Right Now, This is Your Best Opportunity to Become A Stock Market Millionaire

There is a situation quietly brewing in the stock market that almost no one is talking about. The S&P 500, the thing that you've been told your whole life to just buy and hold, might not make you any real money for the next 10 years. It is more expensive today than it was right before the dot-com crash. But, there is one corner of the market that has historically done its very best at exactly these moments. Today, I'm going to show you what can actually make you money. Now, guys, after seeing this data for myself, I'm going to be showing you in this video, it literally, this is no exaggeration, changed everything for how I'm dollar cost averaging from here on out. Now, let me start by being totally fair to the S&P 500. It's the 500 biggest companies in America by market cap. It's one of the greatest wealth-building tools ever created, and Warren Buffett and every value investor out there has recommended it to regular people their entire careers as a method of dollar cost averaging to match the market. For most people, most of the time, just buying it and holding forever is a fantastic plan. But, here's the problem right now. It has gotten absurdly expensive, and I cannot emphasize that word enough. There are two famous measuring sticks for this. One is called the Buffett Indicator, which compares the value of the whole stock market to the size of the entire US economy. The other is a long-term price tag called the cyclically adjusted PE ratio. It is the 10-year Cape, which looks at prices against the 10 years of earnings on the S&P. And both of them are flashing near the highest levels in history. In fact, the Buffett Indicator is pretty much at its highest level ever. Why does that matter? Because of the single most important rule in investing, the price you pay decides the return you're going to achieve. Buy something at a discount, and your future returns tend to be great. Buy the same thing when it's expensive, and your future returns tend to be weak. Even if it's a wonderful business and a great story. And right now, we are all being told to buy at some of the highest valuation levels ever. And guys, it's not just me saying this. A number of legendary investors have been warning that starting from prices this high and valuations this high, the S&P 500 could deliver very weak returns over the next 10 years. Some of the very same voices who warned us before in past bubbles. We've actually seen this before, guys. From the year 2000 to 2012, the S&P 500 was flat. It basically went nowhere. If you look at QQQ, the Nasdaq, it was flat for 16 years. And QQQ was the investment you had to have in 2000 because the internet was changing the world. That's the risk that people are quietly worried about today. For example, Paul Tudor Jones recently said, "If you buy the S&P at this current valuation, the 10-year forward return is negative when you buy the S&P with a PE of 22. That is what history shows." On top of that, Howard Marks, who runs Oaktree Capital, quoted the exact same statistic in a recent memo. Let me show you what he said. JP Morgan published a graph showing that if you bought the S&P 500 index at 23 times the coming years earnings per share, in the period from '87 to 2014, which was the only period we had data on, your average return over the subsequent 10 years was between plus 2% and minus 2% every single time. To the extent that this PE ratio history is relevant, it bodes pretty poorly for the S&P 500. Now, when you look back at history, there's one thing that has quietly done its best at exactly these moments when the big index struggles. Let me prove it to you with some real numbers. Here's a test we ran. Imagine investing a small steady amount, about $100 a month into three things. The Russell 2000, which is an index of about 2000 smaller companies, the S&P 500, which we all know is the 500 largest companies by market cap, and there are a few other rules in there, and QQQ, the Nasdaq index, which tends to have a lot of tech companies that have great growth potential, high returns on capital, and over long periods of time should outperform the S&P. We ran it across different stretches of history, and one pattern jumped right out that changes everything, and that's what I want to reveal to you today. First, look at the years 2000 to 2012, a stretch that started right at the top of the dot-com bubble when the market was wildly overvalued, a lot like today. That's the lost decade that I mentioned earlier. Over that whole stretch, steadily buying the S&P earned you less than 5% a year. That's dollar cost averaging down. But what about the Russell 2000? Guys, about 7% per year. The small companies actually won, and they won because they were a lot cheaper. Their valuations were a lot more reasonable. Now, you might sit there and say, "Well, 2% isn't really a big number." But guys, over a long period of time, that's huge. Over a 12-year period of time with compounding, that's almost 30% difference. Now, look at QQQ. Did better than both. But here's what's interesting. This is the dollar cost averaging method. So, which means if a stock goes like this, you're buying all the way down. The next line is the buy at the beginning and just hold. Look at the difference here. The Russell 2000 did 5.58% from the beginning of this time period, right when the bubble was starting, to 2012, while the S&P did 1.67% and the Nasdaq did -2.55% per year. Why? Well, the Nasdaq fell 80%, the S&P fell 50-some percent, but the Russell just kept doing well. Guys, do you see a pattern here? This is why dollar cost averaging works. If I had told you at the start of 2000 that the next 12 years on the Nasdaq would be a negative 2.55% return, you would have you would have cried. But guess what? If you dollar cost average, you beat both of these. But you had to have the stomach to do that. Now, let's look at the opposite situation. March of 2009, the very bottom of the financial crisis when large stocks were dirt cheap and hated. From that cheap starting point, look at this guys. The S&P did 14.79% annualized to today. Look at the Nasdaq, 20.25. Look at the Russell 2000, 11.32. What's interesting is 14.75 if you just bought at the start of that for the Russell, 16.86 just from the bottom of the 2009 for for the S&P, and 22.28% for the Nasdaq. Guys, these are huge numbers. So, looking at S&P and Russell, it's the same two investments, but the opposite winner. The only thing that changed was the price you started at, the valuation you started at. Start expensive, and the Russell tends to win. Start cheap, and the S&P tends to win. The starting valuation decides almost everything. So, the real question isn't Russell or S&P. It's much simpler. Are we starting expensive or cheap right now? We've already answered that. By both major indicators, by the Buffett indicator, we're near the most expensive levels in history, pretty much the most expensive, well above where we were at the dot-com crash. In plain English, today looks a whole lot more like the year 2000 than 2009. And if history rhymes even a little bit, that points towards the Russell 2000, not the S&P, for the next 10 years. So, guys, what's interesting is I just had a question from one of our producers here, Justin. He said, "Well, Paul, if the Nasdaq's outperforming in both, should I just stick with the Nasdaq?" And I think it's a great question, and here's why. First off, yes, it outperformed, but this versus this, the volatility here, this thing saw an 80% decrease. This I don't think even saw 20% decrease. Maybe it's just gone up. That's the point. Do you have the stomach to be able to see 80% drop and continue buying at the bottom? But I've always said, once QQQ Q falls hard and becomes much more reasonably priced, I'm absolutely adding that to my low-cost ETF dollar cost averaging without a doubt. Without a doubt. Because tech in the future will lead the gains in the market if you pay reasonable prices. So, guys, here is a stock market to GDP ratio going back a hundred years. And guys, it's no coincidence here. I pulled all the data going back, and I said, "Okay, let's go to undervalued to overvalued." And I want to remind everybody, these returns are not including dividends. But the historical 10-year average is 6.4%, which makes sense. You have about 3, 3 and 1/2% historically on dividends, not as of late. If the stock market was 30% or more undervalued, the average return for the next 10 years was 10.7. And as we go along the line to overvalued, 10.7, 9.0, 2.1 -1.2 -2 -2.4 at 50% or more overvalued. Guys, we are currently 140% overvalued to history. Now, there are arguments as to why the stock market GDP ratio doesn't matter because of so much money being made overseas by these companies, et cetera. I get that argument. I understand that. Is that really justifying 140% overvaluation though? I think it's more like we don't want to admit that it's massively overvalued. So, now that you understand why the Russell 2000 is suddenly getting so much attention. Think of the S&P 500 as the giant superstore and the Russell 2000 as the smaller, up-and-coming shops trying to grow into future giants. The Russell 3000 is the entire market. I think it covers like 98% of all stocks that are out there that are really investable. And the Russell 2000 part of it are the 2000 smaller stocks. I believe the average market cap is 3.8 billion, but the median is 850 million or something like that. What's the difference? Well, average you take all of them, get the average, boom. Median means half of them are above and half of them below. What that also tells me is the Russell 2000 is weighted towards the top, of course. So, what is the most exciting part of all this? The rotation that we're talking about may already be starting this year. The cheaper, steadier value stocks are crushing the expensive, fast-growing growth stocks. Value's up about 15% while growth is up only about 2 and 1/2%. This is the widest gap between value and growth since 2022. And the small companies have been hitting brand new record highs. On one single day recently, you could watch the money move in real time. Boring financial stocks jumped about 1 and 1/2% while hot tech stocks fell more than 2% on the very same day. That's part of the rotation. And it's broad. The market is finally widening out. There's a version of the S&P where every company counts equally. It's called the equal weight index. And both it and the Russell 2000 have hit all-time highs while producing much stronger returns. Some of the biggest names like Meta, Microsoft, and Amazon have actually been lagging and by a wide margin. For years, value investors felt left out while the giant tech names got all the glory. Now, for the first time in a long while, the rest of the market seems to be waking up. And remember, there's one core point I want you to remember. Value stocks traded about 14 times earnings, while those growth hype stocks traded almost twice that, almost 30. Now you know that value investors like myself do not group companies by value and growth. To us, it's two sides of the same coin. That being said, the S&P and Nasdaq are far more overvalued today than the Russell 2000. So if money really does start flowing out of the oversaturated indexes and into the cheaper smaller companies, exactly like it did after 2000, the Russell could lead for many years to come. Now, starting from the peak of the dot-com bubble to today, which I would argue are two major bubbles, look at the performance here. You've got 9.85% based on dollar cost averaging on the Russell 2000, 11.64% based on the S&P, and 15.85% on the Nasdaq. Guys, we talk about this all the time. Even buying the Nasdaq, starting at the peak and dollar cost averaging, you'd seen your money drop 80%, you're at 15.85%. Look at this, guys. Look at the returns on the S&P, Nasdaq, and Russell just based on starting from that one day, investing one time, and just watching it. 8.4, 8.2, 8.8. Very similar. It's the dollar cost averaging that gets you the returns, guys. I cannot stress this enough. If you don't dollar cost average, you are missing out on multiple percentages of money being compounded for a very long time. So it's clear. The Russell can win in a sideways market. Guys, the Russell was second when it comes to peak bubble to peak bubble. And my guess is if we have a bad bear market, the 1999 to now, the Russell will win on that one. One of our in-house analyst, his name is Dalton, he makes exactly this case. He thinks the next 10 years could be a long flat grind for the S&P. And guys, I've been saying that for a while, too. But, his big thing is small caps. He thinks that's the place to be, and he's right. It's a smart serious argument. But, to actually win that way, you'd have to guess two things right. When to get in and when to get out. Miss either one and your whole edge could disappear. And nobody rings a bell at the top or the bottom. Even the great struggle with this. Famous investor Mohnish Pabrai made a fortune in small beaten-down companies during the dot-com crash. But, he's admitted his one regret. He didn't recognize when to flip back into high-quality companies once they got really cheap again. If he found the timing hard, what makes any of us think we're going to nail it perfectly? And don't think you can just use valuation to time it perfectly, cuz that's not what valuation is meant to do. Let me be honest with my my own track record. I've been saying this market looked overvalued for about 4 years, and I wasn't wrong that it was expensive. It was, and it still is. But, the price has just kept getting higher and higher anyway. You have to be willing to be patient to sit there and look wrong while everyone else else is making money riding the hype. There is so much emotion and stomach in that. Honestly, that's the majority of the battle. There's a famous chart that shows this absolutely perfectly. It takes 10 different categories of investments and shows you which one actually outperformed each year going back decades. And when you look at it, it's a rainbow of chaos. The winner is different almost every single year, and it looks completely random, cuz basically it is. So, the real question this whole video's about is, do you want to spend the rest of your life guessing what's going to be hot next, and probably guessing wrong, or do you want to own something that does well over decades and stop guessing entirely? Now, guys, real quick before we go further. Our team used a real polarizing title in this video, and please don't take the title and thumbnail literally. We are glad that you're here and thank you for watching, but we're here to play the YouTube game. And part of that is getting you interested in the video and then teaching the lesson later. At Everything Money, we are never going to give you a stock tip. We're here to teach you the process so that one day you were sleeping better at night because you know how to value a stock, make good assumptions about its future, and understand the price you're paying. So, what do you actually do with all this information? For one, you stop trying to be a fortune teller. If you believe, like the data suggests, that the next decade could favor cheaper, smaller companies, you don't have to bet the farm and perfectly time it. You just pick a sensible investment and keep buying it steadily. A set amount every single month, no matter what's hot and what's not. That habit has a name, it's called dollar cost averaging. And here's why it works so well. We saw it right here. Guys, it is boring, and that's what makes it work. When you buy the same dollar amount every single month, you automatically get more shares when prices are cheap, and fewer shares when they're expensive. You never have to call the top, you never have to call the bottom. The market does the hard part for you while you just keep showing up. And over 30 or 40 years, that quiet discipline tends to beat the people frantically jumping from one hot trade to the next. And for those of you who sit there and say, "I don't have 30 or 40 years." Guys, I showed you 10 or 12 years in which it works very well. Where dollar cost averaging into bear markets still massively outperformed the overall market in those time periods. Guys, I do this in so many videos. This is the stock market value over time, but this is the price fluctuation. Dollar cost averaging is very simple. You just buy all along the way. Sometimes you overpay, sometimes you underpay, but over time, you're getting the return. That's what matters here. Now, if you actually want to do this with the Russell 2000, the good news is it's so easy. The most popular Russell 2000 fund is an ETF with a ticker IWM. That's the one with the most investors. There's also VTWO, the Vanguard version, which does the same job for a very low fee. An ETF, remember, is just a basket that holds all those companies at once. So, you can own the whole Russell 2000 in a single click. And guys, the tax benefits are awesome. And to make this dead simple, we put together a free PDF for you. It has the entire study on the Russell 2000 versus the S&P and the Nasdaq. The same charts that I made before, they're in this. Plus, a simple lesson on exactly how dollar cost averaging works. And we break down three Russell 2000 ETFs and give you the details on them. It's completely free. The link is down in the description, so go grab it. It'll be in your inbox in a matter of minutes. Now, here's the thing. The reason most people never actually make money in the stock market isn't cuz they picked the wrong stocks. It's because they never had a process. They were always one step behind chasing whatever was hot. Buying after the run-up, selling after the drop. Does it sound familiar? Cuz it sounds familiar to me. I used to be that guy. The people who actually build wealth in the stock market, they're not smarter than you and I, guys. They just have a system, and they stick to it when everyone else is panicking or chasing. And that's exactly why we built the Everything Money community and our software. Our stock analyzer tool takes any company you're looking at and runs the math for you. What's a fair price? What's the margin of safety? What kind of return could you realistically expect? And here's the key. It's all based on your own assumptions for the future. Not hype, not headlines. It's numbers that you have decided on. Think about what that's worth. One stock that you buy at the right price instead of the wrong price could be a huge difference over 10 years. One stock that you don't buy because the analyzer showed you the price was way too high could save you a lot of money. The tool pays for itself over and over, and most of our members will tell you it already has. You get a community of people doing the exact same thing, sharing research, staying disciplined, and building wealth the right way. So, our current trial is $7 for 7 days, $1 per day to get access to the exact process and tools that separates investors from speculators. So, if you think you're worth $1 a day, if you think your financial future and you sleeping well at night is worth a dollar a day, click the link below and sign up, and you'll see why over 70% of the people who sign up for this sign up for the long run. Now, one last truth that ties it all together. Studies have found that the best performing funds over 10 and 15-year stretches almost all had a period where they were near the very bottom of the pack. Why? Because winning over the long run means owning great things while they're out of fashion, and watching them fall before everyone else catches on. Give me a strong, cash-generating company that's hated right now, like Adobe. People joke about it being down again, but if it keeps growing its cash quarter after quarter, revenue quarter after quarter, eventually people will care again. That's where, for individual stocks, we don't chase. We preach value. I have no idea what's going to happen in the short run, but if they keep doing what they're doing in the long run, someone will care, and the momentum will shift in their favor. Personally, I'd rather bet on the best companies with a long track record than spend my life guessing which trade is hot this month. Anthropic, um OpenAI, SpaceX, any of these companies going public. We may be staring at a decade where the expensive S&P and QQQ disappoint, and where cheaper, smaller companies, like the ones found in the Russell 2000, finally get their turn, just like they did after the year 2000. You don't have to perfectly time it. Build a steady core you're happy to own, and keep buying it month after month. And if you choose to pick individual stocks on top of that, that's where the discipline matters more. Ignore the hype, do the homework, and only buy wonderful businesses at a price that gives you a real margin of safety. The kind you'd confirm with Stock Analyzer. But remember, you're not going to buy at the bottom. If you're not ready to see a stock you bought fall 50%, you shouldn't own it. That's this quote that Warren Buffett has and I love it. But this is the whole game. Not guessing what's hot, owning what's great at the right price, and letting time take care of itself. So, if you want to see how we actually put this into practice, the way we pick what to own for the long run instead of chasing what's hot, we recently made a video walking through all the companies that I personally invested in right now. So, go check out the video right here. Thank you for your time.