Hello, this is Kim Pi from Easy Investment. Today, I would like to talk about whether we are witnessing the beginning of a massive market crash, especially in light of Wall Street's extreme volatility. Recently, NVIDIA has dropped by 99.5%. As of yesterday, NVIDIA had fallen by 99.5%, and the S&P, Nasdaq, and major stocks like Apple, Tesla, and NVIDIA have all seen declines. The drop has been particularly pronounced for NVIDIA, leading the downward trend. Additionally, the futures market is showing unfavorable signs even before the market opens. Let's take a quick look at NVIDIA; today it has fallen by over 3%. The KOSDAQ has dropped by 3.7%. This raises concerns about whether we are experiencing another catastrophic decline similar to what we faced about a month ago. Currently, it is down by 1.57% in after-hours trading.

So, the atmosphere today is not great. The Nasdaq has been falling for the past 54 days, and Nvidia has been declining for 75 days. Amid this, even the strongest bull on Wall Street has changed his perspective. Who is this person? It's Tom Lee, the co-founder and head of research at Fundstrat, a prominent bull in Wall Street. Many of you may have seen him on the news. He is really famous for his bullish stance, often claiming that technology stocks and Bitcoin will rise. He has always talked about buying in any situation and was seen as a savior for retail investors. However, now he has said that he thinks the market might drop a bit. Even he has turned his back; the last bull has turned away. It's hard not to feel anxious about this. So, what did Tom Lee say?

He warned that the S&P 500 index is expected to decline by about 7% to 10% over the next eight weeks. However, he emphasized that this decline would be temporary. He suggests that even though the market is currently falling, it will rise again. He believes that this decline will actually serve as a buying opportunity for smart investors and advises taking a long-term approach. In fact, the market has risen for seven out of the last eight months, maintaining an upward trend, and there are no signs of a market downturn. According to Tom Lee, the decline is only temporary and the market will rise again. It seems he doesn't pay much attention to macro indicators. He also mentions that September has seasonal factors, but overall, he claims there is no real problem. He suggests that elections have an influence on the market.

Now, if we look at the trends of the U.S. stock market every September from 1928 to the present, we see that September has consistently been a month of decline. This is the month with the highest likelihood of downturns. When considering just the dates, without taking any other variables into account, this is referred to as a statistical factor. When viewed as a cyclical period based on certain dates, such as elections or other significant days, it is often stated that the market performs poorly in September. However, bullish investors argue differently. They might say, Well, the market has risen a lot until now; it’s just taking a break, and it can be bought again. But currently, the discussion is about an impending market correction, and after this correction, there will be an upward trend. Long-term investors should not ignore these corrections but rather prepare for them, as it is important.

There is a YouTuber who has summarized the remarks of Tom Lee, and it seems that this person is also advocating for a significant purchase. So, this recent correction is just a slight drop before things go back up. Many people are expected to react without a proper plan, falling into fear. The media is inciting this fear, which could negatively impact investors, suggesting that they should prepare cash in advance because things will go higher, so there’s no need to worry. I also feel the same way as Tory. 

If that’s the case, this person is making a one-sided claim. Is there no YouTuber who can verify these statements with data? There is someone in the U.S. with about five times more subscribers than this person. That person is Kevin.

Now, the person I introduced a few times is saying that Tom and Kevin believe that the likelihood of a transition to a bear market has increased. The YouTuber I mentioned just before is saying something completely opposite. They argue that the current market correction could very likely lead to the beginning of an economic recession. If there are continuous declines in the market for two to three months, it could indicate that we are very close to an economic recession. While they are not completely certain that a recession will occur, they suggest that the possibility has significantly increased. Since this person has five times more subscribers and is somewhat more famous, we might think that we should pay attention to what they say. They are expressing concerns that this could be a signal of a bear market. The reason for this concern is that many people have recently experienced significant losses in their stock accounts due to the declining stock market.

Nvidia's market capitalization has truly evaporated by hundreds of billions. As a result, people will spend less even during their vacations because they have lost a lot of money. If consumers start spending less, what happens naturally? Companies' revenues decrease. When wealthy investors cut back on their spending, companies' revenues decline, and then companies will hire fewer people, leading to an economic recession. This seems to be the argument being made. However, in my case, I analyze various economic macro data from multiple perspectives, and I find this reasoning a bit simplistic. The idea that an economic recession is caused by people losing money in investments and then reducing their spending doesn’t seem quite right to me. I believe there are likely other reasons at play, and I suspect the speaker thinks the same but is presenting it in a rather fragmented manner.

It seems you mentioned that looking at various indicators currently suggests that an economic recession has either already occurred or is about to happen. Let's listen to what you have to say. Currently, as the inversion of the yield curve between short-term and long-term interest rates is being resolved, the likelihood of an economic recession is increasing. In the past, during the 1990s, the dot-com bubble, and the global financial crisis, the recovery of the yield curve inversion preceded economic downturns. The situation now resembles those times, as the yield curve inversion has nearly been resolved. This aligns with what I mentioned earlier; it’s not just about the inversion occurring but rather its recovery that is important. Especially now, the duration of the yield curve inversion has been the longest since the Great Depression. The longer this period lasts, the stronger the potential decline tends to be. If the yield curve inversion lasts for about 300 days, then the magnitude of the decline could be significant.

When we talk about the yield curve inversion lasting over 700 days, we recall that during the Daegu incident, the Dow Jones Industrial Average dropped by 89%. For three years, it was in decline, and now the unemployment rate stands at 25%. Considering that the IMF reports an unemployment rate of 7%, it was an extraordinary crisis. A drop of 89% means that when the KOSPI was at 3,000 points, it would plummet to 300 points. Such an absurd situation unfolded. Since then, we have gone through the longest period of yield curve inversion, and recovery has just begun. Looking at various economic indicators, including the PMI and ISM manufacturing index, as well as construction spending, the current economic situation is trending in a negative direction. In such circumstances, if market adjustments occur, significant challenges are expected, which has led company executives and those managing operations to be quite concerned about these issues.

Now, having a critical perspective, overall, the economic indicators continue to worsen without any improvement. This can be likened to saying that when the economy becomes difficult, stock prices also plummet, and we need to be on alert from now on. Ah, but Mr. Tom Lee, whom I've only seen in pictures, looked quite aged in reality. So, what does Tom Lee argue? He states that the volatility of the stock market tends to increase during uncertain events like elections. Now, around October, the performance results for the third quarter will be announced. The first quarter results will be announced in April and May, the second quarter results in July and August, and this time, the third quarter results will be announced around October. So, when the third quarter results are announced in October, if the companies' revenues decline or net profits decrease, what will happen to the market?

There are discussions that the drop could accelerate much more than gold right now. However, many people think that it will definitely go up before the election. Most individuals hold this belief. Although the election is not far off, it is still before the election, right? So, while a crash may come after the election, many retail investors believe it will happen before the election. However, when everyone thinks the same way, the market often goes in the opposite direction. Many retail investors currently hold this belief. It is true that volatility increases before elections, according to statistics, but it hasn't always resulted in a rise. There have been years when the market fell before the election, and I've seen data on that. Therefore, the third-quarter earnings announcements could induce market volatility, especially.

NVIDIA's earnings, along with those of major companies like Apple, are expected to be announced around October. Additionally, there will be increased volatility due to the upcoming elections. However, the market is already showing signs of a shift, with the Nasdaq rising and then suddenly dropping. If this volatility continues to decline, it could lead to a very difficult market situation. Historically, September and October are known for high volatility, even excluding the election period. Since 1984, there has typically been significant market fluctuation during these months. I believe this is largely because we are in the earnings season for the third quarter. Once the third-quarter results are announced, we can generally anticipate the fourth quarter since we already have the first and second-quarter results to reference.

At this time, I speculate that the volatility of stocks is at its peak, and I believe October is the month with the greatest market volatility. This volatility, in fact, refers to the stock prices dancing up and down. It doesn't necessarily indicate that prices will go up or down, but the current market sentiment seems to be leaning towards a downward trend. This implies that if volatility increases now, it could result in a significant drop. Therefore, we need to be cautious. Of course, prices can also rise, but there are indications that stock prices may fluctuate significantly. This is something we should pay attention to. Furthermore, there is an indicator called the multiple gap folder.

This indicator is one that I've been showing for a long time, about two or three years. It shows how many people in the U.S. have two or more jobs. Currently, the number of people with side jobs is at an all-time high. This includes those with three or more jobs, and it's the highest ever recorded. Now, think about it for a moment. If you are already busy making an enormous amount of money from one job, do you really feel the need to have two or three jobs? Or would you rather maintain that one job well, ensuring that your family can live comfortably and save money for future generations? Generally, most people do well financially with just one job or one business.

If possible, I wouldn't touch other businesses and would just focus on this one. For example, unless you're a large corporation, most people tend to engage in multiple businesses. Those who are involved in various cultural or entrepreneurial activities often start feeling the limitations in one area and then diversify into other businesses. This is similar to the situation where, if income in a particular field is limited, meaning they feel there is no further growth potential, they may take on side jobs or additional work. However, the fact that many people are juggling multiple jobs indicates that the employment market isn't necessarily strong. It suggests that they are seeking multiple jobs due to insufficient income. Considering the slight increase in population, investors...

In the long term, it is true that the numbers are increasing, but even so, the population hasn't really exploded. Considering that percentage, I think having the highest number of investors in history isn't a particularly good sign. Overall, the market has something to consider: the put-call ratio. It shows whether there are more speculators betting on a market decline or those betting on a rise. Based on recent data, this indicator has dropped. The number of people betting on calls is at an all-time high. To give you an idea, it's the lowest level since the peak of the bull market in late 2021. This suggests that everyone is hoping for a rise and is currently betting on it. So, the situation is that all speculators in the market are focused on betting for an increase.

So, as we look forward to how the market will unfold, I believe we will witness a very exciting market. I hope that we can continue to manage risks as we move into 2024.

이젠 정말 대비를 하셔야 합니다

주식과 경제를 다룹니다.

문의: pibibig79@gmail.com
