’s no doubt about it, okay. But at least we’re in kind of like the 2016 2017 range. Not like, we’re, we’re at just you know, a matter of few weeks ago or a few months ago, especially when we were pushing up toward 2726 range.
I mean, that was just incredible. Okay, so we’re high, but that’s not crazy high. I mean, when you start to look at these charts, you start to kind of figure out where real opportunities are in this market.
And for the most part, it’s not in large caps. It’s actually in the mids in the smalls right now. And this is why in most of the stocks I’ve been buying, I show my private group, all the different stocks I buy, most of the stocks.
I’ve been buying in there, almost all of them actually have been smaller cap companies, mid cap companies, companies that have valuations under $15 billion. That’s the high high high majority of them, because that’s truly where the opportunity is in this market right now. And for the most part, it’s not in the big Dawgs.
Okay, this chart here looks at the peg ratio, okay, the price to earnings growth, all right. And I kind of drew in the chart there, because the last time they had done this was basically, you know, 11 days ago. So you know, I assume the markets gone down since the last 11 days.
And so the numbers a little lower, but still unreal, high for the price to earnings growth. We’re still on real high, let’s be quite honest. There. Okay. So once we kind of look at all those charts we just looked at there, you can kind of just know, you just know, like mid cap, small caps.
That’s where the real opportunities are large caps, they still need to pull down a lot more to get more interesting. Let’s just put that way you’re you’re not getting as good of a deal. This is be honest, and you’re not getting as good of a deal. No large caps as your mids and smalls All right.
But why is this market downtrending? All of a sudden, okay. There are three core reasons in my opinion, okay. One valuations way high. This has pushed a lot of investors to say I don’t want to be part of this market, or I’m going to be very limited, right? I’ve been you know, very cash heavy recently.
I’ve been doing a little buying here and there. But I haven’t been going crazy with the buying orders. It’s like I’m very disciplined right now I got a lot of money still sitting on the sidelines. I bought some stocks here today. I bought I think two stocks here today.
And you know, if the market continues to go down, I’ll continue to buy but valuations have been really high. And that’s kept a lot of investors more on the sidelines. Because in terms of if they’re issuing new money the market just because they’re like, do I want to buy you know, this stock at a, you know, a 700 p e ratio? Or do I want to just hold off for now?
Okay, things like that. Right. Ronnie Rona is really taking off, especially in Europe right now. And there’s a lot of worries now serious worries about could the economy close again? And if the economy closed again, in Europe, does it end up leading to the US economy having to close again?
And so there’s a lot, you know, Ronnie, Rona, over the summer has kind of been pushed to the back part. And a lot of people have kind of, you know, not been as worried about that. Let’s just put that way. And when I say people, I’m talking to investors, big investors. Okay.
But now when you start to see also in the numbers take up your big time. Yeah, now in the weather starting to change. And then we’ve heard a lot of you know, folks say, basically, when the weather starts getting cold, you know, wait to see what happens to the Roni Roni numbers again, that’s going to lead to some fear out there.
And some worry, and the uncertainty is what leads the market to go down. That’s just what it is. At the end of the day. It’s uncertainty when people start getting scared and uncertain. They start selling stocks, big investors, small investors, everybody across the board. And so we’ll see what happens with that.
But that’s another reason why the market has started downtrending recently, Okay, number three, election time. We know over the next few months, obviously, the election, okay, the big election, the presidential election, right?
And we’ll see what happens with that. But the fact is, the market gets scared. I mean, the market always looks at both candidates from a negative side rather than a positive side. And they say, Well, what if what if this guy’s elected, he’s gonna, he’s gonna do this and that, and what if this guy’s elected, Oh, my gosh, he’s gonna do this and that, and it’s just the way it is.
And so generally speaking, during election time, you get very volatile markets, you get downtrending markets, it’s just people get scared, that’s just flat out. That’s just the way it is. Okay. That, in my opinion, is why the market is going down.
Now, why is this great news for us? Because this is great news for us. And I’m in I’m going to say us, I’m talking about anybody who’s not retiring tomorrow to live off stocks. Okay. Anybody that’s an active participant in the market that’s buying stocks and looking to buy stocks.
Why is this great news for us? Okay, simple, cheaper stocks, cheaper stock prices? Would you rather buy Amazon at 30 $500 or 20 $500? Obviously, if you got 100k to invest, you’re gonna be able to get a lot more shares at 20 $500 versus 30 $500. If you were looking to buy Tesla stock, right?
Would you rather buy Tesla my Tesla for $200 a share or $400 a share? Obviously, you would much rather buy for $200 a share. It’s much cheaper, okay, cheaper stock prices is great for us. Okay, when I wake up and I see more red than green on my screen in terms of stocks, I own things like that.
It makes me excited. I love that. Okay, why? Because I’m somebody that’s always buying stocks each and every month. I am ready to buy stocks each and every other week. I am ready to buy stocks. I am always ready buy stocks as we’ve been doing this for 12 years now. And that’s the way I still do to this day.
So I love it. If these stocks continue to downtrend for the rest of the year, let’s say for instance, I’m all for I’m definitely not against it every day. If I wake up and I see red bread bread, I say, Hmm, that’s gonna mean a lot of green, green green for me down the road, okay.
I will gladly take short term pain in my stock account saying it’s got less money and then basically the market goes to Sky we end up in a huge bubble, and there’s no buying opportunities. I would much rather buy great companies at fair valuations or undervalue valuations then pay overvalued valuations for companies just flat out okay.
And in the smaller than the mids, I’m seeing a lot of opportunities out there in the market already. Never mind if this market continues to downtrend, okay. In q4 2018, we had a huge sell off case, October, November, December, there was a big sell off in the market. A lot of people were losing a lot of money in the back half and basically the q4 of 2018 in the market, okay.
And two of our best positions in terms of the ones that made me the most money in the public counts is looking at the public count a few stocks I own in there in terms of ranked by the biggest gainers for me sky work solutions and FB were stocks.
I was adding so heavily during that market downturn of q4 2018. By the way, shout out if anybody remembers that. Let me know in the comments, if you remember that that time period, it was a huge sell off in the market, every stock out there was basically going down. And it was just it was ugly. Let’s just put it that way. Huge sell off.
And I added aggressively sky work solutions in the FB during that time. And in the public count work 37,000 plus dollars on Sky works. Were up $35,000 on Facebook, because I was willing to add and add and add to those positions as it went down and down and down over and over and over again. And those positions will be six figure plus position for us in the future and I’m talking about current value.
And I’m talking about the game we will get on those stocks over time. Okay, so Yeah, it definitely pays off to add great companies that have great futures when the whole market is selling off and things like that.
Okay, the more the stock market goes down, the more I buy for the heavier I buy, the more I’m aggressively buying out there’s just put that way if the if the NASDAQ falls 10% Tomorrow, I will aggressively buy stocks that are in the NASDAQ tomorrow.
Okay, if the s&p 500 Falls 10% Tomorrow, I will aggressively be buying stocks that are falling huge tomorrow. That’s the way I do and that’s why I’ve been doing it for 12 years now and I just do it better than I’ve ever done it Okay, and buying in a downtrending stock market is where the real money is made it’s not in buying overvalued companies when the markets at all time highs Okay.
It’s really when you’re buying into a downtrending market stocks are getting hammered you know a lot of fear out there. You know, it’s true, you know, buy when there’s fear out there that’s just the way it is okay, when everybody’s greedy and everybody thinks is so easy money and everybody’s making too much of easy money.
So there’s a time to say okay, I’m a pullback they’re gonna pay I’m gonna maybe build up cash levels a little bit and when times when everybody’s scared talking negative, why the markets gonna continue go down Oh, it’s gonna go down to the 10% next month 10% this quarter blah blah blah, okay, that’s when you need to say you know, something, your hedge should be going okay.
I need to be buying buying and more it goes down the more you buy that’s where the real money’s made. Okay, that is where the real money is made. So hope you guys enjoyed today’s video as always, I hope you learned a lot from it.
I hope you you know especially whether you’re a newer investor the market or somebody has been in this market for a while I hope you enjoyed it if you don’t mind smash the thumbs up that helps YouTube channel out in a massive way and I appreciate each and every one of you both of you ready to take your stock market investing super serious check out the first link in the description down.
There you can go ahead and apply to hopefully join my private group we will be taking some new members in October so if you want to check that out first link in the description down there. We even actually offer coaching by millionaire students now of mine in there. Thank you for watching and have a great day.