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Hey guys, it's Sasha. The stock market
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is at all-time highs again after a
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turbulent few months of ups and downs so
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far this year. The S&P 500 is setting
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new all-time highs every day at the
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moment. American stocks have never been
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valued higher after going up 24%
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in just the last 3 months. The UK's
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Footsie 100 is also at all-time highs
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for whatever reason. European markets
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are setting new records as well. And
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even Japan's NICK index is pushing
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towards its all-time highs after waiting
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35 years to break even from its peak
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back from 1989. And naturally, the world
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is very concerned as to where the stock
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market is going to go from here. Is the
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only viable way down. We have the
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unresolved Trump tariffs where the
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deadline for the 90 deals in 90 days is
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today. And so far out of the 90 deals,
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we have half a trade deal with the UK.
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So everyone is panicking about what the
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tariffs might mean for longerterm trade
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globally and in the US. One day we have
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the biggest looming war in the Middle
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East in a generation. The next day that
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fear subsides and then the day after
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that we're talking about it again. The
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US economy contracted in the first
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quarter of this year. The UK economy is
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on track to contract in the second
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quarter. A post-inflation recession
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seems like it could be on the cards. So,
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is now actually a good time to invest in
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the stock market? Should you be buying
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stocks at these insane valuations? Or
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should you wait until the inevitable
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drop that is 100% definitely guaranteed
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coming so that your investments don't
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collapse in value? Well, this is exactly
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what I want to discuss with you today.
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And I want to share some really unique
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data that might surprise you and might
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make you think a little differently. So,
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here's a chart of the return of the S&P
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500 over the last 98 years. The numbers
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in here might look a little bit higher
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than what you've seen before, maybe in
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other videos, because the websites that
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show this data don't include dividends
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typically. And I went and calculated the
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returns of the stock market, including
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the dividends. And right now, halfway
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through 2025, the stock market is up
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roughly 5%. The average return of the
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market on this chart is 11.6%. So
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despite all of the craziness, the ups
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and downs so far this year, up to now,
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we're actually seeing an incredibly
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average level of return. And it's very,
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very rare to get the average rate of
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return. It doesn't happen often because
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only 14 out of the 98 years had a return
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that was within 5% of the average. So
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only 14 years got between 6.6% and
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16.6%.
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The other 85 years were either higher or
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lower than that. And it's also not
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surprising that we're seeing a good
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spell in the market at the moment
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because 74% of the years in this data
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set had a positive return from the S&P
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500. But I know a lot of people think,
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well, this time is different. Right now
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is different to how it was before,
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right? We have had two years in a row
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with amazing returns. So the stock
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market is bound to correct itself.
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Right? Right. Well, mathematically the
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answer is no. In fact, it's the
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opposite. And I'm going to show you
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exactly what the data says that you
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should do in the current situation. But
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just before we go through the full
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detail, let me tell you a little story.
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Last year, I got an email from one of
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the banks that I use in the United
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States saying they had a data breach and
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my personal details were stolen. As that
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happened, I got a flurry of spam emails
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and phone calls from people who had my
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personal data. They knew my address.
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They knew my date of birth and they were
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trying to scam me. Some were obvious
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scams and some not so obvious. I did
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everything right. I have two factor
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authentication on everything. I'm very
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careful with my data. But it doesn't
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matter how careful you are because if a
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bank in central New York can leak your
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data, anyone can. And this is where
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and sign up now so that you can get
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protected right away. So, here's the
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data I think you will find very
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interesting. Remember that 74% of the
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time on average the stock market has a
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good year, has a positive return. So,
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26% of the time it is red, it goes
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negative, roughly one in four. Now, a
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lot of people like to think of the stock
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market in terms of conditional
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probabilities. People like to think that
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the past really does in some shape or
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form predict the future. You might be
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thinking, well, we've just had one
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really good year, so that must mean that
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next year is more likely than average to
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be bad, right? Well, no. In fact, after
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having one good year, the likelihood of
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the next year being a bad year goes down
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to 25%. So after one good year, the
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likelihood that the next year you will
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see some kind of stock market crash or a
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correction or whatever is lower than if
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you didn't have the good year to start
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with. So you might say, "Okay, Sasha,
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but we just had two really good years in
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a row. Surely that means that the odds
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are we are on the brink of the stock
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market going down. It can't just keep
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going up forever. It must be on the way
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down, right? How often is it that you
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get three good years in a row? Well,
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after two good years in a row, the odds
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that the next year goes bad become 28%.
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So, it's still almost exactly the same
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as the average. There is no difference.
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Having two good years in a row doesn't
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make it any more likely that the next
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year is going to be bad. In fact, only
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after eight consecutive years of
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positive returns do you actually get a
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likelihood of over 50% that the next
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year is going to worse. And that is only
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because that's only happened three times
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ever in history. So there's not a whole
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lot of data for that one. And the
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chances are as time progresses that even
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that data will eventually be diluted to
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look more like the rest. But then you
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might say, well, okay, the last two
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years weren't just positive. They
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weren't just any odd random green year.
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They were very positive, right? In 2023,
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the stock market returned 25.7%
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and last year we got 24.6%.
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That doesn't happen very often. So
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surely after such a massive runup, it
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must mean that we overdue a correction.
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Well, no. Again, there have only been
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three times previously before this time
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when the stock market returned over 24%
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for two years in a row. And only once
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back in 1937 did the following year go
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red. Naturally, because of the way that
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our brains work, we always try to find
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patterns. We know that winter comes
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after every summer. We know that the sun
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sets at the end of every day. We are
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naturally wired. We are programmed to
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look for cyclical patterns. That's how
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humans operate. But as the years pass,
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there is a growing body of evidence that
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the stock market is not cyclical. Not
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cyclical in the sense that past years
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have any way of predicting the
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performance of future years. There is an
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average rate of return which is fairly
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consistent. However you look at it,
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however you break down the periods, it
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tends to be very very consistent and the
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market on average goes up. In the data
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that we were looking at, it's 11.6% 6%
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on average when you include dividends.
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Without dividends, it's more like 9 or
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10% and after inflation, that's maybe
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down to 7%. And the reason that the
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stock market goes up consistently over
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time, is because the stock market is the
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value, the cumulative value of all of
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the different like companies that
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operate, whether it's in the America,
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whether it's globally, whichever index
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it is that you like, right? It's a proxy
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for human productivity. Human
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productivity goes up on average over
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time. People invent new methods, people
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invent new technology, people become
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more efficient, yada yada yada. And as
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human productivity goes up, so does the
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value of that productivity. That's the
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reason. A lot of people overco
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complicate things. That's the reason the
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stock market goes up. But other than
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knowing the average rate at which
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productivity increases, there isn't a
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good way to predict exactly when the
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market will outperform or underperform
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the average, no matter how much data you
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have on hand. because the distribution
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is stochastic and that means a good year
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in the stock market doesn't make it any
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more or less likely that the next year
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will be bad and vice versa. Even five
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good years in a row don't make it any
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more likely that a crash is imminent.
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But as investors, whenever we see an
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all-time high and all the newspapers,
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all the media coverage says, "Hey, the
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stock market is frothing. It is
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booming." There is this automatic
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perception that this is unusual and it
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must mean we're overdue a drop, right?
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In fact, all-time highs are extremely
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common in the stock market. The vast
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majority of time historically, the stock
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market has either sat at or around very
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close to its all-time highs, which is
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why $100 invested into the stock market
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back in 1927 would be worth over $1
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million today. Stock market returns are
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a little bit like London buses. You sit
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around for three years watching the
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stock market go down and then eight good
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years turn up all at the same time. You
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might be sitting in there waiting for
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the crash. You are sure it is overdue.
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You know, you've been waiting here at
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the bus stop, but you just keep waiting
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and waiting and waiting and it just
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doesn't turn up. And even more
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interesting is this. Some of the best
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years in stock market history have come
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after market crashes. So if you don't
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invest on the way down in a market
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crash, you are really going to miss out
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on those really really good returns that
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happen immediately after the crash stops
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crashing. And it's natural after the
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stock market goes down a lot, it does
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tend to rebound quite hard too. But
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other than that first year after a
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crash, some of the best returns actually
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come after several a few good years in a
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row have already happened. And this is
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often the time when people start being
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concerned that we're overdue a downturn.
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People begin sitting on cash. People
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begin selling their stocks. People begin
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exiting positions. Everyone's predicting
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the biggest ever stock market crash,
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right? And then you get a couple of
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years of amazing returns instead. I know
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2023 seems like a long time ago now, but
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at the start of 2023, everyone was
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panicking. That was the last time that
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everyone was collectively panicking.
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CNBC was panicking. Everyone was telling
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you that the worst ever stock market
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crash was inbound, 100% guaranteed.
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Every major financial YouTuber was
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saying that the biggest ever stock
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market crash was coming. I am not
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exaggerating. It was the opposite effect
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of what we're seeing happen right now.
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Right now, we have this market euphoria.
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Everything is going up. Returns are
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insane. Everyone is piling money in.
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Everyone's feeling positive. Back then
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we had panic because 2022 was a very bad
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year for stocks and the sentiment was
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very negative. But exactly the same
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theory holds today as it did back then.
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If I'm looking at 2023 as a whole year,
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I'm very very pessimistic. I think a
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recession is not only unavoidable, it's
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going to be very very violent. So I'm
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staying the hell away and I'm very very
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careful from this market. after everyone
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was telling you that a stock market
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crash was inevitable. The stock market
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went and had two of its best years ever.
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And here's the thing, eventually that
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big crash is going to come because they
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do come. That's what happens. But if you
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decide to stop investing, if you decide
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to hold on to your cash waiting for the
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drop, the maths, the numbers say that
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you are going to be losing money instead
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of growing it. Because there is always
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big problems happening in the world.
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There's always some kind of an energy
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crisis, an oil crisis, a debt crisis, an
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inflation crisis, a big war, some kind
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of problems with regimes around the
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world, trade wars, whatever. And yet,
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the world keeps on moving onwards and
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upwards on average over time, despite
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all of this, missing out on some of
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those best years for investors that
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happen just before a crash is worse than
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getting hit by the crash itself.
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Mathematically, waiting a year or two
00:13:25
without investing, sitting on cash, or
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doing whatever it is that you want will
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on average mean that you miss out on
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more upward movement while you're
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waiting for the crash than you will ever
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lose when the market eventually does go
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down. Let that sink in. And maybe this
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is the year when it does actually all
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start collapsing. Maybe we do hit a big
00:13:44
recession because of the trade war,
00:13:46
global economy is going down, but the
00:13:49
numbers just don't lie. Now, I grew up
00:13:51
as a kid in Russia. And in Russia, we
00:13:53
have a saying, being afraid of the wolf
00:13:55
means you don't get to go to the forest.
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And the forest was where you got all
00:13:59
your food. It's where the berries grow.
00:14:01
It's where the mushrooms grow. It's
00:14:03
where you go hunting. It's where you go
00:14:04
fishing in the rivers. And on a super
00:14:06
rare occasion that you might come across
00:14:09
a wolf,
00:14:11
even if you do, the chances are the wolf
00:14:13
will be more scared of you than you will
00:14:15
be of it. And you will be just fine.
00:14:18
Even if the wolf is hostile and even if
00:14:20
there's more than one of them, if you're
00:14:22
prepared, if you're calm, if you know
00:14:24
what you're doing, you're pretty much
00:14:25
guaranteed to be fine at the end. But if
00:14:27
you choose to not go to the forest
00:14:29
because you're afraid of that wolf,
00:14:31
well, then you won't get any food and
00:14:33
then you'll starve the next winter. So,
00:14:35
there is that. Don't be afraid of the
00:14:36
wolf. Go to the forest, get your
00:14:38
mushrooms, and thank you to Incogn for
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sponsoring this video. Please remember
00:14:42
to go and check them out to protect your
00:14:44
data. Link is in the description and in
00:14:45
the pin comment. Thank you for watching.
00:14:47
See you later.
