Paper-Handing Sissies | The Market Crash.

everyone be kevin here do you know why

most people fail to beat the market

because they're paper handing sissies

they're not a diamond handing and i've

got some proof here to show you

why if you follow a strategy like what

kathy what is doing in diamond handing

over at arc invest you're probably going

to be much better off

first before i show you what i'm about

to show you it's really useful to

remember this

when a stock goes up in price

it is actually increasing risk

when you see oh it's up ten percent oh

it's up ten percent oh it's up ten

percent

that is getting riskier and riskier and

riskier every single

move up is an increase in risk it is not

what we think it is what we initially

think when we see oh it's up 10

today well oh it's it's trending up it

might be a it might be a move upwards

it's momentum driven yay

we get this feeling that oh there's

safety and momentum there's there's

safety in being in the middle of the

sheep farm right because you're in the

middle like the dog's not gonna eat you

the sheep herder is not gonna come kill

you you're in the middle it's like

let's just let's just go this way oh

we're going this way this time okay

we're going that way

like there's safety in that so when we

see green in the stock market

it's human nature for us to feel like oh

well things are getting better yeah

let's let's go over here where

everybody's going this is fun

oh we're going this way now great when

when things are red

that is when there's pain in the market

obviously we've talked on this channel

before about how first of all

fighter flight sets in we can't fight

stock prices falling so what happens

flight sets in

because that's our only option as humans

we don't like being backed up against

the corner and continuously getting

punched in the gut

over and over and over again it's like

just duh sell and make the pain stop

right

it's totally a human nature

an issue in psychology when it comes to

investing

to want to sell when those times are

happening but what's actually happening

is every punch to your gut it's like

your portfolio just got less risky less

risky less risky and it's like ah that

just

that doesn't jive like like you know if

they were handing you flowers like here

your portfolio is

less likely to decline even further

every time the market was ready to be

like oh okay

you know especially if you have any kind

of margin outstanding it's like

oh gosh i keep getting closer and closer

to my margin call

right to your margin calls if you have

margin outstanding and so

psychologically it feels like oh crap

getting dangerous more and more

dangerous

it feels like things are getting more

and more risky but in reality

the pressure this like the amount of

pain

that you need or the amount of energy

that you need to get closer and closer

to a margin or closer and closer to have

a fall

is harder and harder at every stage

because you're really de-risking your

portfolio

here's just an extreme example if tesla

today

just to make this simple and i'm going

to show you some some graphics here if

tesla today was

1500 a share

what's you know what's the capacity for

that to go back

you know down 75 percent well let's do

that really quick so let's say

fifteen hundred dollars today uh let's

take seventy five percent off

uh that would take tesla down to three

hundred seventy five dollars

well i think a lot of people would look

at tesla historically just over this

last year here

even after the split and say well there

was a lot of

you know support for tesla between 375

380 and maybe 420 in that range and so i

think if tesla were 1500

today a lot of folks would say yeah i

mean sure it could go to the last

support level 375 i mean

that's a long way to go but it could

happen now if

tesla is let's say which it is today

it's at 550

what's the capacity for tesla to go down

75

today well 550 minus 75

today would bring it to 137

i think there are a lot of us that would

say uh probably not

as much of a likelihood of that

happening it would take a lot more pain

in the market to see that kind of

collapse going from 550

to 137 then it'll run up to 1500 and

then it'll fall back to 375.

that would be much more likely my

opinion right

so in other words again my opinion here

and i know

a lot of people think tesla is very high

valuation but let's just use tesla as an

example

in my opinion tesla goes up to 1500 it's

much more capable of falling to 375

than it is from 550 to 137

not very likely in my opinion because

any time we fall

more and more people say valuation in

line in my opinion

let's go buy it at least the savvy

investors are saying that

but what do most people do in the

marketplace well

an easy example or an easy way to figure

out what most people do

is just go ahead and look at arc invests

fund flow so here's how this works green

lines mean money or is flowing into arc

invest

so right here on the left side at the

beginning of this chart 46 million

dollars

flowed into arc invest and that was

somewhere around august

of 2020. the red lines mean

money is flowing out of arc invest

so people are withdrawing their money

from the fund so take a look at this

notice this weird pattern we have at arc

invest

so see these this red arrow here i put a

red arrow

anytime we had a substantial decline or

in people investing in arc invest or

when people

are withdrawing their money from ark

invest arrow number one

is right here at the beginning of

september which happens to be

right after tesla's split took place and

we started having our september crash

so we started seeing money flow out of

arkhanvest during the beginning of the

september crash

arrow number two shows us we had an

outflow right around maybe day

10 in november so around november 10th

another large

outflow right around here number three

the end of december

and then we've got the end of january

and then the end of february this is

where we're getting these outflows so we

really saw these outflows

again just to remember the beginning of

september about 10 days into november

end of december january and february

okay pretty easy

well take a look at this for a moment

this is tesla's

stock price tesla stock price beginning

of september

goes down tesla stock price around

you know a week to 10 days into november

goes down tesla's stock price end of

december goes

down tesla stock price end of january

goes down

tesla stock price end of february goes

down

at every single point tesla stock went

down people took their money out of

arkhanvest

even though tesla is becoming less risky

society follows the sheep mentality

of oh my gosh it's red let's sell

and get out now in general i mean

they're always going to be

you know those commenters that are like

oh well that's because you sell when it

starts falling and then once it gets to

the bottom you buy back in

fine go make a youtube channel and start

publicly disclosing

all your trades so we could see how you

perfectly time the market

fine okay do it i would love to see it

uh and i want you to succeed i really

want you to succeed

but the point is the massive

amount of or like the greater society

that is investing into exchange-traded

funds pulls money out of funds

dramatically i mean look at this massive

outflow we got an arc over here at end

of

at the end of february we almost had 400

million dollars flow out of arc in one

day

one freaking day 400 million dollars

pulled out of arc

and it always seems to line up exactly

with when

tesla stock is going down and this is

literally

people going oh my gosh the price is

going down let's take our money

out while the stock is de-risking this

is literally the time to be putting

money

in because the stocks de-risked in fact

watch this

let's reverse the analogy here for a

second let's only buy

or confessed when things are red well

obviously this last segment we're in red

so we can't really look at february yet

because we haven't had the recovery yet

but let's look at the prior times

let's say you bought arkhanvest around

this uh end of the first week of

september somewhere around the uh

first to second week of november end of

december

and end of january let's say you bought

uh into arkhanvest at those points

well that means you would have bought

into arc invest

somewhere around the bottoms of tesla's

price here

and you would have averaged into the

periods of time

where tesla ended up performing better

afterwards again like obviously our

sell-off over here brings us back to a

prior level but the point is

if you did the opposite of what the

masses did

you would have ended up be still on a

substantial ride

upwards from november by buying at the

low every

time so you could literally look at for

as an example here arc invests fund

and just do the opposite of what the

masses are doing and

buying when people are selling out of

ark invest

by following or doing the opposite of

fun flows now again we'll see we

obviously expect tesla to go up again

and then we can update this

you know sort of breakdown here but take

a look at this the other opposite thing

that i did

is i looked at some of the peak inflows

and i marked those in green here so

let's use the blue circle here

and this is about the first week in

january and about the

first day of march where both of these

were pretty green days like the first

trading day in march

i'm pretty sure whatever the first

monday was was pretty dang green the

market actually opened up

very very optimistic and what's ironic

about that

is in each of those examples you would

have ended up buying

right at a particular peak before it

sold off in the short term

now overall my goal isn't to encourage

people to

try to time the market but what's

fascinating is

if you look at kathy woods arc invests

outflows and inflows people are

dumping arc invest right when it's

becoming

the least risky and people are plowing

in when it's the most risky just to sort

of

nail this point think about this look at

where the biggest

thickest charts are are they in october

or november where prices were relatively

low compared to where they are

now no the biggest inflows were after

kathy woods fund had you know plus five

percent plus five percent plus five

percent

day after day after day after day in

december and january

that's where the biggest inflows were

when euphoria was at all-time highs oh

can't lose money in the market with the

exception of those periods of time

at the end of the month where oh it fell

that's it let's sell out

following the trend in my opinion when

it comes to investing

uh unless you're doing like momentum

swing trades but you have to be really

deliberate about those uh calculated and

have a lot of research and information

about those you have to have more

information on the market to really

succeed on those

uh which is possible to do so the market

can be incredibly inefficient which

does surprise a lot of people you'll be

really really careful

with investing when everything is green

which what is everything in the market

right now

bloody red which is a sign that sure can

prices keep going down

maybe but remember what happens when

prices go down you are de-risking

all right folks thank you so much for

watching if you found this helpful

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folks we'll see you next time

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