Latest / Felix Nikolas Prehn's Podcast / Felix Prehn - ⚠️Why Wall Street is WRONG on Big Tech + Stock Market News 23 October 2024

Transcript

Felix Prehn - ⚠️Why Wall Street is WRONG on Big Tech + Stock Market News 23 October 2024 · Felix Nikolas Prehn's Podcast

• 0:00
  Speaker 1: this free market live stream.
• 0:02
  Speaker 1: We've got wall street arguing about the doom and gloom that the most important investment bank in the world put out yesterday.
• 0:10
  Speaker 1: I want to make sure you're super, super clear on that so you know what the right strategy is for the coming weeks, months and even years.
• 0:16
  Speaker 1: We've got mcdonald's uh.
• 0:19
  Speaker 1: We've got starbucks.
• 0:20
  Speaker 1: We've got coca-cola a lot of big stocks um dumping earnings today, super important stuff out there.
• 0:26
  Speaker 1: I'm going to run through all of that.
• 0:27
  Speaker 1: I'll do my best to answer your questions Now.
• 0:29
  Speaker 1: You must forgive me.
• 0:30
  Speaker 1: I'm in a hotel suite so I'm on one screen, so I have to juggle quite a lot of windows here.
• 0:38
  Speaker 1: Hopefully this will work out all right.
• 0:41
  Speaker 1: Is it live or pre-recorded today?
• 0:43
  Speaker 1: Does that answer your question?
• 0:45
  Speaker 1: Drew, my friend, you are wrong.
• 0:48
  Speaker 1: Okay, so let me walk you through this here.
• 0:53
  Speaker 1: This was yesterday's Goldman Sachs' bombshell, where they basically said the stock market is only going to grow about 1% per year, adjusted for inflation, for the next 10 years, which means stock investors, you might as well jump out of the window now.
• 1:09
  Speaker 1: That is a joke.
• 1:10
  Speaker 1: If you're wondering why there are flowers here, by the way, that is the microphone holder.
• 1:15
  Speaker 1: I thought that was a rather smart idea.
• 1:17
  Speaker 1: Can you see that?
• 1:17
  Speaker 1: Isn't that a rather smart idea?
• 1:18
  Speaker 1: There's a microphone in here.
• 1:20
  Speaker 1: It's like a spy novel.
• 1:21
  Speaker 1: So, moving swiftly on, we've had Yardini come out today, another big Wall Street analyst, and they're saying Goldman Sachs is talking gibberish on most things.
• 1:35
  Speaker 1: They do agree on one or two things, but most things they believe and I struggle with the word belief in investing.
• 1:42
  Speaker 1: I don't think it's a religious experience but they believe the US economy is in a roaring 2020s productivity growth, and I do get that.
• 1:51
  Speaker 1: Basically, ai is going to make things more productive.
• 1:54
  Speaker 1: And they say real GDP is growing at about 3%.
• 1:58
  Speaker 1: Inflation is going to come back down to 2%.
• 2:01
  Speaker 1: So that sounds a little bit more optimistic, doesn't it?
• 2:04
  Speaker 1: But is that it?
• 2:05
  Speaker 1: No, there is actually more to that and, yes, I'm going to hit you with some charts.
• 2:11
  Speaker 1: I'm going to hit you with some data points.
• 2:12
  Speaker 1: If you can't handle the truth, then this isn't the channel for you.
• 2:14
  Speaker 1: I'm afraid.
• 2:14
  Speaker 1: If it is, smash the, you know what and we'll share it with more people.
• 2:20
  Speaker 1: So the compound annual growth rate, which is basically how much a profit is going up by of the S&P 500, is pretty staggering.
• 2:35
  Speaker 1: It's about 11 percent.
• 2:36
  Speaker 1: So it's pretty good stuff If you stay in that 11 percent range, then guess what?
• 2:41
  Speaker 1: The market's going to keep going up.
• 2:42
  Speaker 1: And they're saying exactly that.
• 2:46
  Speaker 1: They're saying productivity growth means average annual returns should at least match the 6% to 7% we achieved since the early 1990s.
• 2:55
  Speaker 1: Actually, if you add dividends to it, a bit more AI growth, we should get about 11% a year, which means stocks should go up about 11% a year.
• 3:05
  Speaker 1: So a little bit more optimistic, isn't it?
• 3:07
  Speaker 1: But what about this doom and gloom chart?
• 3:09
  Speaker 1: The market concentration.
• 3:11
  Speaker 1: The larger stocks now make up a bigger percentage of the pie than they ever have since 1932.
• 3:19
  Speaker 1: So even the world's worst collapse of the stock market.
• 3:23
  Speaker 1: We are now above that and therefore everything must end right.
• 3:27
  Speaker 1: Here and there, says Goldman Sachs Well, not quite.
• 3:30
  Speaker 1: And yes, everyone's posting this if you are on X.
• 3:36
  Speaker 1: The Buffett ratio, the Buffett indicator, is basically saying saying forward price to sales.
• 3:52
  Speaker 1: So it's the stock price over next year's expected sales high or low, and at the moment it's it's very high, record high, 2.9 um super, super high.
• 3:57
  Speaker 1: Never been been been that high.
• 3:58
  Speaker 1: So stocks don't seem particularly cheap.
• 4:01
  Speaker 1: But but but if you look at the red line here, is that Buffett indicator, alleged Buffett indicator?
• 4:12
  Speaker 1: I don't think it's really his, but this is basically price over sales.
• 4:17
  Speaker 1: But do you really care about how many you know burgers McDonald's sells?
• 4:23
  Speaker 1: Or do you care about how many people they kill with E coli?
• 4:25
  Speaker 1: That's another.
• 4:25
  Speaker 1: Or do you care about how many people they kill with E coli?
• 4:26
  Speaker 1: That's another story.
• 4:27
  Speaker 1: Do you care about how much profit they make per burger?
• 4:31
  Speaker 1: Well, as an investor, I think profit is really what we're looking at here.
• 4:34
  Speaker 1: So if we're looking at profits, that's the blue line here, that's the PE, and that is also relatively high.
• 4:44
  Speaker 1: Let me draw a line across here.
• 4:45
  Speaker 1: Try to get that horizontal.
• 4:48
  Speaker 1: And what do you see?
• 4:49
  Speaker 1: Not a rhetorical question, that's a real question.
• 4:53
  Speaker 1: What do you see?
• 4:55
  Speaker 1: Well, you see that we were higher in 2021.
• 4:58
  Speaker 1: We were significantly higher in the 2000s and if you believe that profit growth is going to accelerate because of AI, we actually could be well higher and should perhaps be well higher than the dot-com bubble, because, remember the dot-com bubble, no one was making any money, it was just all like pie in the sky stuff.
• 5:21
  Speaker 1: It's a little different right now, isn't it?
• 5:23
  Speaker 1: I would argue, it's a little different right now.
• 5:25
  Speaker 1: So, yeah, but I think the real killer is this, and anybody who says the market's going to be rubbish the next 10 years because we can't continue to outperform, because everything must come down, that goes up and that sort of thing Gravity, laws of physics and all of that complete nonsense.
• 5:47
  Speaker 1: If you ask me, let me just make sure we're actually live here.
• 5:50
  Speaker 1: Jc, appreciate you.
• 5:53
  Speaker 1: Where are you?
• 5:53
  Speaker 1: I'm in Manila.
• 5:55
  Speaker 1: I'm in Manila in a rather nice hotel.
• 5:57
  Speaker 1: We went to a lovely gala last night, a charity gala, which was really fantastic, super fun.
• 6:04
  Speaker 1: But chats let's pay attention to the chats.
• 6:06
  Speaker 1: You can ask me lots of questions after we've gone through the chats.
• 6:09
  Speaker 1: The profit margins in red on here of S&P 500 companies that's the red line there have just gone up and up and up and up and up and they're going up more and more and more and more and more.
• 6:22
  Speaker 1: And, if you ask me, the big companies are about to get a heck of a lot more profitable because you employ one person and they'll have a couple of thousand AI agents underneath them, maybe a couple of 10,000 AI agents underneath them, maybe AI agents who manage other AI agents, that sort of thing and therefore output will be significantly higher per employee.
• 6:47
  Speaker 1: Therefore, profits will be higher per share.
• 6:50
  Speaker 1: So that's really the story that, yes, we already have the highest profit margins in the S and P that we've ever had right now and, in my humble opinion, that's about to really, really take off.
• 7:04
  Speaker 1: So I'm not a doom and gloomer.
• 7:06
  Speaker 1: I'm also not a doom and gloomer.
• 7:08
  Speaker 1: It's generally because I think, no matter what the market throws at us, we can always make more money than the market on average.
• 7:13
  Speaker 1: And if you, we did a really fun live I thought it was fun live training about 12 hours ago.
• 7:22
  Speaker 1: So if you didn't make that, there is a 30-minute pre-recorded masterclass that I made for you where I basically teach you how to spot breakouts.
• 7:32
  Speaker 1: So look at this sort of job.
• 7:33
  Speaker 1: This is PayPal, right, remember this PayPal.
• 7:35
  Speaker 1: Why do people call it Paypal?
• 7:38
  Speaker 1: Because they bought up here.
• 7:40
  Speaker 1: So most people buy somewhere up here, right, and that's, of course, a freaking disaster.
• 7:45
  Speaker 1: And then what do they do?
• 7:46
  Speaker 1: They hold all the way down.
• 7:48
  Speaker 1: And then where do they sell?
• 7:49
  Speaker 1: They sort of sell somewhere down here or down here.
• 7:52
  Speaker 1: And then what's it doing?
• 7:54
  Speaker 1: Right now, it's breaking out, it's going to go to the moon, but people have just sold before.
• 8:03
  Speaker 1: I don't want you to do that anymore, because I think it's utterly avoidable, and therefore I teach you how do you spot those breakouts.
• 8:08
  Speaker 1: And really, where you want to be buying is you should have been buying here, and when should you have exited?
• 8:14
  Speaker 1: Well, you should have exited there and we've got rules for that, and that means life's fun.
• 8:20
  Speaker 1: And, by the way, we're in another breakout there so you can spot those and you can make a lot of money potentially if you understand those rules.
• 8:29
  Speaker 1: Um, yeah, 23 percent, 30 percent by now.
• 8:33
  Speaker 1: Since the beginning of that breakout on PayPal, I've been really enjoying it.
• 8:37
  Speaker 1: Oh, this is a trade.
• 8:38
  Speaker 1: I'm just looking up.
• 8:39
  Speaker 1: I still have this open FOA Beautiful breakout.
• 8:42
  Speaker 1: It's up about 60% so far since we spotted that.
• 8:46
  Speaker 1: Here's Philip Morris.
• 8:47
  Speaker 1: We talked about that 12 hours ago as well.
• 8:50
  Speaker 1: I just nibbled a bit more at Philip Morris.
• 8:52
  Speaker 1: We had a beautiful breakout here at about what was that?
• 8:55
  Speaker 1: 70.
• 8:57
  Speaker 1: He's trading at about 130 right now.
• 8:59
  Speaker 1: So you can write down phoenixfriendsorg slash, get free, or just click on it in the description afterwards and watch the masterclass.
• 9:06
  Speaker 1: You know, what always gets me is that the whole inequality thing, and I want to run through some other stuff here.
• 9:11
  Speaker 1: Obviously, people always say inequality is so freaking unfair, and it's true.
• 9:15
  Speaker 1: Of course it's horrible.
• 9:16
  Speaker 1: But when I see that, say, 100,000 people watched a video yesterday or something, or two videos yesterday of mine, and then how many people sign up and show up for a live training?
• 9:28
  Speaker 1: 500?
• 9:29
  Speaker 1: 600?
• 9:30
  Speaker 1: So it's what?
• 9:31
  Speaker 1: 0.5%?
• 9:33
  Speaker 1: So why do you think the 0.5 percent of all the money?
• 9:36
  Speaker 1: It's?
• 9:37
  Speaker 1: It's a lot about action and not getting stuck in the rut and so on.
• 9:40
  Speaker 1: So I intentionally pre-recorded this for you, so there can be no excuse of I can't make that time and that sort of thing.
• 9:45
  Speaker 1: Um, watch it in your own time, do it today and and and come and join us and let's make some freaking money here, right.
• 9:52
  Speaker 1: Um, now people are still worried about this right.
• 9:56
  Speaker 1: The market cap of the 10 largest S&P companies is now 36%.
• 10:00
  Speaker 1: Does that scare you?
• 10:02
  Speaker 1: Does that number scare you?
• 10:03
  Speaker 1: Let me have a look in the chat.
• 10:05
  Speaker 1: If it does, mr Moose, brilliant.
• 10:19
  Speaker 1: I love you for joining up and for having a chat with us about that.
• 10:28
  Speaker 1: You'll do very well, my friend.
• 10:31
  Speaker 1: Okay, so this is from Yardini again, and they're saying there are two sectors, basically tech right.
• 10:35
  Speaker 1: Tech account for more than a third of the s&p, but they also account for more than a third of the s&p's profits earnings.
• 10:43
  Speaker 1: And they're saying we believe that all companies can be thought of as technology companies, and tech isn't just a sector anymore but increasingly an important source of higher productivity growth, lower labor costs and higher profit margins for all companies.
• 10:59
  Speaker 1: So basically, the whole S&P is going to become just one big tech thing, because everything is tech-driven.
• 11:04
  Speaker 1: There will not be a single company that survives massively well unless they embrace AI.
• 11:11
  Speaker 1: And that's just like if it was 1998 and you said we're not going to use email, put people to go online.
• 11:18
  Speaker 1: No, we're not going to do that.
• 11:19
  Speaker 1: That's a terrible thing.
• 11:20
  Speaker 1: The devils work that sort of thing.
• 11:22
  Speaker 1: Those companies are out of business.
• 11:23
  Speaker 1: Same will happen with AI.
• 11:26
  Speaker 1: And they're saying in our view, a looming lost decade for US stocks is unlikely if profits and dividends continue to grow at solid paces, which they are at the moment, boosted by higher profit margins thanks to better technology and productivity growth, and the roaring 20s might lead to the roaring 30s.
• 11:45
  Speaker 1: Because actually, if you look at technology adoption, the first five years are typically not the real deal.
• 11:52
  Speaker 1: It gets better and better.
• 11:54
  Speaker 1: After when did we get the most benefit out of the internet?
• 11:59
  Speaker 1: Was it 2000?
• 11:59
  Speaker 1: No, it's probably like 2010 or something like that.
• 12:03
  Speaker 1: So they're very, very bullish on that and I agree with them.
• 12:07
  Speaker 1: I think Goldman Sachs are either intentionally manipulating the market to, I don't know, get out of a trade or something, or they're just really depressed people over there.
• 12:16
  Speaker 1: I don't understand.
• 12:17
  Speaker 1: Anyway, for now, computers are going to buy.
• 12:20
  Speaker 1: You look at the next month 65 billion.
• 12:22
  Speaker 1: Next two months, 130 billion.
• 12:24
  Speaker 1: Next three months, 150 billion.
• 12:26
  Speaker 1: So we've got all of that coming.
• 12:29
  Speaker 1: I think the post-election rally is going to be glorious.
• 12:33
  Speaker 1: End of year rally should be fantastic and we should enjoy every minute of it.
• 12:37
  Speaker 1: So don't let the doom and gloomers talk you out of your gains.