Latest / Felix Nikolas Prehn's Podcast / Felix Prehn - The Trillion Dollar BUY Warning! + Stock Market News 20 September 2024

Transcript

Felix Prehn - The Trillion Dollar BUY Warning! + Stock Market News 20 September 2024 · Felix Nikolas Prehn's Podcast

• 0:00
  Speaker 1: Good morning to you on this beautiful Friday.
• 0:02
  Speaker 1: The market is turning bullish and bullisher and I want you to understand why and how that works.
• 0:10
  Speaker 1: A couple of things happening here Valuations, fed general bull run, massive options expiration.
• 0:18
  Speaker 1: What the heck does that mean?
• 0:19
  Speaker 1: We've got?
• 0:20
  Speaker 1: I just saw a hundred million million options buy on one of our favorite stocks.
• 0:27
  Speaker 1: I'll show you that trade as well, from the dark pools and a ton more data to make you the best informed investor out there.
• 0:33
  Speaker 1: That's always my ambition here.
• 0:34
  Speaker 1: Our mission is very simple I want to make a million of you financially free, help you get on that path so you can enjoy your day and you know sips, cups of teas or whatever it is you'd like to do with your day.
• 0:45
  Speaker 1: Smash the you know what.
• 0:46
  Speaker 1: And let me share my screen with you so you can see exactly what we're looking at here.
• 0:50
  Speaker 1: A bit of a complex chart, but I think you can handle it.
• 0:54
  Speaker 1: You can handle the truth, can you?
• 0:56
  Speaker 1: Well, let me get a little pen here and I'll explain it to you.
• 1:01
  Speaker 1: The blue line that's on here, which is a little bit hard to see I'm just going to connect the dots here.
• 1:17
  Speaker 1: So we had that blue line is the S&P 500 forward PE ratio.
• 1:19
  Speaker 1: So how expensive are stocks compared to what we expect next year's profits to be?
• 1:24
  Speaker 1: Why do we look at next year's profits?
• 1:26
  Speaker 1: Because that's basically what the market does.
• 1:27
  Speaker 1: The market doesn't really care what happened yesterday.
• 1:29
  Speaker 1: The market cares about the following year and in 2000, we had this pretty lofty high.
• 1:35
  Speaker 1: In 2021, we had that high there.
• 1:39
  Speaker 1: That was 2021.
• 1:40
  Speaker 1: And right now, right here, right now we're there, that's now.
• 1:45
  Speaker 1: So we're high, but we're not like insanely high, which is kind of a good place to be.
• 1:52
  Speaker 1: So the market's basically saying and all the banks are coming out and going melt up, everything is going to go up, no matter what you want.
• 2:00
  Speaker 1: And let's move on here.
• 2:05
  Speaker 1: This is, I think, from Yardeni, one of his research outlets.
• 2:09
  Speaker 1: Here he's saying we've been using a forward PE so price over earnings, price over profit of 21 to get to our year-end S&P 500 targets this year 5,800.
• 2:21
  Speaker 1: Next year, 6,300, 6,800 for the year after.
• 2:25
  Speaker 1: And in the melt-up scenario, which is what we are possibly about to enter, the S&P could soar above 6,000 by the end of this year.
• 2:36
  Speaker 1: So everyone's becoming bullish.
• 2:37
  Speaker 1: Now what melts us up?
• 2:38
  Speaker 1: Rate cuts, big rate cuts when you're already at all-time highs, that might do the trick, and I might say that's maybe part of the reason why we're making money.
• 2:52
  Speaker 1: I would actually argue that it would be easier for us to make money if the market went down, but that's another story for another day.
• 2:58
  Speaker 1: We are, however.
• 2:59
  Speaker 1: This is our little teaching portfolio, which is up $28,000.
• 3:02
  Speaker 1: Portfolio which is up $28,000.
• 3:10
  Speaker 1: $28,000 so far.
• 3:11
  Speaker 1: It's a $30,000 teaching portfolio.
• 3:12
  Speaker 1: So we've basically turned $30,000 into $58,000 so far this year.
• 3:15
  Speaker 1: If you want to learn how we make that magic happen or maybe you don't believe me, which is also completely fine, it's good to be a skeptic sometimes Come and join me.
• 3:22
  Speaker 1: Next week I'm running a first ever two-day life trading challenge.
• 3:29
  Speaker 1: This is for beginners.
• 3:30
  Speaker 1: You don't need to know a thing.
• 3:31
  Speaker 1: I'll teach you our simple rules how it works when we enter, how we automate profit taking and risk management and so on, and you can pamel me with all those hard questions you've always wanted to pamel me with.
• 3:41
  Speaker 1: So come and join me over there at FelixFrenzelcom challenge on Tuesday and Wednesday at 8 pm Eastern Time.
• 3:49
  Speaker 1: Now the Fed has cut at all-time market highs before.
• 3:56
  Speaker 1: This isn't a new scenario.
• 3:58
  Speaker 1: They've done it 20 times so far.
• 4:00
  Speaker 1: They did it.
• 4:01
  Speaker 1: Let me get a green pen to match the little green dots on this chart here.
• 4:05
  Speaker 1: They did it in the 1980s, they did it there, they did it here and there, and they did it in the 90s a couple of times.
• 4:13
  Speaker 1: Actually, they did it in the late 1990s and then they did it in 2019.
• 4:19
  Speaker 1: And they've just done it again, right?
• 4:22
  Speaker 1: Whoops, I did it again, as Britney would say.
• 4:25
  Speaker 1: And what happened a year later?
• 4:27
  Speaker 1: A year later, the market was higher 20 out of 20 times.
• 4:31
  Speaker 1: So historically, there's a 20 out of 20 chance that the market will be up in a year.
• 4:38
  Speaker 1: Now, of course, past performance and all that you know.
• 4:40
  Speaker 1: But, drew, thank you very much for the smashing that like button there.
• 4:44
  Speaker 1: A hundred of you have found the like button so far.
• 4:46
  Speaker 1: The other 400 is still a bit, you know, foggy or hungover or something, and they can't find the bloody thing.
• 4:51
  Speaker 1: You'll get there, my friends.
• 4:54
  Speaker 1: And another reason to be right here right now is when do we get most of our gains in the market?
• 5:01
  Speaker 1: Hint, yes, it is Q4.
• 5:05
  Speaker 1: Hint, yes, it is q4, q4, the fourth quarter of the year.
• 5:12
  Speaker 1: Q3 is usually um, pretty horrible.
• 5:14
  Speaker 1: Q2 is great, q1 is kind of like, but q4 is usually extraordinary and seasonality I think it's got a lot to do with that.
• 5:25
  Speaker 1: That's just the way it works.
• 5:27
  Speaker 1: Historically that's always been the case.
• 5:28
  Speaker 1: Doesn't mean it has to happen every year, but by and large, q4 is very, very good.
• 5:33
  Speaker 1: Now we might get a little bit of a dodgy October presidential elections and all of that, but November, december, should, if history is judge, take us to the moon.
• 5:48
  Speaker 1: Paul, no hangover over there, brilliant, I already had five this morning.
• 5:51
  Speaker 1: What did you have?
• 5:52
  Speaker 1: Shots of vodka or something?
• 5:54
  Speaker 1: Now some of you are mentioning the, I think.
• 5:58
  Speaker 1: Is it quadruple witching day?
• 6:00
  Speaker 1: I think it is Quadruple witching day and it is not a day where witches get burnt.
• 6:05
  Speaker 1: No, no, no, the Catholic Church has burnt them all already burnt.
• 6:06
  Speaker 1: No, no, no, the Catholic Church has burnt them all already.
• 6:08
  Speaker 1: There are none left, apparently.
• 6:09
  Speaker 1: Quadruple witching you know they did that for like 200 years or something.
• 6:14
  Speaker 1: It wasn't like a blip, it wasn't like let's pick up all the sort of healers and women with wisdom and burn them and after a year they thought that was a bad idea, right?
• 6:23
  Speaker 1: No, no, they did that for like centuries.
• 6:26
  Speaker 1: Really, pretty odd what we come up with, isn't it?
• 6:30
  Speaker 1: Four and a half trillion dollars in options expire today, and fairly meaningless, isn't it to most people?
• 6:36
  Speaker 1: Smash the ad.
• 6:40
  Speaker 1: You're still getting ads.
• 6:41
  Speaker 1: It's so irritating.
• 6:42
  Speaker 1: I don't know why you're getting ads.
• 6:43
  Speaker 1: You don't get a hangover until you stop drinking.
• 6:46
  Speaker 1: Oh, I love that.
• 6:48
  Speaker 1: Okay, to put it simply, at the moment, the way the options market is positioned, it is supportive.
• 6:54
  Speaker 1: It is basically as the market goes up.
• 6:57
  Speaker 1: They force stock buying.
• 7:00
  Speaker 1: It's got something to do with market makers.
• 7:02
  Speaker 1: It's a little bit complex, but we've got three market makers on our coaching team, so I've got a fairly good insight into what they actually do and, in my humble opinion, this looks likely to continue into next week, and that is good news.
• 7:14
  Speaker 1: If you just came here for the simple remember good, okay, it's not bad, it's good.
• 7:19
  Speaker 1: So this options expiration today isn't some nightmare.
• 7:23
  Speaker 1: No, it's actually probably quite a good outcome here.
• 7:26
  Speaker 1: It's so weird that you guys get ads, because I've turned them off but you're still getting them, which is kind of irritating.
• 7:37
  Speaker 1: I don't know what YouTube's doing.
• 7:38
  Speaker 1: They're obviously there.
• 7:38
  Speaker 1: They're creaming it of this live stream.
• 7:39
  Speaker 1: Now I would look pretty hard for some bad news, because I always think there must be a but in there somewhere.
• 7:44
  Speaker 1: Right, a large round but, and guess what?
• 7:47
  Speaker 1: I found one.
• 7:48
  Speaker 1: I found one and I think it's interesting and I think it's useful.
• 7:51
  Speaker 1: And then we're going to look at some of the biggest trades of the day and everything else.
• 7:58
  Speaker 1: Oh, neil, your 22-year-old cat has just passed away.
• 8:02
  Speaker 1: Oh man, my heart goes out to you.
• 8:03
  Speaker 1: It's heartbreaking, isn't it?
• 8:05
  Speaker 1: My kitty passed away now, I think 12 days ago, and it's just the same.
• 8:12
  Speaker 1: Really, it's heartbreaking, it really is.
• 8:15
  Speaker 1: It's horrible.
• 8:15
  Speaker 1: You just miss them so much.
• 8:16
  Speaker 1: They're such lovely little creatures.
• 8:18
  Speaker 1: So, yeah, very sorry to hear that, neil.
• 8:20
  Speaker 1: I hope you'll be all right.
• 8:24
  Speaker 1: Now back to the bad news.
• 8:25
  Speaker 1: Life unfortunately well, maybe fortunately life continues.
• 8:30
  Speaker 1: I think that's just a lesson from it.
• 8:31
  Speaker 1: But also the lesson from it, I think, is life's short.
• 8:33
  Speaker 1: Life's shorter than you think.
• 8:34
  Speaker 1: 22 years sounds like a very, very long time, but, um, it feels quite short, right.
• 8:39
  Speaker 1: So really, you just gotta enjoy every day, and I think for me that was kind of I mean, I already enjoy life pretty much every day, but the wake-up call was kind of I mean, I already enjoy life pretty much every day, but the wake-up call was kind of like you've got to enjoy life even more today and tomorrow, and that means you've got to be able to do whatever you want to do.
• 8:53
  Speaker 1: So freedom, my friends, is what we all need to get FedEx.
• 9:01
  Speaker 1: Disaster earnings they missed revenue, they missed earnings per share, they missed operating income, they missed the margin.
• 9:10
  Speaker 1: Everything was a freaking disaster.
• 9:12
  Speaker 1: And why?
• 9:12
  Speaker 1: They're saying softer demand, which means less demand for package deliveries, which is kind of what they do, and the implication might therefore be possibly I was going to be at a big R recession fears, because a lot's going on in the economy when you're ordering lots of stuff, well, shouldn't FedEx get more parcels?
• 9:35
  Speaker 1: Or is Amazon doing everything themselves with robots or something?
• 9:39
  Speaker 1: So, yeah, something to watch out for.
• 9:41
  Speaker 1: These are real world companies, right, they actually move stuff.
• 9:44
  Speaker 1: When they move less stuff, it's kind of an early warning signal.
• 9:44
  Speaker 1: So watch out, for these are real world companies, right, they actually move stuff.
• 9:45
  Speaker 1: When they move less stuff, it's kind of an early warning signal.
• 9:47
  Speaker 1: So watch that story.
• 9:49
  Speaker 1: Now you might be wondering how long is the rally gonna last and what should I be looking at for that?
• 9:54
  Speaker 1: And I thought I'd give you an answer on that today, and this is it.
• 9:57
  Speaker 1: This, my friends, is the MAG7, the magnificent seven, the biggest top seven tech stocks.
• 10:05
  Speaker 1: There's actually a ticker for it.
• 10:07
  Speaker 1: There's a bunch of ETFs that track it.
• 10:08
  Speaker 1: This one's called MAGS, but I'm sure you can find some other ones.
• 10:11
  Speaker 1: And then what I've done in my infinite wisdom that's the stuff they teach you as a banker Draw a straight line, that line.
• 10:20
  Speaker 1: If it connects at least three points, you've got yourself a trend right.
• 10:25
  Speaker 1: So we've got this upward trend.
• 10:27
  Speaker 1: As long as we stay above that upward trend, everything is good, everything is fine.
• 10:32
  Speaker 1: Christmas is going to be here, santa is going to bring us lots of gifts and all of that.
• 10:36
  Speaker 1: You break below it and you better run right.
• 10:41
  Speaker 1: So watch for the Mach 7.
• 10:44
  Speaker 1: Seriously, that's what carries the market.
• 10:46
  Speaker 1: So that's one thing I'd maybe have a glance at every few days or so.
• 10:51
  Speaker 1: Now, the Mach 7 are very different businesses, so I thought I'd put out the margins here of each of them operating margins, because that tells you a lot about kind of their moat and maybe also their vulnerabilities.
• 11:04
  Speaker 1: So Tesla has very low margins right Now.
• 11:15
  Speaker 1: I actually think that, much like Amazon, that those are both still startups Sounds weird, but I think they're both still startups.
• 11:20
  Speaker 1: They're still in startup mode where they're just building and spending and investing and they don't really care about margins or profits.
• 11:26
  Speaker 1: Yet I think those are going to go up.
• 11:29
  Speaker 1: I actually see that as an opportunity.
• 11:31
  Speaker 1: So I like Amazon, I like Tesla.
• 11:35
  Speaker 1: I think Apple has stalled.
• 11:38
  Speaker 1: I think they don't know what the hell to do.
• 11:40
  Speaker 1: So I'm not really a big fan of Apple here.
• 11:44
  Speaker 1: And the other companies have just established this amazing moat, certainly Microsoft to Google, to Alphabet, who are just kind of stable and growing and generating more cash than they know what to do with.
• 11:58
  Speaker 1: And then the outlier, of course, is NVIDIA with this insane margin, and I think they'll keep that for a while.
• 12:04
  Speaker 1: By a while, I'm kind of thinking two years, but I don't know if beyond that they'll be able to maintain that margin.
• 12:11
  Speaker 1: But it would be highly unusual for a company to have margins that high at that scale for that long.
• 12:17
  Speaker 1: So there is a chance that in maybe two years or something, those margins will come down more to say, the Microsoft level of sort of 43% or something like that, which will at that point then depress the stock price somewhat.
• 12:30
  Speaker 1: But that doesn't mean they can't grow.
• 12:32
  Speaker 1: Think about it If you're selling something at a 60% margin, brilliant.
• 12:36
  Speaker 1: But would you sell an extra unit at a 40% margin?
• 12:40
  Speaker 1: Of course you would right.
• 12:41
  Speaker 1: It's still making money.
• 12:42
  Speaker 1: So it's not the end of the world, but it's just again.