Latest / Felix Nikolas Prehn's Podcast / Felix Prehn - 5 Reasons to Buy THIS Now [before Big Banks do] + Stock Market News 16 August 2024

Transcript

Felix Prehn - 5 Reasons to Buy THIS Now [before Big Banks do] + Stock Market News 16 August 2024 · Felix Nikolas Prehn's Podcast

• 0:19
  Speaker 1: Thanks for watching why and for how long and what the risk is at the same time, because even good things come with some risk.
• 0:27
  Speaker 1: So let me walk you through that.
• 0:29
  Speaker 1: Well, and if Schwab decides to send me a 2FA apparently they will I might also be able to look up what our trades are doing pre-market.
• 0:41
  Speaker 1: But let me share my screen with you here.
• 0:42
  Speaker 1: First of all, all right, let's walk through the bull case here, and I don't mean that as in.
• 0:47
  Speaker 1: It's sort of this weird outlying thing that'll never happen.
• 0:49
  Speaker 1: I mean, okay, let me just type this into Schwab here.
• 0:52
  Speaker 1: I was going to read it out aloud.
• 0:55
  Speaker 1: That's probably not a good idea, right?
• 0:56
  Speaker 1: I mean, this is what my expectations are for what's happening right here right now.
• 1:02
  Speaker 1: So retail is buying the dip.
• 1:05
  Speaker 1: I think it's pretty obvious if you look at what stock markets prices are doing and how low the volume is.
• 1:10
  Speaker 1: That is a lot of retail activity.
• 1:12
  Speaker 1: It's not a lot of institutional activity.
• 1:14
  Speaker 1: Is that good, is that bad?
• 1:16
  Speaker 1: Well, they're buyers.
• 1:17
  Speaker 1: We don't really care who they are.
• 1:18
  Speaker 1: Now, in addition to that, things got even better A.
• 1:25
  Speaker 1: We addition to that, things got even better A, we're making money, making really nice money.
• 1:30
  Speaker 1: Let me show you these are our cleared profits so far.
• 1:33
  Speaker 1: So closed trades, right.
• 1:34
  Speaker 1: This year we made $24,000 on a $30,000 portfolio and then so far, look at what we got open here.
• 1:40
  Speaker 1: It's another almost $4,000 in open trades here, and we don't count those because they're not realized, but you know, just saying they're there.
• 1:49
  Speaker 1: So if we were to close those out today at four grand, we'd be up almost 90% or something like that on the year.
• 1:56
  Speaker 1: Not too bad, right.
• 1:57
  Speaker 1: And you might be thinking I don't know how you do that, felix.
• 2:00
  Speaker 1: Well, come and join me on the workshop that I'm running next week.
• 2:03
  Speaker 1: It's completely free to give you financial education, to give you some real rules, explain to you what happens.
• 2:08
  Speaker 1: We'll work through some real trades and some charts and everything else.
• 2:11
  Speaker 1: You need to know nothing to participate in it.
• 2:14
  Speaker 1: So go down below felixfranzorg slash workshop and grab yourself a seat.
• 2:18
  Speaker 1: What else is new Corporates, big stocks, are buying back more of their own stocks than ever before.
• 2:27
  Speaker 1: And you know some people are saying, oh, that's sort of fake growth and all of that.
• 2:31
  Speaker 1: That's not.
• 2:32
  Speaker 1: These companies generate profits and, okay, they don't know how to reinvest them.
• 2:38
  Speaker 1: So they're sort of at a point where they can't reinvest those billions.
• 2:42
  Speaker 1: So say look at PayPal, right, they generate what?
• 2:44
  Speaker 1: Five, six billion free cash flow, and it's basically a software company, right?
• 2:50
  Speaker 1: What are they going to do, like, what do you do with five or six billion as a software company?
• 2:54
  Speaker 1: Okay, you could build the metaverse, right, let's see how that pans out.
• 2:58
  Speaker 1: But for most software companies, they're just like we're just going to give the money back to shareholders.
• 3:03
  Speaker 1: And how do you give money back to shareholders?
• 3:08
  Speaker 1: Well, you can pay dividends.
• 3:09
  Speaker 1: And if you pay dividends, what happens?
• 3:11
  Speaker 1: Tax, right.
• 3:11
  Speaker 1: Or you can do buybacks, which is typically a lot more tax efficient.
• 3:15
  Speaker 1: So you're basically buying your own shares.
• 3:17
  Speaker 1: Less shares out there means that your shareholding in the company increases, right, you earn more of the company because the pie imagine a pie, right, imagine a pie.
• 3:30
  Speaker 1: And I'm going to get some.
• 3:31
  Speaker 1: I'm getting more hatred on hatred is a bit of an extreme word on my fat comments.
• 3:37
  Speaker 1: I got a lovely email from someone today who's actually very, very nice, but he just said Felix, you got to stop this.
• 3:42
  Speaker 1: You got to stop telling people that being fat is their fault.
• 3:45
  Speaker 1: Like, okay, and then he said you know what?
• 3:48
  Speaker 1: What did you think?
• 3:49
  Speaker 1: That being ill is also a person's fault?
• 3:53
  Speaker 1: And like yes, so a bit of a difference of opinion there.
• 3:57
  Speaker 1: But let's just say you know this is your pie and you've got these amount of shareholders however many that is and then what do you do?
• 4:07
  Speaker 1: Well, you buy out these guys here, right?
• 4:10
  Speaker 1: You buy them back so they're no longer there.
• 4:12
  Speaker 1: So now you have only 1, 2, 3, 4, 5, 6, 7 left, and now I'm going to have to draw a chart with 7 pies.
• 4:21
  Speaker 1: However, we do that.
• 4:22
  Speaker 1: So Investing Bank are challenged One, two, three, four, five, six, maybe seven, right?
• 4:31
  Speaker 1: So, anyway, not equal, but you get the idea.
• 4:34
  Speaker 1: Less shareholders mean you own a bigger pie of the apple pie, right?
• 4:38
  Speaker 1: No jokes there at all about people who are obese, and I know it's not nice to tell people it's your fault that you're ill, but it's true, I've been ill, I've had things happen and the reality is it is it's kind of our fault, but it's much easier if someone tells you it's genetics, not your fault.
• 4:54
  Speaker 1: It's a much, much better pitch, isn't it?
• 4:56
  Speaker 1: If you're selling it, viewers just massively declined on my comments.
• 5:00
  Speaker 1: Comments there.
• 5:01
  Speaker 1: You can't fat shame and then use a pie chart.
• 5:04
  Speaker 1: Yeah, that's what I was thinking, josh.
• 5:07
  Speaker 1: All right, and then we've got third reason we are bullish to heck the pension buy.
• 5:13
  Speaker 1: And what does that mean?
• 5:16
  Speaker 1: Why are pensions buying shares?
• 5:17
  Speaker 1: Okay, this here is a screenshot I've taken of one from Trade Vision, our marvellous software.
• 5:23
  Speaker 1: And what's the blue line.
• 5:24
  Speaker 1: That is the beginning of Q3, the quarter.
• 5:28
  Speaker 1: Okay, so the quarter starts there.
• 5:30
  Speaker 1: And what do you note?
• 5:32
  Speaker 1: Bond prices have gone up a lot.
• 5:35
  Speaker 1: They were at 90.
• 5:37
  Speaker 1: Right now they're at 97.50.
• 5:41
  Speaker 1: So they're at 97.50.
• 5:44
  Speaker 1: So they've gone up by $7.50, which, if I had a calculator I do have a calculator $7.50 over 90 is 8.3% and a quarter.
• 5:57
  Speaker 1: If you go up 8.3%.
• 6:01
  Speaker 1: And again, let's draw a pie chart, we're going to call this channel the pie chart channel and we're going to talk about pies and recipes.
• 6:12
  Speaker 1: So say, your classic portfolio of a pension fund is what?
• 6:16
  Speaker 1: It's?
• 6:20
  Speaker 1: Probably not 60, 40, is it?
• 6:21
  Speaker 1: Let's say it's 50, 50.
• 6:23
  Speaker 1: It's 50% bonds and 50% stocks, and that's obviously a bit of an oversimplification.
• 6:31
  Speaker 1: But you get the idea what happens when your bond portfolio goes up 8.3%.
• 6:35
  Speaker 1: The pie slice of bonds just got fatter.
• 6:40
  Speaker 1: See what I'm doing there.
• 6:42
  Speaker 1: And what do you got to do there for?
• 6:44
  Speaker 1: Well, you got to sell some bonds.
• 6:46
  Speaker 1: So that's what you do you sell some bonds, this many bonds and you buy stocks instead to rebalance.
• 6:57
  Speaker 1: That's what they do.
• 6:58
  Speaker 1: They do that every quarter and we expect them to do that with about $40 billion, which is marvelous for the stock market, right?
• 7:08
  Speaker 1: Axa advert Really More ads.
• 7:10
  Speaker 1: Monkeypox Market is crashing.
• 7:12
  Speaker 1: Oh yeah, that's another one, isn't it, monkeypox?
• 7:14
  Speaker 1: I wouldn't exactly call this a market crash, though pre-market A moderate, very, very moderate dip down, maybe a bit of an exhaustion dip, and then we've got more reasons to be wonderful.
• 7:26
  Speaker 1: And then I'll tell you one reason that maybe you want to be just a little bit cautious with positions and so on.
• 7:32
  Speaker 1: Yeah, this ad thing is really not good, is it 100% chance of looking like a bubble wrap.
• 7:44
  Speaker 1: So computers are going to save us.
• 7:48
  Speaker 1: Why?
• 7:48
  Speaker 1: Because those CTA, those algo funds, those computers, those algo funds, those computers.
• 7:54
  Speaker 1: They've been selling right.
• 7:56
  Speaker 1: So in the last month they sold $50 billion of shares quite a lot.
• 8:06
  Speaker 1: What are they doing right now?
• 8:07
  Speaker 1: Well, if you listen to the investment banks, like UBS here, that says short-term technical drivers are enough to support further equity recovery, we need intraday recovery to return bullish, blah, blah, blah.
• 8:18
  Speaker 1: And then they say here quant funds are poised to unleash a wave of cash in the stock market, which is basically saying funds are likely to add buying pressure, which is a funny word, isn't it?
• 8:34
  Speaker 1: Buying pressure, as in they're going to buy.
• 8:36
  Speaker 1: Can we paint on?
• 8:38
  Speaker 1: Draw on this?
• 8:38
  Speaker 1: Apparently not Buying pressure?
• 8:40
  Speaker 1: More meaningfully, should markets stabilize and data prints return to more benign, which is exactly where we are.
• 8:45
  Speaker 1: So the CTAs, the algo funds, are doing this.
• 8:49
  Speaker 1: If the market stays flat, they're buying $13 billion.
• 8:52
  Speaker 1: If the market goes up, they're buying $13 billion.
• 8:54
  Speaker 1: If a market goes down, they're still buying almost $5 billion in the next week.
• 8:59
  Speaker 1: Pretty good, right.
• 9:00
  Speaker 1: So they're buying, they're supportive, and over the month they're also buying, unless we massively collapse.
• 9:05
  Speaker 1: That's sort of the outlier.
• 9:07
  Speaker 1: Nothing's impossible, but that looks pretty positive, doesn't it?
• 9:11
  Speaker 1: And here is another reason to be bullish.
• 9:13
  Speaker 1: This here, my friends, is VIX.
• 9:17
  Speaker 1: Vix is our little fear friend, right?
• 9:20
  Speaker 1: Vix is fear, the fear index, and it's come down rather rapidly to sort of the $15 range.
• 9:29
  Speaker 1: What is a quant fund?
• 9:30
  Speaker 1: It's a fund run by a bunch of mathematicians who program computers to run things.
• 9:36
  Speaker 1: So they will say analyze the speech of the Federal Reserve Chairman, live, and if he says certain words in a certain frequency, they will buy or sell certain things, or they'll trigger, depending on something here, like the VIX.
• 9:50
  Speaker 1: If the VIX comes down significantly, what do the funds do?
• 9:53
  Speaker 1: They typically buy because it's seen, as things are coming down, things are better, things are happier, so that's buy.
• 9:59
  Speaker 1: So they're algorithms, basically computer software, and the drop in the VIX is the fastest we have ever seen in the history of the VIX.
• 10:13
  Speaker 1: So we've never gone from petrified to happy quite as quickly as we have this particular week.
• 10:22
  Speaker 1: So good news, right, it's kind of good news, I think.
• 10:29
  Speaker 1: Being married to a woman is very expensive, says IJ.
• 10:32
  Speaker 1: Being married to a man is apparently quite expensive too.
• 10:35
  Speaker 1: That's what the gays tell me, although you probably can't call them gays anymore, can you?
• 10:38
  Speaker 1: Is that offensive nowadays?
• 10:39
  Speaker 1: I don't know.
• 10:40
  Speaker 1: Do you see the Kamala Harris job applications you can put in your gender as sort of one of about 21, which is certainly creative.
• 10:48
  Speaker 1: Don't really quite know what to make of that.
• 10:50
  Speaker 1: Okay, let me show you this.
• 10:53
  Speaker 1: But also I want to show you something else, which is where did my, where did my?
• 10:59
  Speaker 1: Here we go, okay.
• 11:01
  Speaker 1: So there is one thing that I'm slightly teeny, tiny bit just concerned about, and hashtag be kind, I know nothing against gay people.
• 11:14
  Speaker 1: Do whatever you like, couldn't care less, but we can still joke about it, can't we?
• 11:19
  Speaker 1: I mean, I think we can joke about everything.
• 11:21
  Speaker 1: I mean, I'm German, like I mean go nuts, right.
• 11:23
  Speaker 1: So what have we got here yesterday?
• 11:26
  Speaker 1: Beautiful, beautiful gap up right.
• 11:33
  Speaker 1: That gap here is a thing of beauty.
• 11:36
  Speaker 1: The distance between this bar and that bar is lovely.
• 11:39
  Speaker 1: So what's the problem with it?
• 11:41
  Speaker 1: Well, there's just one little fly in my soup, and that is you see, the volume down here, the sort of faint Volume is basically flat, and there is a theory in trading that a gap up on very low flat volume could be what we call an exhaustion gap.
• 12:11
  Speaker 1: And you know that usually plays out.
• 12:13
  Speaker 1: You get another candle here, you get another one here, you top out a little bit, and then this happens, that happens, this happens, that happens, and then you're very, very sad.
• 12:27
  Speaker 1: That's the theory.
• 12:29
  Speaker 1: So I'm just putting that out there so you're aware of it.
• 12:32
  Speaker 1: So how do you deal with that stop loss?
• 12:35
  Speaker 1: If you're a trader, I mean, if you're a long-term buy and hold, none of this really matters.
• 12:40
  Speaker 1: But if you're a trader, then this is something to look at and you might want to look at that high here, or even that high here, as your definite exit points or just sort of if you drop a certain percentage point, then maybe it's time to go out, so you've got to watch that here and now, part of the reason the volume is so low.
• 12:58
  Speaker 1: As I said yesterday, most investment bankers are in Saint-Tropez on a yacht, where they belong in the summer, and therefore not a lot going on out there in the market.
• 13:07
  Speaker 1: What's this wedding talk guys?
• 13:18
  Speaker 1: What's going on here um half holidays and a dog?
• 13:23
  Speaker 1: Okay, there's some happy people on this chat here.
• 13:26
  Speaker 1: Let's need the cats.
• 13:29
  Speaker 1: My cat is feeling better today, actually, thank you really.
• 13:31
  Speaker 1: A few of you even sent me emails with like tips on how to make her better and that so on, and very, very appreciated.
• 13:37
  Speaker 1: She's feeling a lot better.
• 13:38
  Speaker 1: Today she's eaten like three cans of food, which is quite a lot for a small kitten, so we're quite happy about that.
• 13:45
  Speaker 1: Now we also talked a little bit yesterday and I actually did a video on two of those hedge fund people about what they