If the Stock Market Crashes, Do This

We know markets go up and down. The stock market has seen about 25 bear markets over the last 100 years. A bear market is when the stock market falls by at least 20% off of its highs. So we know markets move up and down, but over the long term we've seen asset prices rise, we've seen stock prices rise, we've seen real estate prices rise, we've seen gold prices rise, we've even seen crypto prices rise over the long term. I get it, crypto is a whole lot more speculative and it hasn't proven the test of time, but that's what we have seen up until today. No one knows what's going to happen in the future. But what we've also seen is that the asset prices move in different cycles. I really experienced this for the first time after the 2008 housing market crash. After the 2008 crash, stock prices crashed in 2008. They crashed in 2009, but stock prices then rallied by 2012. By 2012, we were essentially seeing new stock market highs. Well, in 2012, the housing market did not recover. The housing market crashed in 2008, it continued to crash in 2009, it continued to crash in 2010, continued to crash in 2011, and it continued to crash through 2012. Housing prices did not hit their bottom until 2012. By 2012, the stock market was booming and it was at or near new record highs. The stock market bottomed out in 2009, but the housing market continued to fall. And so the game then becomes, how do you allocate your money that way you can win throughout different asset cycles? Because what every financially savvy investor understands is that a market crash creates opportunity. A recession creates opportunity. Recessions create more millionaires than any other time because they allow the financially savvy to come in and buy good investments at a discounted price. The key is you got to buy the good investments. You don't want to buy something on the verge of bankruptcy, but if you're buying a good investment and you're buying it at a discount, well, that's a good opportunity for somebody to build wealth a whole lot faster. But the mistake that a lot of people make is they say, okay, Jaspreet, you say that I need to diversify money into different assets, so I'm just going to start putting a little bit of money into everything. And this is where you got to know which stage of your investing career that you're in. Because when you try to do everything, you end up doing nothing. You don't want to dilute your entire investment portfolio. They say that every millionaire has seven streams of income. Well, that's a whole bunch of crap because the way that the millionaire became the millionaire wasn't because they had seven streams of income. They built one stream of income, became a millionaire, and then they started diversifying into the other streams. So if you want to understand how do you actually start buying the different assets, you got to be the master of one first. And you got to figure out what that thing is. Maybe you're a real estate investor. Go out and focus on that. If you want to do stocks, go out and focus on that. You can just go where the opportunity is. That's what I did. You don't have to do that. But I like to go where the opportunity was. Where is the thing crashing? Where's the thing down? Where's the biggest opportunity? And there's always going to be opportunity. Sometimes the opportunity comes through a market downturn. Sometimes the opportunity comes through an economic downturn. Sometimes the opportunity comes through some sort of shift in the markets. Something is always happening. Money is always moving. There's always an opportunity. Sometimes you have to look a little bit harder, but the opportunities are still there. In 2021, when we were in the hottest housing market really of all time, or at least in my lifetime and many of our lifetimes, everybody kept talking about how difficult it was to buy real estate because everybody was doing these bidding wars. All these properties were being sold way over asking price. Well, I was still able to buy some rental properties in 2021 at below asking price at a great deal because I was able to find the deals that other people didn't want. They were more difficult. I had to put in more time. I had to put in more work. It took a lot more time. But if you are willing to put in the work, the opportunities will always be there. And this is where you got to start by, number one, getting your money system right. Always have the money to invest. Make sure you're not spending all your money, right? That's the basics. Then you learn how to invest. You learn how to invest in stocks, how to invest in real estate. If you're investing in crypto, learn what cryptocurrency is. If you're investing in gold, whatever the things are, you got to understand what it is. Then you got to figure out your strategy and execute. Now, I do want to talk about gold and the speculative investments for a second. When I invest in gold, it's not a huge piece of my portfolio. Gold makes up about 2% of my total portfolio. And the reason why I invest in gold is I think of it like an insurance policy, like a real hedge. I don't consider my gold really an investment. I look at it as a way of saving hard money because my theory is if I was to take $10,000 worth of cash and $10,000 worth of gold and bury both of them in my backyard today, my theory is that in 10 years, the gold is going to have more buying power than the cash because of inflation. I could be wrong, but that's why I have a little bit of gold as my doomsday protection, my insurance, my hedge, call it whatever you want. So I look at it as a way of saving some hard money. My speculative investments, I did not start investing in anything speculative until I had established these two, my real estate and stocks. That for me was the foundation. Speculative is something that I think could go up very quickly, but can also crash just as fast. I don't know where it's going to go. It's more of the fun type of investment for me. Speculative for me is not a huge piece of my portfolio. It is less than 20% of my portfolio, about 18% of my portfolio, but I didn't start investing in anything speculative until I had established my real estate and stocks. And I should also mention that when I talk about my investment portfolio, I'm not including my business as a piece of that portfolio because it's impossible to value my company. But when it comes to speculative investments, I have invested in a number of startups. A number of those companies have gone away, gone bankrupt, didn't do anything. But the whole idea is I'm investing in companies that I believe in, hopefully, so they can go get acquired and have a nice exit. We'll see what ultimately happens with that. But it's the same thing with cryptocurrencies. I know that cryptocurrency is risky. I know that investing in a startup is risky, but that's why it is allocated as such in my portfolio. I understand that I could lose everything and it wouldn't affect me because it is that piece in my portfolio. It is a speculative piece of my portfolio. Now, again, you should also understand that when you're investing your money, you don't want to invest money that you need to pay your bills next week. That's not how you do investing. Investing is when you take money you don't need today and you let go of it. That way, over the next 10 years, it can be worth a whole lot more money. That's the way that you really invest your money. The mistake that so many people are making, especially in this economic climate right now, is they're panicking over the short-term day-to-day swings and they're assuming that because we're seeing day-to-day volatility that the entire economic system is going to collapse. Well, we've seen volatility many different times in our lifetimes. We saw a crash in 2022 when stocks fell by 20%. We saw a crash in 2020 when the stock market fell by around 40%. We saw a crash in 2008 when the stock market was devastated. We saw a crash in 2000 when the dot-com bubble burst. Crashes happen, but every time they happen, people say this time is different because of X, Y, and Z. This time is different because now we have tariffs. This time is different because now we have artificial intelligence. Well, in 2022, people said this time is different because of all the debt, because of all the inflation. In 2020, people said this time is different because of the pandemic. In 2008, people said this time is different because of the degree, because of all the subprime mortgages, because of all these financial instruments, these derivatives. In 2000, people said this time was different because of the internet, because of the massive bubble that was built around internet companies and the NASDAQ. Every time it's going to be slightly different. But while history doesn't exactly repeat itself, it does rhyme. And each time the people that went against the grain saw the opportunity and took action on good assets because they were financially educated, were able to build wealth. And that's what I want you to understand. When there's chaos, there's opportunity. When there's a market shift, there's opportunity. And I want you to start thinking like a financially savvy investor instead of like an emotional person because unfortunately, the media, the traditional financial media loves selling to that emotional person because they get you to click, they get you hooked, and that's how they make their money. Trust me, I know. I own a media company. But that's why I'm such an advocate for market briefs because our financial media is enclosed in one email so you don't have to have all that same sensationalism because once you open market briefs, it's all there for you. So that's why it's a little bit different. So when you see chaos, stay calm, just understand when there's a loser, there's also a winner and there's many different ways to win. One way that you can protect yourself against many different types of scenarios is by owning different types of assets, but be the master of one first. And then as you start to master one, that's when you can start diversifying, not just within one asset class, but also across multiple asset classes if that fits within your portfolio. If you enjoyed this clip and you want to continue your financial education journey, I have another video that I think you'll love. All you got to do is click that button right over there. And for those of you who want to stay up to date on the top finance and business news, you can join Market Briefs, my free financial newsletter, by clicking that button below. Thank you for watching and I'll see you in the next one.