Latest / Felix Nikolas Prehn's Podcast / 5 Reasons to Sell Everything NOW + Stock Market News 27 May 2024

Transcript

5 Reasons to Sell Everything NOW + Stock Market News 27 May 2024 · Felix Nikolas Prehn's Podcast

• 0:00
  Speaker 1: Felix here and welcome to this.
• 0:01
  Speaker 1: I was going to say pre-market live stream, but it's kind of premature, isn't it?
• 0:06
  Speaker 1: This very premature pre-market live stream?
• 0:08
  Speaker 1: It is apparently a holiday today in the United States.
• 0:10
  Speaker 1: I have absolutely no idea why.
• 0:11
  Speaker 1: It's also a holiday here in the UK, where I am right now, and have absolutely no idea why.
• 0:16
  Speaker 1: I'm sure somebody's going to enlighten me, but I thought we'd take today as a bit of an opportunity to look a little wider, understand where the market's at, what the risks are, what should we possibly be doing here, and bust some myths.
• 0:30
  Speaker 1: So I take a little bit of banking wisdom, if there's some left in this head, and share it with you and, of course, answer your questions.
• 0:38
  Speaker 1: And should we get cracking, let's get cracking.
• 0:43
  Speaker 1: So appreciate you tuning in.
• 0:45
  Speaker 1: As always, smash the you-know-what, and I'll make myself a little bit smaller.
• 0:50
  Speaker 1: You can see I'm on the screen.
• 0:52
  Speaker 1: So this is what the bears are thinking and there are entire communities dedicated to.
• 0:57
  Speaker 1: The end is near and it's kind of interesting the psychology behind it.
• 1:05
  Speaker 1: So right now they're basically saying to you come on Felix, and come on you.
• 1:11
  Speaker 1: The market's at an all-time high.
• 1:13
  Speaker 1: Yeah, it's true, isn't it?
• 1:14
  Speaker 1: And then they're saying but the US consumer is in trouble.
• 1:17
  Speaker 1: Did you listen to the earnings calls from last week?
• 1:20
  Speaker 1: A lot of the big consumer stocks, like your targets and so on, reporting pretty dodgy looking numbers.
• 1:27
  Speaker 1: Mcdonald's has got the $5 burger back.
• 1:30
  Speaker 1: What's the other one?
• 1:33
  Speaker 1: Burger King, they've just brought back the $5 burger.
• 1:36
  Speaker 1: You could tell.
• 1:36
  Speaker 1: I didn't go to either of those.
• 1:37
  Speaker 1: So you could say the US consumer is in trouble somewhat, and I actually.
• 1:41
  Speaker 1: Yeah, I agree with that.
• 1:42
  Speaker 1: But does that mean the bears are right?
• 1:45
  Speaker 1: I think that's the question we really want to get to here.
• 1:47
  Speaker 1: And then they're also saying look, the Fed's probably not going to cut rates till we are actually in a recession.
• 1:55
  Speaker 1: And you can look at a thousand charts of when the Fed cuts interest rates and when there is a recession, and in fact I'll show it to you.
• 2:05
  Speaker 1: I'll show it to you because I think it's really important to understand it.
• 2:08
  Speaker 1: So you can do this yourself.
• 2:10
  Speaker 1: You can go to tradingviewcom it's a free thingy and you type in US interest rates, okay, and there you have it at the top and you then sort of zoom in.
• 2:25
  Speaker 1: It starts in 1972, which is maybe a little bit far to go back to, but you get the idea and I've got an indicator in the background here in green, which are recessions official recessions, not denied recessions.
• 2:36
  Speaker 1: We had a denied recession last year, but obviously we should talk about that.
• 2:41
  Speaker 1: So what happens when interest rates go up?
• 2:42
  Speaker 1: You see that here in 2006?
• 2:45
  Speaker 1: Well, you get a recession afterwards.
• 2:46
  Speaker 1: Why do you get a recession when rates go down?
• 2:49
  Speaker 1: You don't get a recession because rates go down.
• 2:52
  Speaker 1: You get a recession because rates were too high for too long.
• 2:55
  Speaker 1: The Fed was too slow to cut rates.
• 2:58
  Speaker 1: They didn't realize it.
• 2:59
  Speaker 1: What about 1999?
• 3:01
  Speaker 1: Same story Rates go up quite a lot and you get a recession afterwards.
• 3:05
  Speaker 1: Or in the 90s, right 1998, 1989.
• 3:12
  Speaker 1: Even I was nine years old at the time.
• 3:14
  Speaker 1: I remember distinctly kidding, I was not watching interest rates at the age of nine.
• 3:19
  Speaker 1: That'd be weird.
• 3:19
  Speaker 1: And then you get a recession afterwards, and that happens literally every single freaking time.
• 3:24
  Speaker 1: And right now, interest rates are here and they're keeping them flat.
• 3:31
  Speaker 1: So does it remind you of 2007?
• 3:33
  Speaker 1: Does it remind you of 2000?
• 3:35
  Speaker 1: Does it remind you of the 90s?
• 3:36
  Speaker 1: Yeah, it's the same story.
• 3:38
  Speaker 1: It's the same story and history rhymes right.
• 3:41
  Speaker 1: And the Fed hasn't gotten any smaller.
• 3:43
  Speaker 1: So I think the Fed's going to cut rates too late.
• 3:45
  Speaker 1: I think it's going to cause a recession.
• 3:48
  Speaker 1: Now you could argue about whether the government will spend so much money that there won't actually be a recession on the books, but that's a different story.
• 3:54
  Speaker 1: So people are then saying, well, everything is too expensive, and that's where I take issue.
• 4:00
  Speaker 1: I disagree.
• 4:02
  Speaker 1: I don't think everything is too expensive.
• 4:04
  Speaker 1: I think there are companies that are not very good, that are trading at pretty high multiples, and it's a bit like a story we had in 2021, where everything was kind of on a snowflake.
• 4:19
  Speaker 1: For example, look at that company.
• 4:20
  Speaker 1: I don't get it.
• 4:21
  Speaker 1: I don't get how you can spend what is it?
• 4:23
  Speaker 1: 40% on share-based compensation and your growth is slow and you're trading at some crazy multiple.
• 4:29
  Speaker 1: I don't really get it, but that's okay.
• 4:32
  Speaker 1: We don't need to buy those things.
• 4:33
  Speaker 1: I don't really get it, but that's okay.
• 4:34
  Speaker 1: We don't need to buy those things.
• 4:36
  Speaker 1: Now the next conclusion the bears.
• 4:38
  Speaker 1: And that's where we started.
• 4:39
  Speaker 1: What the bears are thinking not what we're necessarily thinking is that holding cash is the smart thing to do right now.
• 4:45
  Speaker 1: So you can say I'm going to hold cash because I feel safe, I'm familiar with it, just check, you can all hear me and everything else Memorial Day red poppies.
• 5:02
  Speaker 1: Oh, that's it.
• 5:03
  Speaker 1: Beating the bloody Germans, that's the day yes, that's probably why it isn't on my calendar.
• 5:06
  Speaker 1: Beating the Germans to a pulp Memorial Day?
• 5:08
  Speaker 1: No, no, I used to wear poppies when I lived in the UK and stuff, all for it, all for it.
• 5:10
  Speaker 1: It should all be remembered.
• 5:11
  Speaker 1: And I lived in the UK and stuff, all for it, all for it, it should all be remembered.
• 5:14
  Speaker 1: Now, what happens when you hold cash?
• 5:16
  Speaker 1: What's the guaranteed outcome when you hold cash?
• 5:20
  Speaker 1: And I was literally talking yesterday, I had some of my team here in London and we did a whole weekend together and it was amazing and we talked about.
• 5:27
  Speaker 1: You know what happens.
• 5:29
  Speaker 1: You know why are you holding cash.
• 5:31
  Speaker 1: Well, last year, how much did the S&P go up by last year?
• 5:34
  Speaker 1: Does anybody know?
• 5:35
  Speaker 1: Let's have a look.
• 5:38
  Speaker 1: Spx just the last year, one year in percentage points 27%.
• 5:50
  Speaker 1: So the S&P went up 27% and excuse my handwriting because I'm doing it with a mouse S-P-X.
• 5:59
  Speaker 1: I've already packed my pen.
• 6:00
  Speaker 1: Anyway, you get the idea 27%.
• 6:02
  Speaker 1: It's like watching a toddler, right, isn't it?
• 6:06
  Speaker 1: That's what the S&P did.
• 6:07
  Speaker 1: So what happened to that cash you have in the bank account so safe?
• 6:11
  Speaker 1: It lost 27% value.
• 6:14
  Speaker 1: Inflation is not 2%, 3%, 4%, 5%, 7%, whatever you think it might be.
• 6:18
  Speaker 1: Inflation last year was 27% at least, because the people who held stocks became 27% richer and they're therefore able to pay higher prices for that house you want to buy, for that car you want to buy for the holiday you want to go in for that restaurant meal you want to have, and your money lost 27% value.
• 6:41
  Speaker 1: You do this for a couple of years and you're basically living on the street compared to the wealthy, and that's one of the key reasons why we have income or wealth inequality.
• 6:53
  Speaker 1: It's not that they're smarter, it's not that their incomes are even necessarily that much higher, although obviously they are.
• 6:59
  Speaker 1: It's just that the people in the bottom half of the income strata feel more comfortable holding cash, and they might even be in a higher income strata.
• 7:11
  Speaker 1: And it's just because you haven't been taught how to invest.
• 7:16
  Speaker 1: You haven't been taught how to spot risks and opportunities.
• 7:18
  Speaker 1: So you think you freeze and you wait and you hold money.
• 7:22
  Speaker 1: Who loves it?
• 7:23
  Speaker 1: Banks.
• 7:23
  Speaker 1: Banks make a heck of a lot of money out of that.
• 7:25
  Speaker 1: What do they do with your money?
• 7:27
  Speaker 1: They lend it out, they lend it out again, they lend it out again, they lend it out again.
• 7:31
  Speaker 1: It's a cycle.
• 7:31
  Speaker 1: It's kind of what keeps the party going.
• 7:33
  Speaker 1: But from a selfish point of view, you need to be invested Now.
• 7:37
  Speaker 1: Should you be invested with every last dollar?
• 7:39
  Speaker 1: I'm not saying that You're going to have to have a bit of a buffer there, but, quite frankly, if you're holding the S&P, you can sell that thing and 25 hours later you've got the cash.
• 7:51
  Speaker 1: It's pretty liquid.
• 7:52
  Speaker 1: It's pretty liquid.
• 7:53
  Speaker 1: So actually it's probably a pretty good thing to do.
• 7:55
  Speaker 1: So what do we buy when we look at this?
• 7:59
  Speaker 1: So we've agreed, or at least I've agreed with myself.
• 8:03
  Speaker 1: Markets are at an all-time high.
• 8:04
  Speaker 1: The US consumer is heading for trouble, credit card delinquencies, all that stuff, the $5 big mark and all that kind of stuff.
• 8:12
  Speaker 1: The Fed isn't going to cut rates that soon and it's probably going to lead us to a recession.
• 8:18
  Speaker 1: A lot of things seem expensive, though I don't think that's the.
• 8:20
  Speaker 1: That's the right approach to it, because expensive is a relative term, right like?
• 8:24
  Speaker 1: I literally asked someone yesterday.
• 8:25
  Speaker 1: He said to me oh, I want to buy this house, and I said how much is it?
• 8:28
  Speaker 1: And he said it's really, it's a lot, it's really expensive.
• 8:30
  Speaker 1: I said well, what's a lot to you?
• 8:31
  Speaker 1: And he said it's like, it's like at least a million dollars.
• 8:34
  Speaker 1: And I said, okay, how much do you need to put down?
• 8:36
  Speaker 1: And he's like, maybe 200K.
• 8:39
  Speaker 1: I'm like, okay, I know his income.
• 8:41
  Speaker 1: And I said, so, you do?
• 8:42
  Speaker 1: You think you could save up 200K in the next 18 months?
• 8:45
  Speaker 1: And he was like, yeah, like why haven't you viewed the house?
• 8:50
  Speaker 1: You know what I mean?
• 8:51
  Speaker 1: There's so much mindset where we just think stuff's expensive.
• 8:55
  Speaker 1: The same applies to stocks.
• 8:57
  Speaker 1: People are saying Nvidia is expensive, but it actually is probably cheaper than a lot of the other big tech stocks out there.
• 9:05
  Speaker 1: For me and I'll put out a video a little bit later on this, probably today or tomorrow if I get time I think there are some really, really beautiful opportunities right now, and one of them is the whole this comes from Goldman Sachs, so I can't take credit from it the whole AI upgrade cycle.
• 9:24
  Speaker 1: So you have a mobile phone, right, I don't know when you bought it a year ago, two years ago, three years ago, four years ago.
• 9:31
  Speaker 1: If you bought it four years ago, you were in the same boat as about a quarter of a billion iPhone users and that phone's starting to suck, isn't it?
• 9:39
  Speaker 1: It's slow, it doesn't charge for that long.
• 9:41
  Speaker 1: It's got cracks in all directions.
• 9:43
  Speaker 1: It's got sticky tape on the edges to make sure the screen doesn't fall off.
• 9:46
  Speaker 1: And I've been there.
• 9:48
  Speaker 1: Actually, I've got an iPhone that looks exactly like that.
• 9:50
  Speaker 1: And you're thinking, well, why don't I buy?
• 9:52
  Speaker 1: A is going to create apps that we haven't seen yet.
• 10:02
  Speaker 1: It's going to create applications and features in smartphones and in laptops, in iPads, like what Microsoft has unveiled that you haven't seen yet, and they're going to be so freaking good that you'll want them.
• 10:16
  Speaker 1: You'll get the FOMO.
• 10:17
  Speaker 1: You don't want to miss out on it.
• 10:18
  Speaker 1: You don't want to be the uncool kid who doesn't have that feature.
• 10:21
  Speaker 1: You don't want to miss out on it.
• 10:21
  Speaker 1: You don't want to be the uncool kid who doesn't have that feature, and you're therefore going to buy a new phone.
• 10:25
  Speaker 1: So a lot of Wall Street is looking at a whole basket of hardware companies the Hewlett-Packard, the Dell, that kind of thing.
• 10:36
  Speaker 1: Microsoft could be on that list.
• 10:38
  Speaker 1: Apple should be on that list, and I'll give you I'll put a whole list out on it later.
• 10:41
  Speaker 1: I'll make another video on that list.
• 10:42
  Speaker 1: Apple should be on that list.
• 10:43
  Speaker 1: I'll put a whole list out on it later.
• 10:44
  Speaker 1: I'll make another video on that.
• 10:45
  Speaker 1: So just subscribe and so on.
• 10:46
  Speaker 1: There are always opportunities.
• 10:47
  Speaker 1: I guess that's my point.
• 10:48
  Speaker 1: The energy play, I think, is a big opportunity.
• 10:56
  Speaker 1: I think there are some tremendous trades to be had right now because options If you watch me a bit, you know I join on about options.
• 11:00
  Speaker 1: I trade options.
• 11:01
  Speaker 1: In fact, I'm running a live training tomorrow where I will teach you my whole beginner's options training system, the whole system that I apply.
• 11:09
  Speaker 1: You walk away with it, you don't need to know a thing right now.
• 11:12
  Speaker 1: Maybe bullish Apple because people were going to buy another quarter billion Apple phones or something.
• 11:23
  Speaker 1: Iphones you could buy.
• 11:23
  Speaker 1: The stock takes a lot of capital and it's potentially quite risky, right?
• 11:28
  Speaker 1: You could, in theory, lose the whole money if Apple went bankrupt tomorrow.
• 11:31
  Speaker 1: So what we do instead?
• 11:33
  Speaker 1: We set up a trade where we buy very, very, very cheap options with very low, relatively low, risk and we manage that risk and then we automate the profit taking, we automate the whole risk management.
• 11:44
  Speaker 1: That it sounds a bit more convoluted than it is in reality, and that's you know.
• 11:47
  Speaker 1: I was going to do it today and then I realized it was poppy day.
• 11:50
  Speaker 1: Um, you know, we beat the bloody germans day.
• 11:54
  Speaker 1: I mean, that's really what it should be called.
• 11:56
  Speaker 1: But so if you understand that you're looking right now at a market where fear again, again, let me show you that.
• 12:05
  Speaker 1: Let me show you what fear looks like.
• 12:08
  Speaker 1: Here's the Goldman's research is what happened.
• 12:12
  Speaker 1: Here we go.
• 12:13
  Speaker 1: Let me show you the VIX.
• 12:14
  Speaker 1: So the VIX is the fear index.
• 12:16
  Speaker 1: Right, this is the VIX.
• 12:18
  Speaker 1: Let's go back five years.
• 12:19
  Speaker 1: Okay, where are we?
• 12:20
  Speaker 1: At the lowest level we've been in five years?
• 12:23
  Speaker 1: And if you go back even more, I don't know how much data we've got, but we're at about a 10-year low-ish.
• 12:31
  Speaker 1: We were slightly lower in 2017 for a little bit.
• 12:34
  Speaker 1: And what happens?
• 12:35
  Speaker 1: What does that mean?
• 12:36
  Speaker 1: It means there is no fear in the market.
• 12:37
  Speaker 1: It means everyone's like oh, I feel so safe, I don't need to protect my portfolio, and everything is going so splendidly, everything is going up.
• 12:46
  Speaker 1: There's no risk in the world, there's no craziness, there's no war, there is nothing that could possibly go wrong.
• 12:52
  Speaker 1: That's literally where we are right now, which, objectively, I don't know.
• 12:57
  Speaker 1: I don't know what you guys are taking, but I'm not quite in the same boat.
• 13:01
  Speaker 1: I think there is risk.
• 13:02
  Speaker 1: I think things could go wrong.
• 13:03
  Speaker 1: I think rate cuts could come later, I think lots of stuff could happen and therefore for me this means two things.
• 13:13
  Speaker 1: One, I could buy the VIX and please don't if you don't understand how this works.
• 13:17
  Speaker 1: It's a bit of a complex setup.
• 13:20
  Speaker 1: But I would buy an option on the Vix that cost me almost nothing.
• 13:25
  Speaker 1: I'll show you how much it costs.
• 13:26
  Speaker 1: And again, I'm not recommending a specific trade here.
• 13:30
  Speaker 1: But if you go into options watch, which I strongly recommend, you get yourself a free account for, or at least a trial account for, for the month, and we look at VIX and we buy.
• 13:42
  Speaker 1: Say we buy VIX 52 days out.
• 13:45
  Speaker 1: It costs $40.
• 13:46
  Speaker 1: We'd make a 67%.
• 13:49
  Speaker 1: Let's say we buy a call option, then, okay, that would cost $220.
• 13:55
  Speaker 1: If VIX started to kind of spike up a little bit doesn't have to go up all the way, just spikes up a little bit we probably make 100, 200% return on that, which is not bad.
• 14:03
  Speaker 1: That's one way of looking at it.
• 14:04
  Speaker 1: I'm not sort of hoping something's going to go wrong in the market.
• 14:07
  Speaker 1: But I could also just say, hey, I like Apple, I think Apple is going to improve second half of the year, I think the upgrade cycle is going to kick in, and then I might go out into the end of June, or maybe July even, and you could buy a call that way, or you could even go out much further in time, which is actually something I might do tomorrow, maybe go into 2025.
• 14:33
  Speaker 1: And then that costs me $1,600.
• 14:35
  Speaker 1: If we go up, maybe $10 or something like that, we're probably looking at 50, 60, 70% percent return on that and all it needs to do is is move five percent.
• 14:46
  Speaker 1: So those are the kind of things that I'm looking at and you can look at that because you understand a little bit more.
• 14:52
  Speaker 1: You understand the volatility and stuff like that.
• 14:54
  Speaker 1: I know I'm being a bit abstract here, intentionally I don't want to confuse you entirely.
• 14:59
  Speaker 1: So I think that's one thing to definitely go and understand Links down below phoenixfrancidogscom training just literally come and join this traveling circus banker and I will very, very gladly walk you through it.
• 15:14
  Speaker 1: I really enjoy running live sessions and teaching and it's just tremendous to see when people get those results.
• 15:19
  Speaker 1: And let me know afterwards.