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Felix Prehn - (Still) The Best Investing Opportunity This Decade + Stock Market News 22 July 2024 · Felix Nikolas Prehn's Podcast

• 0:00
  Speaker 1: And good morning to you on this market Monday, pre-market Monday, and of course, politics are going to be a factor today because the market's digesting the Biden sidestep, kamala Harris, the new very, very likely new presidential candidate, pretty much endorsed by everybody who matters in the Democratic Party.
• 0:21
  Speaker 1: So how does that change things?
• 0:23
  Speaker 1: Does that unwind the Trump trade of last week?
• 0:26
  Speaker 1: What does that do to interest rates?
• 0:28
  Speaker 1: What does that do to small caps and much, much, much more?
• 0:30
  Speaker 1: We're going to answer that here today and also give you some insights from the analysts at big investment banks up there.
• 0:37
  Speaker 1: Good morning everybody.
• 0:38
  Speaker 1: Celsius has come down.
• 0:40
  Speaker 1: Yeah, some people are saying there might be another trade again.
• 0:43
  Speaker 1: I think it was these rumors around.
• 0:49
  Speaker 1: What was it?
• 0:50
  Speaker 1: Cyanide in it or something which apparently was false.
• 0:51
  Speaker 1: I don't know, I never tried the stuff, but anyway, let's walk through a few things here.
• 0:54
  Speaker 1: So, generally speaking, in election years, the market goes up, unless it's a lame duck president running, but it isn't, because the old one's out and therefore we're going to get a new president either way, right?
• 1:09
  Speaker 1: So the market should, in theory, like this scenario quite substantially.
• 1:14
  Speaker 1: So that's generally what happens in these markets.
• 1:19
  Speaker 1: So a presidential Let me put in some lines here a residential election year.
• 1:29
  Speaker 1: Over the summer we typically go up.
• 1:33
  Speaker 1: It's like about two percentage points in July and August.
• 1:39
  Speaker 1: So from a historical point of view, things should be pretty good, no matter who wins this election.
• 1:45
  Speaker 1: And here's a little snapshot from Goldman Sachs.
• 1:47
  Speaker 1: This is part of a longer report.
• 1:49
  Speaker 1: They said last week's rotational pain is unlikely to turn into a full-blown S&P crash.
• 1:55
  Speaker 1: We saw a little bit of money pour into small caps.
• 1:58
  Speaker 1: We saw a little bit of money leaving the big caps, but we're not going to get a full crash.
• 2:03
  Speaker 1: That's what they're saying and so far we were cautious.
• 2:05
  Speaker 1: Last week we took profits early, as we tend to, which means our portfolio is doing quite nicely.
• 2:12
  Speaker 1: We're up something like $24,000 this year and you might be thinking how big's the portfolio Portfolio is $30,000 in size.
• 2:21
  Speaker 1: If you want to learn how we did this feat, then I'll teach you those three rules.
• 2:25
  Speaker 1: Just come, sign up for the live training on Wednesday, wednesday morning I want to say New York time Links down below in the description FelixPrentzorg slash webinar.
• 2:35
  Speaker 1: Grab yourself a seat because it's fun, it's free and you learn a heck of a lot.
• 2:38
  Speaker 1: But this is also from the same Goldman Sachs report and there's some interesting stuff in here.
• 2:47
  Speaker 1: They're saying CTAs.
• 2:50
  Speaker 1: So these are the algo funds are not going to sell even if we drop 1% or 2% from here.
• 2:58
  Speaker 1: The S&P medium-term threshold level is at 5,202.
• 3:03
  Speaker 1: So you'd need a 6% drop in the market for the algo funds to start selling, and that seems fairly unlikely.
• 3:10
  Speaker 1: Well, I mean, everything is possible, but it seems fairly unlikely.
• 3:13
  Speaker 1: So I'm feeling kind of good and calm and steady about the market, although we've got very, very few trades open, and I won't be opening any trades today.
• 3:22
  Speaker 1: I don't think I'm going to wait and see what happens here.
• 3:24
  Speaker 1: We also have two big tech earnings, of course this week Tesla, one notable one there that I think is really really going to matter.
• 3:31
  Speaker 1: Then they say this rotational pain is unlikely to turn into an S&P 500 story for those looking for index hedges, blah, blah, blah, blah.
• 3:40
  Speaker 1: And then they're saying they're buying cheap semiconductor puts.
• 3:45
  Speaker 1: So they're just buying themselves cheap insurance in case the market tanks, which is what one of our market makers, elliot's been doing for about a week, if you follow his newsletter over there.
• 3:55
  Speaker 1: So I would say things don't look bad, don't panic, don't be freaked out, just be a little cautious.
• 4:02
  Speaker 1: Caution is always a good thing.
• 4:04
  Speaker 1: Market overall is exactly what we think it is.
• 4:06
  Speaker 1: It is at neutral.
• 4:07
  Speaker 1: So this is the CNN fearing greed indicator, and neutral is pretty much boring land.
• 4:13
  Speaker 1: I like boring, I like neutral.
• 4:14
  Speaker 1: So if it drops a lot more we might get into fear.
• 4:18
  Speaker 1: We might get some opportunities.
• 4:19
  Speaker 1: So right now we're looking a little bit for new opportunities to come in and if you look at where hedge funds are so these are hedges, hedge funds, which is probably right on the black bit you can see it more easily.
• 4:35
  Speaker 1: Hedge funds what does this mean?
• 4:38
  Speaker 1: Long short?
• 4:38
  Speaker 1: It basically means up here.
• 4:41
  Speaker 1: They're like super bullish.
• 4:43
  Speaker 1: They've got massive, massive, massive, big bets on that.
• 4:46
  Speaker 1: The market's going to go up and then where we are right now is down here, which is pretty low.
• 4:53
  Speaker 1: So we're kind of likely not going to sell a lot, see a lot more selling from those guys because they're like pretty much sitting on the sidelines and again, that's a good thing because it means it's possible that they could go a lot more invested, which would be good for us because it would make the market go up right.
• 5:10
  Speaker 1: So that's kind of a bit of perspective there.
• 5:12
  Speaker 1: You guys are still talking about making sodas.
• 5:22
  Speaker 1: Good morning to you.
• 5:23
  Speaker 1: Two drones are in the house.
• 5:25
  Speaker 1: There are too many drones on the drone.
• 5:28
  Speaker 1: So is this rally going to continue?
• 5:33
  Speaker 1: Any of you making money out of the IWM, the Russell, the small cap trades?
• 5:37
  Speaker 1: We certainly did last week.
• 5:39
  Speaker 1: As I said, I'm out of it right now because I took profits.
• 5:42
  Speaker 1: But if you look at this little chart here, what does that show you?
• 5:45
  Speaker 1: It shows you that the Russell went up 10% in five trading days very, very rarely since 1979.
• 5:54
  Speaker 1: It did it here rallies very, very rarely since 1979.
• 5:56
  Speaker 1: It did it here.
• 5:57
  Speaker 1: It did it there.
• 5:57
  Speaker 1: One, two, three, four, five, six, not very often, a couple of times and every single time almost.
• 6:05
  Speaker 1: There's some exceptions here like there, but other than that and this one here, other than that, those exceptions, we continued the rally afterwards because there was good reason, probably interest rates came down.
• 6:20
  Speaker 1: So here, and that was a big rally, that was a nice long rally, that was a very nice long rally, nice rally, nice rally.
• 6:31
  Speaker 1: So right now the likelihood is it'll continue.
• 6:32
  Speaker 1: I only have one piece of caution here.
• 6:34
  Speaker 1: Stream cut out for you again, jeroen.
• 6:37
  Speaker 1: I actually asked YouTube support on it and they said no, it's all fine, don't worry about it.
• 6:40
  Speaker 1: But also the re-recording of this stream.
• 6:44
  Speaker 1: The first like five minutes were missing, and then I complained to them and then they fixed it.
• 6:48
  Speaker 1: So weird.
• 6:49
  Speaker 1: Seems to be something to do with the ads.
• 6:51
  Speaker 1: We're not meant to have mid-livestream ads.
• 6:54
  Speaker 1: I need to have another look in the settings.
• 6:59
  Speaker 1: I don't like live stream ads.
• 7:00
  Speaker 1: It's really irritating, isn't it really irritating?
• 7:02
  Speaker 1: Let me have a quick look.
• 7:03
  Speaker 1: Can I dismiss Edit?
• 7:08
  Speaker 1: Can we turn that off?
• 7:09
  Speaker 1: No, they're not meant to be any ads mid-stream.
• 7:15
  Speaker 1: No, they're not meant to be any ads midstream.
• 7:25
  Speaker 1: So weird.
• 7:25
  Speaker 1: Okay, I'll have another word Weird.
• 7:28
  Speaker 1: A lot of you guys.
• 7:28
  Speaker 1: I'm going to take a screenshot of this because they don't believe me.
• 7:31
  Speaker 1: You see, I'm going to take a screenshot and send it tonight.
• 7:37
  Speaker 1: I appreciate you telling me it seems to be a bug in YouTube the last couple of days.
• 7:42
  Speaker 1: Things happen sometimes with software, even companies as big as that, and then, okay, let's talk about this then.
• 7:49
  Speaker 1: And I know people get very strong opinions on who wins the election.
• 7:52
  Speaker 1: The only thing I'd say to you on that is there is a lovely Buffett quote which I can't remember, but it's something like most people can't look at facts rationally and figure out how to profit from them, which is why they never make any money and most people just get really emotionally wound up by stuff.
• 8:05
  Speaker 1: I don't care who wins, I really don't care.
• 8:07
  Speaker 1: I suggest you don't either.
• 8:09
  Speaker 1: It doesn't matter.
• 8:10
  Speaker 1: And you might say, well, you don't live here, I don't care about who wins in the countries that I do live in either.
• 8:15
  Speaker 1: Couldn't care less, because it usually doesn't make much of a difference.
• 8:17
  Speaker 1: What I care about is how does it affect my portfolio?
• 8:20
  Speaker 1: And if you get rid of all that noise and all that emotional nonsense around politics, which is a total monk's game.
• 8:27
  Speaker 1: Think about it.
• 8:28
  Speaker 1: Do you think the guys who run the big departments do you think the people are?
• 8:32
  Speaker 1: They are the secretary of the treasury or whoever you appoint.
• 8:35
  Speaker 1: No, they're not.
• 8:37
  Speaker 1: There is some administrator that has been there for 30 years.
• 8:39
  Speaker 1: Who do you think has got more power?
• 8:40
  Speaker 1: The guy who's there for a couple of years and gets booted out, or the guy who's been there for 30 years?
• 8:45
  Speaker 1: So politics is like a wishy-washy thing.
• 8:49
  Speaker 1: Anyway, for the moment, trump seems to still lead very significantly, but I'd say it's probably a little early.
• 8:56
  Speaker 1: I do think that Kamala is a more formidable opponent to Trump.
• 9:03
  Speaker 1: Being a woman helps, because it's not that easy to attack a woman and not look like a bit of an idiot or a little bit of a prat.
• 9:16
  Speaker 1: It just doesn't look as good right?
• 9:20
  Speaker 1: Two old white guys sparring, that's completely fine, but this is a bit different from a visual point of view.
• 9:26
  Speaker 1: So Trump's going to have to tone things down a little bit, I think, and that'll not necessarily suit his style.
• 9:33
  Speaker 1: So I do think this makes it harder for him.
• 9:36
  Speaker 1: But for the moment, unless we see some real change in polling numbers in the next week, I don't think things are fundamentally changed because the politics are still there and people are upset about that sufficient people from the polling at least.
• 9:51
  Speaker 1: So that's kind of what we're looking at.
• 9:52
  Speaker 1: So for the moment you're expecting basically that the Trump sweep is still the most likely outcome.
• 9:59
  Speaker 1: Of course that can change, but for now that's the way to look at it and for now that's the way to trade it.
• 10:07
  Speaker 1: Now I do think put a pause on the Trump trades, which is oil, financials, infrastructure and those kind of things.
• 10:16
  Speaker 1: I'd put a little bit of a pause on that.
• 10:19
  Speaker 1: Just see what happens.
• 10:20
  Speaker 1: Take profits, because you would have made money by now.
• 10:22
  Speaker 1: That's what I would do, not advice, but that's what I would do, and let's figure out what happens here with the politics, because it does matter, because to me the small cap rally seems like a golden opportunity.
• 10:34
  Speaker 1: But there is one little caveat here that is very, very high import tariffs could increase inflation, and the way that works is that high tariffs do what they lead to higher prices, and what does that mean?
• 10:54
  Speaker 1: That means higher inflation.
• 10:55
  Speaker 1: What does higher inflation do?
• 10:57
  Speaker 1: Well, you know, you've been there, you've done that right.
• 11:00
  Speaker 1: It erodes your earnings and so on.
• 11:03
  Speaker 1: But ultimately, higher inflation mean higher interest rates for longer.
• 11:07
  Speaker 1: And what does that do?
• 11:09
  Speaker 1: Well, that is bad for stocks, particularly bad for small cap stocks.
• 11:17
  Speaker 1: So it would undo some of the rally.
• 11:19
  Speaker 1: Now, I still think rates are going to come down, but they might not come down as much if we do get a Trump presidency with very, very high tariffs.
• 11:27
  Speaker 1: So something to bear in mind like set a trading stop loss on that one.
• 11:31
  Speaker 1: I think, yeah, to bear in mind, set a trading stop loss on that one.
• 11:49
  Speaker 1: Let me just run through some of this here.
• 11:50
  Speaker 1: Can you share your thoughts about the CrowdStrike saga?
• 11:52
  Speaker 1: Crowdstrike, I mean, yeah, obviously a massive cock-up.
• 11:54
  Speaker 1: Hard to see how they let that one slip.
• 11:58
  Speaker 1: Doesn't exactly build a lot of trust does it, but they'll be okay if it's a one-time thing.
• 12:05
  Speaker 1: They just can't do this again.
• 12:06
  Speaker 1: Then you really erode trust.
• 12:09
  Speaker 1: So I don't think people jump ship because they've got a lot of major enterprise clients.
• 12:15
  Speaker 1: It's a big pain in the neck to redo your whole cloud security so I don't think it has that big of an impact on them in the long term.
• 12:24
  Speaker 1: But it's a very highly valued stock.
• 12:27
  Speaker 1: Multiples are pretty lofty.
• 12:28
  Speaker 1: So I'd be a little.
• 12:31
  Speaker 1: I'm not buying it, I'm not trading it because you know this whole oh, let's trade.
• 12:36
  Speaker 1: The latest thing thing is rarely what makes you money, unless you've got some unique insight.
• 12:42
  Speaker 1: Most of the time trading, the boring thing that no one else is looking at is what makes you money.
• 12:49
  Speaker 1: But yeah, let's have a look at we're trading right now $2.89.
• 12:53
  Speaker 1: So that's pretty ugly.
• 12:54
  Speaker 1: It's pretty ugly.
• 12:55
  Speaker 1: So we're below Friday's trading range, at the very, very bottom of it.
• 13:01
  Speaker 1: Support sits here at $2.90.
• 13:04
  Speaker 1: A little bit, not massive support, but some support.
• 13:07
  Speaker 1: So we're back in that April trading zone.
• 13:12
  Speaker 1: So it's bad, but we're back in April.
• 13:13
  Speaker 1: It's not like we're back in that April trading zone.
• 13:14
  Speaker 1: So it's bad, but we're back in April.
• 13:15
  Speaker 1: It's not like we're back in 1998.
• 13:17
  Speaker 1: So if you look at the rally that the stock's gone through, it's not as serious as you might think.
• 13:25
  Speaker 1: This was a $100 stock in 2023.
• 13:28
  Speaker 1: So I don't think it's that big a deal.
• 13:31
  Speaker 1: It's just like they have to be delivering on earnings 26th of August.
• 13:37
  Speaker 1: I think that's really going to be their litmus test.