Latest / Felix Nikolas Prehn's Podcast / You Won't Believe What This 100-Year Chart PREDICTS for Stock Markets + Stock Market News 04 March 2024

Transcript

You Won't Believe What This 100-Year Chart PREDICTS for Stock Markets + Stock Market News 04 March 2024 · Felix Nikolas Prehn's Podcast

• 0:00
  Speaker 1: Felix here and welcome to this live stream.
• 0:02
  Speaker 1: Happy Monday to you.
• 0:04
  Speaker 1: Are markets insanely overvalued or is this the rally that's going to keep on giving?
• 0:09
  Speaker 1: That's what I want you to look at and I want us to understand here, and it's not a doom and gloom video, but I want you to be the best informed investors out there, so you see really what the data says.
• 0:22
  Speaker 1: So I will show you the data sets, I will show you the stuff here that's out from Goldman Sachs, I think, and we'll run through that.
• 0:29
  Speaker 1: We will also look at what's going on today in the markets.
• 0:32
  Speaker 1: We will take your questions, so put them in the live chat and we will do all of that, provided, of course, you destroyed the like button first.
• 0:42
  Speaker 1: That's the way it works, isn't it?
• 0:44
  Speaker 1: So let me share my screen with you, and I'll also be running a live trading training tomorrow, the probably the last one, because, well, we've done quite a few of them.
• 0:58
  Speaker 1: I do tremendously enjoy them, but it is always like me up till one in the morning, which you know is somewhat, somewhat tiring, although I do really enjoy them.
• 1:11
  Speaker 1: But yeah, I think we'll probably take a breather.
• 1:13
  Speaker 1: So come and join me if you want to see tomorrow live 10am, eastern time.
• 1:18
  Speaker 1: If you want to see how we did this, I'm 26% in 20, 20, 205% in 2023.
• 1:28
  Speaker 1: And this year so far we are up.
• 1:32
  Speaker 1: We're making the tracking software a little bit prettier.
• 1:35
  Speaker 1: We are up $3,600 and I'm trading with about $30,000 here.
• 1:40
  Speaker 1: So we're up something like 12%.
• 1:42
  Speaker 1: And why am I trading only with $30,000?
• 1:45
  Speaker 1: Because I want to encourage responsible trading and that means starting small.
• 1:50
  Speaker 1: So that's why we do it, and you know we're winning 70, 75% or so, roughly, of trades, which is about what we'd expect.
• 1:58
  Speaker 1: So come and join me.
• 2:03
  Speaker 1: Links down below Felix Rentselok slash webinar.
• 2:05
  Speaker 1: You will learn my entire system.
• 2:07
  Speaker 1: I'll give it away Literally.
• 2:09
  Speaker 1: So here it is Ideal for beginners.
• 2:11
  Speaker 1: We trade just one stock, three simple rules.
• 2:14
  Speaker 1: Excuse me, I knew it is Turning at Eastern time Felix Rentselok slash webinar, so grab yourself a seat.
• 2:23
  Speaker 1: We're not going to be doing one for a while, so take advantage of it Now.
• 2:32
  Speaker 1: Data it's data time and everyone's like yay or no.
• 2:36
  Speaker 1: The viewers are running away.
• 2:38
  Speaker 1: I can see it.
• 2:39
  Speaker 1: I can see it.
• 2:39
  Speaker 1: You know you want to.
• 2:41
  Speaker 1: You know you want to smash the like button.
• 2:44
  Speaker 1: Okay, if you look at and this is Bank of America B of A and they've come out with like, look are we in a bubble?
• 2:50
  Speaker 1: And I kind of want us to look at different perspectives here to see where are we in this stage?
• 2:56
  Speaker 1: How far, much further have we got to go?
• 2:58
  Speaker 1: What would be the smart thing to do here with our money?
• 3:00
  Speaker 1: Because it's your money, right?
• 3:02
  Speaker 1: It's fine when it goes up.
• 3:03
  Speaker 1: It's no longer fine when it goes down.
• 3:05
  Speaker 1: You want to be prepared for that.
• 3:06
  Speaker 1: So last year's PE price earnings ratios we're 56% above the average.
• 3:12
  Speaker 1: If you look at gap profits so real profits some of that made up, fugazi a bit dust off we're 82% above that.
• 3:19
  Speaker 1: If you look at price of a free cash flow, which I love as a metric, we're only 6% above average.
• 3:28
  Speaker 1: So free cash flow is insane and that's the real number, in a sense, that I look at when I look at businesses.
• 3:35
  Speaker 1: And if you look at in gold terms, all that kind of stuff market cap of a GDP yeah, we're at like double the usual.
• 3:47
  Speaker 1: So the free cash flow makes me feel a little hopeful, right, and the thing to really understand is that the market in the short term is just all hot in the air.
• 4:02
  Speaker 1: It's all momentum, it's all insanity, and that's why what we traders love, right?
• 4:07
  Speaker 1: That's sort of what we actually get a kick out of In the longer term.
• 4:10
  Speaker 1: It's incredibly boring.
• 4:11
  Speaker 1: It's actually all about valuations how good are those big companies?
• 4:14
  Speaker 1: But really, valuations start to mat up over a sort of 8, 9, 10 year time horizon In the short term, over a year or two years, it basically has no correlation whatsoever to the stock price.
• 4:29
  Speaker 1: It really only kicks in once you hold it for like 8, 9, 10 years, which is why the smart thing to do is make a bucket load of money and then put them into really smart stocks and then do nothing, right, which is what I'm attempting to do.
• 4:46
  Speaker 1: Let's skip past this one.
• 4:47
  Speaker 1: Bank of America went a little bit nuts there.
• 4:49
  Speaker 1: This is the one, one of the key ones, and then I want to come back to this with some deeper insight in just a moment.
• 4:57
  Speaker 1: So stick around, because we're going to dive really deep.
• 5:01
  Speaker 1: Put on your goggles and everything else.
• 5:03
  Speaker 1: The whole Island Bill outfit, small bikinis included.
• 5:08
  Speaker 1: And this shows you the market cap concentration of the 10% of larger stocks.
• 5:15
  Speaker 1: So the 10%, the top 10% stocks, the largest companies in the US.
• 5:21
  Speaker 1: How much of the market are they compared to the entire stock market, right.
• 5:27
  Speaker 1: How are they moving?
• 5:30
  Speaker 1: And right now, as we know, the NVIDIAs and the Microsofts and so on hence the Island Bill reference are like 75% compared above the rest of the US stock market.
• 5:44
  Speaker 1: In 2000, we were at about 70%.
• 5:48
  Speaker 1: We've exceeded.
• 5:49
  Speaker 1: How much we've outperformed compared to all the other rubbish stocks?
• 5:52
  Speaker 1: The only time that we've ever been higher was 1931.
• 5:59
  Speaker 1: Right, so you know, get up the bread lines and start to panic.
• 6:06
  Speaker 1: No, in all seriousness, though it is something to understand, Is this because the top stocks are that much better than all the rubbish, or is this just exuberance and we're getting carried away with AI?
• 6:22
  Speaker 1: I think it's a bit of both.
• 6:24
  Speaker 1: To be honest with you, I think a Microsoft is easily 75% better than all the junk that's in the S&P 500.
• 6:33
  Speaker 1: And therefore, in a sense, they deserve the valuation.
• 6:37
  Speaker 1: So you have to always look at like.
• 6:39
  Speaker 1: What does it mean?
• 6:39
  Speaker 1: And that's what we're going to.
• 6:40
  Speaker 1: Dive a little bit deeper, there is the Buffett indicator, which essentially says how much is the market cap of the stock market overall compared to US GDP, and it's almost.
• 6:56
  Speaker 1: That's an all time high.
• 6:57
  Speaker 1: When were we higher?
• 6:58
  Speaker 1: The sort of COVID bubble nonsense?
• 7:00
  Speaker 1: Is this relevant?
• 7:03
  Speaker 1: I think not, and I tell you why.
• 7:06
  Speaker 1: Where does Microsoft sell software?
• 7:08
  Speaker 1: Only in the US?
• 7:10
  Speaker 1: No, they sell it in Europe.
• 7:11
  Speaker 1: They sell it in India, they sell it in everywhere in the world.
• 7:14
  Speaker 1: I was always going to do an Indian accent there, but I'd probably get struck off for that, and it's a lovely accent.
• 7:21
  Speaker 1: I really like it and the don't tempt me.
• 7:24
  Speaker 1: The second thing where do people watch Netflix?
• 7:29
  Speaker 1: Well, all around the world there's Netflix Asia and Africa and Europe and all that stuff, and it's the same.
• 7:33
  Speaker 1: So in a way, you don't want to be looking at US GDP, but in a way you'd need to look at sort of global GDP or developed country GDP or something like that.
• 7:43
  Speaker 1: So I think the indicator is pretty useless.
• 7:46
  Speaker 1: Now Bank of America also saying that Google and Meta are quite cheap and that Tesla is quite expensive.
• 7:57
  Speaker 1: And they're basically saying the mag seven, the top seven stocks here, are actually quite fairly, fairly valued.
• 8:07
  Speaker 1: But they're basically saying the growth expectations are all about AI.
• 8:14
  Speaker 1: And then they say that is not our area of expertise.
• 8:17
  Speaker 1: We don't know anything about AI, and you know that's actually a fair point.
• 8:20
  Speaker 1: Who the frick understands AI?
• 8:22
  Speaker 1: I agree, I agree, but Bull markets end with euphoria and we're not there yet that's Bank of America's summary right.
• 8:34
  Speaker 1: Goldman Sachs says the tech rally is backed by fundamentals.
• 8:38
  Speaker 1: It doesn't resemble past bubbles.
• 8:40
  Speaker 1: They did always say that in past bubbles.
• 8:42
  Speaker 1: By the way, there wasn't really ever a moment where Goldman Sachs said it's $999, folks and I think stocks are insanely expensive Sell everything.
• 8:50
  Speaker 1: It doesn't really really happen.
• 8:51
  Speaker 1: You have to look and put it all together that's all we're going to do here and then come to our own conclusion, because you can't trust.
• 8:59
  Speaker 1: It's like going to the Coke dealer around the street corner.
• 9:04
  Speaker 1: If you have one, I don't, thankfully insaid into him Do you think Coke is overpriced and overvalued?
• 9:10
  Speaker 1: Is he going to say yes, probably not.
• 9:13
  Speaker 1: We should probably cut down on the drug references on this channel.
• 9:16
  Speaker 1: I don't think it's going to help us.
• 9:18
  Speaker 1: Hit the like for the Indian accent oh, don't tempt me, don't tempt me.
• 9:23
  Speaker 1: The S&P 500 earnings tracker what's this?
• 9:25
  Speaker 1: This is Bloomberg, bloomberg Intelligence.
• 9:28
  Speaker 1: To indicate that all the other Bloomberg publications have no intelligence in them.
• 9:33
  Speaker 1: They're basically saying 75% of earnings just reported are better than expected.
• 9:42
  Speaker 1: That is, for a fourth quarter, about in line.
• 9:46
  Speaker 1: This was another one.
• 9:47
  Speaker 1: Go back four more.
• 9:49
  Speaker 1: There's another one.
• 9:52
  Speaker 1: The fourth quarter is usually not the greatest.
• 9:54
  Speaker 1: Therefore, we go back to 2020.
• 9:57
  Speaker 1: We're looking pretty good.
• 10:00
  Speaker 1: Profits are coming in nicely.
• 10:02
  Speaker 1: What about how many companies and stocks are actually overvalued?
• 10:06
  Speaker 1: How many stocks have a value to sales ratios, sort of a PE greater than 10, which you could look at as well?
• 10:17
  Speaker 1: That's quite a lot.
• 10:18
  Speaker 1: It's not very many.
• 10:19
  Speaker 1: It's only about 20% of stocks are that valued.
• 10:26
  Speaker 1: In the dot-com bubble it was 35% of them.
• 10:29
  Speaker 1: Until this broadens out, you would certainly only have a teeny, tiny bubble, not a huge bubble.
• 10:36
  Speaker 1: Then the average PE multiple right now of the 10 larger stocks is 29x.
• 10:42
  Speaker 1: In the dot-com bubble it was 47x.
• 10:47
  Speaker 1: We got a bit to go, I'd say.
• 10:49
  Speaker 1: I think the helium balloon is going to lift us up a little bit more and we can enjoy some more partying.
• 10:55
  Speaker 1: What happened to the rest of my charts?
• 10:56
  Speaker 1: I thought there were some more.
• 10:58
  Speaker 1: Apparently they're not.
• 10:59
  Speaker 1: Do two things.
• 11:00
  Speaker 1: One, go to Felix Renssel or orgslash webinar right now.
• 11:04
  Speaker 1: It'll show you this page and you sign up for tomorrow, because it'll be a shame to miss it and there might not be another one for a long time.
• 11:11
  Speaker 1: I will teach you my dummy's guide to trading, essentially how I make money in three steps, how incredibly simple it is and how, in my view, anybody can do it in a couple of hours.
• 11:21
  Speaker 1: Then let's have a look out at the market.
• 11:24
  Speaker 1: Microsoft is down a little.
• 11:26
  Speaker 1: Apple got hit over the head by a Frenchman assuming it's a Frenchman, the European Commissioner for competition.
• 11:36
  Speaker 1: They're saying you don't behave anti-competitively Well, music app abuses.
• 11:44
  Speaker 1: Sorry, that's it.
• 11:45
  Speaker 1: It's not competition, it's music app abuses.
• 11:47
  Speaker 1: I've assumed it follows by a complaint from Spotify.
• 11:51
  Speaker 1: E-u is to ban abusive app store rules to Apple's music rivals.
• 11:56
  Speaker 1: What do they do?
• 11:57
  Speaker 1: Oops, what happened here?
• 11:59
  Speaker 1: What's going on here?
• 12:02
  Speaker 1: Some sort of compulsive advertising Apple abuse, see Bloomberg's.
• 12:10
  Speaker 1: Next, it's dominant position in the market for the distribution of music streaming through the app store.
• 12:14
  Speaker 1: We did so by restricting developers from informing consumers about alternative, cheaper music services available outside of the Apple ecosystem.
• 12:21
  Speaker 1: They're going to appeal.
• 12:25
  Speaker 1: They're basically saying there was no consumer harm.
• 12:31
  Speaker 1: See how they're showing this ad without me clicking or doing anything.
• 12:38
  Speaker 1: Bloomberg, you and you are brought to us by Hyundai.
• 12:41
  Speaker 1: It must be fairly desperate at Hyundai to stoop to such levels.
• 12:45
  Speaker 1: But yeah, the commission, see what's the F?
• 12:47
  Speaker 1: Okay, we're going to close.
• 12:48
  Speaker 1: We're going to close, but we're not going to give them those cents for the advertising money there.
• 12:54
  Speaker 1: So that's Apple down and video up Another 2.1% pre-market.
• 12:58
  Speaker 1: See, the party can keep going.
• 13:01
  Speaker 1: Fat drugs are also up.
• 13:02
  Speaker 1: Keep tucking in or smash the like button.
• 13:04
  Speaker 1: It burns an entire calorie apparently.
• 13:06
  Speaker 1: Google is down 0.8%.
• 13:09
  Speaker 1: Meta is in the green.
• 13:10
  Speaker 1: Tesla is in the red.
• 13:11
  Speaker 1: We were messing around here with some indicators and things.
• 13:16
  Speaker 1: Let me take that off.
• 13:18
  Speaker 1: What is going on with some of our favorite tech stocks?
• 13:22
  Speaker 1: Let's have a look.
• 13:23
  Speaker 1: Palantir is down 2.3% pre-market Nothing major.
• 13:29
  Speaker 1: Considering the non-SMP inclusion in March, some people are very disappointed by that.
• 13:35
  Speaker 1: It's a pretty modest move, I would say.