Hello everybody, Kirk Spano. It is February 5th, two days before I can't drive 55 birthday. I will be officially eligible for senior discounts at most major retailers.
I want to show you the liquidity of the market as I see it and I've got some questions from people in the chat rooms who don't really understand what I'm talking about so I want to explain it. Liquidity is generally measured by global M2 and central bank M2, in particular the Federal Reserve here in the United States. But really, because we are still a very interconnected global market, the global M2 of the four major central banks, which are the United States, Federal Reserve, ECB, Japan, Bank of Japan, and then Bank of China.
So those are the four major liquidity providers in the world. So. When liquidity is going up, the stock market tends to go up. When liquidity goes down or stops going up, really it just has to stop going up, asset prices tend to stagnate and correct. So what you can see is that the central bank money supply really was on a pretty basic curve here for a very long period of time and then jumped during COVID.
And since COVID, he had a little bit of a pullback. and then some choppiness. And interestingly, M2 was affected by the United States refinancing our debt at very short durations.
So the money didn't really come out of circulation, didn't really negatively impact the money supply. So if Janet Yellen hadn't used two-year treasuries, which are coming back into the market now, then this little uptick the last year would not have happened. So normally with what was going on with... quantitative tightening, you would have seen this trend from here to here continue.
But Janet Yellen basically turned it all into short-term debt that recycled quickly, and the money supply actually ticked up a little bit into the election. Hmm, there's a lot of conspiracy theories about that in Congress. I think it was really just a prudent thing to do, because why would you finance your debt at longer-term higher interest rates at a period when... interest rates had just risen. And the idea is that we should get a chance to refinance a point or two lower, which is important for servicing the debt at some point, right?
Eventually there's a recession and you refinance lower by a point or two that saves you tons of money on the debt service to the national debt, which is now the second biggest contributor to debt service, to all bills paid by the federal government. Right now, just as a side note, you have Doge out there and Musk is messing with systems and payments and they're offering ways for people to retire early, essentially. It's mainly early retirements.
And they're going to try to cut the federal workforce by 10%. I want you to understand that that is less than one half of 1% of the federal budget. So even if 10% of the people walk in there, nobody is hired in those places. You're looking at...
a half a percent of the federal budget. Good. But right now we're running a deficit of about seven or 8%. So there's a lot, a lot of savings that needs to be done.
You can get about two points back of the debt service by having interest rates fall by two percentage points. So I keep talking about how we need the five-year treasury to drop down to about 3%. If that happens, then suddenly we're only running a deficit of about 5%.
5%. If we get rid of most of the stimulus that's left from the Biden bills for infrastructure, then they really shouldn't get rid of that one. But even if you get rid of a lot of the solar and EV and wind incentives, if you stop giving the semiconductor companies money, which honestly, if you think it through, it makes sense for us to have a strong semiconductor industry. But if you're going to put up tariffs, they're going to come back anyway.
So. I think they can probably knock another one or two points off. I think Besant, whose goal is to cut the deficit by three points, I think he's going to pull that off. I think that that's doable.
I don't think you can get to a balanced budget without higher revenue sources. The tariffs can't raise that money. We still produce almost two-thirds to three-quarters of what we consume. So the imports that can be subject to taxation really is only a few hundred billion dollars a year, even at 10 or 20 or, you know, 10 to 25 percent, depending on, you know, if you exclude food and energy and things like that.
But there's not trillions of dollars to be raised. There's hundreds of billions. If you keep nickel and diming and you have efficiency and the economy grows 3%, which I think we can do that too, then it all works out. But it's this transition period where liquidity is flat and we're pulling money out of the system. If the government's budget shrinks, that's less money into the economy, which is recessionary.
It doesn't mean we'll have a recession, but it's downward pressure on growth. So this transition period this year. Elon Musk said that we'd have some pain on the front end, and frankly, I believe him.
Now, does it work out down the road? I think probably it does because, hey, America. But I don't want people to get into the rah-rah rhetoric mindset, either positive or negative, left or right, pro or con.
What I want you to try to do is just think through the scenarios. Game it out. If you watched. Billions, and that show just ended about a year ago, if you watch the show Billions, and I really think you should all watch it, at least up to when they turn it political, but the first four seasons or five seasons of Billions, if you really kind of wanted to understand how high finance worked and how they're using algorithms and machines and a little bit of inside information, which is all pretty much true, it's co-written by Andrew Ross Sorkin, who's an insider, you kind of get an idea of some of the things that I talk about. And Honestly, I didn't know about this show until in the last year.
I just never watched it. And so I watched it and I binged it over the last couple of months. I was like, oh, wow, I should have watched this from the time it came out. But the ideas that you need to think through are how does the machinery of the system work?
How do we see liquidity start rising again? And growth would necessitate the banks to let liquidity. go up until there was an inflationary problem because the system would demand the money. One of the things that is going to be a downward pressure on liquidity this year is something that is theoretical. And I say theoretical because it's never happened in my career, but the econ 102, that's the macro class, right?
Econ 101 is micro. Econ 102 is macro. Crowding out. Crowding out is when the government...
takes up so much money from the financial system that private enterprise doesn't have money to borrow and build business and do building and that sort of thing. So crowding out has never happened in my lifetime. Maybe as a kid, it kind of did in the 70s, but it really hasn't happened. And back then there was hardly any debt.
So we've never really seen crowding out in the United States. We've seen it in emerging markets, saw it in Greece. I don't think we're going to see a lot of crowding out in the United States because it's still, again, America. But there is going to be some pressure that kind of stalls the system for a little while, I think.
And if you're taking a look at the flatness in employment and the flatness of inflation, which it's good to have inflation come down. But if it goes down too much, then that's a problem, too. Right. You need balance. And then finally, if you take a look at corporate earnings.
Only 60% and about half of the companies have reported so far, only 60% of the companies have beaten their estimates. That's three out of five. Normally that number is four out of five. So we are starting to see softer revenues, softer earnings.
And remember, those expectations are pretty well managed, right? They're managed so that the companies beat them. So if all of a sudden managed expectations aren't being met by 40% of the market, that's probably not a great sign for corporate earnings growth later in the year. So at some point, I do expect to see a stock market correction. Here's a couple other charts that can maybe bring that home.
The United States, the blue line, has seen our market cap divided by M2 money supply just surge in the last couple of years. And part of that was the two-year treasuries that Janet Yellen wrote that kept the system liquid into the election. I'm not saying she did it for political reasons, but at a minimum, that was a byproduct.
Other markets you're seeing come down, Hong Kong getting whacked. And frankly, I'm not a big Chinese stock guy. But there might be an opportunity there in the next year or so when liquidity starts to go back up. And somebody was talking about buying individual stocks. I said, I won't buy individual stocks in China because you don't know which company is going to get on the wrong side of the Communist Party.
But if you buy the sector, if you buy K-Web, if you buy some of the other funds that have Chinese exposure, you can get the benefit of this probably double bottoming or triple bottoming. And. And then coming back up would be my guess. And it might not get back to a triple bottom, but, you know, at some point it starts to rise again.
Some of these other markets are interesting. Brazil is the brown line and they're in a crisis right now. So Brazil is probably something, you know, see it over here and now it's way down here.
I think Brazil is a country that we need to keep an eye on. And South Korea, you know, South Korea has not been doing so well. And I think that that's probably.
a country that we might want to take a peek at. I think Brazil is probably the one I'm most interested in because of the combination of better governance compared to, say, China. We don't have to worry about a dictator too much over there. They have great natural resources as opposed to China, which is short on natural resources.
And they have a much better population mix. They have a lot of technology. I don't know if it compares to China.
But they have all the good things you want. A younger population, skilled resources, kind of a rule of law, you know, all the light versions of what the United States has, I guess. But valuation wise and the fact that they have a thriving financial sector, I think probably we get a chance to see some sort of big rally. Right. It's happened before.
It happened over here. Happened over here. This.
beatdown on Brazil is probably leading up to a big rally. And when money supply starts going up and as the dollar drifts down a little bit, I'm still a dollar bull. I just think maybe we're at the top end of the range right now. As the dollar comes down, that's good for emerging markets. This is another valuation measure.
I've showed you valuation measure after valuation measure. The stock market, the United States stock market is the second probably most expensive in history, third at... at the least, and it might depend on the measure you're using.
It's between first and third most overvalued in history. And this is just another way of looking at it. This is the market cap divided by M2. Only 1999 got higher. The same story plays out in commodities.
When you're not seeing big growth in money supply, this is year over year growth, you see commodity prices also react. So as this bottoms out and then starts going back up. you'll see commodities start to go back up. I've been watching Freeport-McMoran. That's one of my bellwethers for commodities.
And Freeport-McMoran has come down quite a bit, but it's just kind of in the middle of its 20-year range. If we get a moment where there's a sell-off and Freeport-McMoran ends up at 15 or 20 or something down there, it's going to be a screaming buy because the demand for copper is huge. And the ability to open up more copper mines is expensive and difficult. So if we can get Freeport Mac Moran at a five-year low or a 10-year low, it's kind of a no-brainer.
I loaded up on it in March of 2009. I think I made 150%. That was in a year and a half. It's one of the easier trades out there.
So keep Freeport Mac Moran on your radar. If we get a... fear of recession sell-off.
And I'm not saying that we get a recession, but I think we at least get the fear of recession. And if we get that fear of recession sell-off, Freeport-McMoran is going to be something we want to take a look at, as well as other stocks. And most of the stocks that I'm looking at are companies that have higher beta, right?
We're 40% cash right now, give or take, and I have that short position on as a hedge. We want to buy beta. When the market has a crash, you should already be out of beta, right?
You should already be out of volatility. And then you want to buy volatility near the bottom. Why? Volatility works in both directions, right, Shooter?
Yep, exactly right. I just sent you a chart, by the way. Okay. So what we want is to see stocks that will go up more than the stock market when the next uptrend begins. And high beta is the way that you do that.
So technology, some commodities. Things like that. Probably Bitcoin.
And speaking of Bitcoin, this is another variation of that chart that's out there that shows the correlation of Bitcoin to money supply. So that's pretty clear. I mean, it's an echo. It's a shadow, right?
So. If money supply has one or two more ticks down, then probably you get Bitcoin coming down in that 60 to 80,000 range. I don't know exactly where, but the longer term story for Bitcoin is still that I can't figure out a way that it doesn't go to about 300,000 by the end of the decade and could go higher.
So the story on Bitcoin, for those of you who haven't heard it, don't quite have your head wrapped around it yet, is that Bitcoin is taking on the role of digital gold. It is starting to fill that function in the international settlement system. And when I say that, what I mean is that when OPEC sells oil, or some country sells grain or potash or whatever, when these giant international settlements happen, they don't just get paid in dollars.
They generally get paid in a basket of currencies. or other items in trade. And one of the transactions that took place last spring, it sounds like it was April or May, was Qatar. It sounds like Qatar, but it could have been Saudi Arabia. It was an OPEC country, sold oil to China, and China settled in mostly dollars because that's what OPEC demands, but also a little bit of yuan, a little bit of the euro, and a little bit of gold.
and a little bit of Bitcoin. So while it was still like a 70% or 80% dollar transaction, they had other stuff in there to diversify it. I think it was probably a test case. You know, nobody's copying to it, but the rumors out there are pretty persuasive.
And I think that's what you're going to see with Bitcoin. Bitcoin is a unit of exchange for big international settlements. We're not going to buy her pizza with it.
We're not going to buy her shoes with it. probably not even pay our rent with it or buy a tesla with it i don't know who's buying a tesla now anyway so when you when you take a look at what bitcoin is it is just becoming part of the international currency system and it is in fact backed by something you know people like to say it's not backed by anything that's not true it's basically backed by the same thing that any other currency is the productive capacity of the people who have the currency that that's basically what it's backed by now you can say well but there's no country that says so. Do you really think the countries are the most powerful economic forces anymore? Does anybody truly believe that? If you believe that anymore, then you have not been paying attention since the financial crisis.
The most powerful financial entities now are gigantic financial institutions and corporations. And then the people who become multi-billionaires because of it. So while a country like the United States has taxation and...
a big budget and everything else. The reality is that corporations control far more money and sovereign wealth funds and gigantic banks and billionaires. Right.
So the true measure of a currency is the productive economic capacity of the people who agree to use that currency. The world doesn't have to use the dollar. Right.
That was a deal cut in the 1970s between Henry Kissinger and OPEC. And, you know, there's quid pro quo. And. We've stuck with it, but we already know that that's been breaking down for a while.
China really hasn't taken on any new dollar debt in, I think, nine or ten years. They've kind of gone sideways and drifted down, even taking payment. So the role of the dollar will remain as the core reserve currency, both for transactions and bank holdings, central bank holdings. But it's not going to be.
as dominant as it was in the past. So it'll still be the biggest. It just won't be as big, right?
So think of it like two companies in a duopoly. One has 80% market share, the other one has 20%. Or better yet, think about the way semiconductors used to be, where Intel was everything, and then everybody else was the rest. Well, now it's completely different.
It's all jumbled up, and NVIDIA is gigantic. I don't see that sort of a flip coming in currency. It doesn't mean it can't happen, but the reality is that Bitcoin is going to grow to probably a similar market cap as gold. So around $30 trillion. And right now it's under $2 trillion.
So it's probably a 15x from here. So that would make it $1.5 million. But that might take two generations.
It could take a very long time. It's just hard to say. What we can say about Bitcoin is that it's one. It's...
over 80% of all cryptocurrency in existence by market cap. And it's something like 87 or 89% of all cryptocurrency transactions. So the thesis that Shooter and I had, is it four years now, Shooter, or three years?
Where we said that Bitcoin is going to survive. Ethereum probably survives. Companies or currencies like Ethereum, there will be several more, maybe a basket.
But then the rest of them are going to zero. The rest of them just have no utility at all. It's like those script things that you did between your church. and the community, they have no value, right?
I mean, if the church gets old and people die off and the church disappears, that script isn't going to survive. And I think the same thing is true with virtually all cryptocurrencies. The only value in most of the cryptocurrencies is what do they collect in fees from the transactions that they facilitate? And the answer is less than the software companies that exist today.
So, bye. Pretty much definition of being more efficient than the software companies. Crypto cannot grow to be larger than the SAAS community is right now. So keep that in mind.
A lot of the cryptocurrencies just don't generate enough fees. If you turn it into a price to earnings ratio, these price to earnings ratios are literally in the freaking thousands. So there's not a lot of value in most cryptocurrencies. Three. And a half years ago, I told you that I bought 32 Ethereum.
I sold them to Eric Trump last week. I don't know if he's the one that bought them, but I sold my 32 Ethereum last week. So, you know, it took a pretty good gain. I mean, in three and a half years, it did really well. I think it was almost a 10x.
Honestly, you don't even know. But I sold my Ethereum because I can't figure out, A, if they're going to be a survivor, because I think there's probably better technologies out there. And I want to ask Shooter about that in a minute. But I think that...
It's important to talk about this so people understand the impact on the technology sector, which has been the leader, right? I don't think it's going to be so broad-based anymore. I think you're going to have a more defined set of winners and losers in technology, and it's going to largely have to do with who can properly deploy blockchain technology. And I don't know that the cryptocurrencies underlying Solana. Chainlink, Ethereum, whatever.
I don't know how you handicap that. They become obsolete or not. Yeah, so I'm just getting out. I'm keeping my Bitcoin.
So, Shooter, tell me a little bit about Ethereum versus Solana versus whatever else, Ripple, Chainlink. How small is the basket of winners going to be? 10 cryptos, 20 cryptos?
It can't be much more than that. It's the use case, I think, that's the most important. And, you know, the difference, and I'll just use Link and XRP as a good example. XRP has created a financial ecosystem where Link has created a system of exchange of different types of crypto.
So the XRP base is the current financial system. So that's going to be Bank of America's adoption, Morgan Stanley, Chase, et cetera. They're going to really flock towards XRP because there really is not a...
competitor for them at the moment. But of course, that's all dependent on the more recent regulation that Trump is talking about, you know, driving into these markets. And we get good regulation from a financial aspect that supports digital currencies. Crypto like XRP and LINK will do very well because the mini cryptos will need a form of exchange to get into the financial system through XRP. So both LINK and XRP will grow.
And then the Mibi coins like Doge, for example, really depends on someone like Elon Musk, how much he financially supports its development. And I'm sure there is something going on there. We got a government agency named Doge now.
I mean, that's just like an Elon Musk ploy. I'm expecting something there. Now, the main thing that was very interesting is we got the news that Trump You know, the cryptos are, and I'm forgetting his name, I think it's one of his nephews or sons that's heading that up, to determine whether or not or to make Bitcoin or crypto a reserve asset for the United States. And they gave us a number, basically 100,000 Bitcoin over a period of five years.
Now, I broke that down. So we're looking at it on a day-to-day basis that they're buying Bitcoin, about 67 Bitcoin. coin a day.
And it's supposed to be scaled out over five years, but it looks to me like it's going to be large blocks. I think that scarcity that's created from that engagement, and I think they do do that, unless, you know, they've got to rewrite some regulations so the Fed can actually buy it like gold or other assets. Because currently it's not legally able to buy crypto.
So there's that migration timeline that we have there. So I think survival is going to be like everything else. You know, when Ford first built the car, how many Ford manufacturers, I mean, how many?
manufacturers of bottom mill bills were there. We think back to that time. Several hundred. How many of those survived?
Three? I don't know. I know that the Dodge brothers were investors in Ford, and when Henry Ford gave everybody a raise, they threw a fit, filed a lawsuit, and that is where companies only can be concerned with profit came from, and then they started Dodge. It's one of the reasons why I won't own a Dodge.
But, you know, I'm holding a grudge 100 years later because. You know, they were MFers. All right. So Bitcoin, I want to talk about this a little bit more because I think there's a couple of things for people to think about. And I'll, you know, you'll get my bias here.
I think that Bitcoin is going to get driven up on purpose. Now, I don't know legally how they can do this, right? It's going to have to get through Congress and Congress is going to be hard to get things through, right?
Only takes like seven or eight Republicans to block anything. Well, here's the thing. The vast majority of people aren't really in Bitcoin yet. And if the government can somehow juice this thing, and we still allow politicians to trade in insider information, don't you think they're probably loading up on Bitcoin because they know that they're going to juice it by having the government buy some, right? The whales are accumulating, period.
Right. There's accumulation out there. So this zone in here is probably as bad as it can get. And I almost wonder if I goofed up selling at 99,000.
I don't know if it's going to break this trend line. What do you think about that, Shooter? Is it likely to break this trend line and go down into this?
We're starting to see some divergence between Bitcoin spot and the ETFs. So in other words, there's much more accumulation in the ETFs because Tom, Dick, and Harry, retail investors, are buying in. through you know where they're constantly allocating a weekly percentage and increasing that as the price keeps pushing highs because everybody's afraid of missing the boat so we clearly see that fomo engaging the etfs that's different so i think there's much more stability in the etfs and even if this you know we should have overlaid a a bitcoin spot chart over the ibid chart you would have seen the differential there but it's there is a substantial difference there yeah bitcoin leverage yeah so bitcoin and this is the i shares bitcoin fund which is the biggest one i bet i this is one i use ibit if we can get it in the 40s again you should probably back up the truck be my suggestion i think my number was 53 48 and it sniffed that the other day yeah so you know and it moves fast you must use limit orders good till cancel limit orders don't think you're just going to be there at the minute that it's there right So set your good till cancel limit orders maybe at 53 and 50 and 42 or something.
But I really think that a single digit percentage of your portfolio should be in Bitcoin. Not more because diversification. But I do think that it is akin to the dollar 100 years ago. And the dollar for, you know, everybody wants to talk about inflation and the dollar is devalued. Well, against itself, but not against other currencies.
The dollar has been on a 12-year bull market that I called on MarketWatch in 2012. And I think the dollar is just going to chop along in a range maybe for an entire generation. I don't see it falling off a cliff, but I think that the system is being created partially from Bitcoin, partially from the way international trade is going to change. But I think the dollar is going to be in what I'm calling the millennial dollar range. in the 90s maybe the very low 100s on the dxy which is compared to another basket of currencies 100 being par and i think we're going to trade around par even though our economy is probably way better than everybody else's and we probably should be trading at 130 140 150 but that's bad for trade and it breaks other you know it turns it creates inflation in other places gives them incentives to hate us and So you got to manage the dollar so it doesn't get too high.
And of course, you don't want it to crash because I've showed you those charts before. The dollar crashes. That basically means we're in a deep recession.
So you can't have a dollar too strong because then everybody else gets inflation. And you can't have a dollar too weak because it means we're in a recession. So you got to have balance. And I think we'll be roughly in balance for a long time. There will be a couple of problems that come up.
This transition, I think, will be a one or two year problem. I think. probably closer to one. And I really think that 2018 is the model year for this year. Could be 2022, but 2018 really looks like it to me.
And when we have the debt that they're refinancing this year and next year come due five and six years from now, because that's when it's going to come due, they're not going to write two-year debt again because they don't want to have to do this again during the second half of the Trump administration. So they're going to put this head out to the next president who's going to have to deal with it in 2030 and 2031. And that is the same time that all these deregulatory policies are probably going to stir some sort of speculative boom. And you're going to have the baby boomer retirement crisis at peak and private credit, you know, and the impact of AI on the workforce. And what do we do with all the taxi drivers and everything else?
So. I see the biggest problems five, six years out. It's Bob Bell all over again.
Maybe, maybe. But I just think that at the start of last year, I wrote that article and I titled it A Permabear Sees a Rally, Angst, and Euphoria. And that's exactly what happened last year. We had a rally, a little bit of angst, and then euphoria. But as I talked about with a client today, we haven't seen the post-party, right?
And about one in the morning, everybody's going home. Okay, the party's over, had a good time. Some of the people go, hey, is there an after party? So I think that right now we're on the drive to the after party. It's going to take a while to get there.
The driver probably isn't 100% sober. So, you know, maybe goes down the wrong street or something. Maybe even has a minor accident, hopefully minor.
But they're going to get to the after party eventually. And the after party starting sometime next year when the new Fed chairman comes in. when quantitative tightening is over with, maybe if quantitative easing gets kicked in, which I think on any hint of a recession will happen, then you're going to get the after party. And that's when you get the final euphoric bubble.
And what happens at five or six in the morning when the sun is coming up and everybody's wrecked after being up for 24 hours and polluting themselves? What happens then? You know, most of you have at least seen this in a movie, The Walk of Shame.
This is the morning. Right, The Walk of Shame, right? And everybody's like, I don't know where I parked my car, you know, and they got to get home.
And they're like, oh, my God, I lost my wallet. You know, that sort of thing. So I don't think we've had the euphoric after party yet.
I think that's coming two, three years out. So if I'm right, and this is a choppy year and we get some pullbacks that 10 to 20 percent type and maybe it's more. But, you know, because honestly, I still have no idea how to handicap Trump volatility. But if we get a.
a bear market-ish or a bear market proper, right? If we're down 15%, you know that twice, the decline in the stock market got to 19% in the last decade, but didn't cross the 20 and become an official bear market, right? It was still just a correction.
Both times there was intervention. I don't think you see that intervention at 19% this time. So if it doesn't stop naturally, then it probably goes that next level down.
Kalenic, I think that's the name, Kalenic. who's a guy that used to be at JP Morgan that retired. He was just in market watch.
He said, look, the downside on the S&P 500 is somewhere between $5,500 and $5,000, but there's risk to weigh down around $4,000. That's exactly how I see it. I think that we're looking at a 10% to 20% correction, but there is enough reasonable, identifiable risk that it could be worse.
But we're going to have to start scaling in it. 10, 15% down unless there's big momentum. And that's one thing that I want to emphasize. And that's why I did that article yesterday that you really want to respect momentum in the market.
You can't just say the market should start going up soon. If it's plunging like a knife, don't reach out and grab it. You got to wait till it bounces around a little bit.
So I talked about how these ETFs work and showed... that the momentum ETFs really did pretty well compared to the S&P 500. Let me see if I can find, here it is. Yeah, a number of outperforming periods. Yeah, so. The S&P 500 momentum ETF always beats SPY, always.
Now, it doesn't usually beat QQQ. When does it beat QQQ? If you read the article, late in the cycle.
So when this next cycle starts, you probably just want to jump into QQQ, but then over time, you scale into the momentum ETF to see how breadth is expanding. Because bull markets end when everything has gone up, right? There's just everything is one.
So when you get to 80% to 90% of the stocks that are above their 200-day moving average, there's just not enough juice left in the system usually, unless they're printing money, to keep pushing things up. Do you know why that momentum is skewed? Do I know why it's skewed?
Yes. Why it outperforms the S&P. Because the algorithm is better than the method that the S&P upgrades their index.
They're cherry-picking the names that are moving. It's very much like a trend strategy. Ciao.
So if you look at an ETF that tracks trends, it's going to outperform as well because they're cherry picking the name. Well, the good ones do. There's plenty of bad ETFs out there with good names.
But these are the ones where you can actually chart it and say, oh, look, this one won. And honestly, it's less than one in five ETFs beat SPY. It's actually about one in 10. So there's very few ETFs that beat SPY unless it's QQQ.
Some of these value plus momentum is what they're called ETFs. Otherwise, you have to go to sector ETFs or more non-diversified ETFs to beat the S&P 500. And that's hard to do, right? The easiest way to do it is to peel out the shitty, excuse me, the crummy sectors like consumer staples.
I mean, you should just not own consumer staples. In fact, if you take consumer staples out of the S&P 500. you automatically beat the SP500 because consumer staples always trail the SP500. It's that easy.
You take the Mag7 out, too, of the NASDAQ. Well, in this last cycle, equal weight historically has won, but not since the age of QE. It is during the QE age that we've had the hyper focus in the mega caps, and that is not historically true.
So, you know. Will we leave the QE age? Look at the Enron error. I don't think we're going to leave the QE age soon.
I think we have one or two more major QE coming. I think it'll have something to do with fixing Social Security and Medicare, the big one. And I think we get a little one next year to clean up the banking system.
Teresa? Yeah. Oh, you're just a voice in the sky. Well, and I show my camera, but oh, well, that's okay.
Okay. So. You have a chart in here somewhere for the S&P 500, correct?
No. Oh, you did not? You did not put any charts up?
I did put charts. I didn't think you asked for the S&P 500. Oh, what did you decide to put up and where? Oh, it's on MOSI. It's in the... One moment, please.
I just did several equities that looked kind of interesting to me in the chat. In the chat? All right. Yeah. All right.
Well, then let's talk about stocks here. And actually, Shooter, where is your S&P 500 chart? It's in the rare chat. So, folks, this is how you search for a chart. You just go to search feed and you say spy, if that's what you want to find.
And it'll say zippity-doo-dah. Now, there's two versions of it. Yeah, well, we just want to look at the weekly.
Well, they're different labeling formats. Let's look at this one. What does that mean? What does that mean? That we're on a precipice.
Yeah, it looks like we're on a ledge, right? Yeah, exactly. Yeah. However, I think it's a flat. Right now, you know, there's obviously varied opinions on this, you know, the doom and gloom folks.
And the fact that this is, then you have the folks that believe we're going to accelerate from here and have a huge blow off top up around 7,000, around 700. So with the SPY. Yeah, right now that trend. support line, which is that red line, okay, is roughly around 567. As long as we stay above that, that's the way we should continue.
So we know where the line in the sand is. And, you know, the secondary, the likely retrace is where equality comes from wave one and a corrective leg, barring, you know, unforeseen momentum and FOMO coming into the market. But even if you look at my mound structure, mound structure. based on the extent of this extension, should come back to a list of 78.6, which on that chart is around 553. The monthly target number right in the center of the chart, that is a likely place for us to overshoot trend support first. And I think that holds based on the history since COVID buying the dip.
I don't see that changing. They're just they're coming in too strong. Even when you have a good flush on Bitcoin, they're buying it. I mean, it's just there's too much money coming in.
I mean, it's just stellar strong. You can't fight it. Looking for that article from the JPMorgan Cheese guy. that talks about where he thinks this is all going.
And I want to show it because it jives with what I had to say. I don't know. I can't find it.
I can't remember how to spell the guy's name. But in any case, so in relation to this chart, what he's saying is right where you have your three bars, he's saying that this is like a done deal, that this is going to happen. And he said the risk is down to here.
I mean, he spelled out exactly in an article. to market watch what you're saying in this chart. This is probable.
This is possible. Or I guess this is likely this is possible and could happen, right? If there's a shock to the system, we could end up way down here. But it would probably take a shock to the system. Yes, it would.
It needs everybody running for the exits at the same time. Right. And as I've said, that could happen. And that's what we have to keep our eye on, folks, is. Don't predict it.
Just understand what could happen and then recognize it when it does. If the millennials and the Gen Zers, who are the majority of the new traders, see a trend down, right? If they see this happening and they start shorting with SQQQ and whatever else, they might just push that thing as hard as they can until they're afraid of a margin call.
And then they'll close. And a lot of them think they're smart. They understand the toolbox kind of.
But they don't realize the daily resets on all those ETFs. And that's why if you do use SQQQ or what's the S&P 500 short one? Is that PSX or something? What's the short S&P 500 ETF you use? I'm not recalling.
I think it's SPYL. Okay. Well, whatever.
Whatever. Teresa, are you using a short S&P 500 fund? I am not.
When I want a short, I just go to the futures market. Yeah, I basically go to the NASDAQ SQQ or TQ. Okay, well, Larry says it's SPX. It is, but you've got more room.
If you look at your percentage and change, NASDAQ is always more than the SPY. This week we had one day where the SPY was more, or the S&P 500 was more. But like 99% of the time, the NASDAQ is going to have more volatility. So you can make a little more bang for your buck by going there. And that's what I talked about earlier, is right now it's beta sells off.
But then beta also rallies. So you want to be out of beta. You can bet against beta, which is QQQ. So the downtrend in the S&P 500, I own puts on the S&P 500. If a trend develops, I will probably day trade the SPXU.
I'll probably day trade those for downside. Or SQQQ probably because I can follow you. But, you know, because shooter trades. Be careful with SQQ because it's got something rolling in June. April is still good, but June, they're going to be all screwed up.
You can't, don't buy any contracts in June. Well, and I won't even buy contracts. I'll just use the ETF and day trade it.
I'm still disappointed because I think it's splitting. Okay. The thing to understand about leveraged and inverse ETFs is that they daily reset.
So you're not getting compounding by holding through an overnight. So those are strictly day trading vehicles. If you hold it overnight, you better hope the trade goes your way at the open.
So, you know, they are definitely day trading vehicles. Understand the mechanics of the product if you use it. Again, going back to the article I wrote a month ago, if you're concerned about a correction and you want to make a tactical move on your asset allocation to adapt to that, which everybody here, that's what you're thinking. because you wouldn't be here otherwise, I guess maybe just to get some stock picks.
If you're going to adjust your asset allocation, for most people, it's just trim your beta and hold extra cash. And when you think that long-term interest rates have finally peaked, you buy TLT. So I don't think we're quite there yet. We're probably close.
And at some point, we get a correction and you can buy in. So I did a screen and this is just the S&P 500. And I did my weekly screen. And if you take a look at all the stocks ranked by RSI on the weekly, these are the ones that are oversold. And do you remember what we're looking for?
We're looking for red, red, green, because the oscillator is bending up. but the trend is still down. So if we can find red, red, green, we want to take a look at it.
So the first one is Comcast. Comcast has a Wyckoff buy signal. I'm still not buying it.
I think that it can get down to about 30. At that point, I might buy it in retiree accounts. And because it's a business that we understand and think probably is going to hold up, it tends to bottom around 30. It could get down to this one, but in this area, so a little lower on Comcast. And that's... not a growth stock. That's just for retirees who want a dividend and a stable utility-like company.
That's not a utility. But look how far I had to scroll. Freeport-McMoran. I talked about that. It's got a Wyckoff buy signal, but I think that it can get all the way down here to 30 pretty easy.
And if there's a break in the economy, it can go further. Yeah, 25. Yeah, so it can go further. I've got a countdown there.
Yeah, but take a look at these rallies. You know, I bought it for the first time in my career. I guess I have to use the monthly chart.
The first time I bought it was right there. That was pretty good, huh? So we bought this around 10, sold it up here about 30. So I about tripled my money. And it looks like, I don't even remember. I just know it was a big trade.
I don't think I tripled my money. I think I only made about 150% because, you know, I'm a chicken. But look at these crashes.
Look at these rallies. So if we can get... This is the institutional fair value range. So an overshoot, I mean, really an overshoot could take it way down here.
I don't think that happens, but it's happened recently. It's happened recently. So free part macarons is a neat one. If you can get it cheap, you probably want to buy it cheap.
Dell Technologies, who are they taking business from? A little company called Supermicro that I was short on until recently. I covered my short on Supermicro, by the way, just because. It was kind of expensive and I was up, so I took the money. Electronic Arts, I think that that's a pretty good company in general.
And I think probably still gets, you know, bought out at some point. Intel, right? We have a position in Intel and it has a Wyckoff buy signal.
And I think that this is the type of choppiness you're looking for, right? You got a double bottom. Yeah, this is nice. I like this.
I mean, unless the business falls to hell and falls off a cliff. This is going to start grinding its way back up probably in the next year. Yeah. Can you look at the last base on your chart? You can see.
What's the last base? How long was it in comparison? This one, you mean?
Oh, over here? Yeah. About a year, right?
Yep. From here to here is about a year, and it was a triple. So you like that. So this one is one and two. So it could go like this, and it'd be where it goes up, right?
So good one for selling cash-secured puts. There's some premium in this one. It seems to be around its floor.
So this is a really good one to sell cash secured puts on. Devin Energy. Expiration, by the way. What was that?
Sell them into expiration this month. Sell them into expiration? Yeah, weekly or monthly expiration on options so you get your best premium. You are so exciting. I don't like to be that exciting.
Super Micro. So, again, I took my profit because I saw that they might have a rally. And they have disciples. They're dumb disciples, but they have disciples.
I don't want to fight with them. I don't really want to be in battleground stocks, right? I want the easy moves. And I do think Supermicro is at risk of being put out of business. But, you know, that's a hard bet to make.
But look at this. Look how far I'm scrolling without seeing any really good setups. Nucor, Steel.
It's interesting, right? What we've been watching in the news of Steel is interesting. Looks a lot like the Freeport Mac brand chart. You got one more good leg down on this one in Freeport-McMoran. I think these are very, very interesting because they're going to get stimulated by the government.
And I think it makes a W, right? So if we can buy at the bottom of the W in the middle, then ride it back up, you know, two or three year trade. And again, I think you should want to be bullish the last couple of years of the Trump administration.
So you should just be looking for, OK, how bad does the transition correction get here? The volatility, Trump volatility. The Musk weirdness. How bad does this correction get? If the world doesn't end, you probably buy it.
If the world ends, been nice knowing you. Well, just look how few buys there are, right? And a couple of other energy name. I don't even know what Synopsys does.
Cadence Design, I'm sure that's some sort of tech. But there's just very few things to buy. So, lighten up, folks.
You don't have much time. This is... By the next earnings, right, by April, you know, you don't have much time. So if you want to sell one last batch of covered calls, sell them, sell them close to the money.
And I'm talking about basically. large caps. The small and the mid caps are a case-by-case basis, and the catalyst at a small cap and a mid cap outweighs the correlation to the index because they're not in the S&P 500. It is the S&P 500 that's weak.
The small and the mid caps, it's always a pick-em game, right? It's always a pick-em game. So keep that in mind. Teresa, what do you want to talk about?
Well, I agree with you. I don't think there's very many setups. I posted a couple charts in the chat, but I don't think there's anything all that interesting.
I think we've got a ton of downtrends, and I don't think it's smart to fight those. There's some exceptions. MP Materials looks kind of nice to me. This is one of those SMID caps that the market isn't the major thing here.
The major thing here is what the company does. And this chart looks like the market is starting to recognize that. What do you think? So you think that we are possibly at a breakout stage if the market doesn't hold it back temporarily?
I think so. It's broken its weekly downtrend. We've got some, the RSI looks pretty good. I like it. I mean, it could break down, of course, but at least we're not in a downtrend.
I just see most of the charts. are still showing a downtrend. So they might be stretched to the downside. So there's a buy until it gets back up to the top of the downtrend line, and then it's just going to keep going. And there's a ton of charts, actually, that show that maybe there's a buy.
But you could just see the sellers are just right there. One of the charts that I posted shows that really well. Merck or the other one?
Uh, actually it's serious. Serious is, is that, um, it's, it's got a, um, you can see where it's, it's got a breakout that it wants to break out, but it's breaking out right smack dab into a place where we know sellers hang out. Now, I, you know, I don't think in that one that the sellers are going to, unless we just get a huge market swoosh, but I don't think the sellers are going to take it back down very far.
I think it's just going to retest work. broke out and then it's going to hit start to head back up but there's a lot of charts that look like that where we see breakouts but it's breaking out right into a bunch of sellers so it doesn't it doesn't make for very good asymmetry um i'd like iipr is a good example of the opposite maybe so um it shows a little bit what i'm thinking there because we've got a breakout we're showing a breakout on iipr but the zone is sellers is a long ways up. So the risk reward looks really nice on that one. There's not very many charts like that. And IIPR is a little bit attractive because that's such a big risk reward, but it's still in a downtrend.
That's a weekly downtrend. Well, right. It got to here when they lost some leases after COVID and then they lost some leases just now and it got down to the same spot.
So this is basically kind of... bottom of their intrinsic value range. And this is this area here and here, you know, right in there, you know, basically this bar here, it's probably fair value.
This one up here to me is the, what if they ever finally loosen the cannabis restrictions on finance? That's where this goes when that finally happens. Otherwise I think it's in here. But a nice thing about IIPR is you've got a dividend and if a...
I went ahead and I bought a little bit because it's while you're waiting, you've got a nice dividend and it looks pretty good. Right. So one of the things I point out is that the small caps and the mid caps are six months to a year ahead of the large caps and their corrections.
So they're already kind of bottomed out or darn close or double bottoming or triple bottoming. So take a look at this. This started way back in 2022, this correction. Let's pull up Freeport Mac brand. Looks like it's been choppy.
but it hasn't really corrected. You go to Comcast, kind of more choppy, right? The SP500 holds it up.
Now it's finally started to correct. You just keep picking them out. Well, this one fell off a cliff. Reverse into the mean. Anybody know why electronic cards fell off a cliff?
I don't remember why. Did they have a problem with a game or something? Everything reverts. Doesn't matter.
Yeah, so Intel, this one's a year into their correction, but not, right? I guess. This one started a while back too.
But in general, the large cap stocks aren't nearly as beaten up as the small and mid caps. So the small and mid caps, right, you got to understand the definition of margin of safety. As Buffett and Graham described, it is that price is just so cheap that there's not much downside left, right?
And that's why I say. If something gets super cheap, then just ask yourself the question, is it going to be in business in three, four, five years? If the answer is yes, you start to buy it. All right, folks, any questions?
Kalanovic. Yeah, thank you. By March, 550 puts, good hedge. You go even a little deeper. So, yeah, that's the one I own right now.
I don't think I'd buy it right now. I think that's a hedge, you know, small piece. Yeah.
Very much like we've been doing with Bitcoin and Repop. Hedge for risk to the downside? I'm about even on that put right now.
So you could add it, right, if you just wanted to add a few points of protection. I'm not speculating on downside. I'm just, like I said, I'm down to 40% to 50% cash or up to 40% to 50% cash. But some of that is holding cash-secured puts.
Not much of it. A lot of those have expired. I have a few cover calls left. I haven't gotten called away. My MP materials got mostly called away.
I'm waiting for the stock to go under 20 so I can sell puts again. But the March 550 puts on SPY is about 3% of my portfolio, and my cost is a little under $3, so I think I'm about even. And again, I don't have a big position. I'm not speculating. It's just something that will go up if everything else goes down.
Hey, Kirk, as you take a look at energy and specifically . clean energy, but just energy in general, too. I just was tooling through charts and thinking that there's wondering how much longer until we see a turn there, especially a chart like a solar edge.
My gosh, that thing is just gotten killed. Right. So if you take a look at the six month chart, it's stabilized, right?
Right. It's already off its bottom. by 40%. I mean, it doesn't seem like a lot, but it's from 10 to 14 is 40%.
And then take a look at Enphase. I was on Stocks on Spaces and I said, take a look at Enphase because they'll probably have a big move. Let's go look at my, just a four hour chart. This rally here was off the earnings, they beat and then it jumped, right?
Maybe it was this day or was it this day? Yeah, the 25th. Yeah, 25th is what earnings.
So it jumped up on earnings, and then it came right back down. The earnings for this one, the estimate was like 49 cents or something, and they crushed it. But their outlook, I don't think, was awesome. It got lower. Yeah, and it came back down.
So I think that if you just take a look at this, let's take a look, put a weekly chart up here for end phase, right? What do you care about? Only need to go back.
Only need to go back. Christmas of 2018 is when you need to go back to on most charts. Why? What happened on December 24th, 2018?
That was the bottom of the market. So if you go back, you take a look, and now you start adding just the different symbols in the space. F for solar. Who else do you want in there?
Whatever. These are pretty representative. Enphase just killed these guys. So let's get rid of Enphase. Wouldn't spy.
All right. So here's your chart since the bottom on Christmas Eve 2018. That was the bottom, that day. I remember I traded it.
It was a half day. I told everybody to buy that day. We did it in a webinar because it was a Monday. So anyway, here's First Solar. Crushed everything since then.
Big rally here. But look from here to here. I mean, it's down about 40%.
S&P 500. But look at how all these funds, these are the three funds in clean energy, all getting crushed. All getting crushed. That's the finance metrics.
Yeah. So in six years, they've just gotten crushed. It doesn't have too much to do with finance. It has to do with they just didn't make enough money. The cost of money has...
been relatively inconsequential to these companies. I mean, they're not drilling holes in the ground. So just like residential or commercial real estate, the financing doesn't work the same. It is totally different.
It has to do with, did they actually have revenue? And the answer is for a lot of them, no. So the financing was inconsequential because they didn't have revenue, so it didn't freaking matter.
But this sector still has a growth rate over 20%. The growth rate of clean energy crushes the growth rate of the S&P 500, crushes it. So at some point, the survivors of the washout, which has been a long, painful...
washout. The survivors of the washout do very well. This happened in 2012. So what's going on in clean energy now is very indicative of what happened in 2012. And I expect the same sort of thing. The survivors, your Enphase, your SolarEdge, the companies that buy other companies out of bankruptcy, Complete Solar.
Remember, SunPower was a $9 billion company. Complete Solar bought it for $45 million out of bankruptcy. Even if it's only worth a billion.
It's still a billion and complete solar trades for 100 million, right? It's still a 10 bagger. So when you take a look at this industry, it's just like any other industry that got hyper competitive because everybody saw gold and then a crash, just like in 1999. So this is the second time this industry has just gotten wiped the hell out, despite huge growth rates.
So at some point, the survivors make money. We saw it in fracking, right? All sorts of fracking companies went out of business from 2017 to 2020. All sorts of them. And now suddenly, what was the biggest trade in 2021?
It was energy, right? Shooter? Energy was the biggest trade.
I mean, oil went from zero to 100. That's a pretty big trade. So I don't know that you get that type of spike. But remember, who buys stocks? And it's the millennials and the Gen Zers.
There will come a day. when this is in vogue again. And when it happens, it's going to go straight up.
It's going to be two years or three years of Zoom, Zoom, Zoom. And I would say that I think that there's more potential for a positive surprise out of Trump than a negative surprise. I think all the negatives are baked in, right?
They've just gotten crushed. Everybody is basically saying they're dead, but they're not. They're growing 20%, the ones that survived.
So that's my question. And that's... That's what I see is that obviously they did. They ran up huge into 2021 and then just crashed starting in 2022. And look what happened here.
Yeah, no, no. It was just a blood in the streets kind of a thing. And I've just, you know, as I look at these charts, sedge and end phase, they just at some point they're going to start to go.
Yeah. It's been a four year bear market. That's a long bear market for an industry that's growing at 20% clip. Yep.
You know? So they just have to put together. I mean, there needed to be less players, right? There just needed to be fewer companies so that the margins would expand a little bit. I mean, this really becomes a margin equation.
If you have the revenues, you just got to drive your 20% or 30% margin instead of not making money. All right. ETF question.
You have suggested. getting away from stocks and ETFs to correlate to the S&P 500. I have a 401k with very limited ETF choices. Do you think it would be wise to rotate out of the SPY equivalent into a small mid-cap fund or international fund? Eventually, the international fund.
Probably not a small cap fund because they're Russell 2000 correlated and the Russell 2000 is less than half profitable. So small caps, pick out stocks in your stock portfolio. But the mid-cap fund is where you can find some growth. So mid-cap, whatever your best performing mid-cap fund is, is probably something to get into at some point. Right now in the 401k that I manage, it's 50% cash.
Excuse me. It's 60% cash and bonds, 10% gold, 10% the ARK internet fund, because I can't get a Bitcoin fund in there. Otherwise I would have had it. And then I just have a little bit of diversification and QQQ and some other stuff.
But. because I just can't be zero equities. But I do think that you should be somewhere in that 40% to 60% non-equity range.
Cash, return of principal above return on principal every now and then. This is then. And just be prepared to invest in the future. I think you can buy SPY back or if you have Vanguard growth or something like that, that's better. and then a mid cap fund.
And honestly, in 401ks, you don't need six funds. You need two or three, maybe four. And the international, I think you're going to want to have 20-ish percent of your money in at some point, because as the dollar drifts down later in the Trump term, that'll be very good for international stocks. But the United States is still where most people want to invest.
Do you view IEI as a cash? equivalent. No, it's not cash.
It's three to seven year bonds. What you're earning in interest is similar to what you'd get in a good money market account. I don't know what you have available to you. But the reason I own it.
It's because Buffett has plowed into it. I have learned over 30 years, if Buffett plows into something as a major part of his asset allocation, there's usually a pretty damn good reason why he did it. And I think the reason is that that part of the curve is relatively stable. And if they do cut interest rates and they do start having recessionary pressure, those rates will actually come down and you'll make a 5% to 15% capital gain for one year. So that's why he does it.
Remember, those are the bonds that finance building, right? That's where commercial loans come from, right? Commercial loans aren't 10 and 20 and 30 years like a mortgage. They're one and two year building loans and then five year notes.
Occasionally, you see a 10 year note. You got to have a really good banker friend to get one, right? Right, Shooter? How often did you see a 10 year note on a commercial development?
Not. Yeah, almost never. So they're all five years. Any thoughts on ETF BTGD? Anybody know what that is?
That's my thought. What is it? B2 Digital. Is this seriously a penny stock? I don't know what this is.
This symbol's got to be wrong. B-T-G-D? Oh, I put it in D-G. B-T-G-D, not D-G.
All right. I thought it was a joke. Oh, look at that time frame.
This is a one-year-old fund. X, X, you cannot buy new ETFs. Don't do it.
Look at the assets under management, $28 million. I know people with that much money. Get the hell out of there.
Don't ever buy an illiquid ETF. Don't do it. No.
No. No. I buy them all the time.
Yet. Nunca. All right. Any other questions, folks?
You have one. I'm looking. I don't see one.
Yeah. What about AI? Where do you see that?
No, you were supposed to ask me about AI. Oh, hey, sure. What about the AI that you built?
Well, you know, right now you're watching a video and you think it's me and AI is generating the whole picture. Really? No, I'm messing with you. I was going to say, would that make you look better? Actually, it's pretty close though.
So, no, very exciting stuff in AI, I have to admit. I worked on a model today. after the close.
And the ironic thing is, you know, I used to, you know, in the past couple of weeks, I looked at artificial intelligence as, you know, hey, this is a great tool. It really simplifies your life. I've now figured that I've become about 200% more productive or more to the extent where some things are 100x. I was not capable of doing them before.
I didn't have the time to do them. I couldn't look at the collective. You know, what I've been doing over the last really three months at this point is perfecting what's called prompting, which is your conversation with artificial intelligence.
You end up having a dialogue and you back and forth discussing a topic, drilling down, looking at academic. Well, even simpler, you can go into every academic university now and get a collective opinion about a specific topic and then you can drill down with that. So. What I've been working on is I've been inserting my charts, my trading strategies, and I'm sure some of you have noticed that some of the things I share on my charts and, for example, in my AI risk model have changed dramatically, and that is because of AI's opinion on that. And, you know, ultimately the game plan here is to be able to load every stock symbol in the world into a system that scores it and can pick out...
candidates, for example, short squeeze, or for example, pick out all of the three drives. And I think I'm fairly close to that. Right now, my timeline on my modeling and programming that I'm working on now is about six to 12 months, and very extensive. We're going to be bringing a couple of things to market that are related to that that are very exciting.
And of course, you folks in Fundamental Trends are going to have access to many of those features, those tools. we're trying to make that a little more direct, a little more interactive, where you can just click a button and do it versus having to track a lot of things, because that's ultimately what I'm trying to accomplish with AI is make it so I don't really have to spend as much time tracking it, but I get the same results or better or improving those results. And that's really sort of the idea there.
But, you know, I would welcome any input on whether or not stuff that I'm posting is helping you, if it's improving, you know. I really would appreciate that engagement as much as you guys would like to do. So what specifically did you just build? You showed it to me.
Yeah, that is an AI modeling screening format for primitives that ultimately. The fact is, for example, I can go back and I can look at Paul Tudor Jones or I can look at what George Soros did in his life and create a model off of that specifically. And then the system that I'm working on right now will rank all of the investors and traders together and basically compare what they've done right versus what they did wrong or how they can improve upon that.
So basically, I'm building a large language model, which takes all that information into one place. where we can teach it to give us a result based on those particular strategies or a combination thereof. And much more in depth than that, but I'm even looking at a ranking system of investors and traders and hedge funds, etc. So I'm looking at the whole world in a heat map, just like we look at a heat map of stocks where, you know, hey, if George Soros has been right, he's really been trading and 90% of the time his stuff's working.
Why is this stuff working? And then we're going into those AI models, those large language models, and taking all of that data and squeezing it down and saying, okay, yeah, he did this right. Let's add that.
Which is one of the reasons AR, you know, average true range and the MACD histogram has come into my work a little more aggressively, as well as the broadening formation, because AI helped me identify improvements to the current strategy that I'm using that complement what I'm doing. So that model is just. taking all of the charts that I submit and it's scoring them and ranking them.
And then we're setting alerts within the system. Right now it's manual, but at some point we will have that whole alert system automated within AI. Okay. That's pretty amazing.
So I just asked Perplexity how to build something like that. And they gave me a really long answer. So I'm just posting it because it'll be fun.
But. So I learned how to write Python. I don't even remember how long ago it was, 15 years.
And I stopped using it six or seven or eight years ago because what I found is that what I programmed was all right, but it was just as easy for me to find somebody else's stuff that they did better and they did faster and it worked real well. So I stopped coding, right? I stopped coding. And now with AI.
because you don't actually have to write the code. You just tell it what you want and how you want it to be done. I think that what you showed me is pretty incredible. And actually, our AI guy has posted something, so I'll check it out here in a second. I think that with what you were already doing, that expanding the knowledge side of it, right, using the AI to build an algorithm for you, Again, I would just tell people to go watch Billions.
I mean, the money that you can make by just being a step ahead is a pretty big deal. And if we can figure out a way. So, like, I was off in two or three years early on trades.
And I've gotten much better at that, right? We got into Rocket Lab and ASD Space Mobile and Bitcoin, like, perfect. But, you know, a lot of them just chopped.
But if we can figure out a way to exploit the other traders. because I think that in a lot of the trader mindsets, including some of yours, so you've got to police yourself, is you get into the chase. Yeah. And the chase is usually bad unless you started the race early, right? If everybody's already run 40 yards of a 100-yard dash, you probably want to skip that.
Yeah, you want to skip that race. But if you only start one or two steps behind, that's... then go ahead and race. You might not win the gold medal, but you'll finish.
I think that if we can be a quarter ahead of the crowd, that's perfect. And if we are six months or a year ahead of the crowd, that's okay too. You can't be perfect, but you can still be excellent.
If you're scaling in three months to either side of a bottom and you're scaling out three months to either side of a top, you know, for a position trader. That's really good. If you are a shorter term trader, you know, then obviously that all becomes condensed into hours and days. But I think that most of the traders out there, they pile on, they become they become lemmings.
So there is a way to take advantage of that behavior. And that's what we're trying to do is take advantage of the less informed, more emotional behavior and try to get you to police yourselves. Even if you can't do the technical stuff yourself, you need on your end to do the reading, understand why I picked the stocks that I pick.
because they generally have huge upside or very low downside. And when I can get both, I get both, right? So if I can find another AST, Space Mobile, or Rocket Lab trading in the single digits, and I'm like $10 billion, $20 billion, $30 billion market cap, potentially easy, and it's trading at under a billion, right?
That's margin of safety plus huge upside, asymmetry. There are ways to scale those trades, right? If you're swing trading, you don't need...
600% upside. But if you can say, well, there's, you know, there's 50% upside. And if I catch 10, that's a pretty good trade, right? So we want to take advantage of what we know is a very hyperactive gambly trading community that piles onto the same trades because they're sharing information in chat rooms and whatnot, and just use them like a matador uses a cape.
And remember, it's not the red color that the bull goes for. It's the movement. Yeah. So we can use that, right? Or let's do some karate kid analysis, you know?
Yeah. And that's really what I'm doing. I'm looking at the big picture. I'm trying to get the big, like right now, what's in my background. That's the big picture, okay?
I can't look at those screens all at the same time and comprehend what's there. Artificial intelligence can. And it can go to one of those screens and say, hey, now's the time to buy Apple or now's the time to sell Apple.
And it's going to tell us why. And then it's going to compare that to a risk reward model. And, you know, we're going to look at the hierarchy of all of those stocks at the same time.
We're going to know how many traders are talking about Apple, for example, or NFE on social media, every single source. We're going to be able to look at that in a very similar radar window. And really, it's not a huge amount of data to be able to do that. It's just that you have to have the scripting in place and you have to train the AI, which is what's becoming very time consuming at the moment.
But we'll get through that. You have to teach it to look for those things in a fashion where it becomes usable, where you can make that actionable trade off that information. That's really what has gotten me excited and what I'm really focusing on. Because I see the opportunity there.
I see the ability, you know, for example, this week's primary wave article that I put out there, all four names on there ultimately came from that work in AI. And all four of them were up 2% plus within 24 hours. That is, you know, we don't need to stay in a trade very long. If we can just pick four of them every week, they're up 2%.
And we get position for this. And as for the swing traders at rare, you know, like I said, I'm primarily a position trader. I don't do much swing trading. For the position trader, this knowledge on top of the fundamentals that we understand, right?
We've already found the asymmetric upside. Now we're just trying to engineer when's the right time to get in and out. It's helpful, right? It helps us define what the crowd is doing and what the crowd is likely to do soon. And if you can anticipate what the crowd is likely to do soon, you're going to win a lot.
And I'll go back to my poker analogies. When I sit at the poker table and when I'm focused, right, I will watch the other players play and I will think to myself, if he does this, this is about what he has. If she does that, that's about what she has, right?
Based on my knowledge of the player, based on their position on the table, based on, you know, what I have in my hands, what I'm blocking. So if we can make that same kind of analysis about the other players in the market, we can find. We can find these opportunities, right?
We say, okay, this is starting to develop into a meme chase. Let's get on early and ride it up a couple hundred percent. And then we can look at it over here and say, they're all starting to flatten out, right? This is probably going to turn up here in the next year or two. So let's try to engineer a good entry because we know it might not go up here again, but it might get up to here and that's still a couple hundred percent.
So that's what we're looking for. ways to beat the S&P 500 with less risk. If we can do that by even a few points a year, that's better than 90% of the people out there. And if from time to time we have a big year because the stock picks are real good, then great. I took a look at my aggregate return over at Interactive Brokers.
Those are the more aggressive accounts. And that was up about 40% last year. And that was with about 40% in cash right now.
And on average... It told me the average cash holding last year was like 23%. So with basically an 80-20 portfolio, I beat the index by quite a bit. And that was on the back of a ton of option selling.
and two really good stocks in Bitcoin, right? So the three big winners are what created the distance between me and the index. All the options selling basically got me the index part. And by the way, I had 20% of my money in cash, which means I was taking less risk than everybody else to begin with.
That's a pretty good way to make money in the long term. And like I said, I have a low threshold for pain, mainly because when my client assets go up, I get a raise. I like raises.
So, you know, you have to understand who you are. There are different things that different people will do depending on how aggressive they are. My personal portfolio was up closer to 70%. But again, I told you, I was like a quarter in Bitcoin.
And then I had, I only owned, you know, I only owned a dozen stocks, but it was mainly in three of them. And Ametis didn't make nothing for me. So it was all Rocket Lab and...
And... and AST Space Mobile, and I guess right before that, Palantir. So you take a look at it and you're like, okay, how aggressive do I want to be?
Do I want to be like Kirk and own 12 stocks in Bitcoin? Probably not. You probably shouldn't do that. But you can own a few ETFs and a nice basket of 12 to 20 stocks, a little bit of Bitcoin. And all you have to do is try in your head to think, okay, is this position likely to beat the S&P 500?
Okay. How is it going to beat the S&P 500? Is it going to beat it by a little bit with a ton less risk, maybe a Comcast?
Or is it going to, and I don't know that it's Comcast, but that's kind of the sort of thing you should be looking at. You know, what's my proxy for the S&P 500? Can I get a proxy for the S&P 500 with less risk?
You know, Berkshire Hathaway is probably the best one. Or do I have a basket of a combination of dividends and a combination of high upside, right? Because if something's paying a dividend, it probably doesn't have a lot of upside. And it's just the way it is. Those are more mature companies in most cases.
But those mid-caps in particular and some of the small caps, man, all you got to do is answer the question, will they be in business in a few years? And the answer is yes. And you take a look at that total addressable market, like for AST Space Mobile, you just can't, you can't not see.
If you do the math on AST Space Mobile, you cannot. reasonably say that it won't be on the S&P 500 in a few years. As a $20 to $30 billion company, easy. And I think it's between a $50 and $100 billion company.
So you create a range of outcomes. Okay, worst case scenario, it gets to about here. How does that leave me if I buy it? 5X? If my worst case scenario is 4 or 5X, I can live with that, right?
So think through what your risk tolerance is. And what really you're trying to do, you're trying to generate huge amounts of wealth. Then you're going to be aggressive with the small and mid caps and probably Bitcoin. If your goal is to just beat the S&P 500 by a few points with less risk, you can almost do that with ETFs and a handful of stocks. Right.
And a little bit, a little bit of Bitcoin the way that they used to tell you, hey, just put 3% of your money in gold. Same thing with Bitcoin. I mean, that'd be the way that I think most people should allocate.
Any closing thoughts, Teresa? You covered it. Very, very, very well. Nothing.
Great webinar. Oh, by the way, on the uranium stocks, I think most of them have run up already. There is one or two out there that I've been looking at.
The thing with uranium is there's really no shortage. And the demand isn't going to come on until the 2030s at the earliest. So it's just a tradable thing.
Uranium's just tradable. And if you take a look at the charts, it spikes, it crashes, it spikes, it crashes. So just keep that in mind.
There's not a lot of sustainable. demand for five plus years and there really is no shortage of supply right because the minute we need a little bit more we're going to open up a mine in montana or canada or something so all right that was long we're going to close shop i'm going to edit this down to about an hour tomorrow and i'll put it out there for you peace thank you everybody thanks hey by the way i don't speak to you between now happy birthday yeah thanks a lot i am uh I'll post the pictures, but I made three giant pasta sauce, Italian sausage, and 80 meatballs yesterday that I'm taking to poker. So it is my grandma's sugo. So sauce, meaning vegetarian.
Ragu has meat in it or was cooked with meat in it. So I've got a ragu, and I've got two ragus, one with sausage, one with meatballs. And then I have the sugo. The sauce. Now you're of what descent?
I'm Sicilian. Yeah. Yes. Sicilian.
So. All right. Yeah, yeah, yeah.
I remember Blue Lake Special. I already can tell it's good because you're talking about it. It is good. You know, the one without the meat actually turned out to be much better than I thought it was.
If I can repeat it, I think it's probably like the type of thing, you know, when you go, I heard about this Italian restaurant. This is the sauce. It's that good.
So. I'm going to, and I think the meatballs turned out really well. I didn't make the sausage. I just bought the sausage at Costco. But the meatballs turned out pretty good.
And I did something that grandma always did and I always skipped. And it turned out to be the right thing to do. Add lactose-free milk to the breadcrumbs in the Italian breadcrumbs, lactose-free milk, a couple eggs. You know, basically an egg for every three pounds of meat.
No. Huh? Virgin olive oil. And olive oil. Yeah, there's olive oil splattered all over.
Yes, virgin olive. I mean, real virgin olive oil. Yeah, yeah. No, I buy the good stuff. One of the ingredients my kid's nanny used to buy.
She was an Italian lady in her 60s. And man, could that woman cook. For about 10 years, she used to make multiple types of soffits and Italian dishes every single week. And it was like, the house always smelled like fresh sauce or pasta. Always.
Very fond. First cold pressed. That's...
Right? That's the magic word for olive oil. First extra virgin olive oil, first cold pressed. If the label doesn't say that, then it isn't.
Because if it is, they brag about it. There's like first cold pressed. She didn't buy any of that. Yeah.
I actually bought tomatoes from Italy for this sauce. And I think it made a big difference. So maybe that was it. All right, everybody. Have a good one.
Thank you very much. Good night, Teresa. Good night.
Good night, all.