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Invest Now or Wait for a Stock Market Crash in 2021

hi i'm jimmy in this video we're going

to look at the u.s economy

we're using different economic

indicators to see if we can objectively

gauge

where the economy stands today and then

we'll try to answer the question

should we invest now or should we wait

for the stock market to crash again okay

so let's jump right in

so first up we have consumer confidence

now historically

the consumer is one of the biggest

drivers in the us economy

and last month we actually had this as a

bearish point a negative point

because it was drifting lower but this

most recent

pop in the number implies that it could

be strengthening or at least

potentially strengthening so if with

this in mind i actually think it makes

some sense

to shift our negative point into a

neutral point so over on our scorecard

well now we have a point for the bulls

and for the bears okay moving right

along next up sticking with the consumer

but now we're going to look at household

debt

as a percentage of gdp or gross domestic

product

and this economic indicator is exactly

what it sounds like it tracks how much

debt debt like uh credit card debt um

car payments mortgages things are

personal loans things along

those lines relative to the size of gdp

now this is a quarterly number and the

most recent number came out

was for december of 2020 and as we could

see

well this big jump here happened when

covid happened

although recently this number did appear

to drop

some so it's not quite as high as it was

now i still think that this is a

negative sign

for the broader economy especially when

we consider that

back in the 1990s look at how low the

number was back then

granted interest rates were lower back

then so it would make some sense to have

more debt now with lower interest rates

but still even off of very recent time

periods

this number i think is too high and

could end up being a drag on the overall

economy

either way this is going to be a point

for the bears so over on our scorecard

here

well now we have one neutral point and

one point for the bears

now along these same lines very similar

to household debt

to gdp there's another economic

indicator that is put out

by equifax they're a credit bureau and

basically what they do

is they track the number of credit cards

specifically this is a percentage of

credit cards that are more than 90 days

late

so clearly higher numbers here are a bad

thing and the fact that this is

up higher than it was implies that this

could be a problem these are people that

are having trouble

paying their credit cards in fact they

haven't paid it in at least 90 days

so this is clearly going to be a drag on

the economy and once again a point for

the bears

so over on our scorecard we have a few

negative points but now we're going to

shift over to the yield curve

and this one is actually a tricky one

and i'm afraid

that i've been using it wrong i've used

this for a few months now

and i have i accidentally did not give

the proper picture behind the yield

curve so here's what i mean

the treasury yield curve shows us what

the interest rate is or the yield

for different treasury bonds and

treasuries they have a whole

different types a whole bunch of

different types of bonds some expire

three months six months two years five

years 10 years

30 years there's a lot of bonds out

there but

this is exactly the way it's supposed to

look if you invest for just three months

you'd get received one interest rate if

you invest for 30 years you'd receive a

very different interest rate

and it's supposed to move higher just

like this that's supposed to be the

shape of the yield curve so they call

this a normal yield curve

but what if we were to switch back to

february of 2020

well here we can see that short-term

interest rates were higher

than some longer-term interest rates

which by definition is an inverted yield

curve

now the when the yield curve inverts

this

is supposed to be a predictor of an

economic recession

to come and as we know well this

happened in february of 2020

shortly after that the economy really

turned lower thanks to the coronavirus

that is exactly why this inverted like

this and this brings us to the mistake

that i made with the yield curve

so what i've done is i've looked at the

yield curve and said hey look

here's the present there when i look at

this and say hey look it's a normal

shaped yield curve

this is a good thing this is not

inverted it is properly shaped therefore

it's a point for the bullets

but the reason that was a mistake is

that the predictive power

of sure with the coronavirus going back

to the february chart

it happened very fast but that's fairly

unusual usually

can happen with some time as far as

let's say a year ahead of time

sometimes even longer but a year now

should be enough of an example

so i think it's unfair to look at one

month and say

hey this is a normal yield curve

everything's great since it's possible

that we have a normal yield curve today

but if last month the yield curve was

not normal

well that could mean that the economy

could be in trouble

down the road so with that being said i

think it makes sense to start from march

of 2020

that was after the last inversion of the

yield curve also when the economy really

turned bad

and scroll through each of the months

now we can see

that clearly this is going to be a point

for the bulls

i had it as a point for the bulls last

month and it's still a point for the

bulls this month

because as we go through these months we

can see that

the yield curve has stayed consistently

positive

and consistently properly shaped so

over on our scorecard here well this is

going to be the first point for the

bolts

okay now we're shifting over to the job

situation

first we have jobless claims and clearly

this is a bad

sign the current level although it's not

getting worse is clearly not getting any

better

so i think it still makes sense to give

this

point to the bears at this point and

then when we look at unemployment this

is the unemployment rate

well we can see that it also makes sense

to give this one

a neutral point that's what we gave it

last month now the reason i went neutral

and not negative on this

is that the short-term trend appears to

be heading in the right direction

but the overall level is still well too

high

compared to where it could be or at

least it where it was before cove

so i think over back here on our

scorecard i think it makes sense

to give this one a neutral point and a

negative point for the jobless claims

okay now we're shifting over to housing

so our first economic indicator for

housing is the it's put out by the

national association of realtors

where they track the average price of

housing

of new of existing home sales not new

homes existing homes

and we can see that the average price is

in fact drifting higher

and historically speaking increasing

housing prices

at a reasonable rate have historically

been a good sign for the broader economy

and then when we shift over to new

houses being built

well new houses being built are also

drifting higher

so i do think it makes sense to give

this a bullish point

on top of existing home sale prices

because now we have the prices going up

and new houses being built which

should be two positive signs for the

broader economy now we should point out

that the most recent number

is in fact they dip lower but we're

really a month or two away from seeing

if this is a true

if it truly breaks lower from the

shorter term trend

so for now i think that it makes sense

to give both of these points to the

bulls

so over on our scorecard here now we got

two points for the bulls

and we're starting to even this whole

thing out a bit okay now we're on to

manufacturing

so this economic indicator this is the

ism manufacturing indicator

and this is put out by the institute of

supply management management that's what

ism stands for

and basically the higher the number that

this is the

stronger manufacturing is growing so the

key level here is 50. anything below 50

is negative growth anything above 50 is

positive growth

and we can see that the number has

recently ramped up quite nicely

so this implies that the manufacturing

sector

is getting stronger and obviously this

is a brighter point for the broader

economy if manufacturing does well

that should help the overall economy so

easy point for the bulls here

okay now this brings us to the question

does it make sense to invest now or wait

for the stock market to crash

and the first exception to even asking

this question i talk about it every

month but i really think we should point

out

that if we're talking about dollar cost

averaging or investing

out of our paycheck into 401k or 403b or

some retirement account

that is really an exception to this

question we should continue to do that

no matter what so we shouldn't try to

time our retirement investments just

keep consistently doing it

but here's the real problem that i'm

personally finding with investing right

now

outside of of course consistent

investments retirements

uh dollar cost averaging things like

that keep doing that

but beyond that my problem is that i

haven't been able to find many

undervalued stocks i'm having trouble

finding fairly valued stocks never mind

undervalued stocks so while i'm not

afraid of this economic situation if we

look at this scorecard this seems fairly

neutral

and this is okay usually not going to

get things to tilt in one direction or

the other by an extreme amount

i'm just worried about where to find the

value right now and i'm not willing to

just sit back and start

broadly buying you know stocks or etfs

for the entire market

because i do think that stocks at this

point look to be overvalued now i'll do

a video on the not too distant future

looking at that the current valuation of

the stock market

relative to its own history but for now

as we look i have no trouble with the

economics of this i think it makes sense

to invest but

where do we invest that's the trouble

that i'm having right so if we can

identify companies

that have reasonable growth prospects

but

are not way overpriced or even not

hopefully they're undervalued

if we can identify those companies well

then i would be more than happy to jump

right in

and invest in those immediately and if

you know any companies like that please

let us all know in the comments below

and beyond that i actually did a video

just recently where i talk about seven

of the most popular dividend stocks

right now

and i'm a big fan of dividend stocks so

if you like dividend stocks

perhaps that's a good next video for you

to watch i've got a link right here i

got a link in the description below

and thank you so much for sticking with

me all the way to the end of the video

i really do appreciate it thank you and

i'll see in the next video