 Good day, fellow investors. Welcome to the stock market news with a long term twist. We're first going to discuss what happened this week as the short term gives us a little bit of indication what will happen over the long term. Then we are further going to touch a little bit on commodities, a little bit on chip maker guidance and lower smartphone sales and on covenant ratios. And I will discuss what are covenant ratios. That will give us a perspective in relation to what's going on with interest rates. And then I'm going to talk about what should an investor do and I'm going to try to make investing easy because there is so much information I will now give you good information, bad information and it brings to a lot of confusion. However, there is a way to make investing easy. Let's first start with the news and we'll finish with the steps to make investing easy. So stocks went up the first part of the week and then went down the last part of the week. This volatility and direction seeking is a signal of the very late stages of a bull market or seek for direction. So we don't know whether we will have a bear market or a bull market in continuation. As would Buffett say, I never know what markets are going to do. There's never been a time in my life when I I know what markets are going to do over a long period of time. They're going to go up. But in terms of what's going to happen in a day or a week or a month or a year even, I never felt that I knew it and I've never felt that was important. I will say that in 10 or 20 or 30 years I think stocks will be a lot higher than they are now. Thanks, Warren. Another signal that we are in the late part of the economic cycle are rising commodity prices. Those who started watching this channel in the beginning remember how I was positing on metals and this is exactly what happened. Metals are up about 40% over the past year, let's say from summer and 150% over the last two years. Higher commodity prices late part of the economic cycle because there is more demand for commodities, the economy is doing good, peak productivity around the globe and the consequences are higher commodity prices that lead into inflation. Sooner or later, those higher commodity prices we see high oil prices, high aluminum especially now with tariffs and those prices sooner or later bring manufacturing costs higher and we see inflation and the Fed likes stable inflation but not surging inflation. And that's the reason higher commodity prices, inflation, late part of the cycle, the Fed is rising interest rates fast in order to prevent an overheating economy because stable inflation is good, higher inflation is not good. Why is higher inflation not good? Because if you know inflation is at 5%, what do you do? You spend your money now so that you save and it's worth more now than in the future. When that happens people start buying more thus inflation goes even higher, when people buy more inflation goes higher higher and you might quickly find yourself with hyperinflation. So the Fed's goal is to balance and keep things stable, keep prices stable or with 2% inflation and they are doing whatever they can to do that. Also when a recession comes to be able to lower rate to stimulate the economy. Now the Fed is let's say normalizing a bit but the ECB and the Bank of Japan are still buying. Here you can see the asset purchases of the European Central Bank and they are still buying 40 billion euros per month of securities. So the Fed starts to normalize but those other banks are still pumping money into system pumping money pumping money which spurs global inflation global demand for commodities but I wonder whether that is fundamentally strong businesses or it is everything that we are enjoying as growth is a result of monetary easing. The point is that we never saw something like this in the past and we don't know what will be the result. There is a high probability that the economy overheats becomes a bubble and then enters in recession over the next few years but that's just a probability nobody knows what will happen. Something that I find very interesting and a signal of how so much money in the system makes people more prompt to take more risks for any kind of return is covenant quality. We can see here that over the past five years covenant ratios have deteriorated from 3.26 to 4.05. Debt covenants are agreements between a company and a creditor usually stating limits or thresholds for certain financial ratios that the company may not breach. So for example a company says okay I get this loan of 100 million and the covenant is I don't know that too equity must never surpass one. So when that is the case if that surpasses one then the deal gets renegotiated then the company is in trouble let's say if it breaks the covenants or interest rates go up and by deteriorating covenants ratios the market is showing that it accepts any kind of risk for getting a yield and that's very very risky because it destabilizes the whole environment. Another cyclical indicator is that the world's largest chip maker revised its guidance on softer demand for smart phones and less crypto mining and that's what's hit apple over the last days and that's why the market is down over the last few days. The point here is that nothing can grow forever and that's something that we should all be aware of. Taiwan semiconductor manufacturing the stock is down over the last week but still up hugely over the last five years so long term done very good short term this growth stops sometimes does it stop here or will it grow further we will see. So now we have this data good economic data commodities are going up on the other hand smartphone demand is going down risk is nobody looks at risk so bigger risks are piling up and central banks are still printing money. So what should an investor do now we have different news I bet a lot of you are confused and when you're confused the best thing to do is go to Buffett. One of his most important sayings is the following by stocks you would want to hold if the market were to close for 10 years. So whatever you own whatever you do try to see it from the perspective okay if the market closes today whatever happens in the future am I happy owning that as a business over the next 10 years if you say yes then that's what you have to own if you're saying no okay then at this point in time that's something you really shouldn't do because the risk is high and the reward isn't there so this is a good start and makes things much easier but let me complicate things a little bit because that's how I am. There are other questions that you have to ask yourself will we see a recession in the next 10 years most probably yes will we see higher interest rates higher inflation and tighter credit markets most probably yes will we see more monetary easing in the next 10 years most probably yes will we see disruption coming in various new technology forms most probably yes and now I have complicated or made it really easy to invest if you find something that stock market is closing and there is a positive answer to what you own I would still own it no matter what happens over the last 10 years and you would still own it if there is a recession higher interest rates lower interest inflation technology disruption whatever you would still own that stock then that is something you should own in addition that it is at a fair valuation now in this market if you look at so many things as we do a lot here we look at a lot of stocks there is so much that is overvalued that I would say no I wouldn't own that over the next 10 years however this makes investing easy because no no no no no okay what will I hold I will keep cash and wait for opportunities so that something falls into my net that I would like to own for 10 years or as Buffett would say so we're almost always a buyer of stocks and we're a more aggressive buyer when they're going down I mean I I feel much better when they're going down but it's hard to think of very many months when we haven't been a net buyer of stocks so we are mostly net buyers over the long term thus we can't really avoid not buying stocks and being out of the market is very risky because you never know when the market will go up and down so what you can do is rebalance on your buying activity okay I will buy a little bit less pile up the cash until there is a company that fits all my criteria so as Buffett says be more aggressive when valuations are low and be a little bit more timid when valuations are high and buy only those things that fit your criteria thank you for watching let me know which stocks fit your 10 year criteria so we add value into the comments and all of those reading into the comments see you in the next video