Latest / Felix Nikolas Prehn's Podcast / Felix Prehn - A Warning to All Investors + Stock Market News 05 August 2024

Transcript

Felix Prehn - A Warning to All Investors + Stock Market News 05 August 2024 · Felix Nikolas Prehn's Podcast

• 0:04
  Speaker 1: Felix here, and today is a day that we have not seen since 1987.
• 0:09
  Speaker 1: That is how bad this crash is looking, and I want to walk you through what caused it, where we're at, how we make money out of this yeah, seriously, how we make money out of this and why we should stay incredibly calm and perhaps celebrate a little and maybe that's a little too early for some of you, but that's my goal here to make you the best informed investor out there, so that you are not losing money like most people.
• 0:31
  Speaker 1: So let me share my screen with you and we'll jump straight into it.
• 0:40
  Speaker 1: Is the mic a little loud?
• 0:41
  Speaker 1: It seems a little loud on my thing, but there we are.
• 0:43
  Speaker 1: So Japan's Topics, which is the sort of S&P of Japan, crashed 12% today and that isn't just like any old crash.
• 0:52
  Speaker 1: That is literally the biggest since the 1987 crash.
• 0:59
  Speaker 1: We're right here.
• 1:00
  Speaker 1: So this is a huge, freaking move and let me run through a few data points.
• 1:06
  Speaker 1: I'll answer all your questions, so please ask them in the chat and hopefully, by the end of this early morning market therapy session, everyone is going to feel a little happier and calmer because you understand what's going on.
• 1:18
  Speaker 1: But I also want to explain to you really what's caused this, because it's important to understand this stuff.
• 1:23
  Speaker 1: At the same time, over the weekend we got notification that Berkshire Hathaway sold more stock than they have at any time in their history.
• 1:32
  Speaker 1: There's never been a quarter where they sold more stock.
• 1:35
  Speaker 1: What did they sell Apple down something like 8% last time I looked.
• 1:38
  Speaker 1: And they also keep selling Bank of America not exactly a huge confidence builder for the market.
• 1:45
  Speaker 1: So those are the two things that came in together.
• 1:47
  Speaker 1: And, of course, we had macro data last week and all that kind of good stuff.
• 1:53
  Speaker 1: But guess what?
• 1:54
  Speaker 1: We're still making money.
• 1:55
  Speaker 1: We're up $24,000 on our portfolio and you might be thinking, oh my God, it must be terrible today.
• 1:59
  Speaker 1: But look at our teaching portfolio here.
• 2:02
  Speaker 1: Ok, our PayPal position is suffering somewhat, at 5% down.
• 2:06
  Speaker 1: Spy is down 4% and guess what?
• 2:09
  Speaker 1: We have a bearish trade open on SPY which could, if the market continues to go south, make us somewhere between $1,000 and $3,700 on a 30k portfolio.
• 2:22
  Speaker 1: That's pretty significant.
• 2:23
  Speaker 1: So why do we have a bearish trade open?
• 2:25
  Speaker 1: Did I get up really early this morning?
• 2:27
  Speaker 1: No, it was just what the market's been telling us last week.
• 2:31
  Speaker 1: And if you look at Trade Vision, which is our tool to give you better data.
• 2:42
  Speaker 1: The link should be down in the description and you open SPY and you look at what our indicator says, which is the red thing there in the background and that turned red like a week ago.
• 2:55
  Speaker 1: Right, that gap down there, that was the sell signal and we trade momentum.
• 2:59
  Speaker 1: We don't care what happens in a month or in a year or any of that, we trade that.
• 3:03
  Speaker 1: So we did and we're being rewarded for it today as we dip.
• 3:06
  Speaker 1: But also just zoom out a little, because we've had similar dips in recent history and they were not the end of the world.
• 3:14
  Speaker 1: This dip here okay, our dip so far is bigger, right, my dip's bigger than your dip, kind of thing.
• 3:21
  Speaker 1: But zoom out a bit more and you see that we had a monster dip at the end of 2022.
• 3:29
  Speaker 1: Why Recession fears?
• 3:32
  Speaker 1: And that looks about worse actually than what we're looking at right now, although I suspect it's going to get a little bit worse here.
• 3:39
  Speaker 1: So we get these adjustments in the market and they're not the end of the world.
• 3:45
  Speaker 1: A lot of people panic and what do they do?
• 3:47
  Speaker 1: They do the stupid thing they go to the bottom of the dip and they sell and then it rallies back up and they go, oh no.
• 3:54
  Speaker 1: And then they buy, and then they wait for the dip, and then they sell.
• 3:58
  Speaker 1: And I always say to people if that's your strategy right now, take all your money out of your bank account, drive to midtown Manhattan, look for a hungry looking investment banker.
• 4:09
  Speaker 1: You'll identify them.
• 4:09
  Speaker 1: They wear little midtown vests, little sort of Patagonia vests, and just give them a shoebox of cash.
• 4:14
  Speaker 1: It's easier, it'll save you time.
• 4:16
  Speaker 1: Okay, now, I say that slightly in jest.
• 4:18
  Speaker 1: Obviously, I hope that by the end of this you come out a little bit smarter.
• 4:22
  Speaker 1: But we trade momentum.
• 4:24
  Speaker 1: We make money up and down.
• 4:26
  Speaker 1: Actually, it's a little easier on the way down.
• 4:28
  Speaker 1: So if you want to learn really how we do that properly, then come and join me tomorrow, felixfranzorg slash training free live trading training and see how we're going to make a boatload of money in August, like we have done in July.
• 4:41
  Speaker 1: Okay, I'll teach you the full strategy done in July.
• 4:42
  Speaker 1: There she is, there she is and we're right now.
• 5:03
  Speaker 1: I'm not going to get a pen, pen, please, a kingdom for a pen.
• 5:08
  Speaker 1: We're right now here In COVID.
• 5:12
  Speaker 1: We went all the way up there, okay, so it's pretty extreme there.
• 5:32
  Speaker 1: 2015,.
• 5:33
  Speaker 1: We did this briefly.
• 5:34
  Speaker 1: Let's zoom out a little, if we may.
• 5:35
  Speaker 1: What happened here?
• 5:35
  Speaker 1: Let's go back.
• 5:39
  Speaker 1: What about 2008?
• 5:39
  Speaker 1: Yeah, we went to the 90s.
• 5:40
  Speaker 1: That was a record.
• 5:40
  Speaker 1: We're not quite in 2008 yet, but it's pretty bad.
• 5:42
  Speaker 1: Right, it's pretty bad.
• 5:42
  Speaker 1: Now, how do you make money out of a thing like that?
• 5:45
  Speaker 1: And again, this is not a recommendation in any way, shape or form.
• 5:48
  Speaker 1: But yeah, you could set up a bear call spread, which is an options trade, which would give you about $380 risk and about a 28% return if we go below 59 or 60 on VIX at some point in the next 45 days, which seems fairly likely.
• 6:09
  Speaker 1: It seems fairly likely.
• 6:11
  Speaker 1: We've never stayed at these elevated levels for 45 days.
• 6:16
  Speaker 1: It's just never, ever happened in history of the market.
• 6:19
  Speaker 1: So there is a way to potentially make some pretty good money, but of course, you need to understand what the heck you're doing.
• 6:26
  Speaker 1: So come and join me tomorrow, okay, so that's a little bit of an opening shot here, and please ask your questions.
• 6:32
  Speaker 1: I will answer them all.
• 6:34
  Speaker 1: Google is still profiteering from us.
• 6:37
  Speaker 1: I've turned ads off on all live streams, but they still show them the bastards.
• 6:41
  Speaker 1: I keep emailing them and they say we're working on it, but we haven't got a firm deadline on it.
• 6:46
  Speaker 1: You know that kind of thing.
• 6:46
  Speaker 1: So here's that massive fear.
• 6:51
  Speaker 1: Move up today.
• 6:53
  Speaker 1: But let's move a little bit further in here.
• 6:57
  Speaker 1: If you look at the S&P and you want to know how bad is this going to get, felix?
• 7:03
  Speaker 1: How low can we go?
• 7:05
  Speaker 1: Should we be shorting the market?
• 7:07
  Speaker 1: That kind of thing?
• 7:07
  Speaker 1: Okay, right now we're trading around 5,350, give or take.
• 7:12
  Speaker 1: There is support at 5,300.
• 7:16
  Speaker 1: Pretty big support actually.
• 7:18
  Speaker 1: But market makers the guys behind the curtain running the market are basically following whatever move the market makes right now.
• 7:29
  Speaker 1: So we're selling, they sell.
• 7:31
  Speaker 1: We go up, they buy.
• 7:32
  Speaker 1: So the trouble is that all the way down to 5,000, those guys will continue to sell if we sell and therefore you might see some monster moves in the S&P today and this week until somebody steps in and does something about it.
• 7:50
  Speaker 1: We'll get onto that in a moment as well.
• 7:53
  Speaker 1: Right now, as I say, we're trading at 5346, something like that on the S&P.
• 7:58
  Speaker 1: We're down a staggering, I think, 5% or something like that on SPY 3.6% right now we're down pre-market on SPY.
• 8:11
  Speaker 1: That is huge.
• 8:13
  Speaker 1: Look at that gap here.
• 8:14
  Speaker 1: Look at the size of that gap.
• 8:16
  Speaker 1: That's pretty extraordinary.
• 8:17
  Speaker 1: We're trading here right.
• 8:19
  Speaker 1: So we're back to March levels.
• 8:21
  Speaker 1: Now we've had this extraordinary rally.
• 8:21
  Speaker 1: So so we're back to March levels.
• 8:22
  Speaker 1: Now we've had this extraordinary rally, so we're only back to March levels, not to sort of 1986 levels, but still it is a big, big move.
• 8:29
  Speaker 1: And so how do you play that?
• 8:31
  Speaker 1: You just have to be aware that it's going to be very, very choppy.
• 8:35
  Speaker 1: And to some of you who are saying, oh, why don't we short the market, I say this Okay, first of all, if something flips right, the Bank of Japan could step in, the Fed could step in, somebody could step in and bail us out.
• 8:51
  Speaker 1: And if they do and say they do that you know pre-market on the weekend, you, my friend, with your short, are screwed.
• 9:00
  Speaker 1: So I wouldn't bother.
• 9:01
  Speaker 1: Okay, definitely wouldn't bother.
• 9:04
  Speaker 1: So the market is already pricing in a 60% probability probability if I could spell that long word of a rate cut in one week as an emergency meeting by the Fed to say we're freaking out, we're going to cut rates, they're going to do their best to not do that.
• 9:33
  Speaker 1: How can they get around doing that?
• 9:36
  Speaker 1: Because if you do an emergency meeting, it never looks good, right, it tends to cause more panic than it solves.
• 9:41
  Speaker 1: But we're now also up to five rate cuts by the end of the year.
• 9:47
  Speaker 1: The market's now expecting five cuts.
• 9:49
  Speaker 1: Remember we had six or seven we were expecting last December, we went to two and now we're back to five.
• 9:55
  Speaker 1: It is rough fun, isn't it?
• 9:56
  Speaker 1: In the market.
• 9:56
  Speaker 1: Well, there was a charter that I was going to show you, but I forgot to put it in, which is that the Fed is already pumping liquidity into the market, and they've been doing it for about a week, and they can do that through their sort of making money available to banks and just generally printing money.
• 10:16
  Speaker 1: So M2 is ticking up, and if you don't believe me on that, let's have a look.
• 10:20
  Speaker 1: Fred M2.
• 10:22
  Speaker 1: Who's Fred, you ask?
• 10:24
  Speaker 1: Fred's my friend, the Federal Reserve Bank of Louisiana.
• 10:29
  Speaker 1: These guys, and what do you see?
• 10:31
  Speaker 1: Can we zoom in on this?
• 10:32
  Speaker 1: Are we allowed to zoom in on this?
• 10:33
  Speaker 1: There we go.
• 10:35
  Speaker 1: See, they've been pumping money into the market here.
• 10:38
  Speaker 1: That only goes up to Hang on.
• 10:42
  Speaker 1: What did I do?
• 10:43
  Speaker 1: What did I do?
• 10:44
  Speaker 1: I want to see the rest of it.
• 10:46
  Speaker 1: Yeah, as you see, they are actually pumping money back into the market.
• 10:49
  Speaker 1: So, despite the whole like tightening things, they have been pumping money back in.
• 10:56
  Speaker 1: So they can just do that make more money available through money printing, buy a few T-bills or government debt or something like that Plenty of that stuff around, and we actually don't need to tinker with interest rates.
• 11:08
  Speaker 1: So they could do that.
• 11:09
  Speaker 1: That would be definitely something, okay, shaps.
• 11:20
  Speaker 1: So let me explain to you.
• 11:22
  Speaker 1: Obviously, we're down significantly here this morning and I'll show you just how much.
• 11:29
  Speaker 1: Now, if you have a weak constitution then you might want to avert your eyes.
• 11:34
  Speaker 1: This was Friday.
• 11:35
  Speaker 1: Free market.
• 11:38
  Speaker 1: Yeah, it's pretty red, isn't it?
• 11:40
  Speaker 1: Nvidia's down 11%.
• 11:41
  Speaker 1: Apple down 9.5%.
• 11:42
  Speaker 1: Microsoft down 4%.
• 11:44
  Speaker 1: Meta 7%.
• 11:44
  Speaker 1: Google 5.6%.
• 11:45
  Speaker 1: Tesla down 8.8%.
• 11:48
  Speaker 1: Pretty much everything is down, with the exception of utilities, which is a good hedge.
• 11:52
  Speaker 1: Pepsi is doing all right and I think Lockheed Martin is making some money because someone's starting a war somewhere, but that's pretty much it.
• 12:01
  Speaker 1: Everything else out there is pretty much down.
• 12:02
  Speaker 1: No idea why CMCSA is up, but other than that it's a bit of a bloodbath here this morning.
• 12:10
  Speaker 1: Can we make money out of that?
• 12:12
  Speaker 1: Yes, we can.
• 12:13
  Speaker 1: I think going against the VIX grain might be one trade we just looked at, I think.
• 12:19
  Speaker 1: Well, obviously, you know, we've got a SPY trade open already, so we're feeling quite smug, which should make us some nice money today because that was bearish.
• 12:26
  Speaker 1: It's been sitting there since last week because the market actually turned sour before anyone was talking about it.
• 12:34
  Speaker 1: We turned sour on the 24th.
• 12:36
  Speaker 1: We had that gap down.
• 12:37
  Speaker 1: That was the bearish call.
• 12:39
  Speaker 1: We never reversed that bearish call and therefore we're hopefully going to make some money on this.