20:50
The Federal Reserve just did something it has only done twice in the last 60 years, and both times in the past we saw the economy turn upside down. Both times the economy went into recession, the stock market halved, and both times it created incredible investment opportunities for financially literate people. What am I talking about? About the inflationary reversal. This means: first, the Fed raised interest rates to fight inflation. Second, they declared that inflation was over, so they lowered interest rates to stimulate the economy. And third, they realized: oh, oh, inflation is still a problem. We have to raise interest rates again. The last two times we've seen this three-stage cycle over the past 60 years, both ended in
recession. Now we are seeing the same three-stage cycle again, and the question is what happens next? And the reason I remember the past is that while history doesn't repeat itself verbatim, it often rhymes. We can see which investors and which assets have been successful in the past when we have seen similar cycles because that can give us some clues about the future. Does this guarantee anything? No, absolutely not. Investing has risks. You never have any guarantees of profit when investing. In fact, you will lose money at some point. So make sure you always do your own due diligence and never blindly trust a random guy on
YouTube. But today, in today's economy, one thing that can help you become a smarter investor is the use of AI. If you don't use AI, ChatGPT, Claude, or other tools to analyze your investments, I highly recommend doing so, as it's almost like having a Wall Street-level analyst in your pocket, provided you know how to use it. If you don't know how to use it, it can be dangerous because you can use these AI tools to get investment advice and make decisions based on what the artificial intelligence says. And if it gives you poor results, it could mean you're making a bad investment that could cost you a lot of money. That's why, for the first time ever, I'm hosting a free live stream on
November 17th, where I'll show you how my analysts and I use AI to research stocks, find investment opportunities, and pick stocks using AI properly. This is a free live broadcast. I will be hosting this twice on November 17th: in the morning at 10:30 AM Eastern Time and in the evening at 8:00 PM Eastern Time. There will be so much useful information here. This event is of great interest. This is a very popular live broadcast. You should register as soon as possible, as the number of places to participate in the broadcast is limited. So, if you're interested, the registration link is in the description below. And as an added bonus: those who join the live stream on November 17th will receive my set of AI prompts. This is a list of the top 10
AI queries that my analysts and I use. You can simply copy and paste them into ChatGPT, Claude, or any other service to get better answers from AI. So, if you haven't registered for free yet, I remind you that the link is in the description. Let me start with what happened in the past; This will help you understand what the future may hold for us. We have already seen a similar three-step process, when the Federal Reserve raised, lowered, and then raised interest rates again in the late 1960s and early 1970s. We saw this in the early 1980s, and now, in the mid-2020s, it's happening again. So let's start by looking at what happened in the late 1960s. The Fed first raised rates in
1966, then reversed course in 1967, declaring its intention to stimulate the economy, and began lowering them. Then came the years 1968-1969. The Fed realized: oh, inflation could become a more serious problem. Now we need to raise interest rates again. By the way, in the early 1970s, the Fed again made a U-turn and began lowering rates in an attempt to stimulate the economy. This led to higher inflation, which ultimately hurt the economy and the stock market. Take a look for yourself. The economy went into recession from 1973 to 1975, the stock market fell by half, by about 48%, and many people lost their jobs. The unemployment rate in the United States has reached about 9%. Now let's move on to the
next decade and see what happened in the 80s. This is a very interesting period, because in the late 70s, inflation started to rise again, so the Federal Reserve had to act very aggressively to overcome it. So, in 1980, in the first part of it , we saw interest rates rise to about 20%. So in March, April, May, around that time, rates skyrocketed. Then, in mid-1980, the Fed declared that we had solved the inflation problem. So in mid-1980, the Fed began lowering interest rates again. But in late 1980, the Fed realized: oh my, inflation is still a big problem. So they had to start raising interest rates again in 1980. Some call this a "stop- start" policy by the Federal Reserve, but it has caused severe recessions in the United States. We saw a
recession in 1980 and then another one from 1981 to 1982 because of these Federal Reserve reversals and the impact of higher interest rates. As a result, we also saw how badly the stock market was hit. It fell by about 27 %, and the unemployment rate in the United States jumped to about 10.8%. So, the economy felt the pain from these Fed actions. Now let's look at what's happening today. During the pandemic, the Federal Reserve lowered rates to stimulate the economy, which subsequently created an inflation problem. To combat this inflation in 2022, the Fed began to raise rates aggressively, and we continued to raise them throughout 2024. Then in 2024 the Fed declared that we had won the war on
inflation and everything was resolved. So they started cutting rates to stimulate the economy again, and they continued to do so into 2025, but then in 2025 everything changed. President Trump has entered the White House. We began to observe a new economic policy. We started hearing concerns about tariffs. We began to hear concerns that inflation could rise again. So, as a result, and because of higher oil prices, we saw the Federal Reserve raise rates again in 2026 . And here we are today, and the Fed is saying we can expect more rate hikes, possibly in 2026 and probably in 2027. That is why everyone is worried about the question now: what will happen to the economy, what will happen to the stock
market, what will happen to unemployment. Because in the last 60 years, when we've seen this kind of reversal cycle twice, we've seen pain in the economy, pain in the stock market, pain in employment. Could it be different this time? Certainly. But all we have is this historical data to rely on. So, with that in mind, let's look at which investors and which assets made people richer as a result of this Federal Reserve cycle. Because your job is not to panic, not to worry, and not to give in to emotions. This is the job of the news. The news is already going to cause emotional reactions and panic. Your job is to find opportunities by becoming a smarter investor. And one way to become smarter is to simply study what happened in the
past. By the way, if you're wondering, the reason this reversal of the Federal Reserve cycle created recessions and major stock market declines in the past is because when the Fed fought inflation, the whole world was watching. And then they announced that they had won the war on inflation. Once they start lowering interest rates, it means they have declared victory over inflation and the dollar is safe. So now people, investors all over the world, are starting to put their money back into the US dollar because they trust the Federal Reserve. And then, when they realize, oh no, inflation is a bigger problem, that trust is lost.
Now that trust is lost, people don't want to keep their savings in US dollars, which is now hurting the US dollar. So the Federal Reserve had to act more aggressively here, not just to protect the dollar or fight inflation, but also to restore that confidence. Because if the dollar doesn't have global trust, people don't want to save in dollars, they don't want to lend money to the United States, and the loss of that trust can be extremely painful. So now the Fed is not just trying to fight inflation , they are trying to restore confidence, which is forcing them to take more aggressive measures, and higher interest rates are making it more expensive to borrow money.
Buying a house is becoming more expensive because mortgages are getting more expensive. Car financing is getting more expensive. Business financing is becoming more expensive. Borrowing money for investing is becoming more expensive. And the United States national debt is now becoming more expensive because our government owes a lot of money to other people, other countries, and the Federal Reserve. And this interest rate will change depending on the actions of the Fed. So when the Federal Reserve raises interest rates, our national debt also becomes more expensive. All of these higher costs drag the economy down,
which could lead to a recession and ultimately hurt the stock market. But there is a big difference today compared to what we saw in the 1980s: the size of our national debt relative to the economy. Let me show you this, and then I'll tell you which investors and which assets have won in the past during times like these. In 1980, our national debt in the United States was about $900 billion. This is the amount of money the government spent in excess of tax revenue. So, this $900 billion national debt was about 30% of our economy. The debt-to-GDP ratio is a measure that compares the size of government debt to the size of the economy as a proxy for
debt. In this case, the collateral is the size of the United States economy, and at the time it was significantly larger than the national debt. So that $900 billion was only 30% of our total economy. Every year, the United States spent 2.6 % more than it received in taxes. Thus, our deficit was 2.6% of GDP: the US government received a dollar and spent an additional 2.6%. This means that for every dollar of tax revenue, the US spent an additional 2.6 cents. Today the situation is completely different. Not only do we have a much larger national debt, exceeding $40 trillion, but the debt-to-GDP ratio is now 125%. This means that our debt exceeds the size of the economy.
Also, we are spending money faster as the deficit is now around 6%. That is, for every dollar of taxes, the US spends $1.06, so we are spending more and more aggressively than before. The reason why this is important is because of what I just said. At that time, the Federal Reserve needed to protect confidence in the US dollar and fight inflation, and it had to act very decisively. They could do this because the burden of higher interest rates was acceptable given the size of the debt relative to the economy, as high rates make debt servicing more expensive.
Today, our debt is already a huge burden. It is larger than the size of our economy. If we raise interest rates, it will make debt significantly more expensive at a time when it is already putting pressure on our economy. The situation has worsened so much that in early 2026, Treasury Secretary Scott Bessant said: The US is having a hard time finding lenders because we continue to spend money we don't have. And while we're trying to find lenders, interest rates are set to rise even more. So, interest rates, the bond market faced a big problem, because rates were going up and up because the United States couldn't find lenders. So, to solve this problem, the
US government showed ingenuity. Treasury Secretary Scott Bessant said that we, the United States, will simply start buying up our own debt, which might make you scratch the back of your head. How can we afford this? After all, we are already up to our ears in debt. We don't have extra money, but it was a decision. We will become our own buyers to keep interest rates lower, support the bond market, and we will simply print money, essentially, to now buy back our debt. This is the situation we are in today, and it is very different from previous ones. Why is this important? Because higher interest rates today have a much greater impact on our national economy and government than they did before. Now let's see which assets have gained or lost during
this decade. Specifically, I will look at gold, real estate, stocks, and cash as an investor so that we can understand how different assets have performed during different cycles in our economy. Again, if you are not using AI to assist in research, I strongly recommend that you do so. I'm hosting a free live stream on November 17th. If you haven't registered yet, the link is in the description below. But let's look at what happened during this decade to gold, housing, stocks, and cash. Gold prices skyrocketed about 24 times because in the 1970s we had a huge inflation problem and the Federal Reserve had a big problem with the credibility of the US dollar and people turned to gold as a hedge against the
collapse of the dollar. And that was the main concern in the 1970s. Will the dollar collapse? Has the end of the US empire, the empire of the US dollar, come? This was a huge concern because of the money printing and all the fears about inflation during the 1970s. Therefore, people sought to find a safe asset. Gold was such an asset, which is why its prices skyrocketed during that decade Now, you also need to understand that gold prices don't always go up. They rise when people are concerned about the state of the dollar. During this decade, gold prices became the undisputed leader and skyrocketed. But if you look at a longer period, you can see that gold prices subsequently fell
and were unable to maintain their rise, because gold prices rise when people are worried about the dollar. Gold prices rise when people are worried about inflation. Gold prices rise when people believe the dollar is about to collapse. But when those fears passed, people stopped buying gold, took their money away, and returned to stocks, real estate, and other assets. Therefore, gold prices fell and did not continue to rise in the next few decades. However, during that decade, gold performed phenomenally. Real estate prices have also increased. They have increased by about 157% because people also view real estate as a hedge against inflation. The nice thing about
real estate, unlike gold, is that it has real value: you can live in the house or rent it out, generating income, which is much harder to do with gold. Another advantage of real estate is that people who bought homes with mortgages were able to lock in rates during an era of high inflation. What does this mean? Imagine you bought a house 25 years ago. You bought a house in 2001. You paid $125,000 for the house. Your mortgage payment is only a few hundred dollars a month. You locked it into a 30-year fixed- rate mortgage. You did not refinance. And today the house may be worth many times more than you paid for it,
but your mortgage payment has remained the same. And now those few hundred dollars a month you pay are much less than what it would cost to buy the same house today. So the advantage was that people were able to fix their mortgage payments during times of high inflation. Stocks performed well, and part of the reason for their weaker performance was the recessions we saw during that period. We saw recessions from 1973 to 1975. We saw the stock market halve. We had concerns about inflation, which was hurting the market, as well as concerns about rising interest rates, which was also negatively affecting the stock market. So the stock market felt pretty weak during that decade. But if we look again at the
long-term perspective, we see that over the next two decades the stock market outperformed all other assets. So, not every asset grows in every decade. Not every asset will be a leader in every decade. Every asset is cyclical. Certain assets perform better in some parts of the economy, while others do not. And, of course, there was cash: if it was just lying around doing nothing, it would have lost value due to inflation, somewhere around half of its value over that decade. Why? Because of inflation. So what does this mean? If inflation continues to be a problem, if we continue to worry about the economy, these are the assets that have been successful in the past. So what assets can you buy now? Again, I can't tell
you where to invest. My goal is to help you become a smarter investor and teach you how to think like an investor. The first idea is "dry powder." You should always save money to take advantage of market downturns, because they will inevitably come. This is part of our economy. We have experienced 25 market crashes in the last 100 years. That's 25 times the stock market fell 20% or more. For the average person, such a decline was a cause for panic. The reason for losing money is because of selling in a state of fear.
For financially literate people, a small group that understands how the economy works, this was a great buying opportunity. Each of these 25 times was a great opportunity to buy assets if you have the money and the ability not to panic when everyone else around you is doing it. So always have "dry powder", and the advantage of higher interest rates now is that you can earn extra income while the money is waiting. This does not mean that you should wait with investments, just that some money should always be set aside in case of adversity.
Use the good times to prepare for the bad. There are several ways to do this. First, simply open a high-yield savings account. There are now accounts offering almost 4 % per annum. Make sure it is a reliable bank. It must be FDIC insured. For some of you, especially those with higher incomes or larger net worth, the FDIC only protects up to a quarter of a million dollars And when you have more money and you live in a state with high taxes, it's worth starting to think about taxing that income. And if you live in a state with higher taxes, well, they can significantly reduce some of that income. This is where you can use Treasury bonds as a place to store some of that money. This way, you can earn about 3.5-4% per year
without paying any local or state taxes. If you choose to buy bonds directly, it requires additional steps, or you can use an exchange-traded fund (ETF), such as SGOV, to access Treasury securities. It is backed by Treasury bonds, so it is not FDIC insured. It is protected by the US government, so you will receive interest without any fluctuation in the principal amount. You invest solely for the sake of interest. It currently yields about 3.5% per annum, and because it's an investment in Treasury bonds, you typically don't have to worry about state or local taxes. So for those with higher incomes and more savings, this is another place to store money. It is not FDIC insured, but is backed by the United States government. Can it
depreciate or go bankrupt? Yes, but if that happens, we will have a lot of problems in the economy. Again, the purpose of this is to set aside funds so that we can buy assets when they are cheaper, when people are panicking or nervous, so that we can buy stocks at a discount. The second is gold. I always talk about this with some caution, because I started talking about investing in gold before the pandemic. I said that for me-and I don't advise others to do so-it was a regular monthly purchase of a small amount of gold. It was simply a method of averaging the cost: I bought a little gold every month. It was about 2% of my portfolio. Then the pandemic came.
Gold prices began to rise rapidly, and it became a much more popular investment asset. People started buying gold as a way to get rich. And here I want you to remember: what is gold? It's just a piece of metal that lies in place. It doesn't actually do anything. It doesn't create value like Amazon or real estate. Your gold is just sitting in the safe, staring at you. Can it be used in jewelry? Of course. Can it be used in electronics? Of course. But mostly gold is used simply as a means of saving. So I see gold as another way to accumulate hard money. This is a way to save physical money. My theory is that if I hide $10,000 in cash and $10,000 in physical gold in my backyard today
, and dig them up 10 years later, the gold will have more purchasing power than the cash. That's the theory. So I'm buying some gold. The problem, and the reason I say to be very careful now, is that many people started buying gold after the pandemic to get rich, because they believe that its prices will continue to rise rapidly, as they did after the pandemic. But remember: gold prices rise when people worry about the dollar. They rise when people worry about inflation. They grow when people expect something bad to happen. When these concerns disappear, as they are never permanent, gold prices may go down. We saw gold prices drop significantly in 2026, but just be aware of this cycle:
overall, yes, in the long run, gold, stocks, and real estate prices are rising. Almost all asset prices increase in the long term. It's the same with gold, but each asset class has its own cycles. And that's exactly what I want you to understand. When it comes to gold, you can buy physical bars or use "paper" investment methods. For example, GLD is an ETF that provides access to gold. I just prefer physical gold. Number three is real estate. And the reason I like real estate is because it has real value. You can live in it yourself. You can give it to someone else. The office can use it. The company can use it. Real estate can really be used, because all people need a roof over their heads. And it is also a protection against inflation.
As inflation increases, real estate prices usually increase. Additionally, many people buy real estate on credit, and if you don't take on the maximum possible debt, refinance it in a timely manner, and use it strategically, you could lock in payments while inflation depreciates the value of your mortgage. After all, if you bought a house 25 years ago, and you bought an average house, your mortgage payment might have been only a few hundred dollars a month. Today, that same house would cost you a few thousand dollars a month, but if you didn't refinance, you're still paying the same few hundred dollars. So, you can use inflation to your advantage, which makes the mortgage actually cheaper because it reduces the value of
the dollar, but you fix the amount of the monthly payment thanks to a 30-year fixed-rate mortgage. Again, I love physical real estate. You can go out and buy a rental property yourself. You can buy real estate this way or use paper real estate like VNQ. VNQ is an ETF from Vanguard that provides exposure to the broad real estate sector, or you could choose something like SCHH. This is another ETF. It is created by Schwab and also provides broad access to the real estate industry. And with these real estate ETFs, you also get dividends, which means cash flow, because you are investing in the real estate industry. Next we have number four: dividends. I am a fan of cash flow
. And again, I'm not forcing anything on anyone, but I like investing for cash flow. In the stock market, this means companies that are not only profitable, but also generate large profits that they pay out to their investors. You receive a cash payment , usually every three months, in the form of dividends. It's just money that gets credited to your account. I like it because it's a so-called value investment. Many people don't like them because they don't grow that fast. They are not that exciting. This is not Nvidia, AMD or SpaceX. These are rather lesser-known companies such as Johnson&Johnson, AT&T and other similar corporations. Again, I'm not telling you what to invest in, but these are what are called dividend companies.
The advantage of these dividend companies is that they can pay solid dividends that grow year after year, creating a new source of cash flow for you And I mention dividends because when people are worried about market crashes or economic downturns, where do they turn They are starting to move away from riskier, fast- growing companies and toward more stable, high-profit companies because they have large profits and can weather downturns more easily than companies that relied solely on investments and large debts. Therefore, during downturns, dividend or value companies tend to fall less compared to fast- growing, high-risk companies. If you want to access dividends, there are several ways to do so, but
among ETFs, one example is SCHD. For the sake of disclosure, I will say that I personally invest in SCHD. This is an ETF created by Schwab that provides access to companies with high dividends, or more precisely, to strong companies that pay and increase their dividends year after year. Another option if you want something more niche is NOBL. This provides access to the S&P 500 Dividend Aristocrats, which means, first, you must be part of the S&P 500, one of the 500 largest companies in the stock market. Second, you must be a dividend-paying company. And third, you have to be a dividend aristocrat, meaning you have to not just pay dividends, but increase them every year for the past 25 years. So this is a very short list.
You won't get huge dividends here, but the idea is that you get a steady income by investing in the best of the best in the dividend space. And the fifth option is simply investing in the economy as a whole. It could be something like the S&P 500. There are many ways to invest in the S&P 500. One example is VOO. For the sake of disclosure, I will say that I personally invest in VOO. Another example is SPY. Both of these funds give you access to the S&P 500. This is a group of the 500 largest companies in the stock market. We see that every time there are market crashes, the S&P 500 falls. But historically, the S&P 500 has grown by an average of about 10% per year over the past 100 years. So this is a proven way to invest your money in the American economy in a
broad sense. It fluctuates up and down, but it is a proven method of investing and accumulating capital over time. As for me, when it comes to these types of broad market ETFs, I follow a strategy called ABB, " always buy," which means I set up a system. For me, it's weekly, but it could be weekly, biweekly, or monthly. You simply buy assets in the market regardless of whether the markets are rising, falling, stagnant, booming or bust, whether Republicans or Democrats are in power-it doesn't matter. You always buy. You do this for years and decades, and it's a proven way to accumulate wealth over time. When I first started learning about money management, I avoided using a credit card because I thought credit cards were something bad
and evil. And then, when I realized that I knew how to manage my money and wouldn't spend what I didn't have for the sake of bonuses and points, I realized that I could get more cashback; I can earn more rewards and points without doing anything other than making transactions that I would have made anyway using a credit card instead of a debit card. That's why I partnered with my sponsor Finance Buzz to put together an article about some of my favorite credit cards. And now a warning. If you don't know how to manage money, don't use a credit card. But if you're confident using a credit card, in this article with my sponsor Finance Buzz, I review some of my best credit cards based on different tiers. If you have
credit card debt and want to pay it off faster, I'm talking about some of the best 0% APR cards. This will give you the opportunity to deal with your debts faster without accruing any interest during the 0% APR period. I'm reviewing some of my favorite cashback cards so you can earn more points and cash back when you spend them on regular purchases. I review some of my favorite travel cards for those of you who travel more often and earn more. And then I also talk about some of my favorite business cards. So if you're good with money and comfortable using a credit card, you can check out my top cards right now in the free article linked in the description. So, in this video, we talked about how the two times the Federal
Reserve has done this kind of reversal in the last 60 years led to a recession and a stock market crash. We are now witnessing a similar situation when, during the 2020 pandemic, the Fed lowered interest rates to stimulate the economy. This, in turn, caused inflation. Then, from 2022 to 2024, the Fed began raising interest rates to combat inflation. In 2024, the Fed declared that the inflation problem was over. We have overcome inflation. So the Fed started lowering interest rates from 2024 to 2025. But then, in 2025, the Fed said: oh, inflation could become a bigger problem. In 2026, the Fed began raising interest rates again. This cycle of lowering and raising rates, as we have seen before, leads to economic recessions. As inflation not only becomes
a problem, but higher interest rates slow the economy, causing a confidence issue for the US dollar, forcing the Fed to raise rates even further, putting pressure on the economy. The difference between today and the past is that today we have a much larger public debt, not only nominally, but also relative to the size of our economy. This makes higher interest rates more expensive, which makes people ask: what will this mean in the future? Because although history does not repeat itself exactly, it has its own patterns. In the 1970s, the best asset was gold.
Why? Because everyone was panicking about the dollar and its possible collapse. But that didn't mean gold outperformed other assets in the following decades, as it actually started to fall. Why? Because people decided: maybe the dollar won't fall. Maybe inflation isn't such a big problem. Between 1970 and 1990, we saw stocks outperform all other assets because people wanted to own a stake in where the money was going. So as an investor, you must not only understand what happened in the past, but also know how to apply it now. So we discussed different ways to invest your money. This is not a call to action, but just a way to learn to think like an investor. First, always have " dry powder"-free funds. This way you
can take advantage of the downturn to buy investments when prices are falling. We talked about ways to earn interest on your savings, whether it's through a high-yield savings account or through Treasury bonds. This way you earn interest and don't pay state or local taxes. Then we discussed investing in gold. People are very fond of gold, hoping that it will make them rich. I like to think of gold as a way to store hard currency. Next, we talked about real estate, not only as a hedge against inflation, but also as a way to create cash flow, because people need housing. Then we discussed investing in dividends, as these are valuable assets that people pay attention to, especially during downturns, and which can provide a
steady income. And the fifth is simply investing in the economy as a whole. If this video was useful to you, the best thank you would be a recommendation. So, if you can, share this video with a friend, family member, colleague, or other investor. This way we can continue to spread this kind of financial education. Thank you For years, AI companies have overcome all obstacles, their stocks have been rising steadily with no signs of stopping, and people have been saying that AI stocks can't go down. Well, the AI bubble just burst. Not here in the United States, but in China, where AI stocks have fallen 40% in the last few
