Why is the Stock Market Down Today | How We Made Money

Why is the stock market down today? The stock market today fell due to fear and trading psychology. While this probably isn’t the start of a stock market crash, the stock market news today shows a stock market crash 2023 could be coming soon. Regardless, it’s possible to make money in the stock market even during a stock market crash. If you want to know how to make money in the stock market and how to make money online, check out the trades we did in this video. If you want to know how to make money in stock market, how to start investing in the stock market, or even just the stock market basics of the share market, this video will help you out. And it’s not just about how to invest in the stock market, even though I will show you how to start investing in the stock market. This is ultimately about how to make money and how to build wealth with stock market investing. So if you want to know how to become a millionaire and how to invest in stocks, watch this video. It will answer your question of how to be a millionaire.

Whether the stock market is going up or down, whether the economy is good or bad, there are ways to make money. So how do you profit regardless of whether the market is going up or down? Well, whether you are a beginning trader and you’ve never placed a trade before in your life, or you’re a more experienced trader and you’re just looking for some trade ideas, I’ve got something for you in this video. First, let’s talk about where the overall stock market and economy stand right now. Then we’ll talk about some trades that you can place in order to make money.

Oracle stock just suffered its steepest drop since 2002 after bad earnings and a weak revenue guidance. The stock was down 12% on Tuesday, which was the biggest drop in more than two decades. Now, the fact that stocks are dropping just like they did during the dot com bubble should tell you something about the current market environment. A lot of investors have only experienced a major bull market. The only thing they’ve ever known is interest rates near zero, where technology stocks grow like crazy. And what that has caused is a major bubble in the stock market. Now that interest rates are rising, they’re well above 5%. And when interest rates rise like that, it significantly slows down growth. Right now, stocks are still priced as if they would be able to continue to grow like we were in a 0% interest rate environment. But we’re not. We’re in a 5% interest rate environment. And that means stocks are not going to grow like they did over the past 15 years.

That means valuations have to come down. And as a result, this bubble that we’re currently in is on the brink of eliminating these forward PE ratios of 60 and 80 that we’ve seen. They’re going to go away and a lot of investors are going to get hurt just like they did in 2021 when retail stocks that were hyped up like crazy started to fall and crash starting in April of 2021 and going all the way into the end of 2022. Now, I only tell you this to inform you so that you can avoid losing money.

Then let’s talk about how to make some money. First, let’s get back to the stock market and talk about Apple stock, because this was a great way to make money. Apple just had their 2023 event where they launched a new iPhone, they have a new Apple Watch, and they also updated their AirPods. Now, whenever Apple has an event like this, this is a classic buy the hype, sell the news. In other words, you would do something like a call option or just buy Apple stock going into the event. Then on the day of the event, you turn around, you start shorting the stock or you buy put options. And that’s because Apple stock generally rises going into an event and then it sells off once the event is over. And this is called Buy the Hype, Sell the News, as people buy the hype going into the event, then they sell the news. The news is the event.

So playing call options leading up to the Apple event would have made money. I certainly did that, the people in my coaching program did that, and we made money. Then today you could have sold the stock or you could have bought puts on the stock and made money on the way down. And quite a few people in the stock trading alert Discord, which is a separate discord, they did that today and they also made money. Now, these are an example of some ways that you can make money on certain stocks. And today, as Apple stock fell, this had the result of causing the entire stock market to go down with it, with the Nasdaq closing lower by about 1%.

Now, the stock market wasn’t just down on Tuesday due to Apple stock, although that was a large portion of it. The stock market was also down for another reason, and that’s because the CPI, or Consumer Price Index, is being released Wednesday before the market opens – about an hour before the market opens on Wednesday. We’re going to get the inflation data for August, and unfortunately, the headline CPI is expected to increase from 0.2% month over month up to 0.6% month over month. The annual headline CPI is expected to go up from 3.2% in July, up to 3.6% in August. If there’s any good news, it’s that the core CPI is expected to go down.

And as inflation rises once again, this is going to put more pressure on the Federal Reserve to increase interest rates. The good news is at their meeting next week, they are widely expected to pause again and not raise rates. However, at their next meeting on November 1st, they are expected to raise rates once again. And as interest rates continue to go up, as inflation continues to go up, this is putting a lot of stress on the overall economy. I’m going to show you just how bad the economy is in one second, despite what the official data is showing. Keep in mind that the official economic data lags and it’s not a really good indicator. If you look at the leading indicators, the leading indicators all point to the US being in a recession. And I’ll show you just how bad that recession might get in a minute.

First, I want to go back to the banks. You might recall how in March we had a couple of bank collapses. The largest bank collapses since 2008, and two of the three largest bank collapses in US history all occurred in March. And the reason for those bank collapses was because a lot of people pulled their money out of the banks and that caused the banks to become illiquid. They didn’t have enough deposits on hand, and the federal government stepped in, took over the banks to insure deposits. Now, unfortunately, the same issues we saw in March are starting to rear their ugly head once again.

As it turns out, the banks have been lying to us about just how strong their balance sheets are. They did a simple little trick to make their balance sheets seem really strong, when in reality they’re quite weak. And what I’m talking about here is a little trick called, “Brokered Deposits”. A brokered deposit is a deposit made to a bank by a third party deposit broker. A brokered deposit is a type of investment that attracts individual investors because the deposits typically offer higher interest rates. You might be aware that there are a lot of different platforms that you can get on right now, like Save and Raisin and a few others where they will go out and they’ll find the highest yielding interest for your money. And what you do is you give Raisin or Save or some other broker your money, and then they go and invest that at multiple banks around the country that pay the highest yielding interest rates. And these are called brokered deposits. The deposits at the banks aren’t coming directly from individual investors. The deposits of the banks are coming through a third party broker.

The problem is those third party deposits can go away very quickly. Should the interest rate drop or something occur at the bank and the broker decides they’re no longer going to keep the money on hand, that money will just disappear and it’ll go to a different bank. And the issue as of late is that banks have loaded up on $1.2 trillion in these risky hot deposits. Brokered deposits rose 86% from a year earlier, and now regulators are growing concerned. You can see on this chart just how quickly these brokered deposits have been growing. And if you’re wondering where all this money came from that’s now going into these banks, well, it came from the banks themselves. People pulled their money out of savings at the banks. They sent it to a broker, and now the money is going back into the banks through a broker.

Many industry players view brokered deposits as a double edged sword. They can be a quick and easy way for a bank to shore up its balance sheets. Unfortunately, they’re also a type of hot money that is prone to disappear when a bank hits a rough patch, since these high yield seeking customers don’t tend to be loyal. And herein lies the problem. Banks have been loading up on brokered assets in order to shore up their balance sheets. They wanted to shore up their balance sheets to ensure both federal regulators, as well as individual depositors, that the bank was safe and to try to prevent any more bank runs. But what happens when those broker deposits leave the bank and go to a different bank that’s offering a higher yield savings accounts? Well, that means their liquidity disappears overnight and the balance sheet becomes far worse overnight. That is not good news.

And should that happen, it could cause either a bank run, which will cause more banks to go out of business, or it could cause the Federal Reserve to decide that a bank doesn’t have enough cash on hand and the Federal Reserve could take over the bank in order to prevent a default. In either case, these broker deposits are just gambling with the banks balance sheets, and sooner or later a few of these banks are going to go under because their broker deposits are going to leave. And this has caused not only federal regulators a lot of concern, it’s also caused the rating agencies a lot of concern as well.

Earlier this year, S&P Global and Moody’s Investor Service pointed to brokered deposits as a factor when they downgraded a number of regional banks. That’s because the broker deposits can present liquidity risks, and it is a liquidity risk that has caused so many of these banks to go under. Unfortunately, the credit downgrades aren’t over. Earlier, we got word from a couple of different rating agencies that they were still planning to downgrade more banks at the current time. We’re just waiting for those downgrades to come out. About one month ago, stocks tumbled as Moody’s warned it could cut the credit ratings of six big US banks. Just one week later, Fitch warned that it may be forced to downgrade dozens of banks as well, including JP Morgan Chase.

So right now, the stock market is acting like everything is fine. But if we get more of these bank downgrades and we get more bank collapses, we are very likely to see another major downturn in the market, kind of like we did in 2008, where we kind of got through the collapse of Bear Stearns in March of 2008. This year, we got through the collapse of Silicon Valley Bank and the others in March of 2023. Then in 2008, the stock market started to rise as everybody thought we were through it and everything was fine. Now in 2023 the stock market is starting to rise as everybody thought we were through it and everything was fine. And then in September, October 2008, more banks started to collapse under liquidity crises. Now we get to 2023 and we are very close to more bank collapses due to these liquidity crises due to these brokered deposits. So all of that just shows how similar the market and the banking sector is acting to the way things panned out in 2008. This is a concern. It hasn’t happened yet, but it certainly is a concern. And this might just happen to line up perfectly with the fact that September is historically the worst month of the year for the stock market.

Now, let’s talk some trade ideas. One simple trade idea, one thing I’m doing right now, is doing some long dated put options on FAS. DPST is another one to consider, and both of these are leveraged banking ETFs. So essentially, if the banking sector does get these downgrades that we’ve been waiting on for the past month, and if we do get more bank collapses, which regulators and the rating agencies are expecting, that could ultimately cause the stocks to go down. And if the bank stocks go down, then the ETFs that hold those bank stocks are also going to go down, which means ETFs like FAS and DPST are going to fall. And if they fall, then put options are going to pay off. The problem is we don’t know the timing of this and that’s why I recommend some longer dated put options possibly out to January of 2025, but probably no earlier than January of 2024.

Now, again, this is not financial advice. Nothing I’m talking about is a recommendation to go buy, sell or hold any asset. I’m just telling you what I am doing and the trades I am making now. That is what’s happening with the banking sector. Those are the risks to the stock market. We have an extremely overvalued stock market with some of the highest forward PEs in history. We have a bubble that is about to burst. We have the banking sector that is under a lot of pressure and bank stocks might continue to fall. And we have the fact that historically we’re in the month of September, and the whole market normally goes down in the month of September. So all of that combined is just putting a lot of downward pressure on the stock market this month, which means some put options might be the way to go. Now, if you want a far safer play and you’re a little bit more advanced, you’re a little bit more skilled at this, rather than just buying a put option, a better play is to sell options. Buying options generally yields a very low chance of making money, but selling options generally yields a very large chance of making money. So if you sell a credit call spread or any sort of cash secured put, that might be a better option than just buying a put option. Now, that’s what’s going on with the stock market.

Let’s get into the economy for a second because we’ve seen the economic numbers for many months. They all seemed great. The stock market rallied as the economy was resilient. But we have to understand that never in the history of the United States has the Federal Reserve raised interest rates without causing a recession. And this time is most likely going to be no different. And while the past, the backward looking economic data, looked very strong for a while, it’s starting to get weaker. And we’ve seen this in the unemployment numbers now rising. We see this in job openings going down. We see the economy getting weaker. We see this in credit cards getting maxed out. We see this in savings accounts getting dwindled. We see a lot of different signs of a weak economy. We also see tighter lending standards, which is going to impede growth. And it’s going to stop people from being able to buy houses and cars, which in turn causes the price of those assets to go down. But more importantly, it causes the companies that deal in those industries to lose a ton of revenue. So that’s all truth.

Now, if you look at the leading economic data, the forward looking economic data, it all points to the US already being in a recession, even though that hasn’t showed up in the official backward looking data yet. And how bad of a recession are we talking about? Are we talking about a mild recession, basically a soft landing, or are we talking about a much harder recession? Well, there were two different news stories that came out today that they’re not really painting a great picture. Let me show you what I’m talking about. The first issue is that the child poverty rate more than doubled in the US after the expanded tax credits and stimulus checks ended. The child poverty rate surged to 12.4% in 2022, up from 5.2% in 2021. And it’s not just the very young who are suffering here in the United States. The elderly are suffering as well. More baby boomers are sliding into homelessness. The aging of America means more old people on fixed incomes are overwhelmed by the high cost of housing and other financial shocks not seen since the Great Depression.

Okay, we’ve had a lot of economic data that has been compared to 2008, such as more businesses filing for bankruptcy and more businesses defaulting on loans than they did in 2008. We’ve had data that is compared to the dot com bubble, such as the valuation of stocks currently and stocks like Oracle falling more than they did since the dot com bubble. But now we have economic data pointing to things being as bad as they have ever been since the Great Depression. So if you look at the data, not the official government backward looking data, look at the real economic data, the forward looking data, the leading data, how people are actually surviving. And it is really, really bad. Businesses are collapsing. They’re going under. Banks are collapsing. More than 10% of children are in poverty. There are more elderly homeless people now than there have been since the Great Depression. Things are horrible in the US economy. So things are bad. I’m not going to dwell on that.

I told you it’s time to talk about how to make money. And again, something like a put option longer dated now because we don’t know timing. So something like a January 2025 put option on the overall market or something to that effect might be a good way to go. Now, stocks just with their valuations really don’t have a lot of room to continue to run up. So if I was going to short any of the indices right now, it would probably be the NASDAQ, because the NASDAQ has the highest number of stocks that are extremely overvalued. And the drop in stocks is not going to happen suddenly. This isn’t something that you can just buy a put option on for September and expect to make money. I mean, you might get lucky, but the odds are pretty low. This is something that’s going to happen slowly over time as more and more earnings come out, as the economic data gets worse and worse, as the Fed continues to raise interest rates, as inflation continues to go up, this is something that’s going to take months or even years to pan out. This is not an overnight thing. When we’re talking about macroeconomic factors, we have to take on macro trades, which means we have to be really long dated on any options that we play. So this is kind of how to make money.

Now, if you are a brand new beginner investor and half the stuff I just said went in one ear and out the other and you have no clue what I’m talking about, I strongly recommend you go take the trading and investing course for beginners. There’s a link for it here: https://weprofit.io/courses. If you are a more experienced trader and you want to learn what we are buying and selling how to make money in the stock market, there is a discord community. I have not talked about it on this channel before, so this is the first time I’m mentioning it. It’s called Stock Dads. I don’t have a direct affiliation with Stock Dads, but I have partnered with them, and they have over 20 traders in there that are seeing win rates greater than 75%. I mean, just about anybody that wins more than 75% of their trades is going to make money in the stock market. And one trader in there called Ace of Trades.

Last month, he did a small account challenge where he turned $1,000 into $5,000 in just nine trading days, literally $1000 to $5000 in nine days. And he is starting a brand new small account challenge this month. It starts on September 18th, where he’s going to be turning $1,000 into $10,000. Now, this is like the 10th or 11th small account challenge he’s done. Every single small account challenge he’s done, he has been successful in reaching the goal. So this one going from $1,000 to $10,000 starts on September 18th. The estimated time it will take to get there is between 2 and 3 months. Again, nothing is guaranteed. I am not by any means saying that you are guaranteed to make money. If you follow the trades, there is always risk. You could always lose your investment. But I’m just saying, based upon his past performance, that is what he’s expecting this time.

If you want to follow along in those trades, go check out the stock alerts that are available on the new discord called Stock Dads. There is a link for that here: https://weprofit.io/discord.

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