Latest / Felix Nikolas Prehn's Podcast / Banks Just told Big Clients to SELL... + Stock Market News 15 March 2024

Transcript

Banks Just told Big Clients to SELL... + Stock Market News 15 March 2024 · Felix Nikolas Prehn's Podcast

• 0:00
  Speaker 1: and they probably don't give a hoot about you as a retail investor other than making money out of you.
• 0:05
  Speaker 1: So they're not quite as charming as a lovely golden retriever little rescue puppy, but they do have a point, and it has something to do with the fear index, and I want you to understand what that is.
• 0:18
  Speaker 1: So I'm going to walk you through it here and I might just come a little closer up to the screen so I can actually show you you what this is all about while Winston is snoozing back there.
• 0:29
  Speaker 1: Oh, we lost the mouse.
• 0:30
  Speaker 1: That's usually helpful, alrighty, so let's get cracking.
• 0:36
  Speaker 1: I want you to be the best informed investors out there, and for that you need to understand a couple of things.
• 0:42
  Speaker 1: This is all going to be not all, but a fair bit of this is going to be about the fear index VIX and what Goldman Sachs has just said about it, which really matters.
• 0:51
  Speaker 1: And then, of course, we also go on to answering all your questions and everything else, and I've actually made for you a document it's like a couple of pages long, three pages long which actually explains these things, because I think it's always good to have a reference and understand what the terms are and everything else and I get sometimes.
• 1:10
  Speaker 1: I just maybe assume something that you might know, that you may not know, so I think this might be helpful for you.
• 1:16
  Speaker 1: So you can download that for free at philxfrensorg slash fear.
• 1:20
  Speaker 1: It seemed appropriate today and it explains really how the VIX works, what it does, what moves, how we can make money out of it.
• 1:28
  Speaker 1: It's also one of the reasons I trade options the way I do and everything else.
• 1:33
  Speaker 1: So download that.
• 1:35
  Speaker 1: It's completely free of charge and where is the link?
• 1:39
  Speaker 1: Here?
• 1:39
  Speaker 1: It is philxfrensorg slash fear, which seems to be a cheerful way to start the day.
• 1:46
  Speaker 1: But before we get into that, I also want to encourage you to come and learn with us, winston and me, back here on coming Tuesday evening where I will teach you exactly how we make money.
• 2:00
  Speaker 1: We did 126% return on capital employed last year, 105% this year, so last year and the year before, and we are so far up $4852.
• 2:11
  Speaker 1: That's realized profits on approximately $30,000 that I trade with.
• 2:17
  Speaker 1: So that's not too shabby and we're going to do really really well this year, like we do every single year, because it doesn't really matter.
• 2:25
  Speaker 1: Like the market can go up and go down, we don't really give a hoot, we just have.
• 2:28
  Speaker 1: Look, we have a 74% win ratio on trades for like every single year, and to understand that, you need to understand three things.
• 2:38
  Speaker 1: There are basically three steps that I do every week that I automate and that allow me to do this in probably two to three hours a week and therefore it's possible to do this while you have jobs and golden retrievers and children and everything else.
• 2:57
  Speaker 1: So come and come and join me.
• 2:59
  Speaker 1: Links down below Felix Ransardorg slash webinar.
• 3:01
  Speaker 1: It'll be an evening session.
• 3:02
  Speaker 1: That's 8pm Eastern time, so get your pause on one of those seats at Felix Ransard org slash webinar.
• 3:10
  Speaker 1: Now this is what Goldman Sachs put out today by VIX calls.
• 3:14
  Speaker 1: You might think, well, that's meaningless, felix.
• 3:16
  Speaker 1: What the heck does that mean?
• 3:17
  Speaker 1: Hence the document I just referred to.
• 3:20
  Speaker 1: If you look at yesterday this was the VIX from yesterday and it's a ticker you can look up a little Winston on any brokerage or anywhere of EIX and you can see the thing went up very, very, very significantly in the space of a day from about $13.40 to $15.30, which is a monster move.
• 3:44
  Speaker 1: Right, that's a big move.
• 3:45
  Speaker 1: And then it kind of calmed down a little bit again and that basically said people got a bit spooked yesterday.
• 3:50
  Speaker 1: People got a bit freaked out yesterday because people buy this when they get scared.
• 3:55
  Speaker 1: Now, one thing that really helps to calm it down is to smash the like button.
• 4:00
  Speaker 1: That was a fairly cheesy plug, wasn't it?
• 4:03
  Speaker 1: And really, coming on a stand that download what I've written out here at philixfrensorg, slash fear and you already understand.
• 4:09
  Speaker 1: You could even scan the QR code if you are so minded.
• 4:13
  Speaker 1: But here is what Goldman Sachs predicts.
• 4:16
  Speaker 1: They are saying that we could jump from the 13 VIX that we have now to a 28.
• 4:24
  Speaker 1: So that would be a doubling and that would go hand in hand with a mini crash, sort of 20% down or something like that.
• 4:33
  Speaker 1: And that could happen if we get an economic shock.
• 4:39
  Speaker 1: Now what's an economic shock?
• 4:41
  Speaker 1: It just means maybe stagflation becomes something we actually worry about.
• 4:46
  Speaker 1: So right now I'll get on to the second, but Feds talking about the second.
• 4:52
  Speaker 1: Typically, vix is at 19.
• 4:55
  Speaker 1: Right now we're at 13.
• 4:56
  Speaker 1: So for this to move up is fairly likely, which is why they're saying buy call options.
• 5:02
  Speaker 1: I'm not telling you to do it, not the financial advice and so on.
• 5:05
  Speaker 1: I'm just telling you what Goldman Sachs is saying.
• 5:07
  Speaker 1: But we're down here.
• 5:08
  Speaker 1: We are down here somewhere super, super low levels, way, way lower than we've been historically.
• 5:14
  Speaker 1: And they're basically saying if you buy a VIX, like an April VIX, with a 16% strike price, you get a five times payout if we hit 21, which is what they're estimating.
• 5:32
  Speaker 1: So basically there's a bit of fear comes into the market, we go back to pretty much normal historic levels and you make five times your money.
• 5:39
  Speaker 1: So it's kind of a sort of trade investment banks like, because it's asymmetric, as in, the payout is massively larger than what you pay for it.
• 5:48
  Speaker 1: Happy to walk you through how that works in a second as well, if you like.
• 5:52
  Speaker 1: We want to get on to Adobe as well in a second, but before we do, right now the Fed are telling us essentially three rate cuts this year, in 2024.
• 6:07
  Speaker 1: The market was pricing in like six, something like that, but that's gone.
• 6:16
  Speaker 1: The market has repriced itself to now three rate cuts.
• 6:22
  Speaker 1: So we're actually in tune, but we're still partying like it's 1999.
• 6:26
  Speaker 1: So if I wear the Fed and I was a little bit worried about inflation, just being a bit, you know it's hanging around, isn't it?
• 6:34
  Speaker 1: It's like a bad smell.
• 6:36
  Speaker 1: It's like the guest who never leaves, the guest who stays with you and is still there on day four and think you're thinking did you know the rule?
• 6:43
  Speaker 1: After three days you go somewhere else.
• 6:45
  Speaker 1: That's the rule for house guests, by the way.
• 6:47
  Speaker 1: After three days it's like fish, right, it's not to smell with the head.
• 6:50
  Speaker 1: And if you didn't know that, now you know, even if your family, quite frankly.
• 6:56
  Speaker 1: So what's that going to mean?
• 6:59
  Speaker 1: Well, all they got to do is put some doubt into their three rate cuts and some of the banks are now saying we might just get zero cuts this year.
• 7:07
  Speaker 1: And what would that do?
• 7:09
  Speaker 1: Well, that shouldn't, theory, bring the market down by about 7%?
• 7:14
  Speaker 1: That's sort of the correlation in theory between rate cuts.
• 7:19
  Speaker 1: But we do, of course, have AI right, which is the, the savior, which fixes everything, which fixes absolutely all problems.
• 7:27
  Speaker 1: But what if AI does not drive profits up as quickly as we would like at AI companies?
• 7:36
  Speaker 1: Now, adobe is generally seen as one of the early movers on AI because they integrated and charged for it in in all of the Adobe software suites and they were very early on to image creation and all that kind of stuff.
• 7:50
  Speaker 1: Well, their margins have just come down.
• 7:53
  Speaker 1: Their margins are lower, net profit margins are lower and they missed revenue guidance by Well, the Q2 guidance they gave is a little bit short of what we were expecting.
• 8:17
  Speaker 1: Not a lot $10 million but still, in this AI world we expect beats, right, we expect everyone to come in and go.
• 8:24
  Speaker 1: It's going to be double what you expected here.
• 8:27
  Speaker 1: Have that and they didn't.
• 8:30
  Speaker 1: And if you look at why this is it Creative business growth, which includes their AI kind of their subscription business, right, well, it's flat, it's just not going anywhere.
• 8:45
  Speaker 1: It's pretty good, you know.
• 8:48
  Speaker 1: $400 million plus in recurring revenue, that's pretty decent.
• 8:54
  Speaker 1: You know you could buy yourself a nice I don't know what with that, but you know that's a lot of money.
• 8:58
  Speaker 1: But the chart of course the market wants is that, right, what's happening?
• 9:04
  Speaker 1: It's slowed down, it's going sideways and that is potentially a warning signal, for the AI thing Doesn't mean Nvidia isn't going to go through the roof and all that kind of thing.
• 9:17
  Speaker 1: Because they are going through the roof because the Metas, the Googles, the Amazons, the Midos, they're all competing to put out the software faster, the open AI and so on.
• 9:27
  Speaker 1: So therefore they need more computing power, right, but the actual end customer, the Adobe's, are not able to really ramp up revenue from it, which is kind of interesting.
• 9:42
  Speaker 1: So it's a bit of a hmm right, but it is having an impact.
• 9:47
  Speaker 1: Ai is not some sort of myth.
• 9:49
  Speaker 1: I'm not saying it's a bubble or anything like that.
• 9:51
  Speaker 1: Right now, what's happening?
• 9:52
  Speaker 1: Job losses.
• 9:54
  Speaker 1: So you can lay off the middle management.
• 9:58
  Speaker 1: That's where we're losing all the jobs.
• 10:00
  Speaker 1: The job losses are right here in the middle middle managers.
• 10:03
  Speaker 1: That 31% of the job losses are middle management and you know that's a historic high.
• 10:08
  Speaker 1: And that's because middle management often collates data from the people below them, they repurpose it and then they shove it back up to senior management.
• 10:19
  Speaker 1: Right, you don't really need that, because actually, ai is very, very good at doing exactly that collating lots of data and then summarizing it and putting it upwards.
• 10:29
  Speaker 1: So you're seeing a lot of job losses there.
• 10:31
  Speaker 1: So if you are happen to be a middle manager, you're going to want to get yourself a side hustle man.
• 10:38
  Speaker 1: Seriously, like it's, it's, it's going to get ugly.
• 10:40
  Speaker 1: It's going to get very ugly Now.
• 10:42
  Speaker 1: Right now, everything is still looking pretty rosy.
• 10:44
  Speaker 1: But imagine if we actually got some sort of economic shock and companies got serious about cutting costs.
• 10:50
  Speaker 1: Well, that's where the ax is going to fall.
• 10:52
  Speaker 1: Right, it already is, but it's going to fall for them more heavily.
• 10:55
  Speaker 1: Again, I didn't say that to scare you.
• 10:56
  Speaker 1: I say that to encourage you to plan ahead.
• 10:58
  Speaker 1: A bunch of side hustlers, obviously you can do.
• 11:01
  Speaker 1: We talked about that before.
• 11:02
  Speaker 1: Maybe that's also something.
• 11:03
  Speaker 1: Maybe I should make a guide on that.
• 11:05
  Speaker 1: But one thing you could do if you do have some capital, is make your money work harder for you, right?
• 11:10
  Speaker 1: That's always the easiest thing to do, in my view.
• 11:12
  Speaker 1: So come and join me Tuesday evening live and I teach you exactly how I do that.
• 11:17
  Speaker 1: Felix van der Roogslash webinar.
• 11:18
  Speaker 1: So check that out Now.
• 11:21
  Speaker 1: This is what I was talking about.
• 11:23
  Speaker 1: Fed and market expectations are the same right now in terms of rate cuts.
• 11:29
  Speaker 1: So we are now looking at three rate cuts for the year and we hope that Papa Powell, the great, the infallible man who printed 40% extra dollars and got away with it and told everybody that wasn't inflationary and bizarrely seems to get away with a lot that former cockroach tradeup sorry private equity hedge fund gentleman.
• 11:55
  Speaker 1: He's going to speak next week and we're hoping he is in a good mood and someone spiked his drink with some sugar or something, because if not, then you know, this could become two or one or zero, and that would not be great for the market, right?
• 12:12
  Speaker 1: Literally, we started this year off with hopes for a 2% cut.
• 12:17
  Speaker 1: Now we are at a 0.75% cut for the year, or maybe less.
• 12:23
  Speaker 1: So that should have an impact on the market.
• 12:27
  Speaker 1: It just hasn't yet.
• 12:28
  Speaker 1: And the market in the short term is Like a, like a nutter who's high on cocaine, and in the long run it's sort of like a calm, serious Charlie Munger.
• 12:41
  Speaker 1: So the short term doesn't necessarily mean you know we're going to keep keep on this trajectory.
• 12:46
  Speaker 1: So come and learn what the VIX really does, how this fear indicator works, how we can make money out of it, what we do with it.
• 12:52
  Speaker 1: I see a couple of you guys already in the document here, phoenixfrensorg, you can download this.
• 12:58
  Speaker 1: It's just three pages but it walks you through what it really means, what these terms mean, and I think that's very, very useful to understand.
• 13:05
  Speaker 1: Now the market today is looking well.
• 13:09
  Speaker 1: We had a massive day yesterday, right, remember yesterday?
• 13:11
  Speaker 1: This was yesterday.
• 13:12
  Speaker 1: Google up 2.3%, amazon off 2.4%.
• 13:15
  Speaker 1: Okay, nvidia down three, tesla down four.
• 13:18
  Speaker 1: We'll have to talk about that in a second, but this morning just a mild profit.
• 13:25
  Speaker 1: Take on the biggest runners from yesterday Rebounding somewhat.
• 13:29
  Speaker 1: Nvidia still down, fat drugs are up somewhat and Netflix is up 2%.
• 13:35
  Speaker 1: Anybody know why?
• 13:36
  Speaker 1: I actually don't Netflix.
• 13:40
  Speaker 1: Netflix is not an index.
• 13:43
  Speaker 1: It's 2.2% up.
• 13:48
  Speaker 1: Why Someone raised their price target?
• 13:53
  Speaker 1: That can't be it, surely, really.
• 13:56
  Speaker 1: Evercore ISI?
• 13:58
  Speaker 1: Who the F is Evercore ISI?
• 14:00
  Speaker 1: Really, people are fickle, aren't they?
• 14:03
  Speaker 1: They believe that they think their subscription advertising based video on demand should at least help Netflix capture a larger audience, maybe price sensitive to ads, and blah, blah, blah, blah, blah by $640.
• 14:17
  Speaker 1: So it's up a bit Okay.
• 14:18
  Speaker 1: I'm not necessarily sure that's gonna last, because I'm not sure anybody should care about Evercore.
• 14:23
  Speaker 1: It's a nice trajectory here.
• 14:31
  Speaker 1: Now let me look at some of your questions.
• 14:32
  Speaker 1: Good morning, millionaires.
• 14:33
  Speaker 1: I love that.
• 14:34
  Speaker 1: This is great.
• 14:34
  Speaker 1: Winston's back.
• 14:35
  Speaker 1: He's now gone to the floor.
• 14:37
  Speaker 1: I'm afraid he's a bit tired.
• 14:42
  Speaker 1: Christian says the dramatic thumbnails will disappear.
• 14:44
  Speaker 1: I think it's interesting.
• 14:45
  Speaker 1: We like to blame the algorithm for it, but if you really think about it, it's the algorithm response to people.
• 14:51
  Speaker 1: The reality is that our brains react to tabloids Just the way it is.
• 14:58
  Speaker 1: If I caught this, it is an interesting conversation on how VIX impacts your future earnings potential as an investor.
• 15:07
  Speaker 1: There'll be nobody here other than me and Winston, so it's just the way it works.
• 15:13
  Speaker 1: We have to just, I think, accept that our brains have been trained by the media to react to fairly loud things.
• 15:21
  Speaker 1: Unfortunately, the videos themselves are not that loud, but we've got to do what we've got to do to actually reach people and teach people.
• 15:28
  Speaker 1: It's no point in teaching three people and we're at almost 100,000 subs.
• 15:36
  Speaker 1: Have you seen that?
• 15:36
  Speaker 1: Isn't that insane?
• 15:37
  Speaker 1: Isn't that crazy?
• 15:38
  Speaker 1: Have you seen it?
• 15:39
  Speaker 1: Very crazy, I think we might hit it tomorrow 99,452.
• 15:45
  Speaker 1: That's totally bonkers.
• 15:47
  Speaker 1: And look at this.
• 15:48
  Speaker 1: Are you allowed to show this?
• 15:49
  Speaker 1: Do you think YouTube cares?
• 15:50
  Speaker 1: Ah, who cares?
• 15:51
  Speaker 1: Right, 8,000 to 8,000 views here.
• 15:53
  Speaker 1: We had yesterday we had like 40,000 views, which is very, very cool.
• 15:57
  Speaker 1: Subscribers are really, really going up.
• 15:59
  Speaker 1: So I love you guys for that.
• 16:00
  Speaker 1: I love people building this community with me.
• 16:02
  Speaker 1: Winston Winston's here too.
• 16:03
  Speaker 1: So, yeah, we're going to obviously celebrate that and love your suggestions on how to, but we'll definitely be doing that.