A Recession is Coming | Two reasons why I'm still buying stocks

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Published 2022-07-04
There are two things that you need to understand about the stock market.


1) A ≠ B

The stock market is one of - if not the - most complex system we know. The number of variables that influence stock prices is near-infinite. And any patterns we observe, or opportunities we see to predict what might happen, are short-lived and eroded by the activities of other investors.

If a new event "A" occurred, and it looked like it was going to cause "B", the market would move within minutes to bake this into stock prices. This brings me nicely to reason number 2:

2) It's forward-looking

The stock market is constantly weighing the odds and potential outcomes of what might happen in the future. So all the risks you read in the newspaper will already be baked into stock prices. Does the market get it right all the time, no, does it get it right more than you? Yes.

You can either buy into that collective intelligence, and trust the market, or you can pit your wits against it.

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DISCLAIMER:
This channel is for education purposes only and does not constitute financial advice - James is not responsible for investment actions taken by viewers. Please seek out a regulated advisor if you require assistance (while James does run a financial planning business, he does not provide advice through this Youtube Channel, which is not affiliated with his employer).

0:00 A recession is coming
1:22 Reason 1
5:54 Reason 2
9:06 In the context of today's environment
11:40 Take aways

All Comments (21)
  • James Shack
    Focus on what you can control:

    Diversification
    Risk
    Cashflow

    And then... don't look.
  • Dominic Cahalin
    Another exceptional video. You've got a very rare knack of being able to explain complex ideas in an engaging and easy-to-understand manner. 👍
  • Williams Caywood
    I will forever be indebted to you, You've changed my whole life and i continue to preach about your name for the whole world to hear you've saved me from a huge financial debt with just little investment,Thanks so much Luciana cruz
  • Ann miller
    I bought my last property in June for 600k, I’m moving profit from stock to my real estate, really happy I got my cash flow right
  • DSLRguide
    I’ve been learning about the stock market for the past few years and this is the most relevant and rational argument for buy & hold investing in index funds. Makes me feel more confident in my strategy of investing heavily every week as the markets continue to drop :)
  • rolo153
    You have a truly fantastic way of explaining complex financial issues. Long may this continue. Thank you.
  • Sean Kennedy
    One of your best videos yet, thank you James. Really insightful and brilliantly explained.
  • Ryan James
    Excellent video James, you really explained this well. Keep up the great work 👍
  • Peter Stuart
    As we get deeper into this recession more people will lose their jobs which will expand the inventory along with homebuilders delivering their massive backlog .In my opinion Inventory could keep building for a few years .The more inventory that builds up , the more desperate sellers are going to feel and will be cutting prices . Fear drove it up and fear is going to drive it down.This is what the beginning of a crash feels like.I would rather buy at a cheaper price and a higher interest rate. I can always refi when rates come down but I don't want to buy a depreciating asset. Thanks again for a great show with facts backed by real data.
  • Keith Brown
    Thanks again for your great insights. Your enthusiasm and knowledgeable content are always worth my time.
  • presterjohn71
    Brilliant video. Well done on bringing something fresh to what is going on at the moment.
  • Honestly James, your videos are fantastic and have completely changed my attitude to my finances. Thank you!
  • Lea Freeman
    Great analogy - explained in simple terms without talking down to the viewer. 👏👏
  • Neil Cook
    Cool, Calm, Collected and Rational as ever James, THANK YOU!
  • Maria Samper
    Thank you for these great videos James 🙏
  • jpalan
    And this is basically why you start buying those good businesses on discount now, while still anticipating a recession, and not later when the prices are maybe already up again because you wanted to wait and see if the market would go even lower. If the market then tanks more, you just buy more of the good stuff.

    We have all made the mistake of waiting for the market to sink even more before hitting the buy button, it didn't work out great.
  • Philip Gallagher
    great advice as always, certainly helps me to take a balanced view, and "Don't Look" is genius!
  • Keith Halliday
    Great video James. Thanks for you excellent insight.