Latest / Felix Nikolas Prehn's Podcast / Felix Prehn - Banks Just told Big Clients to BUY Before This Date + Stock Market News 21 October 2024

Transcript

Felix Prehn - Banks Just told Big Clients to BUY Before This Date + Stock Market News 21 October 2024 · Felix Nikolas Prehn's Podcast

• 0:00
  Speaker 1: Felix here.
• 0:00
  Speaker 1: Wall Street is planning to buy stocks like mad, but they're not telling you what they're buying or when they're buying or why they're buying.
• 0:08
  Speaker 1: Why are they not telling you?
• 0:09
  Speaker 1: Because you are not a large institutional client.
• 0:11
  Speaker 1: It's only those that get the lovely research notes from Goldman Sachs and that like but Winston gets his paws on those, so we're going to share them with you to make you as well informed as an institutional Wall Street investor.
• 0:25
  Speaker 1: That's always kind of my goal here.
• 0:26
  Speaker 1: My goal is also to make sure that you stop losing money, because the ugly truth is that retail investors that's, you and me we'll always lose money if we are fear driven and most people are fear driven.
• 0:41
  Speaker 1: Why are we fear driven?
• 0:42
  Speaker 1: Because we don't have confidence in our knowledge to manage our money and therefore we sell when bad things happen and we don't buy when bad things happen.
• 0:52
  Speaker 1: If you look at the dip, remember the August dip.
• 0:55
  Speaker 1: Fifth of August, japan sort of collapsed.
• 0:58
  Speaker 1: If you'd bought the dip, nvidia was up 37% since then.
• 1:02
  Speaker 1: The Nikkei, the Japanese stock index, is up 22% since then.
• 1:05
  Speaker 1: Bitcoin up 20%, tesla up 19%, metro up 17%, amazon up 17%.
• 1:11
  Speaker 1: So there is a lesson in here, and the lesson is spot the freaking breakouts when they happen and learn what those rules are.
• 1:19
  Speaker 1: And if you want to learn what those rules are, there's two ways you can learn.
• 1:22
  Speaker 1: One if you're impatient, you can simply go over to the masterclass that I've recorded for you at felixfrenzorg slash getfree.
• 1:29
  Speaker 1: And, by the way, if you've checked that out on the last couple of days on a mobile phone, you got the wrong video.
• 1:34
  Speaker 1: I'm really sorry about that.
• 1:35
  Speaker 1: I take the blame for that Mea culpa and all that.
• 1:39
  Speaker 1: We we fixed it, though.
• 1:41
  Speaker 1: So if you want to check that out and I'm also running a live training on this, and this is like no live trading I've ever done before this is about stock trading.
• 1:51
  Speaker 1: It's about spotting those breakouts, to spot those big rallies before they happen you can join me on Tuesday evening.
• 1:57
  Speaker 1: Link is also down below in the description.
• 2:00
  Speaker 1: So let's look at what Wall Street's saying with regards to buying right.
• 2:05
  Speaker 1: Well, actually, one more thought on the whole dip buying thing.
• 2:08
  Speaker 1: You know when your favorite stock goes down and you feel miserable.
• 2:11
  Speaker 1: If you thought about it this way, if you say, invested $500 every single Monday and did that all year round, or you know, whatever the amount is that you invest over the month, you split it into weeks and then the stock market dropped on a Monday, would you be happy or would you be sad?
• 2:26
  Speaker 1: Or whatever the amount is that you invest over the month, you split it into weeks and then the stock market dropped on a Monday.
• 2:29
  Speaker 1: Would you be happy or would you be sad?
• 2:30
  Speaker 1: Well, would you be happy if you walked into, say, walmart, and everything was half price?
• 2:32
  Speaker 1: Probably right, you'd buy like mad.
• 2:34
  Speaker 1: It's the same thing with the stock market and if you get that into your mindset, you're ahead of 99% of people already.
• 2:41
  Speaker 1: But if you're on top of that, you add when to buy and you get confidence when to buy because you understand what the rules are.
• 2:52
  Speaker 1: There are four rules that Wall Street applies.
• 2:53
  Speaker 1: To pick those Then.
• 2:54
  Speaker 1: Well, come and join me on Tuesday.
• 2:55
  Speaker 1: Now I'm going to hit you with some charts here.
• 2:56
  Speaker 1: I'm going to hit you with some data.
• 2:58
  Speaker 1: I'll put the charts on the screen for you so you can see them, and I'm holding this mic because I've already packed my mic stand.
• 3:02
  Speaker 1: I'm going on a little trip there.
• 3:04
  Speaker 1: More than that in a moment.
• 3:06
  Speaker 1: So the growth stocks are once again outperforming value stocks.
• 3:10
  Speaker 1: Why does that matter?
• 3:11
  Speaker 1: Well, value stocks only really beat growth stocks.
• 3:14
  Speaker 1: When people start to panic, they start to get worried, so they get out Papa Buffett's investment book and they buy the safe stuff.
• 3:23
  Speaker 1: Growth stocks are outperforming value stocks again.
• 3:26
  Speaker 1: That's a good thing.
• 3:27
  Speaker 1: That means the market's going up and high quality stocks and I always say, buy high quality stocks and they are bouncing off the trend line.
• 3:36
  Speaker 1: High quality stocks are flying compared to low quality stocks and we always expect that.
• 3:41
  Speaker 1: Now we've had a lot of concerns around GDP.
• 3:44
  Speaker 1: Is the US economy slowing down and so on.
• 3:46
  Speaker 1: Guess what the consensus view is now that GDP is just fine.
• 3:51
  Speaker 1: There'll be no recession, nothing to worry about whatsoever.
• 3:54
  Speaker 1: Here's a little chart from Goldman Sachs which shows cumulative stock approximated change to market's one-year-ahead GDP view Clear as mud, right.
• 4:02
  Speaker 1: Basically, what it's saying is that we think GDP is going.
• 4:04
  Speaker 1: Approximated change to markets one year ahead.
• 4:05
  Speaker 1: Gdp view Clear as mud, right.
• 4:06
  Speaker 1: Basically, what it's saying is that we think GDP is going to grow and everything will be just fine, which is good.
• 4:12
  Speaker 1: On that note, morgan Stanley also says that things are going to go higher.
• 4:17
  Speaker 1: They're basically saying rate cuts on the horizon, earnings are going to be good, strong economic data, everything is going to go up and sentiment which is sort of like how exuberant are we right?
• 4:32
  Speaker 1: We can be like, oh my God, the market's going to collapse to buy everything, buy everything.
• 4:37
  Speaker 1: And when your cleaner starts buying Tesla stocks and that kind of thing people who would never talk about stocks usually that's when you know we're near the top.
• 4:46
  Speaker 1: We're not.
• 4:47
  Speaker 1: We're at a 0.6 on the sentiment level.
• 4:52
  Speaker 1: This is Goldman Sachs' sentiment level and basically it goes from minus two to plus two, I think.
• 4:59
  Speaker 1: So 0.6 is kind of like it's not even stretched, which means we can go a lot higher and a lot higher.
• 5:06
  Speaker 1: So there you go, and one of the key reasons for that is that our expectations for earnings per share so real profits divided by numbers of shares out there, which is a real measure of the market ultimately cares about well, it's going through the roof.
• 5:19
  Speaker 1: I'll show it to you here S&P 500 Q2 2024 estimates of earnings per share.
• 5:25
  Speaker 1: A bit of a mouthful there again, but basically we are expecting things to look brighter and more profitable.
• 5:30
  Speaker 1: And then, of course, you're going to think, well, but yeah, but what sectors should I buy?
• 5:33
  Speaker 1: Well, have a look at the underlying.
• 5:39
  Speaker 1: So have a look at the earnings per share growth for stock sectors, because that tells you a lot more than the stock price, right, and who's leading the party?
• 5:48
  Speaker 1: It's utilities, it's information technology that's basically big tech and then it's financials, and then it's healthcare and then a bit of consumer discretionary.
• 5:56
  Speaker 1: So makes sense, right?
• 5:59
  Speaker 1: Big tech, finance utilities are doing well, thanks to the whole AI thing.
• 6:03
  Speaker 1: Everybody needs a lot more energy, but the ultimate driver of the whole thing is essentially how much cash large companies are generating and what are they doing with it.
• 6:14
  Speaker 1: Well, they're doing two things with it Buying back their own stocks and they're sending it to NVIDIA.
• 6:20
  Speaker 1: A bit more on that in a moment.
• 6:23
  Speaker 1: Buyback authorizations as in the amount of buybacks that are going to come up are up 21% so far this year.
• 6:30
  Speaker 1: 21%, that's pretty extraordinary, and we think that 2025 growth will be even bigger.
• 6:36
  Speaker 1: So, pretty extraordinary 15% growth in buybacks expected by Goldman Sachs for next year, and that just means there'll be a lot less shares out there.
• 6:47
  Speaker 1: And who are the biggest guys out there buying back?
• 6:51
  Speaker 1: Well, apple.
• 6:51
  Speaker 1: Apple is the monster $92 billion of buybacks this year and Nvidia is very sweetly adding to the party.
• 7:00
  Speaker 1: They're going to buy back a lot more.
• 7:03
  Speaker 1: I can't remember what the exact number is, but it's growing and Microsoft is, I think around 19 billion.
• 7:10
  Speaker 1: I think Nvidia is going to be 30 billion, so pretty tremendous volume there in terms of buybacks, which will be good for the stock prices.
• 7:19
  Speaker 1: And then when are they buying back?
• 7:20
  Speaker 1: Well, november.
• 7:22
  Speaker 1: So there you got the date now, right?
• 7:23
  Speaker 1: So now you know when the rally is meant to kick off properly.
• 7:26
  Speaker 1: Goldman Sachs says we are going to get $100 billion worth of share buybacks in November.
• 7:33
  Speaker 1: That's $6 billion a day.
• 7:35
  Speaker 1: Yeah, there are only about 19 trading days in the month, and they're also estimating that next year it's going to be over a trillion about 1.1 trillion.
• 7:46
  Speaker 1: Crazy stuff, right.
• 7:47
  Speaker 1: So what about the other bit that big companies are spending money on NVIDIA?
• 7:53
  Speaker 1: Everyone's spending money on NVIDIA chips.
• 7:54
  Speaker 1: It's a waste of money, it's too much.
• 7:56
  Speaker 1: Someone just wrote in my comments what happens to companies when their AI gets hacked.
• 8:01
  Speaker 1: They go bankrupt, right, and people are very afraid of change.
• 8:06
  Speaker 1: I replied well, if the companies don't adopt AI, they'll also go bankrupt.
• 8:11
  Speaker 1: This time, it's a certainty.
• 8:12
  Speaker 1: The hacking thing is a little bit less likely.
• 8:14
  Speaker 1: So people are very afraid of change and it means there'll be a lot of change.
• 8:19
  Speaker 1: Isn't that a funny thing?
• 8:20
  Speaker 1: The more afraid you are of change, the bigger the change will be.
• 8:23
  Speaker 1: It's kind of ironic, really, because if you don't participate in the change, well, you'll go out of business.
• 8:33
  Speaker 1: But NVIDIA has done something extraordinary.
• 8:34
  Speaker 1: There was a thing called Moore's Law, which was, I don't know, every two years or something, compute power doubled, something like that.
• 8:39
  Speaker 1: I can't remember what the exact number was, and that was true for years and years and years.
• 8:42
  Speaker 1: Maybe it was every five years or something.
• 8:44
  Speaker 1: Anyway, now NVIDIA has changed that.
• 8:47
  Speaker 1: It is now called Huang's Law, jensen Huang, and every chip delivery every year is going to be two to three times cheaper, at the same performance as the previous year.
• 9:00
  Speaker 1: Two to three times every single year.
• 9:02
  Speaker 1: And that is basically double or so what Moore's law was.
• 9:07
  Speaker 1: And what does that mean?
• 9:09
  Speaker 1: It means everyone's going to keep buying NVIDIA trips because, you see, you don't buy a new car every year, because the car that comes out the next year is kind of almost the same as the one the year before right, slightly different color or something, but it's about the same thing.
• 9:23
  Speaker 1: But imagine if the car was two to three times cheaper to run every year.
• 9:30
  Speaker 1: You'd be upgrading all the freaking time if you're driving a lot.
• 9:33
  Speaker 1: Wouldn't you Imagine if you were like a commercial business that used that car like all day long.
• 9:38
  Speaker 1: That's the same for data centers.
• 9:40
  Speaker 1: So if they don't upgrade every year to the latest chip, their cost of compute power would be two to three times higher than their nearest competitor, which means their nearest competitors can undercut them right, because basically we all rent computing power now Nobody builds servers anymore pretty much and therefore you'd be out of business within like two to three years because you'd be utterly uncompetitive.
• 10:07
  Speaker 1: So all these major companies like the Amazons, the Microsofts, the Googles, teslas, are going to have to keep buying NVIDIA chips at this insane rate every single year unless they manage to build their own, which will be better, which will eventually come, but it'll take a long time, and I think they'll start doing it for niche stuff and then they'll use like five or 10% of their own chips and see if it works.
• 10:30
  Speaker 1: And then you know they start doing that because NVIDIA doesn't just have chips, they have an ecosystem.
• 10:36
  Speaker 1: All your stuff, all your developers basically work in the NVIDIA ecosystem.
• 10:40
  Speaker 1: You'd really piss them off if you changed it.
• 10:42
  Speaker 1: But Microsoft is to spend 80 billion over the next year on NVIDIA and that's pretty glorious news for the whole AI thing.
• 10:52
  Speaker 1: And if you think about.
• 10:54
  Speaker 1: If you think that AI is going to generate a return and I do, I think it's going to generate insane returns then, on investment, then that's money very well spent.
• 11:04
  Speaker 1: So it's going to be very interesting over the next year or two.
• 11:08
  Speaker 1: Now, the other thing that I just saw was that throughout this year, ceos were feeling a little bit more miserable.
• 11:15
  Speaker 1: You know, the bonuses were getting a little bit smaller.
• 11:17
  Speaker 1: They were worried about should I buy the second yacht and, you know, is the second house for the mistress in the Hamptons?
• 11:24
  Speaker 1: Is that something I can really afford?
• 11:26
  Speaker 1: You know, those are the real concerns of the CEOs of corporate America, and then we have to have some sympathy for them.
• 11:34
  Speaker 1: It's a tough life.
• 11:35
  Speaker 1: I mean, how do you live on 50 million or 100 million?
• 11:38
  Speaker 1: It's a hard thing to do and well, they've chirped up a little bit.
• 11:41
  Speaker 1: The confidence of CEOs has rebounded quite significantly from about 30 to about 50.
• 11:47
  Speaker 1: And anything above 50 is sort of good.
• 11:49
  Speaker 1: Anything below 50 means they're breaking up with mistresses.
• 11:53
  Speaker 1: You know recession territory, so that's a good thing and, yeah, that's a very, very good thing.
• 11:59
  Speaker 1: Now, if you want to learn how you actually make money out of this rally that we're being promised by Wall Street.
• 12:05
  Speaker 1: Check out the masterclass down below, phoenixfriendsorg slash masterclass and I'll teach you in that how to spot those breakouts before they happen.
• 12:13
  Speaker 1: They are utterly predictable and if you want to learn a little bit more about that, come and join me tomorrow evening, live for a proper workshop on that, and you can also ask me a gazillion questions, which is what the point is, what we're doing at live.
• 12:29
  Speaker 1: You're going to sign up for that at felixfrenzorg slash workshop and I am going to throw the microphone in my bag and head out and catch a flight to somewhere glorious.
• 12:40
  Speaker 1: I'll share some more on that tomorrow and I hope you're having as wonderful a day as I am and I appreciate you for watching and I hope to see you on that live workshop tomorrow.
• 12:50
  Speaker 1: All the best.