 Good day, fellow investors. Welcome to the weekly stock market news with a fundamental twist. Today, we're going to talk about what's going on in the markets, how much cash do investors have now in this market, which is crucial to understanding how the markets move and how people's behavior is. We're going to discuss earning season. We're going to see what Radialio tells us about trade jitters and trade wars and how to invest now. And I'm going to finish with a little touch on future disruption that is starting now. So let's dig into what happened in the S&P 500. Over the last five days with past Friday, we have seen a huge drop on last Friday, then a huge rebound on Monday, then a huge drop on Tuesday, flat Wednesday and a very nice rebound on Thursday. So the market is really searching for direction and one day people are ecstatic, one day people are panicking. This is a clear sign that anything can happen. That's the first point. If you look at this chart from the S&P 500, from March 2007 to March 2008, you can see how the S&P 500 was in a similar place, looking for direction. There was a huge drop in August 2007, huge drop in November 2007, rebounded, rebounded and only then the actual drop happened. Similarly to what's going on now, the S&P 500 from 2004 to 2007 went up pretty much straight with some bumps here and there and then dropped like a rock. If we compare it to what has happened in the last five years, we can see that in 2015 we had one drop due to fears about China and in 2016 January there was the big commodity fear. So that really resembles what happened in 2008. And it shows how the risks are high. I always look at fundamentals. The price to earnings ratio of the S&P 500, probably not the price to earnings ratio because that's skewed by one-off events like tax issues or something like that. If I look at the K-Pratio, the actual long-term earnings power of the companies, it will tell me what will be my long-term return and the K-Pratio is pretty, pretty high now and I will expect a long-term return from stocks of 4%. 10-year returns will probably be negative. And you will see the market, okay, are we going to have more legs up? So is there some more money to be made? Or this is really the downturn. So you have seen big sell-offs in the last months and big run-ups that say, okay, it's going to last a little bit longer. And something that might make it really last a little bit longer are upcoming earnings and the upcoming earnings season. Let's dig into that. Earnings estimations for 2018, for the quarters 19, 21, 17, for all of 2018, it's 18.5% in earnings growth. This is huge, huge expectations. And when there are such expectations, it's usually priced in the price already. So if those are missed, the results will be terrible. If we look per sector, energy is the expected biggest growth, higher oil prices, higher commodity prices followed by materials, information technology, as always, tax benefits, financials, higher interest rates, SAP 517.3% the average, and then the other sectors that will not see such a bigger growth. Estimates for 2019 are even higher at another 10% growth of earnings in 2019. So this is what Wall Street expects. Usually, Wall Street always expects the rosiest picture out there. And if those things are missed, if there is a recession, if there is something that happens, then due to the high valuations, we can really see a big, big drop somewhere in the next six months, one year, two years, I don't know. But if the earnings exceed expectations, we might see even new highs. So that's always a risk reward in the short term. Over the long term, the fundamentals are simply, simply very, very stretched. And let me show you now how people are invested, because we are going to check Schwab's client's cash position. So now that stocks are peaking, people have the lowest levels of cash. On the contrary, when there is a dip, when there is a crash, people rush to sell and have the highest amount of cash. So this is totally counter-intuitive to what should be done. And I'm going to let Ray Daley explain what you should do and how you should actually invest your money. The greatest mistake of the individual investor is to think that that market that did well is a good market, rather more expensive market. And that market that did badly is a worse market. And I don't want any part of it rather than a cheaper market. And you can't make that distinguishing. So please don't call me then. Just don't do that. Would be my first advice for her. Can I just say none of you paid anything for that advice? But based on my knowledge of these things, that was very valuable advice that if you can discipline yourself and your relatives to follow over the next substantial number of years, will be worth a lot of money to you. So thanks Ray. But this is the key. You should do the opposite of what everybody else is doing. And we see by this chart about the cash levels, how everybody else is doing the wrong thing. Because they invest, they buy high and they sell low. But that's how the market works. That's how the market has been working in the past. And that's probably how the market will continue to work for the next 100 years. So better take advantage of what's going on. Following on Ray Daily, he recently published an article discussing how trade wars jitters are most probably just a bluffing strategy and how actual trade tariffs aren't significant on a global scale. He expects that we will see some trade agreements which will make Trump a winner, thus again a positive for stocks. However, he also discusses how populism is rising, inequalities are rising, which are again long-term risks. And he hopes that there will be no wars, even if there is a lot of hardlining going around in politics. We'll see. But I'll quote him to tell you what you should do according to Ray Daily. I believe that it is especially important to keep one's portfolio liquid, to be flexible and diversified, to not have concentrated risks. So Ray Daily says that you should do the opposite of what the market does and not have concentrated risks now. I wonder to whom we should listen, to your banker that says buy index funds or to Ray Daily who is a multi-multi-billionaire guru investor. I don't know, I'll let the decision to you. I'll finish with some good positive disruptive news from Saudi Arabia. With SoftBank the Saudis have signed an agreement to build the largest solar project and the plan is to invest 200 billion dollars for a 200 gigawatt solar capacity in Saudi Arabia by 2030. This might mean much, this might even not happen, but it is showing that things in the world are changing and we might readjust our thinking to okay the world will be much different in 2030. Thank you for watching, looking forward to your comments and I'll see you in the next video.