Why Did The Market Crash? - Was This Just A Pullback Or The Beginning Of Something Bigger?

Why Did The Market Crash? | Coffee With Markus | Episode 86

Intro: 00:00
What's Happening In The Markets: 0:27
Why Did The Market Crash: 0:55
Deep Dive Q&A 15:17
Q: What is your thought on writing covered calls on SPY. As you know SPY has options expiring M, W and F of each week. ROI will be between 4-6% a month if you sell calls every 3 times a week. 16:15
Q: Markus, but in order to compare EPS between companies you should do it in %, no? 17:12
Q: Is a crash in November likely? 18:45
Q: Wow...TSLA is crazy...AMZN is a cash machine, but TSLA is just a bubble (personal opinion): 19:22
Q: How is it that indices are at or above pre-pandemic highs, even though many parts of the economy are still decimated 20:22
Q: Markus did you get filled on TQQQ Call? 22:16
Q: Hi Markus, I received an email from you this morning about Steven Brooks options trading services. Was that really you or has your email been hijacked 25:06

Last Wednesday I went live the day before the beginning of the sell off, warning that something like this was likely to happen very soon...and the next day it did just that.

So why did we such a violent sell off? Was this technically a "market crash."

And maybe even a better question for today: Is this just a bounce before the next sell off?

Well that's exactly what I plan to discuss. Why Did The Markets 'Crash'?

First off, let's talk about what are stocks.

In short, a stock share is a little piece of a company that they're offering as a way to raise capital in lieu of taking out a loan from a bank.

Let's take a look at AAPL. Right now AAPL has 17.1 Billion outstanding shares. Now let's talk about another company that's been in the news a lot lately, Zoom Communications (ZM).

Zoom has 194.76 Million shares outstanding right now.

Now that we have the number of shares they have I want to discuss the EPS, or Earnings Per Share.

For AAPL their EPS is: $3.30
For ZM their EPS is: $0.78

Now as you can see AAPL is far more profitable per share than ZM and I think that it goes without saying why.

The next key metric we want to take a look at is the P/E Ratio or Price Per Earnings. To get this you simply take the price of the stock then divide it by the EPS.

P/E Ratio For AAPL: 35.79
P/E Ratio For ZM: 500.51

Now let's take to see what is normal so we have a baseline.

The average for the S&P 500 is: 29.28.
The average for the Nasdaq is: 27.04

Now let's take a look at the top 7 company's P/E Ratio. These 7 companies make up 50% of the Nasdaq 100:

1) AAPL: 35.79
2) AMZN: 126
3) MSFT: 37
4) FB: 33
5) GOOGL: 34
6) GOOG: 33
7) TSLA: 907

So if take a look all of the companies are currently trading above the inde average with both AMZN and TSLA way above.

If hedge funds or big institutional investors look at this and only take profits on the these 7 companies, it can and did send the overall markets lower.

So over the past few days this has (in my opinion) just been profit taking, but that money is just moving out of some overvalued stocks into some others.

This was really more of a correction than a crash and I wouldn't be surprised if we continue to see higher prices in the coming days and weeks.

#whydidthemarketcrash #stockmarketcrash2020 #stockmarketcrashfall2020
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Видео Why Did The Market Crash? - Was This Just A Pullback Or The Beginning Of Something Bigger? канала Markus Heitkoetter