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what's up Graham it's guys here and we
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got a bit of a problem as of a few hours
00:00:03
ago the Federal Reserve decided to cut
00:00:05
interest rates by another 25 basis
00:00:07
points except this time there is a bit
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of a catch despite the stock market
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housing prices and Bitcoin recently
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reaching brand new record highs experts
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are beginning to warn that we've
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officially entered bubble territory to
00:00:20
the point where now there's no turning
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back after all we have seen similar
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valuations in
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1929 2001 2020 before the covid crash
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and again today as people throw their
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hard-earned money into the most
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ridiculous places like fart coin which
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is somehow up 50% in a week it makes no
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sense anyway with the recent rate cuts
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and Market Euphoria it's more important
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than ever that we break down exactly
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what's going on what the Federal Reserve
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just said their warning for 2025 and
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what this means for you watching because
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this will have a direct impact on almost
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everything from the stock market housing
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prices Bitcoin and even the price of
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fcoin although really quick if you
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appreciate the videos where I try to
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bring you updates like this as quickly
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as I can it would mean the world to me
00:01:05
if you hit the like button or subscribed
00:01:07
if you haven't done that already it
00:01:08
helps out the entire Channel and that's
00:01:10
all I ask so thank you so much and also
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big thank you to policy genius for
00:01:13
sponsoring today's video but more on
00:01:15
that later all right so before we go
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into the biggest changes about to take
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place in 2025 when it comes to rate cuts
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the single biggest factor is what's
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going on with inflation that's because
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on December 11th it was revealed that
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overall inflation increased by 2 2.7%
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year-over-year and even though this is
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higher than their 2% Target it is an
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improvement from last year's
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3.3% and according to them inflation
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isn't accelerating it's merely just
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persistent anyway in terms of where it's
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most persistent food at home increased
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by 1.3% food away from home like
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restaurants is up 3.6% motor vehicle
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insurance is up almost 133% health
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insurance is up 6% and hey at least some
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good news energy is down 3% .2% on top
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of that it's estimated that shelter
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which has about a one-third waiting in
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the CPI calculation accounted for more
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than 40% the total increase in November
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and in this case the shelter index rose
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4.7% on a 12-month basis which by the
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way is the smallest increase since
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February of 2022 all of this implies
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that as long as the Federal Reserve
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holds steady or manipulates the data
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everything is on a bit of a downtrend
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although none of this comes even close
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to what we're experiencing in the stock
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market look on the surface someone needs
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to say it this year has been absolutely
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incredible for every single stock market
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investor unless you shorted micro
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strategy I mean for anyone who's been
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paying attention to their portfolio this
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has been the best year for the S&P 500
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of the century being up more than 30%
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and it doesn't even end there if we go
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all the way back to the 1920s we could
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see that there have only ever been nine
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times where the s&p500 has returned more
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than 30% in a year but some experts are
00:02:58
warning that you better not get used to
00:03:00
it even though historically the stock
00:03:02
market tends to see above average
00:03:04
returns in the Years following all-time
00:03:06
highs Warren Buffett is taking a
00:03:08
slightly more cautious approach as he
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sells massive positions and sits on his
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largest cash pile of all time at 325
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billion doar and if that sounds crazy
00:03:18
just take a look at what's called the
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buffet indicator this measures the value
00:03:21
of the US Stock Market divided by GDP
00:03:24
and he's previously referred to this as
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the best single measure of where
00:03:27
valuation stand at any given moment
00:03:29
moment with this gauge it's suggested
00:03:31
that a reading of 100% is said to be
00:03:33
fair at 70% stocks are a bargain price
00:03:36
and if it's near the 200% Mark investors
00:03:39
are playing with fire yep I think you
00:03:41
know where I'm going with this as you
00:03:42
can see we are currently trading at an
00:03:44
above Trend price of
00:03:46
208% which places this as one of the
00:03:49
most expensive stock markets since the
00:03:51
1950s of course these days the buffet
00:03:54
indicator is said to be somewhat flawed
00:03:56
because it doesn't take into account how
00:03:57
lower interest rates could affect a
00:03:59
company's valuation but that isn't
00:04:01
stopping experts from warning that these
00:04:04
types of returns probably are not going
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to continue for instance one Economist
00:04:08
was quoted as saying that the stock
00:04:09
market is in a Mania that will push it
00:04:11
higher before a potential 26% drop in
00:04:14
2025 however it is important to mention
00:04:17
that not everybody agrees with this
00:04:18
thinking and just because something is
00:04:20
historically expensive doesn't mean it
00:04:22
can't keep going higher and higher like
00:04:24
most experts have been calling for below
00:04:27
average returns for more than a decade
00:04:29
now like this Forbes article which
00:04:31
estimated an 80% chance of the S&P 500
00:04:34
being lower over the next 5 years in
00:04:36
2017 safe to say that didn't happen
00:04:39
these days most analysts all seem to
00:04:41
fall within the same camp that we
00:04:42
probably going to see an annualized
00:04:44
return of 0 to 7% over the next 10 years
00:04:47
and in the next year JP Morgan Goldman
00:04:49
Sachs and Morgan Stanley are calling for
00:04:51
an S&P 500 at 6500 Barkley's estimates
00:04:55
6600 Bank of America is coming up with
00:04:58
an oddly specific
00:05:00
6666 make it that what you will and
00:05:03
Wells Fargo thinks 7,7 is possible
00:05:06
although whatever happens don't expect a
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straight line upwards in fact throughout
00:05:11
history most returns simply come from a
00:05:14
few very very good years that outweigh
00:05:16
the very bad years and 37% of the time
00:05:19
stocks see an annual return of more than
00:05:21
20% this suggests that the title average
00:05:24
returns aren't normal normal returns are
00:05:26
extreme is very true and what we're
00:05:29
seeing right now Now isn't so much
00:05:30
Reckless it's just part for the course
00:05:33
even if people are getting caught up
00:05:34
these days again in meme coins and that
00:05:37
of course brings me to the second topic
00:05:39
I want to talk about Bitcoin in a
00:05:41
remarkable turn of events my thumbnail
00:05:43
from January of 2021 finally came true
00:05:46
when Bitcoin hit its Infamous price of
00:05:49
$100,000 which by the way I'm sorry to
00:05:51
be the bear of bad news here but my mom
00:05:54
recently asked me if I heard of Bitcoin
00:05:57
and whether or not she should buy in
00:05:59
that's probably a top signal I hate to
00:06:01
say that but uh you know it is what it
00:06:04
is anyway even though it's currently a
00:06:06
bit down from its all-time high
00:06:07
everything is lining up for Bitcoin to
00:06:09
be pretty well positioned politically in
00:06:12
2025 for instance the Trump family is
00:06:15
openly Pro Bitcoin and could be open to
00:06:17
a Bitcoin Reserve in the next year or so
00:06:19
Gary gendler is stepping down and being
00:06:21
replaced by Bitcoin Advocate Paul Atkins
00:06:24
and it appears as though quite a few
00:06:25
companies are now beginning to raise
00:06:27
money for the purposes of buying Bitcoin
00:06:30
for example Riot platforms is
00:06:31
considering a raise of $500 million to
00:06:33
place in Bitcoin both Microsoft and
00:06:35
Amazon are considering proposals as well
00:06:38
that would allocate 5% of their reserves
00:06:40
into the asset and the basketball player
00:06:42
Scotty Pippen said that Satoshi Nakamoto
00:06:45
came to me in a dream last night and
00:06:46
handed me Santa's list I saw Bitcoin
00:06:48
next to Gates and Bezos history is being
00:06:51
written now whether or not Scotty has
00:06:52
Supernatural future telling dreams or
00:06:54
it's just privy inside information is
00:06:56
yet to be seen But no matter what you
00:06:59
think Bitcoin is certainly going to be a
00:07:01
very hot topic for 2025 and I have a
00:07:03
feeling that many more companies will
00:07:05
soon begin to adopt it although in terms
00:07:07
of what's happening with the housing
00:07:09
market it's a completely different story
00:07:12
although before we go into that keep in
00:07:13
mind that this is the last Federal
00:07:15
Reserve meeting of the year and as we
00:07:16
wrap up 2024 it's important to use this
00:07:19
time to take care of anything that you
00:07:21
might have been delaying up until now
00:07:23
for instance just like the Federal
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Reserve is trying to protect our economy
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from inflation it's equally as important
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that you protect yourself and your loved
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ones with life insurance for anything
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started today thank you so much and now
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let's get back to the video all right
00:08:36
now before we go into Drome Powell's
00:08:38
latest comments and his outlook for 2025
00:08:40
there is one more item that we really
00:08:42
need to talk about and that would be
00:08:44
housing prices that's right despite
00:08:46
mortgage rates staying at their highest
00:08:48
level in more than 20 years home prices
00:08:50
have continued to grow with the average
00:08:52
home Rising 5.9% since December of last
00:08:55
year of course in terms of growth
00:08:57
towards the end of this year a lot of
00:08:59
lot of analysts were saying that home
00:09:00
buyers were waiting on the sidelines
00:09:02
until after elections well now that
00:09:04
elections are over it said that we've
00:09:06
started to see signs that home buyer
00:09:08
demand is coming back that could lead to
00:09:10
increased competition in coming months
00:09:12
possibly pushing prices higher unless we
00:09:14
see a major spike in the number of homes
00:09:16
being listed in terms of which housing
00:09:18
markets are seeing the biggest increases
00:09:20
we got to give it up to Detroit Michigan
00:09:22
with more than a 15% gain year-over-year
00:09:24
followed by Chicago at 13.5% New York at
00:09:28
11% and Cleveland to 10% with the
00:09:31
hardest hit being Austin and San Antonio
00:09:33
Texas having fallen 3 to 42% over the
00:09:36
last 12 months although in terms of the
00:09:38
future outlook of housing prices Zillow
00:09:40
has made a few of their own predictions
00:09:43
and surprisingly they're all pretty
00:09:44
reasonable first they think that the
00:09:46
housing Market's going to pick up with
00:09:48
prices rising another 2.6% within the
00:09:51
next 12 months this suggests that home
00:09:53
prices May simply rise alongside
00:09:55
inflation which has been the trend for
00:09:57
over a hundred years after all if home
00:09:59
prices rise by 5% but inflation Also
00:10:02
Rises by 5% your Equity is simply
00:10:04
holding value and I have a feeling this
00:10:06
will continue to be the case second
00:10:08
expect mortgage rates to remain a bit
00:10:10
volatile since home interest rates are
00:10:12
generally tied to the value of the
00:10:13
tenure treasury there tends to be a lot
00:10:15
more speculation here than let's say
00:10:17
credit card interest rates so as a
00:10:19
result there could be a lot more
00:10:21
fluctuation over the next year third
00:10:23
more of the United States will become a
00:10:25
buyer Market as inventory gets listed in
00:10:27
terms of where this is going to happen
00:10:29
happens Zillow thinks that the Southwest
00:10:31
will become the hot spot for
00:10:32
affordability and negotiations fourth
00:10:34
they've pointed out that smaller homes
00:10:36
are now becoming more common in this
00:10:38
case Builders are realizing that it's no
00:10:40
longer profitable to maximize square
00:10:42
footage when their buyers are just
00:10:44
strapped for cash so as a result they're
00:10:46
building less and they're passing some
00:10:48
of the savings on to you on top of that
00:10:50
more than a third of Builders said that
00:10:51
they built smaller homes in 20123 and
00:10:54
more than a quarter planed to construct
00:10:55
even smaller this year and finally fifth
00:10:58
rent concession will end in their mind
00:11:00
an apartment construction boom meant
00:11:02
that landlords were competing with one
00:11:04
another to try to get tenants but now
00:11:06
that almost all of those units are leas
00:11:08
competition is going to increase now
00:11:10
that there's less to pick from now
00:11:12
honestly from my perspective just
00:11:13
anecdotally I am seeing a lot of Sellers
00:11:15
List their homes at exorbitant prices
00:11:17
just to see what they could get and on a
00:11:19
lot of listings that I'm following I am
00:11:21
seeing consistent price reductions as
00:11:23
they slowly come back down to reality
00:11:25
but everyone else is simply asking a
00:11:27
very high price just for the sake of
00:11:28
seeing what they could get and this
00:11:30
provides a unique opportunity for a
00:11:32
buyer who's willing to negotiate
00:11:34
although in terms of what Jerome pal
00:11:35
just said as of a few hours ago and the
00:11:38
reaction of the market here is what you
00:11:40
came for as of a few hours ago the
00:11:42
Federal Reserve has decided to cut
00:11:44
interest rates another 25 basis points
00:11:46
as expected except this time we get the
00:11:49
benefit of receiving a lot more
00:11:51
information about their plan for the
00:11:52
next year and what's called the summary
00:11:55
of economic projections this estimates
00:11:57
where they believe we'll see inflation
00:11:59
interest rates unemployment and GDP over
00:12:02
the next few years and in this case bad
00:12:04
news they're now expecting significantly
00:12:06
fewer rate Cuts in 2025 than they
00:12:08
initially expected as you could see here
00:12:10
which has caused the market to enter a
00:12:12
bit of a freef fall as investors price
00:12:14
and higher rates for longer for them
00:12:15
they explain that they want to take it
00:12:17
slow make sure that inflation doesn't re
00:12:19
accelerate and by holding firm they're
00:12:21
ensuring that prices don't meaningfully
00:12:24
Spike back up on top of that they
00:12:26
believe that we'll be able to return the
00:12:27
inflation rate back to their 2 % Target
00:12:30
and then hold steady and adjust in the
00:12:32
future as needed and overall it appears
00:12:34
as though their fight against inflation
00:12:36
is working all in all none of this is
00:12:38
too shocking all of this was somewhat as
00:12:40
expected except with a few extra details
00:12:42
sprinkled in and if history shows us
00:12:44
anything it's that the Federal Reserve
00:12:46
does move a little bit more cautiously
00:12:48
and slowly Than People expect but
00:12:50
eventually they're probably going to get
00:12:51
the job done now I do have to mention
00:12:53
that in the last meeting he was asked if
00:12:55
he would step down if Trump wanted him
00:12:57
to and his response was no because
00:12:59
that's not permitted under law if he
00:13:01
asked you to leave would you go
00:13:04
no uh can you follow up on is do you
00:13:08
think that legally he you're not
00:13:10
required to leave no so of course
00:13:12
leading up to today's meeting Trump
00:13:14
preemptively made the comment that he
00:13:16
would not try to remove Drome Powell so
00:13:19
hey for the time being it looks like
00:13:20
we're getting more of the same now as
00:13:22
far as my own thoughts about everything
00:13:23
discussed in terms of the stock market
00:13:26
even though it is expensive relatively
00:13:28
speaking based on history at the end of
00:13:31
the day no one has any clue what's going
00:13:33
to happen and no one has any idea what
00:13:36
the price is going to be a year from now
00:13:38
that's why I like to take the approach
00:13:40
of prepare for the worst but hope hope
00:13:43
for the best prepare for the worst that
00:13:45
one this means I diversify my money
00:13:47
throughout a variety of index funds I do
00:13:49
not buy individual stocks I keep a
00:13:51
little cash in the sidelines just in
00:13:53
case and I keep buying in on a regular
00:13:55
basis regardless of the price because
00:13:58
you know the saying the Market could
00:13:59
remain irrational longer than you could
00:14:01
remain solvent look I know I always give
00:14:03
the same boring advice at the end of
00:14:05
every single video but the truth is the
00:14:07
boring strategy works and I've been
00:14:09
saying the same thing in 2017 18 19 all
00:14:13
the way through today if you would have
00:14:15
followed this over the last 8 years
00:14:17
you'd be up over 200% now sure that's
00:14:20
certainly not as much as bitcoin's 9000%
00:14:23
return in that time frame but that's why
00:14:25
I believe a well Diversified portfolio
00:14:27
is worth it I like placing a small
00:14:29
amount of Bitcoin in something like an
00:14:31
ETF where if it goes up great and if it
00:14:33
doesn't that would really suck but it's
00:14:36
not the end of the world so even though
00:14:38
yes markets are high I'm not deterred by
00:14:40
the price and I'm just buying in on a
00:14:42
consistent basis no matter what like I
00:14:44
remember making similar videos
00:14:46
addressing the market all-time high six
00:14:48
years ago and we'll continually hit new
00:14:50
all-time highs as the market and economy
00:14:52
grows hopefully I'm just a firm believer
00:14:55
of taking a very slow and steady
00:14:57
approach that's very consistent and no
00:14:59
matter what hitting the like button and
00:15:01
subscribing if you have not done that
00:15:03
already so thank you guys so much for
00:15:04
watching it really means a lot happy New
00:15:06
Year happy holidays and until next time
