It's Happening Again.

0:00 it's happened at least three times in the last 100 years a president is elected on the heels of one of the biggest stock market rallies in history with the S&P 500 hitting alltime highs and in a lot of ways those previous three times mirror the current economic situation the question is will this time be different or is it happening again it seems as though we may be on the verge of a president who is otherwise considered to be good for the economy stepping into a situation where there is nothing but downside and in this video I'm going to discuss what led up to those previous stock market crashes just months after the elections the parallels between then and today whether or not this time will be different and if it isn't how you compare to make sure that

0:47 you don't find yourself financially destroyed but before we get into it my name is Nolan Maas and if you want the truth the real truth about personal finance and economics this is the place for you and if you believe that there is opportunity in crisis then go ahead and hit that subscribe button so more people like you can see this video okay so let's get into it let's discuss what has happened previously in history and whether or not we are on the cusp of yet another devastating economic recession that even the president cannot prevent so let's start by taking a look at history in the 1920s there was Hoover in the 1970s there was Nixon in the early 2000s there was Bush and now most recently there is Trump all of of whom have been elected on the heels of the greatest stock market rally in history

1:34 with the S&P 500 hitting all-time highs now I want to start this video by prefacing that nobody is a fortune teller anybody on the internet who is making these videos about the next stock market crash or the financial crisis that is right around the corner is essentially making a guess and historically economists are really good at predicting 50 200 of the last three or four recessions because there's often surprises in the economy but that doesn't doesn't mean that the past doesn't leave Clues take for example those three eras after Hoover Nixon and Bush were elected all of which suffered devastating recessions mere months after the elections with these stock markets falling significantly almost overnight and ironically in each one of these situations Hoover Nixon and Bush were

2:21 all considered to be presidents that would be significantly better for the economy than the alternative but in all three cases the damage was done long before they took office and no matter what they did there was no stopping the inevitable and when you look at the Nixon and the bush eras specifically you can see from the bottom chart here that consumer confidence was quite High when they took office only to turn quite quickly as the economy went into the well proverbial but what's interesting is when you look at today Donald Trump is taking control at the all-time highs of the S&P 500 now this is not abnormal it is normal for the the market to hit all-time highs on a fairly regular basis in fact in 2024 alone the S&P 500 hit all-time Highs at least 50

3:08 times however what isn't normal is for consumer confidence to be as low as it is today I mean if you take a look at the current numbers you can see the consumer confidence is at the lowest it's been in quite some time ironically though the S&P 500 is hitting all-time highs it doesn't make a lot of sense except when you look at the fact that inflation has led to higher prices which has led to inflated profits which is causing the S&P 500 to increase however that doesn't mean that there isn't storm clouds on the horizon because even though it's largely considered that interest rates are about to come down if you look back in history at the Nixon the bush and the Trump eras we see that in all three eras interest rates have come off lows and

3:55 come back to a 5 to 6% range which is an indicator that in all all of these scenarios the economy was booming leading up to those highs in the S&P 500 but when the Federal Reserve increased its interest rates in the same way that they did in the previous two eras to curb inflation it leads to what's called an inverted yield curve this is when the yellow line which is the difference between the 2-year and the 10-year bond turns negative and as you can see from this chart in all three instances when the Federal Reserve started reducing interest rates and subsequently the yield curve uninverted well that was a key indicator that a recession was right around the corner and it seems as though history might just be repeating itself today one of the scariest pieces of data in economics

4:40 today at least in my opinion is when you graph the yield curve versus unemployment the two charts almost identically mirror each other and currently we are seeing that yield curve un invert which means if history is true we should start to see unemployment increase as well and if unemployment begins to increase that is a sign that we are in the early stages of a recession and this has happened before in recent memory we've seen the stock market on at least four separate occasions hit all-time highs this isn't including the Hoover and the Nixon ays only to see it come down substantially as we entered a recession now the stock market is not the indicator that tells us a recession is coming but the stock market does in fact react to

5:26 recessionary signals things like the yield curve on Inver and unemployment increasing which are both things that we see happening right now and that leads us to a rule an economic rule that predicts a recession Almost 100% of the time it's called the Sam rule the Sam rule is when the 3-month moving average of the national unemployment rate is05 percentage points or more above its low over the prior 12 months we're in the early months of a recession and if you graph out the Sam ru as of right now what you can see is that in the same way that it increased in the 1980s the 1990s the early 2000s leading up to the financial crisis in 2008 and in the

6:12 first couple months of covid it is once again on the rise indicating that a recession could be right around the corner so even though Trump campaigned on tariffs in the same way that Hoover did and lower taxes like Bush and Nixon his business-friendly stance doesn't mean that a recession is going to be avoid it now is there a chance that we could avoid a recession yes absolutely but in the cases of Hoover Nixon and Bush one single individual was not enough to turn the tide and the question is Will trump be enough to turn the tide himself and the answer is nobody knows but the indicators are suggesting that we need to prepare for the worst now here's the thing about investing if you prepare for the worst and you reduce your exposure to risk you are highly

6:57 unlikely to suffer the same losses that many people face just think about great investors like Ray doio and Warren Buffett they don't stop investing they don't jump into the popular Investments of the day they buy high value Investments that they know will perform well even if the economy falters and if the economy does falter and the S&P 500 drops they set up their portfolios in a way that they have the buying power to go in and buy all of the Investments that are on fire sale at a discount now if all the people people out there who were making these YouTube videos really knew what they were doing and could really predict the future well they wouldn't need to make the YouTube videos and not only that they would be wealthy Beyond imagination the reality is

7:43 they're probably wrong reality is I'm probably wrong but the lesson that we can learn is to use the paranoia to reduce our risk and reducing our risk doesn't mean pumping all of our money into Bitcoin or gold because investing in one or two things is the reason why people lose fortunes when the economy turns instead the best thing you can do is not follow the crowd but diversify your Investments and Hedge for risk and from everything I've learned over the last 20 years there's two ways to do that you either follow an investment strategy like Warren Buffett where you invest in stocks that have significant value or you follow an investing strategy like Ray Delio where you diversify for risk and if you do either of those two things you should be able

8:31 to protect yourself from the storm now it's significantly harder to invest like Buffett if we could all do it we'd all be rich but the ray alio allweather portfolio which he has talked about in several of his books and on YouTube seems to be the single best investment strategy to reduce risk in times where there could be a significant downturn in the economy and this portfolio is quite simply Diversified based on instead of the the Investment Portfolio the actual risk associated with different types of Investments the strategy suggests that you should invest about 7.5% in Broad Commodities and gold and by the way if you are going to invest in gold you can watch my video on why you shouldn't invest in physical gold and silver then invest about 30% of your portfolio in

9:17 large US cap stocks and then 15% in short-term treasury notes and 40% in long-term treasury bonds and what this asset mix does is it reduces exposure to anyone asset class meaning that when the economy does turn the draw Downs that are expected are significantly lower and when you look at the all- weather portfolio versus global equities over the last 50 years what you can see is that the all- weather portfolio is very much the Steady Eddy and even though there are times like today where Straight Equity investing can outperform the all weather portfolio there's almost inevitably a crash a recession something that leads to a significant draw down in equities and by looking at the bottom

10:03 graph which is a graph of the draw Downs you can see that the red line the global equities are significantly more volatile than the blue line which is the all weather portfolio and this is why the all-weather portfolio outperforms almost every other type of investment strategy over the long term it's because it follows the number one rule of investing which is don't lose money and the way that you lose money is by pumping all of your money into into something like gold or something like Bitcoin or something like individual stocks like apple and Tesla the diversification is what reduces the risk and creates the long-term returns that are almost guaranteed now if you don't have an Investment Portfolio let's say you're not at the point where you're in savings

10:49 mode and investing mode yet there are some other things that you can do in order to protect yourself from an upcoming recession whether it's today a year from now 3 years from now or 5 Years From those things are really quite simple spend significantly less than you make and if you can't do that you probably need to either focus on making more money or changing your lifestyle significantly then get rid of as much debt as possible the only debt that somebody should be carrying at least in my opinion is a mortgage on a property that they can afford for the long term and by the way if that mortgage payment is a significant portion of your income well you may want to look at downsizing because more than likely the house that you have is far more house than you actually need but it's important that

11:35 you consider the fact that the economy at some point will turn and what you do today will determine just how bad it is for you and your family so leaving this video the one thing you need to be doing is taking action and by the way if you are watching this video YouTube which the algorithm is incredibly intelligent thinks that you should probably be watching this one as well and