Latest / Felix Nikolas Prehn's Podcast / (Still) The Best Investing Opportunity This Decade + Stock Market News 17 June 2024

Transcript

(Still) The Best Investing Opportunity This Decade + Stock Market News 17 June 2024 · Felix Nikolas Prehn's Podcast

• 0:01
  Speaker 1: We appear to be live and we have in stock today to you today, everything that's actually moving the market, and I mean that in a big way, and I mean that most of the stuff you read out there in mainstream media is complete nonsense.
• 0:14
  Speaker 1: And I'm going to walk you through that.
• 0:15
  Speaker 1: I'm also going to give you the actual key levels, the key setups that you should probably write down towards the in about five, 10 minutes or so.
• 0:24
  Speaker 1: So stick around.
• 0:25
  Speaker 1: And those levels come directly from one of the market makers who works with me, who's got some serious insight there.
• 0:32
  Speaker 1: I'm going to share that with you in a way that's easy to understand.
• 0:36
  Speaker 1: And good morning to everybody.
• 0:38
  Speaker 1: Smash the.
• 0:39
  Speaker 1: You know what 200 people live.
• 0:40
  Speaker 1: 20 likes that's a scandal, but let's get cracking and make you the best informed investor this week.
• 0:47
  Speaker 1: That's always my goal here, and my goal is also to help you make money from your money, because that's ultimately the big, big freedom piece in the world.
• 0:58
  Speaker 1: If you know that skill, then life becomes much sweeter.
• 1:00
  Speaker 1: And in 2022, we did 126%.
• 1:04
  Speaker 1: In 2023, we did 105% return on capital and this year so far, we're doing about 14,000.
• 1:13
  Speaker 1: I run a small portfolio, life for the community.
• 1:15
  Speaker 1: We're doing about $14,000 on a $30,000 portfolio.
• 1:19
  Speaker 1: So we're doing all right and that's 48% or something.
• 1:24
  Speaker 1: And if you want to learn exactly how we do that the actual three steps that I implement in like two to three hours a week, the full automations and the whole rulebook, then come and join me tomorrow evening at felixfriendsorg slash webinar or training even felixfriendsorg slash training.
• 1:43
  Speaker 1: I'll get you to the same place and you will actually walk away with my rule book and handouts and everything else.
• 1:49
  Speaker 1: But while you do that, let me walk you through some myths and bust some real myths that you see in the kind of stupid financial media that we are all exposed to and that's everyone's going.
• 2:02
  Speaker 1: Oh, the S&P is so overboardbought, yeah, it is.
• 2:05
  Speaker 1: So basically, down here in purple you've got the RSI, which is a momentum indicator.
• 2:12
  Speaker 1: When you're nearing or above this line here, which is a 70 point line, it goes from zero to 100.
• 2:19
  Speaker 1: When it's above 70, everyone says overbought and therefore, in theory, you should now be selling stuff.
• 2:25
  Speaker 1: Now there is a little bit of usefulness in that.
• 2:28
  Speaker 1: I do look at RSI, but when you're on a rally, when you're on a tear, it's going to be overboard for weeks, maybe for months.
• 2:36
  Speaker 1: So you have to look a little bit just beyond the one indicator.
• 2:39
  Speaker 1: So at this point I would quite happily ignore it, because I don't think it means very much.
• 2:45
  Speaker 1: Look, we were really overboard here.
• 2:47
  Speaker 1: A tiny correction and then party right.
• 2:50
  Speaker 1: Did you want to exit there?
• 2:51
  Speaker 1: Is that the place where you wanted to close everything out?
• 2:54
  Speaker 1: Probably not.
• 2:56
  Speaker 1: Now here is another one.
• 2:58
  Speaker 1: Nothing's going up, except for the tech stocks, the big tech stocks, and therefore there is no market breadth everyone's talking about.
• 3:07
  Speaker 1: There's no width in the rally.
• 3:08
  Speaker 1: Therefore it must collapse.
• 3:10
  Speaker 1: It must be terrible.
• 3:12
  Speaker 1: And is that true?
• 3:13
  Speaker 1: Is that true?
• 3:15
  Speaker 1: No, no, it's not.
• 3:17
  Speaker 1: Here is why Microsoft, nvidia, amazon, google and Meta outperform.
• 3:24
  Speaker 1: These are their earnings per share.
• 3:27
  Speaker 1: So profit per if I could spell profit per share for 2024, our expectations, and well, they are 38% up.
• 3:39
  Speaker 1: That's what we're expecting them to do.
• 3:42
  Speaker 1: The S&P overall is 0% because all the other junk in the S&P is expected to actually decline their profits by minus 5%.
• 3:51
  Speaker 1: This is why I'm not a fan of index investing.
• 3:53
  Speaker 1: Yeah, it's a lot better than putting it under the mattress.
• 3:55
  Speaker 1: Of course that's true.
• 3:56
  Speaker 1: But you know, the same could be said it's probably better to take cocaine than crack heroin, right, probably better still doesn't mean it's brilliant, it's just better.
• 4:06
  Speaker 1: Better is relative.
• 4:08
  Speaker 1: So, if you're not investing, buying an index fund is better than not investing.
• 4:12
  Speaker 1: But why are you buying the thing that has 0% growth when you could be buying the thing that has 38% profit growth?
• 4:19
  Speaker 1: That's what you're going to ask yourself, right?
• 4:21
  Speaker 1: So not a big fan of index investing for that reason.
• 4:23
  Speaker 1: But this is why the top tech stocks are going to keep going up and are these going to continue to happen?
• 4:29
  Speaker 1: Yeah, so here we go.
• 4:31
  Speaker 1: Take that index fund Ayas.
• 4:33
  Speaker 1: In 2025, the big tech stocks are expected to grow their profits by 19%, in 2026 by 13%, and notice the gap to the green little bit there, which is the S&P 500 overall.
• 4:49
  Speaker 1: So if you strip out the top five, six stocks, the overall S&P looks pretty miserable, right?
• 4:55
  Speaker 1: So again, you got to ask yourself what do you want to do with that?
• 4:58
  Speaker 1: It's not financial advice, it's an old banker, yeah, sharing some insight there.
• 5:05
  Speaker 1: Dz says great comments.
• 5:08
  Speaker 1: Say no to drugs, absolutely say no to drugs, for sure.
• 5:11
  Speaker 1: It was a tongue-in-cheek comparison point.
• 5:15
  Speaker 1: Now, is the market a lover?
• 5:18
  Speaker 1: Does the market crash, like some mainstream media reporting, when the top stocks outperform?
• 5:25
  Speaker 1: No, no, they don't.
• 5:27
  Speaker 1: If you look at the mega cap leadership since 1986, in every single year when mega caps outperformed massively against the S&P or Nifty.
• 5:47
  Speaker 1: Then what happened in the following year to S&P returns?
• 5:49
  Speaker 1: Well, on average they went up 12% 73% of the time the market outperformed in the following year.
• 6:00
  Speaker 1: So it typically just means that the top companies have got something figured out, they've got a better product, they're more efficient, they're saving money or selling something Like, right now, ai, and therefore they're going to make more money in the next year too.
• 6:15
  Speaker 1: So the market can actually sustain this for quite a long period of time.
• 6:20
  Speaker 1: That's my view.
• 6:22
  Speaker 1: Jean Moreau, you're named after the Seychelles.
• 6:28
  Speaker 1: That's very, very nice.
• 6:29
  Speaker 1: That's a lovely place.
• 6:30
  Speaker 1: If you haven't been there now.
• 6:35
  Speaker 1: There's another myth, and these are all myths, so don't just read the headline and go.
• 6:38
  Speaker 1: Felix said the Fed can't cut rates.
• 6:40
  Speaker 1: No, that's not what I'm saying.
• 6:41
  Speaker 1: I'm saying it's a myth.
• 6:42
  Speaker 1: The Fed has cut interest rates at all time highs of the stock market 20 times since the 1980s 20 times.
• 6:53
  Speaker 1: They've done it again and again and again and again.
• 6:56
  Speaker 1: All these little green dots here are when we had all-time highs, for that you know, at that moment in time these were all all-time highs and the Fed was cutting interest rates.
• 7:04
  Speaker 1: So can they cut interest rates up here?
• 7:07
  Speaker 1: Yeah, of course they bloody can Done it 20 times in the last since 1980.
• 7:11
  Speaker 1: Why wouldn't they do it again?
• 7:12
  Speaker 1: So it's a myth that the Fed can't cut rates just because the market's doing super well.
• 7:18
  Speaker 1: The two are not necessarily that correlated.
• 7:20
  Speaker 1: Now here's another myth Buying stocks is the best way to make money.
• 7:25
  Speaker 1: It's better to own stocks than to own paper, because money paper is worth nothing in the long run, whereas stocks are worth quite a lot.
• 7:34
  Speaker 1: But right now, look at this chart here and you're like what was the option implied?
• 7:40
  Speaker 1: Or correlation, I get it.
• 7:41
  Speaker 1: It's confusing, it's weird, right.
• 7:42
  Speaker 1: It's like why do they call it that?
• 7:42
  Speaker 1: I have no idea.
• 7:43
  Speaker 1: It's weird, right?
• 7:44
  Speaker 1: It's like why do they call it that?
• 7:45
  Speaker 1: I have no idea.
• 7:46
  Speaker 1: But this is what it means.
• 7:48
  Speaker 1: It's expensive when we're up here and it's cheap when we're down here.
• 7:54
  Speaker 1: And what is it?
• 7:55
  Speaker 1: It is options.
• 7:56
  Speaker 1: So options right now are insanely cheap.
• 8:00
  Speaker 1: So that's why you see me make quite a lot of videos lately and I'm buying options, right.
• 8:04
  Speaker 1: If you watched me 18 months ago, I was never buying options.
• 8:07
  Speaker 1: I options, right.
• 8:08
  Speaker 1: If you watched me 18 months ago, I was never buying options.
• 8:10
  Speaker 1: I was selling the things.
• 8:10
  Speaker 1: Why?
• 8:10
  Speaker 1: Because, well, options were expensive.
• 8:12
  Speaker 1: They were expensive Right now down here, cheap as chips.
• 8:16
  Speaker 1: So if you're worried about the rally, you're not sure where it's going to go, but you still want to be involved somewhat.
• 8:22
  Speaker 1: Actually buying an option is a far, far lower risk thing to do, provided you understand how the heck that works, right.
• 8:28
  Speaker 1: So what Peanut gallery?
• 8:36
  Speaker 1: Stop the nonsense comments, william.
• 8:38
  Speaker 1: Okay, well, what are you guys talking about?
• 8:42
  Speaker 1: Hi, everyone, okay, I don't see any nonsense.
• 8:45
  Speaker 1: Maybe you see some more nonsense than me.
• 8:47
  Speaker 1: Entirely possible.
• 8:48
  Speaker 1: So that's what I'm looking at.
• 8:49
  Speaker 1: It's just taking advantage of that right now and just buying the good stocks at really, really, really cheap prices right Now.
• 9:00
  Speaker 1: Here's another one there will be no recession is what the FedT till tells you, and everybody who's you know anywhere close to Washington is telling you.
• 9:07
  Speaker 1: Well, here is a bit of a problem.
• 9:09
  Speaker 1: Every single time when unemployment went up by 0.6%, we triggered a recession.
• 9:19
  Speaker 1: This goes back to 1945, nine months later, three months later, two months later.
• 9:24
  Speaker 1: These are like even before, one month before, two months before, one month after, two months later.
• 9:26
  Speaker 1: These are like even before, one month before, two months before, one month after, two months before, exactly when that happened, one month after it happened, exactly when it happened, and right now, apparently there is no recession.
• 9:36
  Speaker 1: No, no, no, no, no.
• 9:37
  Speaker 1: Recessions are illegal, at least until November.
• 9:40
  Speaker 1: So again, I wouldn't believe it and I would therefore be prepared to make money out of the recession through a bunch of things.
• 9:47
  Speaker 1: One is the stock market's going to get a bit more volatile.
• 9:49
  Speaker 1: Some of the consumer stocks are going to suffer, some of the companies that are exposed to the low end consumer because they are really drowning in credit card debt.
• 9:58
  Speaker 1: All of those things are going to suffer.
• 10:01
  Speaker 1: And then there are other parts of the market that are going to love it.
• 10:04
  Speaker 1: Why?
• 10:04
  Speaker 1: Because rates are going to go down.
• 10:06
  Speaker 1: So big tech's going to like it, right, small tech's going to like it, provided they have a half decent business.
• 10:11
  Speaker 1: There's a lot of opportunity here when you hear the word recession.
• 10:14
  Speaker 1: So, again, you want to understand how that works, and we've got a bunch of like educational videos out on that if you want to learn some more about that.
• 10:30
  Speaker 1: Now here's another myth.
• 10:30
  Speaker 1: I should have probably numbered these.
• 10:31
  Speaker 1: This is myth number, I don't know.
• 10:32
  Speaker 1: Five or six.
• 10:32
  Speaker 1: Small caps are over.
• 10:33
  Speaker 1: They will never recover.
• 10:33
  Speaker 1: No Well, do you remember when people said, oh, boren Buffett is over.
• 10:35
  Speaker 1: This was at the height of the COVID madness or any other thing.
• 10:36
  Speaker 1: People are always saying that Whatever is badly performing now will never recover again and the market doesn't work like that.
• 10:43
  Speaker 1: The market is a cyclical beast.
• 10:45
  Speaker 1: It does this and small caps are cyclical.
• 10:48
  Speaker 1: And where are we right now with small caps?
• 10:50
  Speaker 1: We're down here somewhere.
• 10:52
  Speaker 1: Why are we down here?
• 10:53
  Speaker 1: High interest rates If you're a small company, you actually have to go to the bank and you have to get a loan.
• 11:00
  Speaker 1: You're going to pay like well, eight, nine percent right now.
• 11:02
  Speaker 1: That's going to kill you.
• 11:04
  Speaker 1: That's going to almost kill you.
• 11:05
  Speaker 1: It's going to squeeze your margin.
• 11:06
  Speaker 1: Inflation is going to hit you really hard.
• 11:08
  Speaker 1: You haven't got $100 billion lying around like an Apple company might.
• 11:12
  Speaker 1: And if you look at the valuations right now, like literally every single metric, there is last year's price earnings multiple.
• 11:22
  Speaker 1: This is a discount versus historical records 1985 to 2024, we're 7% cheaper than historical Forward PE.
• 11:33
  Speaker 1: So next year's PE we're cheaper than by 1% Price to book pretty much average.
• 11:40
  Speaker 1: And just look at the comparison points to like mid caps.
• 11:44
  Speaker 1: I wouldn't look at the large caps.
• 11:45
  Speaker 1: That's a whole different world.
• 11:46
  Speaker 1: You can't compare that.
• 11:47
  Speaker 1: It's like saying you're a basketball player, you are six foot nine and you know someone else is four foot eight.
• 11:53
  Speaker 1: It's a different league, like literally different climate zone.
• 11:57
  Speaker 1: So don't compare small caps to big caps.
• 11:58
  Speaker 1: That's never going to work.
• 11:59
  Speaker 1: But to sort of mid caps is sort of the gap shouldn't be too large.
• 12:07
  Speaker 1: And we're having these massive gaps here all around on every single valuation metric.
• 12:10
  Speaker 1: And I'm not saying that is the underperformance of small versus large caps, I'm not saying that small caps are going to rebound by July or August.
• 12:19
  Speaker 1: But if you've got a longer horizon, so if you've got a longer view, then I think again this could be something that is definitely worth digging into.
• 12:25
  Speaker 1: And you've got a longer view, then I think again this could be something that is definitely worth digging into.
• 12:28
  Speaker 1: And you could just buy and hold.
• 12:30
  Speaker 1: You could buy a call option that goes into 2026 or something.
• 12:33
  Speaker 1: And again, no promises with any of these, obviously just a perspective.
• 12:36
  Speaker 1: And I think it's an opportunity.
• 12:38
  Speaker 1: Why?
• 12:39
  Speaker 1: Because we're at pretty low levels, right, the last time we were at these levels was 1999, 2000, disaster, the end of the world, and 2001.
• 12:52
  Speaker 1: Remember 2001?
• 12:54
  Speaker 1: Twin Towers, all that was a bleak period for the world.
• 12:58
  Speaker 1: So that was the last time we were at these valuations, so if you've got a longer horizon again, I think that's something that could be useful.
• 13:13
  Speaker 1: Felix sounds sick Really.
• 13:14
  Speaker 1: No, no, not at all.
• 13:15
  Speaker 1: Actually, absolutely perfect.
• 13:16
  Speaker 1: Maybe we need a sound engineer in here or something, but no, no, I feel great actually.
• 13:20
  Speaker 1: Here's another one from the forecasters tesla will never be a 650 billion dollar company.
• 13:29
  Speaker 1: Now this, of course, is from 2016.
• 13:32
  Speaker 1: From the new york times, andrew ross soken and he said if musk were somehow to increase the value of tesla to 650 billion a figure many experts would contend is laughably impossible, laughably impossible and would make Tesla one of the five largest companies in the US His stock award would be worth as much as $55 billion.
• 13:54
  Speaker 1: And he did that in like three years.
• 13:56
  Speaker 1: So, yeah, take stuff with a pinch of salt.
• 14:00
  Speaker 1: That's kind of my lesson from that.