 Good day, fellow investors. Welcome to the stock market news with a long-term fundamental twist. So this week the Fed lowered rates again. So it lowered the benchmark rate to 1.5 to 1.75. And we can see how the trend is clear. They said they will not lower rates anymore, but then they said also they would raise them much higher a few years ago when they started to raise them. So never trust the Fed. They don't even know what they will do. They said they'll stop now just to keep the system at place to keep confidence, but that's something that never happens. They also said they will lower the balance sheet, their balance sheet, but since the repo liquidity issue, they increased their balance sheet by 260 billion dollars. So they also said they were going to lower it, but this is not lowering from my perspective. This is a huge increase and a huge injection into the market and into the economy. So they have tested higher rates, they have tested the lower balance sheet, and they have seen this. They have seen that the economy has been slowing down, the economy has been weakening, and what they can do, not manufacturing, not development, not productivity, let's give money, let's give free money to people, lower interest rates, lower the payments so that they can consume more. And the only thing keeping the US economy is personal consumption. We see fixed investment, very low net exports, also low. And you see only the black line is here strong. Also the average economic growth has slowed down in 2019 and immediately the Fed pushed on printing more, more money and lowering interest rates. Also a very big issue, home prices have started to decline a little bit and then of course immediately lower interest rates increase the availability of mortgages, increase the money in the system so that people buy more, so that people take more debt. Also another reason why they can't lower, why they can't keep interest rates higher is that the deficit, America's deficit has almost reached one trillion in the latest fiscal year, which is something really, really crazy. And you can't finance this, you can't refinance this with higher interest rates. So it's practically impossible to see higher interest rates without significant inflation, which is something we are not yet seeing because higher interest rates and no recession, the Fed doesn't allow for a recession, thus nobody goes bankrupt, thus there is high competition, thus there are low prices, which inhibit inflation. So it's all correlated and we will see how it will end. On the other hand stocks just keep marching up, the money that the Fed is pushing into the system, the lower interest rates make stocks more attractive. We have the SAP500 at all times high, 21.5% up for this year, which is something insane. And then investment banks like JPMorgan are even bullish. JPMorgan says the SAP500 could reach 3200 early in the expected, thus 3200 by the end of this year. So it could reach 3200 by the end of December. So what should I do? I should take all the margins, all the loans I could can and then put it simply in the SAP500. It's 20% up over the last year, 52% up over the last five years. So I would be crazy to invest anywhere else to bother about anything else I should just invest in the SAP500. And the reason for their prediction is not only the Fed, but combined with US, China, trade war, easing, there will be 23 cuts in interest rates projected for central banks worldwide in the fourth quarter. 23 interest rate cuts globally. So everybody is stimulating the economy and that's simply insane where in what kind of environment we are living in. But no matter that environment is irrational, the markets can stay irrational much longer than we all can stay liquid. So this is a risk. It can go on for five, it can pile, it can get bigger, bigger, bigger. But at some point it will change. As soon as there is some weakness in the business cycle, the Fed starts printing money, taxes are lowered. So everything is done to prevent any kind of slowdown or recession. But it is natural for the economy to be cyclical and it can only be postponed. But usually when it is postponed, the next downturn is worse than it should be with slower recessions. That's something that they don't want to think about, but it is the truth. When it comes further to stocks, look at this, the Schiller price earnings ratio that takes into account 10 years of average earnings is higher than where it was in 1929 on the peak of the stock market of the 1920s stock market bubble of euphoria and everything. So it took stocks 25 years to reach again the 1929 peak in the United States America somewhere even longer. So it's not a good signal if you are just invested in the SAP 500. Yes, it can go to 3200 points by the end of the year, it can go to 3500, it can go wherever the Fed pushes it to go, but that's not investing. That's just betting on monetary policy and that's something that, okay, I might miss out the neighbor that's five times dumber than me will get richer, we'll get richer faster and we see the SAP 500 going up 20%. So everybody didn't invest, feel stupid now. But investing is about risk reward and it is about lifelong investing and this 30 number here tells me that long-term returns, no matter the financial engineering, will be not so positive and that's something I don't want to bet on, that's something I don't want to risk. A similar situation was in 1986. If we look at Buffett's letter to shareholders, he says that we have little hope of finding equities to buy for our insurance companies, but markets will change significantly. You can be sure of that and someday we will again get our turn at bet. So history always shows that markets interest rates, inflation, everything is cyclical and we will get again our turn at bet. For my fortune there has been Russia over the last year and some commodity stocks that did really well. So I'm saved on the comparison to the SAP 500, but still it's about risk and reward and I prefer to have the same upside as the SAP 500. I also benefit from printing money but I prefer to cover for my risks by having a margin of safety, which the SAP 500 doesn't have. So to conclude I don't know when will a crash happen, whether it will happen, whether the SAP 500 will go to 5,000 or 10,000 points over the next 10-15 years. If they print more money it's really possible. However I know that this postponing of a recession makes the next recession even worse. At some point the injections of money will not be worth it anymore, will not have effect, lower interest rates will not have no effects and then we might see a situation like in Japan and that's something I wouldn't wish for anybody. That's why I buy businesses, I buy things that will do good no matter what happens, will do excellent if there is more money printing and will do also good if there is no money printing because by investing in individual businesses you can pick where you invest, you can pick the risk and reward and not just invest in something that is supposed to go up because there will be 23 rate cuts. Please subscribe to the channel, thanks for watching and I'll see you in the next video.