A Once In A 100 Year Investment Opportunity Just Started (Most Aren’t Ready) – Transcript

00:00Right now, six out of 10 American stocks are in a bare market, down more than 20% from their highs. And always, nobody has noticed because one number on the news, the S&P 500 is holding up just fine. The surface looks calm underneath it. Most of the market has already been through the fire, a bit like Winne, who's been through the beach, which is why he's looking so sleepy this morning. Yet the most watched strategist on Wall Street,

00:27the man who runs the house view for Morgan Stanley, big investment bank. He just called this one of the best setups of his entire career. And that is not a reason to run and buy things blindly, but it's a reason to get ready because three things are lining up at the same time. And the last time they did, a generation of investors got well did it

00:53really, really well. While everybody else was still reading scary headlines and the window is not a year away, it's literally the next few weeks. It's around the midterms and most people will find out after it's over when it's in the papers and the easy money is potentially gone. So, by the end of this video, you know the three things lining up, why the midterms are the trigger, and what the skilled money is doing right now. I'm Felix Nicholas Pin, an

01:20economist and former investment banker. That down there is, of course, Winston. Most importantly, we're the founders of the Prin Institute. We publish research on financial markets. We provide instructions on how they work. We take zero sponsorships and zero endorsements ever, so we can say whatever the heck we like. And because there's a fair bit to this u charts, numbers, all that stuff, um I put the lot into a single document for you. You can download that

01:45completely for free. Uh it's at felixfriends.org/midterms and you can look over it in your own time right after this video. Cost you absolutely nothing. And honestly, before I show you anything, give yourself a bit of credit because the fact that you're actually sitting here watching this instead of, you know, scrolling past and looking at kittens or whatever you normally look at, it actually puts you in 99 bears ahead of 99% of people here.

02:09And I do really mean that. So, most people will find out after this opportunity once it's gone and they're like, "Oh, how do they know? Why? It's unfair and all of that." It's actually it's a skills gap. It's not about what the headlines are telling you. It's about what the headlines are not telling you. This on the screen, hopefully my editors will put that up for you, is the S&P 500. And on the face of it, it looks fine. It's up on the year, new highs in the headlines. And if that's the only number you ever look at, you'd think

02:36everything is just glorious. But look at the red. Nearly six in every 10 stocks across the whole American market are already down more than 20% from their highs. And that's the technical definition of a bare market. And most of the market is already in one. It's just no one's noticed behind the green headline number. Now, in the one corner,

03:03everyone was told this is a sure thing. You know, the the chip makers uh the companies at the center of the whole AI story that you know, they're going to do really really well. Well, nine in 10 of them, nine out of 10 of them are down over 20%. Four in every 10 have lost half their value.

03:22Half. These are the names people were told could only go up. So how can the index be up while most of the stocks in it are down? Because the index isn't really 500 companies anymore. It's about seven or eight companies. It's a tiny handful of giant tech names that now make up basically the whole index. The rest is just outlier noise. Now think about what that means for you. If you just buy the index fund and you tuck it away because you're just, you know, discount averaging into it or something,

03:50which is what, you know, sensible people have been told to do for 40 years, you think you own 500 companies, you think you're safe, you think you're diversified. In reality, you own eight stocks that basically all do exactly the same thing. So, that's probably your pension. That's probably your portfolio.

04:04It's probably your savings and support you're planning to retire on. Now, look, over 30 years, that's worked out for a lot of people. And I'm not going to pretend otherwise, but just look at this chart and tell me you're honestly comfortable owning a basket where most of the names are falling in a teeny tiny group at the top is holding the roof up.

04:24Because the trouble with leaning on eight companies is simple. The day one of those eight companies trips because some manager does something dafted or one earnings call lands badly, the whole thing comes crashing down and it's your life's work underneath that. But there is good news, and I think that should give you some hope, not fear. A market where most stocks have already fallen a long way is not the top of a bubble. The

04:51top is when everything is going up together and nobody's worried. This is closer to the opposite. Most of the damage for most of the market has already happened. The fear has already been paid. The question is what comes next and who's getting paid when it does. And I'll play you in a second a little clip from the Morgan Stanley chat because that's really insightly. I'm going to play you a little clip from the Morgan Stanley chat because that's really insightful. But here is where it actually gets personal. So stay with me for a second. Most of the market has

05:18already fallen. The money when it comes back is not going to come back into everything equally. It never does. It'll pour into a certain kind of company and it'll leave the rest sitting there or worse, they'll continue to lose. So the difference between the people who do well out of the next year and the people who don't is not luck. It's whether they know where the money goes first and whether they position before it moves, not after. And you can say, "Well, I own the index. I'll do all right." Well,

05:46how's that working out for you? When most companies are down 20% and you're relying just on a Morgan Stanley chap, the man who runs the view at Morgan Stanley, he called this one of the best setups of his career. I mean, the professionals are saying that out loud in public. That is not the moment to be sitting in cash with no plan and being fearful or whatever. But most people have no plan. They've got a feeling. And the feeling is always what the m news

06:13prevents you, which is which is generally fear. That's how you sell stuff. So I want to do something about that. This Saturday, we're going to remove the fear. We're going to run a completely free live training. It's called How to Invest for the Midterms and Beyond. And you can get your seats at midtermsinvesting.com.

06:31The link is down below in the description. And now this is what I want to walk you through. how an election actually moves your money, the mechanics, I mean, not the slogans, what the politicians are saying, that doesn't matter, but what kind of investments have historically done well in these moments, how to tell real scarcity from the fake kind that gets dangled in front of you to make you act, and how the skilled money, the Wall Street money is arranging itself right now before any of it reaches the news. And how you can

06:59read that and how you can do that yourself because reading this setup is a skill. It's a skill you weren't taught. It's very useful watching this video, but in three days time you're going to be like, "Yeah, but but but now what?"

07:12Right? That's what I want to fill in for you. That gap, that skill gap, so you can stop listening to me. So come and learn it with us. Winston will be there, too. Midtermsinvesting.com link is in the description down below and it's in the pinned comment as well, so you can't miss it. And then let's understand together first here. Why are the midterms a trigger? So every election does one thing. It opens up spending. More promises, more programs, more boring and all all that kind of

07:39stuff is always what happens. But there's a second half to that and that's the spending floods the system. It's got to go somewhere and it's going to land somewhere in the real economy in roads, contracts, wages, whatever. And a chunk of it will end up in the market. It'll bid up the price of the things people own. And if you look at history, because this is actually really remarkable in terms of data, go back decades and look at how American stocks behave in the 12

08:05months after midterm election. The S&P has averaged 16% returns in the year after midterms. 14% of that just in the first six months. Not once in a while, it has finished higher after every single midterm going back like 50 years. It's one of the most consistent patterns in the entire history of the market and lines up with the midterm which is the most predictable event on the calendar. So you can see it coming from a mile off if

08:32you know what to look for. So why does it why does it work like that? Well, partly it's the spending I just mentioned. Partly because an election clears the air. Markets hate not knowing what's coming more than they hate being the politician they don't like. An unanswered question freezes people. It freezes the money. So people sit on their hands. They hold cash. They wait.

08:53Once the vote is done and that question mark lifts, the money that was hiding on the sidelines starts looking for a home again all at once. So the question for you is really which way is the money moving? Because the money moves first and the and the real world your wages, the prices of eggs, the job market, all that follows a long time afterwards. So get the direction of the money right and you are ahead of almost everybody including people who are far far cleverer than you and me and far busier

09:21worrying about the wrong thing. He saw it in 2023. Half the experts were still promising a recession that never turned up. The headlines were grim and the market went on to have one of its best years in a decade because the money had started to turn before the news caught up. So the people who sat waiting for the all clear from the news, well they missed most of it. And right now for the first time in years, three separate things are about to push that money in a

09:48particular direction at the same time. And that's the part I promised you, right? So let me show it to you. It's it's honestly rare for even one of these things to line up, but having three arrive altogether right at a midterm is the thing that I've generally not seen ever actually in my life. So start with the one that's already been hurting you, right? The giant wave of spending on AI is being digested. For two years, the big tech companies have been pouring hundreds of billions into AI and the

10:14market got a little bit nervous uh about whether any of this would have a payoff and and and about how is all being financed. And that nervous is exactly why most stocks have already fallen. But a wave of spending like that doesn't just sort of evaporate. It works its way through the economy into the companies that supply the picks and the shovels, the chips and the power and the data centers and then into the ones that actually use that stuff to make real money. So the fear comes first. The

10:41payoff tends to come way after. And the fear is now mostly in the price, which is another way of saying the risk is actually a lot lower than it was like a few months ago in my humble opinion. And we've seen this film before, right? Every time the world builds something big and new and shiny, railways, electricity, the internet, that sort of thing, it goes the same way. Everyone piles in, they overbuild, the crowd panics, and it was all a waste. The weak players get washed out, and then once

11:08the dust settles, the ones left standing make an absolute fortune on the very thing everybody had just given up on. The internet didn't die in 2000. The nonsense died. The real businesses went on to run the world. And AI is walking that same path right now. And we're somewhere in the wash out. The next one you already know about because we just spent a good while talking about it. The midterm uncertainty is about to clear.

11:33So I won't labor you with it. But the single most reliable thing an election does is it removes a question mark. And the market loves having a question mark removed. In a few weeks, in a few days, whenever you're watching this, that one is a goner. Whichever way it goes. And the biggest of the lot, the one I'd circle twice, this one here, right?

11:52Circle it twice. Not a circle, is it? But you get the idea. The people who control the supply of money, they are turning on the taps. The amount of money slloshering around America, they call it M2. What is M2?