STOCK MARKET CRASH: I lost $50,000 in 10 minutes!

Hey everyone, it's Mike Andes and you're listening to the Business Bootcamp podcast. Today I'm going to be sharing with you exactly which stocks I'm choosing right now. As we have this week gone into a massive market correction, or somewhat of a pullback, I should say. And I wanted to share exactly what stocks I'm picking, what direction I'm investing right now. And I'm doing this because so many of you asked me over the past few days as the market has had a massive downfall. And so I'm going to go ahead and share everything that I'm doing. This is by no means financial advice. You, you should absolutely be looking at these companies yourself, getting advice yourself, et cetera. But so many of you have been asking. So I wanted to go ahead and share my opinions and my thoughts here. Before we get into the show though, a big thank you, today's sponsor, which is Gusto. If you haven't already, go to gusto.combootcamp you can try their software completely free, run your employees through their software and get their paychecks directly into their bank accounts via direct deposit. Great reporting features and I've seen some really, really cool thing that they're creating for your employees. You'll take money out sooner than the end of the paycheck without having to ask you for a pay advance, things like that. So check it out Today, go to gusto.combootcamp alright, so the past few days we've had a massive drawback in the stock market. I know if you are invested in the stock market, you know what I'm talking about. Because it has been painful, it has been a bloodbath in a stock market if you are invested heavily in growth stocks. So we've talked about growth versus value stocks in previous videos, but in the day when it comes to growth stocks, a lot of these stocks are smaller cap. And when I'm talking about growth stocks and they're getting valued based upon how fast they're growing, not necessarily their price to earnings ratio and that they're super profitable and there's a multiple on that. To find a valuation that's not kind of stock, we're talking about those type of stocks like Chevron, beach, bp, these big companies been around for a long time, Walmart, you can look at their earnings and then just multiply that by their PE ratio and come up with a relative valuation based upon the value of the company. Now it's a lot harder to come up with a valuation with a company that has no profit, is growing extremely fast, like 500% a year and is burning money. Like literally they're losing money. And so over the past 12 months and as the government has pumped in money into the system via stimulus, bail bonds, not bail bonds, junk bonds, buying those up literally like hundreds of billions every single month. No, as that's been happening, these small cap, which small cap is small companies that have small cap rates or cap sizes, they don't have hundreds of billions. There may be 2, 3, 4, $5 billion the size and the valuation that is put on the company. Now these stocks in the past year have done tremendously small cap and growth stocks. And these have led to the increase of things like Tesla that has 10 or 12x over the past 12 months. And we've seen these little companies that were 2 and 3 billion dollars, now they're worth 30, 40, 50 billion or literally overnight they went from 10 billion to 100 billion because they literally talked about electric vehicles in their quarterly reports. And so we have seen in the past few days a massive correction. We're talking in the sum of 10 to 20% decline in a lot of these growth stocks. And so I'm gonna share what I'm doing right now. And there's a much better place to listen to me when it comes to stocks. Meet Kevin, is a great place to get started. Tom Nash, great place to get started. Jim Cramer talks every day on cnbc. Mad Money. Good to listen to that. I don't really subscribe to one person. I only get stocks that they use. I kind of get a whole bunch of different opinions and I kind of come up with a blended thesis that I am really, you know, which stocks I'm going to invest in. And so those are some of the ones I listen to. A lot of you have been asking that. But here's what I'm doing right now. So fortunately, a couple of weeks ago, I took about 30% of what was in the market. I took off the table and I paid off all of my margin and like was, you know, had cash set aside and everything like that. Really just waiting for what's happening right now. And that is a pullback. And so I'm of the opinion that like when I, when I am investing into a stock market, it's gotta be on discount. Like, it's funny, like when it comes to stock market, it's the one place where people like panic when prices come down. If the prices were going down at Walmart for like a Black Friday sale, everyone would rush to buy whatever was going down in price Whereas when it comes to stocks, people literally when the price goes down, they start panicking and being afraid. Like when, when the price comes down, that is the time to buy. When the price is going up to the moon for the past two or three weeks and everything's been green in the market, that's when I get kind of afraid. That's when people are doing fomo. Fear of missing out. They're just buying in, they don't know what they're doing and some dumb money in there. And so people are spending their stimulus check like, ah, just throw it in the market, Buy more Tesla. It only goes up. Like that type of investing scares me very much and that's when I pull out. So a couple weeks ago I was kind of feeling a little bit like the market was there, pulled 30% of my money out, paid off all my margin, had cash set aside. And then over the past week I've been trickling money back in. Now, this morning we woke up to a crazy market. This is Tuesday morning that I'm talking about here, February 23rd. And literally it's very difficult to wake up in the morning and literally see in the first 10 minutes of training, you lose like $50,000. Now everything inside of you at that moment wants to be like, oh my goodness, get out of it. Sell. It's all going to zero. But as long as you're not spending money that you can afford to lose, that's the time you actually need to be buying. When things are going up like 10% up a day, like, let's go, like every single day, five days in a row, that's when I start selling. That's when I'm like, this is getting a little bit too much. And I kind of get a little bit afraid when there's sales in the market, that's when you want to buy. As long as you believe in two things. Number one, that the stock market long term is going to do well, and number two, that the companies you're investing in are going to be profitable for the long term and they have strong balance sheets. Now, if you're investing right now in companies that are blank checks, SPACs, they're called special acquisition companies. SPACs. If you're investing in those and they have no intention of being profitable for years in the future, I would be a little bit apprehensive right now to be buying into those. I wouldn't sell necessarily as long as you believe in the thesis of the company, but I would not be buying those right now. Over the past three Weeks, I've been transitioning more away from growth stocks and into value stocks or. Or at least in the companies, even if they are based upon growth. Companies that I know will be around in 10, 15 years, companies that I believe in for the long term, companies that are profitable. Like, that's actually a really important thing right now that I'm investing in. Companies that make money like, they're profitable on paper. They make money because there's so many stocks right now that are literally losing money, and people are just pouring money in it. It doesn't make a lot of sense when you actually break down the fundamentals of the stock. And yes, people can look at, like, low interest rates and all the rest of it, but the reason we've been having this massive drop in the past couple days is because the risk of inflation has been kind of going up. Because as treasury bond yields increase, it basically means the government's having to incentivize investors to buy their bonds so they raise the interest rates on those yields, those bonds. And so traditionally, that precedes inflation. And so that's right now what we're kind of feeling. In my opinion, a lot of people kind of afraid of that happening because we have seen kind of an uptick in the bond yield curve. So what am I doing right now? I am simply buying stocks that I feel like for the long term are going to do very, very well. Those of you have talked about Bitcoin, for example. Like, I'm not invested in bitcoin. I sold out at $40,000. You know, shame on me. However, you know, now it's at 50. It was at, like, 56,000, whatever. But I feel like it's just, like, it's just getting out of control. Same thing with Tesla. I sold out. Shame on me. Around 750. But guess what? This morning it went all the way down to, like, 715 after going up to, like, 900. And so, you know, now. Am I buying in Tesla? Yeah, this morning I went ahead and bought some Tesla because it dropped. It's dropped precipitously the past week. I think it's dropped, like something along the lines of like 25 or 30% from its highs. So I'll buy a stock that drops that much, but I'm not gonna buy a stock at its peak at its height. Like, when people buy stocks and it's been like 100% up in the past week, I freak out. Like, that's. That's crazy. Like, why would you do that? You wait for a correction. You wait for a downturn. And so right now what I am doing is trying to invest more heavily in profitable blue chip that's large cap stocks, companies that I believe in for the long term. And I'm trying to cut off anything that is losing money that super speculative that I've maybe doubled or tripled my money in like for example Lemonade, Expi. There's other companies like I'm just gonna go through some of like Twilio. I super believe in that company even though it's been gone down a little bit. But like I believe that's a long term hold. Anything that's not a long term hold is what I start to doubt myself on. Right. So like for example, Lemonade, Expy. I believe in these companies. I love these companies. I haven't sold anything but they're definitely things that a few weeks ago I trimmed my positions in cause they've doubled over the past several months. And so there's definitely going to be, this is a time to be a very disciplined investor, to know I'm gonna buy when things are crashing, when everyone is going to be freaking out and the market's down 10, 15, 20%. That's a great time to buy. I'm not going to buy. When everyone is euphoric, Everyone is saying that there's money all over the place. Everyone says it's gonna go to the moon. Everyone is trying to get on the next Gamestop, the next Tesla, the next door bitcoin. People are buying things out of emotion instead of the fundamentals of investing. That's when I get scared. That's when I'll start pushing the sell button. But right now, the last couple days, I have been buying into the market. I've been buying companies like Walmart, Adobe, Oracle, Alibaba, Salesforce, Facebook. I'm big on Facebook right now. Last week I bought a whole bunch. And my two best companies the past couple weeks have been Oracle and Facebook. Oracle, Facebook and a couple other, you know, larger ones because they like when a massive company like Amazon has a bad day, they drop like 2%. When a speculative SPAC play has a bad day like cciv, which is the Lucid Motors merger, like literally today it dropped 40%. Thank goodness. I sold out at about 36, $37. It went way up and I was like, oh man, I missed out. It was up to 65 and then it dropped literally today like 4, 40, some odd percent. So those sort of speculative moves, they're much more volatile. And so if you're looking, if you get afraid if you're afraid of big drops like we've had in the past couple days, you shouldn't be investing in speculation. You should be investing in tried and true long term stocks that when they drop, they have a bad day, they drop 1, 2 or 3%, not 10, 20 and 30%. And that's literally what we're seeing right now. Because the companies that have had that don't make money, they've been losing money hand over fist and growing up to the moon. All of a sudden the fundamentals, like eventually the party has to stop, eventually musical chairs, the music stops and everyone is left standing on their feet and there's chaos. That's what's happening in the market right now because of people just getting too greedy, people going after the froth of the market. And so I really encourage you, if you're going to invest in the stock market, this is a great time to invest. Don't invest in froth, don't invest because you saw someone say that this is the next stock going to the moon because Cathie Wood invested in it with Ark Invest. That's not the time to follow the crowd. The crowd gets slaughtered. Right? You want to be the one that actually is diligently finding good deals in the market. Educated, making sure that you are actually buying when everyone else is selling, selling when everyone else is buying and everything's going up. You can just throw your money in blindly into something, whatever. When that is around, I get afraid. And right now we're seeing a correction of that mentality. Is it hard to wake up and see $50,000 just literally disappear out of your account? Yes. Even if it's 500 and you have a couple thousand dollars in. Here's my hypothesis. I'm doing it at the very end because this is kind of what so many of you have been asking the past couple days. What should I be investing in the stock market? How much should I invest? In my opinion, this is what I think you need to be comfortable as long as you're investing. The strategy that I just talked about, investing in companies you believe in for the long term, that are large blue chip companies, super profitable and are based upon like their solid growth numbers, not just speculation.

If you're investing companies like that. I am. My kind of definition of safety is you need to be able to lose 50% of your money in those stocks and not give a care. Like it shouldn't affect you. It shouldn't affect definitely not putting food on the table, paying your debt, paying your employees, etc. You should not be risking that money. That money should not be in the stock market. And if you should be comfortable with losing 50% of it, if you're not, you need to take money off the table. And that's just how I, that's kind of like my level of gauge of risk. And so I very worried. When people are young entrepreneurs and they have a few staff on hand, $10,000 in the bank and they have 5 and 6 and 7,000 of that in the stock market. If that disappeared or 50% of it disappeared, would you be okay? That's kind of like my acid test in terms of my risk level, my risk tolerance. Some people, hey, you might as well yolo it if you, only if you have a couple thousand bucks, you're like, I'm just gonna throw it all in GameStop and see what happens. Like, sure, go for it, have fun. Just realize you're not investing, you're gambling and you're just having fun. Like, you know, go for it. Just throw the money in there and cross your fingers and hope nothing happens bad. But if you're investing for the long term, you know, you gotta make sure that you're okay with losing 50% of that money. And that if you, you gotta ask yourself, if I lost 50%, like if all these stocks went down 50%, would I still believe in their fundamentals enough to stick with them and know that I'll ride this out? It's very hard to find any two or three year window in the stock market where if you would have invested in index funds, invest in these type of companies, that you would have actually lost money. The problem is people get afraid and people sell out at the bottom because they're afraid they're gonna keep going down and they keep buying at the top. That's just traditionally what happens. Because we're humans and we follow the crowd, we follow the emotions, we follow the head. And that's exactly the opposite of what you should be doing right now. So if you're investing in the stock market, I would get more disciplined about which companies you are investing in. I would really, really focus on the long term. I would definitely not allow your emotions to be speaking to you. And as long as you can afford the money to be lost and you're not risking money that you need for your business or for your family, this is actually a really good time to buy. Because everyone else is panic selling. There's absolutely risks in the market, or whether it be inflation, whether it be the interest rates going up at the Fed, all of those things are definitely an impact. Do I believe that 2021, 2022 are still gonna be pretty strong in the stock market overall? Yes. I feel like there's gonna be pockets of high bubble territory that's going to collapse, and so I'm trying to get out of those markets. And I think that overall it's still a good place that I want to have my money in. I don't want to have it in cash right now if inflation does happening cash is going down very quickly. So that's my two cents. Just one man's opinion. It could be completely wrong. You could lose all your money if you invest in those companies I'd mentioned. But companies like Oracle, Amazon and Facebook that I've invested over the past couple weeks, while all these other small caps have literally gone down 20, 30%, they have, if not gone up, gone down to maybe a couple percent. Those are the kind of stocks you want to have if you want to be investing. And if that money that you are investing is you need for a nest egg for retirement or for just security. I'm Mike Andes. You'll be listening to the Business Bootcamp podcast. Until next time, be great, because nothing else pays.