 Good day, fellow investors. Over the last week, I must have received more than 100 questions from emails, from Facebook, from your comments here. Sven, the market is likely to going to crash over the next six months, because there is the biggest economic recession since ever coming. Insolvency issues, debt issues, so greatest economic collapse. We are at the end of the debt cycle. Everything is wrong with things that can go wrong. Stocks are going to crash and we should sell. What do you think about it? And everybody is so scared about what's going to happen? Well, I have no idea what's going to happen. What's going to happen depends on what happens in the future. But I can tell you what is the market pricing in now? What are the positives and the negatives and why the stock market is up 40%. I can tell you that and we're going to discuss that by discussing the current news, the potential future news, the financial markets, the bond market, the stock market, the Fed, ECB, Bank of Japan in between balancing interest rates and doing whatever it takes. And then at the end, you will see how this data that summarizes what the market is pricing in fits your strategy and what you can do it about. What can you do about it? After all, it's all about you. It's not about the markets. And then you might find, okay, what's the best answer for me? Before starting with the content, if you enjoy this analytical discussions on markets, the risk and reward, please click like and consider subscribing to the channel. Thank you. All right. So let's start immediately with the news. Bad news, unemployment, fillings cross 40 million over the last five weeks. That's really terrible news. On the other hand, let's look at the better news. If we look at the new coronavirus cases over time, we have prevented the exponential curve when the lockdowns started and we are already seeing flattening line and the declining line, which is positive. And I might even get a hard haircut next Monday as the lockdown is easing. Further, also very interesting from Google Trends, what are people searching for now? When will flights resume in the UK? In Italy, they are wondering, okay, when we will have summer, when we can travel again. And if we look at the situation on Google Trends, coronavirus research, search terms has peaked exactly when the market had bottomed. So we are there 21st, 22nd, 23rd of March, peak panic, peak negative thinking. And since then, we see high improvements globally. This is worldwide Google Trends. But keep in mind now, what was the news a month ago? This was the news a month ago. So panicking, what can happen? How many people will die in the United States, in Great Britain? That has fortunately been prevented. And therefore, the market is pricing other things, is pricing differently, add a little bit of panic. And we are 40% up since the dumbest days a month ago, a little bit more than a month ago. And then when you look at the positives, the US stocks post best month since 1987. So gloomy outlook, depression, recession, whatever, best month in 30 years. Isn't that insane? Well, let's see what is the market pricing in. That's the key. Government action. We recently had ECB Lagarde have making a press conference and you see, okay, boom, government action on top of monetary action. And even if the ECB president says Euro area economy might shrink 12% this year, stocks we see have gone up. Why are stocks going up? Well, look at this. Pelosi says states and cities six one trillion in next stimulus. So the markets are expecting next stimulus, next more, more, more pumping money into the system to keep the employment high economy as stable as possible. And to get out of this crisis as good as possible. So that's what the market is pricing in now. And that's why we are seeing the 30% recovery from the March 22 bottom. And that's something we have to think about and see, okay, what can happen next? Let's start looking at what can happen next. All right. So what to price in high stimulus, zero interest rates, extremely important for financial markets, improvement with the virus situation, easing of lockdown measures. So that's the positive to pricing versus 12% GDP decline for a year. That's really terrible. Holes in income and balance sheets from private, from corporate, from governments, fiscal deficits, huge fiscal deficits that might lead to insolvency and a liquidity crisis like 2009. So these are the positive against the negatives. And we might also see and hopefully not a second wave with the virus. But then again, we have news like vaccines. And what will be the future news? It might be, okay, 3 million new jobs, 2 million new jobs as the economies eases out, gets out of lockdowns. We might see positive news. And the market always anticipates. So the market now is anticipating, not the news, isn't focused on the news now, but on the future news where things improve, especially thanks to the money coming in from monetary and fiscal policies that we'll discuss in a moment. If we look at the Federal Reserve statement released two days ago, what are they discussing? Well, the Federal, this is extremely important. The Federal Reserve is committed to using its full range of tools, full range of tools to support the US economy in this challenging time, thereby promoting its maximum employment and price stability goals. So they will do whatever it takes to promote maximum employment, which is at 3% of unemployment, not at the current 15-20%. So they will do whatever it takes to bring back employment, which means a lot of good news coming ahead. On the economy, the disruptions are there, we all know about them, have impaired the flow of credit to US households and businesses, and they are covering on that by stimulus, by giving loans, by giving money to banks to give loans to businesses. They are keeping their target range at 0%, let's say, and again, achieve maximum employment and price stability is their goal. And to support the flow of credit to households and businesses, they will continue to purchase treasuries, all other residential and commercial mortgage-backed securities, even junk bonds, whatever they will do, whatever it takes to support smooth market functioning, thereby fostering effective transmission of monetary policy to broader financial conditions. In addition, the open market desk will continue to offer large-scale overnight and term purchase agreements, and the committee will closely monitor market conditions and is prepared to adjust its plans as appropriate. So whatever it takes, they are there, they are ready, and that's something we have to keep in mind. What does it mean, whatever it takes? Well, we can simply take the example of Japan. So the Fed is looking at how the Bank of Japan printed trillions of yens over the last years, bought 75% of the ETFs outstanding, and how they can perhaps do that too. They have a monetary policy purchase of ETFs and Jay Reitz. And if you look at that, they have more than 77% of ownership of the ETF market in Japan. The Bank of Japan is the top holding of the biggest Japanese stocks and businesses. That's a tool, and they might be following that. And this is something that is also a positive risk versus the negative risks that we have been discussing. We don't know what will happen, we have to be ready for anything. And now let's look at something even more important, yields. When it comes to pricing assets, it's all about the yield versus risk reward, risk reward. And then you can see these big, big fluctuations. And when the interest rates are so low, small changes in yields have a big impact on asset prices. As Warren Buffett says, if interest rates stay at zero for longer, and we have seen practically 12 years, 10 years of zero interest rates now, then the value of assets is infinite. And that's something we have also to keep in mind as a positive. If we look at the yield curve, so 2013, if you landed the money to the US government for 10 years, your interest rate was 3%. Now, if you do that is 0.7%, or at 40 years, you get 1.35% per year. So you should be really crazy to invest, to give money to the government for 1.35%. This is why the Fed has intervened, and they are buying the bonds. And then the money is switching from the bond market to other markets, because this is the real yield. You have the nominal yield at the 10-year treasury, and you see here it is at 0.7% bottom down, right corner. But if you look at the real yield accounting for inflation, it's minus 1.67%. So if you invest in treasuries, you are certain of one thing. You are losing money day by day, and you will lose money in 10 years, especially according to even normal purchasing power government measured inflation. That is insane. And therefore, those that are smart are starting to look for other options to invest. If we look at negative yielding debt, it's more than 20% of the fixed income market globally. So we have government debt in Japan, government debt in Europe, and also corporate debt, negative yields. Can you imagine negative yields and breakdown of government bonds by yield? We see that 0.7 US 10 treasury yield is among the better yields you can expect by lending money to governments. That's really insane. And that is why they are looking for other options to invest. On the left, the global bond market is 110 trillion. On the right, the global equity markets with 57% of it in the United States are 98.4 trillion. So imagine that these guys owning bonds simply say, okay, zero point negative yields, it's not something for me. I'm going to switch my few trillions into stocks. And who will cover the whole? You have the Fed that will buy your bonds that is happy buying your bonds and putting liquidity into the system. And then you say, okay, we have negative yields on the left side with the bond markets, better yields on stocks or infinite value with stocks on the right side. And therefore, if you look at cumulative flows, a lot of flows went into bonds a little bit less into stocks. But if you count that just one or two or three or four trillions go into the stock market, that's already a big plus. And that is why stocks go up or have been going up over the last month, because bonds are like Ray Dalio said, a ticking bomb that pays you while you are sitting on it and while it's ticking. But when it blows up, it might blow you up to 110 trillion to be blown up. Hopefully, the central banks will cover for the whole so that it doesn't blow up. And that's also something to price in. We don't know what will happen, but this is extremely important to understand and give it a risk reward perspective on the market. If we look at interest rates, 0% interest rates, compare it to 2% dividend yield of the SAP 505% long term likely earnings yield 2% growth stocks could be priced to infinity, real financial assets. Also, to show you how the whole is being filled with the Fed, look at the balance sheets, the Fed's balance sheet will go to likely 10 trillion. ECB is also pumping money. Bank of Japan has been printing pumping money for the last 10 years and this is what's impacting the markets now. And now what are your options? Nobody has the answer because we don't know what the markets will think in three, six, nine months. The situation now is that we have had the best month in the last 40 years because there is so much money going into bonds. From monetary policy, from bonds, people are looking at yields. I have negative. I'm losing 1.5% of my wealth in bonds given the inflation, given the low interest rates. Okay, let's switch to real assets, big stocks. And as the Fed says and everybody else says, we will do whatever it takes to bring back unemployment to the level of stable prices and everything, 3%, which means that they will do whatever it takes to bring back all those jobs, all those 20 million jobs back. And that's the forces that are governing the market. Yes, there can be insolvency. There will be especially insolvency in the periphery areas, but that is something that we will see and we have to always weigh what are the positives and the negatives. Nobody knows what will happen. And if somebody tells you this will happen, run away. Just try to assess, okay, this can happen, this can happen, this can happen. How can I position myself that whatever happens, you end up well. It requires work, but you have to see how whatever happens can hit you. And what does that mean for you? We don't know what will happen. We know that we are in high uncertain territory, uncharted waters, the Fed, ECB will do whatever it takes huge, they will cover for the huge government deficits to try to save us from a very, very bad situation. Keep in mind 1930s, it took four years to react with the New Deal from 1929 to 1933. Now it took a month and a half or even less a month for people to start real reacting from monetary policy, immediate reaction, global spending, very fast, a lot of money. So that's something we have to keep in. To say it again, I don't know what will happen. I try to be ready to whatever scenario and then see how to take out the most for me as a long-term investor. And this is something very important. Also about timing the market, will we see a crash or not? So I've been investing for 18 years now. I've seen it all, the dot-com crash, I've seen the financial crisis, and these are the crashes that were hitting. We had 2010, the markets were up 100%. Everybody was saying it's overvalued. We had the flash crash, oil spill, issues in Europe, Greece, really, really bad things, and a lot of people sold. The market is still up 300% since then. Then we had US downgrade. US debt was downgraded. Greece was a really, really bad position. The market went down 20%. Many were expecting a second recession, a second crash. It didn't happen. The double dip in Europe, taper tantrum. 2014, we had Ebola, also something to keep in mind and many have sold, and many have sold especially in 2015, 2016. We had a double dip on fears of China slowing down, China entering a recession, commodity crisis, oil crisis, lower oil prices. But then again, we had 2018 trade issues, whatever rising interest rates, peak growth cycle, and now we have the collapse and the recovery due to the coronavirus. The thing is that you never know when you can time the market, what will happen to the market, when will it crash, so that's something impossible to know. Even if we look at the long-term charts here, there have been recessions, there have been market declines, big recession in 1982, the market declined only 20%. Okay, different valuations, and that's also my message. My message is simple. As investors, we have to see, okay, what are the fundamentals of the assets we are buying? What is the yield and are you happy with that yield? That's it. The SAP 500, I keep telling to people and they ask me, okay, is that a good investment or not? The business yield is 5% the earnings, there will be likely growth. It protects you a little bit from inflation due to pricing power, and if you're happy with that yield now, then you have to see, okay, what are the other options that I have, pay back your credit card debt with a yield of 19% or something like that, and put things into your personal perspective. If you are trying, okay, markets will crash 50% over the next three, six months, good, you're timing the market, that can happen. But try to put it in perspective, okay, I'm not happy with a 6% yield from the SAP 500, I want a 12% yield. Then you wait for the markets crash because you have other opportunities. But as investors, you know that over the long term, if you're investing the dividend, the earnings is what creates your return. Inflation is what creates your returns. So you have to be positioned in a way that inflation doesn't eat you up if you wait too long and that you gain the rewards of what the market is giving, what businesses are giving over the long term. So see how that fits you. I'm looking at businesses, I have great businesses, we'll pay a dividend, double-digit dividends somewhere which relative safety over the long term will be volatile. I know that, but I'm used to volatility. I was born in a frontier market communist country, we are crazy, we don't, you know, another crisis or something like that. So we feel it differently, that's what I do. And I'm looking at the market, okay, if it goes down 50%, I know what I'm going to do. I get dividends, I have still some ammunition in the form of leverage for the one portfolio that is fully invested or I'm adding each month money to the portfolio that is structured in a way that I add money, I will invest, I will accumulate more wealth over the next five, 10 years. Even if there is a crash now of 50%, I'll end up better. Why am I not selling everything? Because I don't know whether the crash will happen. I'm looking at the businesses, I'm happy. If it happens, okay, I'll increase my exposure as much as I can, buy better assets and then enjoy the upward trend. But selling now and timing a crash, that's too risky for me because I don't know what will happen and it's let's say the same probability that it goes, especially my businesses that don't go up in a recovery or go down. And when the probabilities are the same, it's better to own businesses for the long term, in my opinion. And this is something very important to conclude with. This is the return on investment for different classes according to JPMorgan and for the average investor. So don't be the idiot here. Don't do stupid things at the wrong moment in time. Because when investors start timing the market, they are focusing on what the market will do, not on what the businesses are doing. Then you see people selling and there has been a lot of selling the 20th of March and everybody or those that have been waiting kept waiting and therefore they miss out on 30% increase over the last month. The average investor therefore over the last 20 years has annualized returns of 1.9%. Because the investor thinks, okay, we have a crash, I have to sell and that happens every two, three years. They sell, they miss the upturn, they miss the dividends, they miss the exposure. And that's why, unfortunately, the average return of people is much lower than that of the SAP 500. So see what is your strategy. Okay, you can time the market one time, you will be lucky the other time you want. But at the end, it's proven that investing through thick and especially thin is what works best if you are not George Soros or whoever the magician at the time is. Again, so a lot of people send me an email, okay, I'm waiting in cash, this is the crash, but did they deploy the money they had in this crash? No, off a little bit and they are waiting for the next crash hoping for another crash this summer. And therefore YouTube videos predicting a crash this summer or in May will likely get a lot of views. I'm buying businesses, long-term fundamentals. When I see something that will likely increase my wealth over the long term, I buy that, I hold that for the long term, allow for compounding. That's pretty much it. Thank you for watching, looking forward to your comments, subscribe if you like this mindset, we'll be analyzing a lot of stocks in the next month and we'll be discussing Warren Buffett's shareholder meeting tomorrow. Thank you and I'll see you in the next video.