The Weekly Trend
The Weekly Trend
Episode 227: Don't Be That Guy
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In this weeks episode, David and Ian discuss seasonality, the upcoming election, biases, how you shouldn't fight the trend, Bitcoin, and Argentina.
Welcome back to the Weekly Trend Podcast. Today is Friday, October 25th, 2024. SAP 500 currently sitting at 5839. I'm David Zahling. I'm here with future SEC Chair Ian McMillan. Got some things we can cover this week.
ian-guest404_20_10-25-2024_121311If I was to be SEC chair, it'd be like me and four employees.
david_18_10-25-2024_111312Department of Government Efficiency, right?
ian-guest404_20_10-25-2024_121311Yeah. That's probably all Elon would let me have. He'd say, Ian, here's your budget, 300, 000. You can hire five people.
david_18_10-25-2024_111312Yeah. And he's, and you, yeah, you'd be like, I want five and he'd be like, are you sure you need five?
ian-guest404_20_10-25-2024_121311Do you need five though? Do you think we could put some processes in that could knock that down to four?
david_18_10-25-2024_111312Yeah. And you're going to be like, how else am I supposed to get ETFs inside of four or three Bs?
ian-guest404_20_10-25-2024_121311Yeah, that's weird. That's, I don't know. I'd never heard that before today.
david_18_10-25-2024_111312Yeah.
ian-guest404_20_10-25-2024_121311The
david_18_10-25-2024_111312It's an interesting, I'm sure there's lots of things like that, that are, that we're not aware of. Like every day, you know, every day you're in finance and marketing is a day of learning. It really is. Even,
ian-guest404_20_10-25-2024_121311many times, a day of learning how. That's a good PC way to say it. How silly the government and compliance can be.
david_18_10-25-2024_111312I mean, I, you know we want to have rules to the game. You know, we want to a playing field that's efficient. Yeah. Yeah. And so people know how to play by the rules, right? It would really be hard to, I mean, that's one of the hard things about government regulation and being in finance is many times the deck gets reshuffled or the game gets changed.
ian-guest404_20_10-25-2024_121311And what am I, one of my five employees will be focused on that,
david_18_10-25-2024_111312Yeah. Make the game.
ian-guest404_20_10-25-2024_121311overseeing all of it. So that's all I got.
david_18_10-25-2024_111312That's all you got. I love it.
ian-guest404_20_10-25-2024_121311It's all of
david_18_10-25-2024_111312I mean. You know I think efficiency is a beautiful thing and we have a market that is beautifully inefficient, but mostly efficient, which by definition is inefficient. So it's mostly efficient, which means partly inefficient, which is the definition of inefficient.
ian-guest404_20_10-25-2024_121311Yeah. I mean, the markets. So I would agree. I think it's an it's efficient because it I mean the market just does what it does
david_18_10-25-2024_111312It's a future discounting mechanism. It's the most current information we have. I know people like to get wrapped up in earnings, GDP.
ian-guest404_20_10-25-2024_121311and of course we are in earning season We're like two three two three weeks in earning season at
david_18_10-25-2024_111312Yeah. Yeah.
ian-guest404_20_10-25-2024_121311been pretty quiet The only one I can really think of that people have talked about is Tesla. And maybe that's because I find myself paying and less attention to earnings. Or
david_18_10-25-2024_111312Yeah.
ian-guest404_20_10-25-2024_121311in general, I guess I never paid attention to it. Maybe people just are talking about them a lot. Maybe we've just maybe we're winning the trend following, battle.
david_18_10-25-2024_111312Oh
ian-guest404_20_10-25-2024_121311Earnings don't matter.
david_18_10-25-2024_111312right. Earnings don't matter. The price response to earnings matters. And we're not talking about the day of earnings. It's what happens in the days to months following earnings. Does it match the trend? Does it not?
ian-guest404_20_10-25-2024_121311In
david_18_10-25-2024_111312Right. If you,
ian-guest404_20_10-25-2024_121311this week.
david_18_10-25-2024_111312right.
ian-guest404_20_10-25-2024_121311Three one year highs. Yep, back to where we were. October 2023
david_18_10-25-2024_111312Wow. So 0 percent return since October of 2023 for Tesla.
ian-guest404_20_10-25-2024_121311for Tesla.
david_18_10-25-2024_111312Too far, too fast. One year, 0 percent return.
ian-guest404_20_10-25-2024_121311Too far, too fat. You're probably short it.
david_18_10-25-2024_111312Why do people short up trends?
ian-guest404_20_10-25-2024_121311That's not real. That's not real advice. Don't go do that
david_18_10-25-2024_111312No. Correct.
ian-guest404_20_10-25-2024_121311if you're a
david_18_10-25-2024_111312Do people short do people short uptrends because they're lonely so that because they can have like their own conversations with themselves or like because they really want that margin?
ian-guest404_20_10-25-2024_121311up trends out of ego and thinking that they know better.
david_18_10-25-2024_111312Yeah. And maybe they just want that margin call. They want that phone call saying like, Hey, you don't have enough money in your account to cover this.
ian-guest404_20_10-25-2024_121311They're so lonely. They just want to talk to someone so bad that they would go into debt. So someone would call them
david_18_10-25-2024_111312Yeah.
ian-guest404_20_10-25-2024_121311Hey, you know that might be on be beyond rock bottom.
david_18_10-25-2024_111312I just don't have, I just don't. Why short uptrends? That's all you're going to get is a margin call. Yeah. And I think you're, I think you're spot on, you know, there's going to be all sorts of, you know, if you have a stock in an uptrend and you're trying to short that, it's somehow you think more, you know, more than the market. So it's, yeah, you're right. It's an ego thing.
ian-guest404_20_10-25-2024_121311and we had a and you know, we had a I don't know. I mean stocks this week dave of all over the place I mean russell's gonna be down nasdaq's gonna be
david_18_10-25-2024_111312Yeah. I was going to say that there's a resurgence of the all stars showing back up on the field here.
ian-guest404_20_10-25-2024_121311the whole growth, large cap growth particularly at the large cap level. When you look at growth versus value,
david_18_10-25-2024_111312And what are you using that? Are you using RPG versus RPV or using spy G versus spy B?
ian-guest404_20_10-25-2024_121311spot. I probably should go back to use an RPG,
david_18_10-25-2024_111312Oh, I don't think it, I think either way is fine.
ian-guest404_20_10-25-2024_121311but I use SPYG, SPYV.
david_18_10-25-2024_111312Yeah, so S& P 500 growth versus S& P 500 value. Go ahead. You're saying,
ian-guest404_20_10-25-2024_121311And it's been pretty even throughout mid, I mean, Mid July a lot of stuff happened in mid July. Bring pretty back and forth. But big picture says this makes sense because you got an upward sloping 200 day. So it should likely resolve in the same direction as what the trend's been doing. We are getting that. Not looking great for value. I'm gonna extrapolate that and say not looking great for Russell 2000. From a from a outperformance standpoint.
david_18_10-25-2024_111312yeah,
ian-guest404_20_10-25-2024_121311Not saying that Russell can't go up. I assume that it would. that's the thing also. I could also see it getting stuck in this channel that we were. Stuck in for a year back in 2021.
david_18_10-25-2024_111312well, yeah, now that we know that 2021 was all distribution in small caps, the fact that we're up in that area right now, it doesn't get, it's not surprising if it takes a little, if it takes time to chew through that supply, previous supply. And it's even bigger information. If somehow we clear that quickly if we get through, you know, let's call it 2330 to 2450 on something like small caps or Russell 2000, we get through that level quickly, that's information, but your point is that's a quality characteristic on an absolute basis on a relative basis, still no opportunity advantage, small caps versus something like that.
ian-guest404_20_10-25-2024_121311Yeah, see that's it. I mean, just, you know, we like to use the term you know, trying to carve out a bottom.
david_18_10-25-2024_111312Yep.
ian-guest404_20_10-25-2024_121311And, you know, you can watch it and I still get that, I still kind of get that vibe. But, at some point you got to be out of the bottom. So
david_18_10-25-2024_111312Great.
ian-guest404_20_10-25-2024_121311I don't. You can dig and dig and dig. It's not there. And then of course, right? And this, is it a surprise that this relationship can't get going if we have a, if we have a downward sloping 200 day? Like, okay, I mean, yeah, it's, that's what it's saying. Like it's saying it should struggle,
david_18_10-25-2024_111312Great.
ian-guest404_20_10-25-2024_121311To get this turned around.
david_18_10-25-2024_111312And here we are looking back six months with tech being the underperformer during the prior six months and is this week a clue that those, the bad boys are about to come back onto the field and take charge of this market? This is what it would look like is what this week looks like where. Your large cap growth reasserts itself. And we'll find out with time, but this is what it would look to start. This is what it would start to look like if that were the case, it's going to be really hard for the SMP to have any meaningful correction. I can't say, I'm not going to say it can't happen, right. Cause we still have. A lot of these large cap growth names that haven't reached new highs yet. But if they do, all it's going to do is carry the SMP with it.
ian-guest404_20_10-25-2024_121311Yeah, it's gonna be real. I mean, that's a major tailwind. If NASDAQ goes out to performing, it goes back to outperforming. And you're seeing other things. I mean, right. We see health like healthcare, multi. We are at 13 and a half year round of lows for healthcare.
david_18_10-25-2024_111312Yeah, that looks pretty bad. It looks bad
ian-guest404_20_10-25-2024_121311about that in context absolutely abysmal performance in healthcare the last two years. You can say the last nine years, but for sure the last two. Yeah,
david_18_10-25-2024_111312for sure.
ian-guest404_20_10-25-2024_121311it's I also wonder if this is gonna be right So where in times of uncertainty where do people go now because it hasn't been right and it hasn't been Your staples and utilities it's been Mega cap. We've got an election coming up. Do people say, well, no matter what happens
david_18_10-25-2024_111312Wait. There's an election,
ian-guest404_20_10-25-2024_121311Yeah, well the people that text me tell me there is. Right? No matter who gets elected, we're selling iPhones. People are keep, keeping their Amazon Prime just subscriptions. People are you know, all the people are still logging on to Google, searching things.
david_18_10-25-2024_111312When, and you brought up a really good point this week with the team, which is really, maybe I'm stretching a little bit for about six months heading into this election, which thank you for telling me about it. Cause I didn't know that
ian-guest404_20_10-25-2024_121311Are
david_18_10-25-2024_111312they're really. Oh, yeah.
ian-guest404_20_10-25-2024_121311Okay, we gotta get
david_18_10-25-2024_111312Oh, yeah.
ian-guest404_20_10-25-2024_121311registered.
david_18_10-25-2024_111312Oh I'm registered, baby. Don't you worry. November 5th. I got something to do.
ian-guest404_20_10-25-2024_121311Yeah. Hey, I'm glad we're both on the non early voting train.
david_18_10-25-2024_111312Yeah. Yeah. I like to watch. I like to be there on election because I like to think that you can get election done in a day. I mean, every other country in the world gets it done in a day,
ian-guest404_20_10-25-2024_121311Less than a day.
david_18_10-25-2024_111312right? And you just brought up a good point that there, it's, there hasn't been a sector leader,
ian-guest404_20_10-25-2024_121311No.
david_18_10-25-2024_111312right? We have 11 major sectors and of course there's one sector that's more more than others. Yeah. Yeah. But it's not outperforming the S and P as a whole. So you kind of have this natural calm and rotation going into the election. And what you really want to pay attention to when at the election or after is what happens then, because you typically see that's the foot dropping, and then you study the sectors because that's the dust settling, you know the market's going to move. And now it's about doing the deep dive, doing the work which most people don't like to do, but we look at thousands of charts per week is identifying where's the money flowing. Cause that's really in the end of what's happening, right? When you see, price move upward is just demand outpacing supply. It's money flow. What areas are those going to be? And you don't get to marry your opinions, right? Like, cause you see clean energy stocks do really well. If a Trump is elected, it's
ian-guest404_20_10-25-2024_121311If I
david_18_10-25-2024_111312happened.
ian-guest404_20_10-25-2024_121311my opinions, we're gonna have a micro wedding.
david_18_10-25-2024_111312Yes. It's going to be real quaint.
ian-guest404_20_10-25-2024_121311It's gonna be a real quaint 25 30 people. Maybe like 8, 000.
david_18_10-25-2024_111312Yeah. Ian, do you take this opinion through sickness and health?
ian-guest404_20_10-25-2024_121311Trend
david_18_10-25-2024_111312I do.
ian-guest404_20_10-25-2024_121311I was marrying trend following.
david_18_10-25-2024_111312Yeah.
ian-guest404_20_10-25-2024_121311And I, so go back to you, no one you take all 11 spider ETF sectors, the big, super liquid ones, your Excel, whatever's you can't, you couldn't pull up an intermediate, you couldn't pull up an intermediate term chart and tell me that there is like, Oh, this is like, this is the market leader right now. Not financials
david_18_10-25-2024_111312Not tech.
ian-guest404_20_10-25-2024_121311Not tech, not real estate, not utilities, not industrial. Industrial is just, and it's back to a flat 200. Not discretionary, who has made a move the last, like there is no short term and long term. Yeah, okay, like long term. Yeah, let's talk about tech, although I don't know it's losing it here, over the last few months. There's just, and, okay, so, we sit here and we say that. To me, that sounds like, and people might scoff at this, to me that honestly sounds like wildly healthy.
david_18_10-25-2024_111312Yes. You're saying that we don't have, we have this internal rotation happening in the market. Which is the lifeblood of markets that you're just saying that this is a solid foundate a solid foundation
ian-guest404_20_10-25-2024_121311happens, and no one is winning the race by, you know, Like, five strides. It's just, you know, two sectors move ahead for a week, and then every, like, it is the most like, in, what's the word I'm looking for?
david_18_10-25-2024_111312There's a there's opportunity costs there meaning like you know,
ian-guest404_20_10-25-2024_121311most,
david_18_10-25-2024_111312you can eat
ian-guest404_20_10-25-2024_121311Yeah, no, I, yeah, what were you gonna say?
david_18_10-25-2024_111312I was just gonna say that you know, you can because the analysis is okay Where does where should the dollar be and where should our dollars be invested? And so every dollar you have a decision to make with And what's the opportunity cost? Well I could buy the S and P all right. Now, if I'm not going to buy the S and P, then I should be involved with things that are outpacing S and P. And your point is nothing is at this point for the past six months,
ian-guest404_20_10-25-2024_121311No. But yeah, look what we've done.
david_18_10-25-2024_111312right? And yes, so, and there's definitely a large versus small dynamic. If you cut the loaf horizontally, that large caps have begun to resurge themselves or reestablish themselves. And that's. I mean you're talking about going into the strongest six month period, which typically is even stronger post election. So here we have an election year, November through April is the strongest six months. Market can't possibly go higher. Right. But yet you look at the internals and to your point, you, to your point, we haven't seen a leader. And we know that elections typically bring about a leader. I mean, the stage is set once again, for the market to move higher. Now it doesn't have to I'm not here to say this is a slam dunk guarantee. It's always a weight of evidence approach, but the weight of evidence continues to stack up that we're about to head into November. The old phrase, buy in October and get yourself sober is in full effect. We've had an October that's been extremely resilient and positive.
ian-guest404_20_10-25-2024_121311it's been a great October so far.
david_18_10-25-2024_111312And in, in a month that's notoriously weak.
ian-guest404_20_10-25-2024_121311For
david_18_10-25-2024_111312So
ian-guest404_20_10-25-2024_121311third time, aren't we like 0 for 3 on supposed bearish seasonality this year?
david_18_10-25-2024_111312yes, yep. I mean,
ian-guest404_20_10-25-2024_121311We just, and we have a really good Dietrich pointed this out. I know we like talked about, we talk a lot of Ryan's data on here. I feel like more and more every week.
david_18_10-25-2024_111312Rightfully so they put out good information.
ian-guest404_20_10-25-2024_121311reason for that.
david_18_10-25-2024_111312Yep,
ian-guest404_20_10-25-2024_121311We've got the, you know, you look back over the last 70 plus years. We've got the strongest day of the year coming up Monday. is not a top like that typically Begets this I mean, it's a nice two week run and then it kind of begets this whole six month period
david_18_10-25-2024_111312and it's kind of crazy you add in when you look at like surveys of investment managers and how We're at the lowest bullish reading in that Since April and the bear the bearish reading on that like when they survey and say, you know Are you bearish or bullish this market? The highest since mid September is that going back to the old phrase by John Templeton on market evolution, as far as markets growing on skepticism or optimism, like that seems like skepticism, people are very skeptical of this market yet.
ian-guest404_20_10-25-2024_121311they are and hey, i'll tell you this So another step this is we talk about seasonality. It is a great thing to be aware of we certainly talk about it a lot on here. We talk about it with clients but what What trumps all of that no pun intended Would be price and we have, this is, going back to 1950. This is the, when up to October 25th, October 24th, this is the strongest election year ever.
david_18_10-25-2024_111312So what I mean,
ian-guest404_20_10-25-2024_121311up this, we've never had this type of return going into October 25th of an election year.
david_18_10-25-2024_111312and that's information. Like we're allowed to look at that and be like, huh. We've skipped over the, we've skipped over these other seasonal week periods. We had these two breath rusts in July of this year and October, November of last year. We have uptrends all over the place, higher highs and higher lows. We have rising 200 day moving averages. We have a NASDAQ 100 trying to go out to new all time highs today. We'll see if that holds with a couple hours still closed.
ian-guest404_20_10-25-2024_121311We taught, we've talked about fixed income every week that there's. They've told you for months that fixed income is fine. Like it's, there are no, I mean, there, I would say there's divergences,
david_18_10-25-2024_111312Yeah. And speaking of that,
ian-guest404_20_10-25-2024_121311momentum divergences, but then just grinded through all of them.
david_18_10-25-2024_111312right, and momentum divergences are only actionable when price confirms.
ian-guest404_20_10-25-2024_121311Yeah.
david_18_10-25-2024_111312And, you know, speaking of fixed income, I know you had the privilege and did a great job going on, you know, Fox business this week with Charles Payne. What'd you guys talk about?
ian-guest404_20_10-25-2024_121311Hey we talked about there continues to be no for the things that us as technicians on the adaptive team monitor. There just really aren't any cracks there aren't any cracks out there. And I know that sounds crazy to people. How could we be up, how much are we off the last Halloween, can you believe we're coming up on a year of the Halloween lows? Year, I mean, we are, I mean, 40 percent off the lows?
david_18_10-25-2024_111312yeah,
ian-guest404_20_10-25-2024_121311And how could there, how could it still be going? How could there not be show, how could we not be showing any time, any signs of petering out? And I'm telling you, it's not there yet. It's not there yet.
david_18_10-25-2024_111312and we'll see it we'll see it in price when it starts to happen like there will be a top
ian-guest404_20_10-25-2024_121311Have they
david_18_10-25-2024_111312We won't
ian-guest404_20_10-25-2024_121311something in? I don't know what they're trying to price in. I'll tell you one interesting correlation I saw this week. And I'm, I say this with the key word of interesting, take it or leave it. But the price and the correlation are right. they I think it was early, like maybe Monday they were showing the poly markets. Polymarket's been a big, what's the right word to use here, Dave? Kind of big
david_18_10-25-2024_111312topic
ian-guest404_20_10-25-2024_121311topic as an insight as to who might win the election. So they took the polymarket odds and overlaid them with the 10 year yield. So the market's saying the economy can grow. The economy can grow just fine with 4 percent on the 10 year, basically. So basically implying that we've got great economic growth that outlook continues to grow as Trump's. Chances to win presidency grow
david_18_10-25-2024_111312Yeah,
ian-guest404_20_10-25-2024_121311so you can take that for what it's worth I don't know if equities are also trying to price that in That there is substantial economic growth on the horizon over the next 12 18 months Right. Well, it's been pricing it in for 12 18 months. So that we're still Right, you would still if we're hitting all time highs. You're still looking at another 12 to 18 months That's
david_18_10-25-2024_111312right,
ian-guest404_20_10-25-2024_121311see it. So back in October a year ago, still looking out 12 18 months, we've gone up 40%. We're still looking up 12 18 months and the market says it should likely keep going
david_18_10-25-2024_111312right.
ian-guest404_20_10-25-2024_121311if it's going to continue at the same rate
david_18_10-25-2024_111312Well in November through April will be You know, November through April will be an extremely important time because if that's supposed to be the strongest six month period, and it's the strongest, also the strongest six month period in an election cycle, and it's not, that'll be information too. We have to live both ways. When we buck seasonality, when it's supposed to be weak, that's information. And if we're weak November through April, that'll be information too. And it may be signaling that things aren't as Goldilocks as we originally thought. But I can tell you that price moves first and then the news happens.
ian-guest404_20_10-25-2024_121311Price
david_18_10-25-2024_111312I can,
ian-guest404_20_10-25-2024_121311man.
david_18_10-25-2024_111312yeah. And price is moving. And by the time the narrative on this comes out, like, let's say we're up another, I'm making this up 20 percent in April of 2020 by April, 2025, the narrative. What's that?
ian-guest404_20_10-25-2024_121311manifest that
david_18_10-25-2024_111312The narrative that would come out during that, it'd be too late.
ian-guest404_20_10-25-2024_121311yeah be like Oh, maybe trump is good for the account or whoever I shouldn't preface it that would be the headline I could definitely see that kind of being like, okay. Well, maybe he's not a dictator.
david_18_10-25-2024_111312Yeah, maybe he's not Adolf Hitler It's just it's an interesting thing to keep in mind that narratives follow price It's not price follows the narrative. It's price moves first and then the headlines are written So the headlines don't provide any value in an investment process, but price does if we continue to highlight I still remember our first episode in November of 23 talking about the data that was happening at that point in time with the breath for us and the flush that it had just happened in October of 23 that the table was set for Mr. Market to come to the party and dine with everybody rather than come and flip the table and Mr. Market could have showed up and flip the table and been a poor guest.
ian-guest404_20_10-25-2024_121311Hey, literally November 11th, 2023 episode title table is set.
david_18_10-25-2024_111312Yeah, so that, that's not a statement about, oh, look at how ripe we were, it's look at how ripe price was. Look at the data price, understand the probabilities, right? Because there's no such thing as guarantee, but what are the probabilities? And we're still sitting in an environment with probabilities pointing to higher prices ahead. Like by very definition, a new all time high in the NASDAQ 100 means institutions and investors are willing to pay a higher price for something because they view that as value. I don't get to sit here and say when my neighbor down the street sells his house and someone agrees to buy it, that price is wrong. But people like to have that, I can't believe, I can't believe that they sold that house for that. That's ridiculous. Maybe, or maybe that's just the market at work. Maybe that's just economic law. The agreement between a buyer and a seller on a price. We see it every day in markets, and if they're willing to pay more, the uptrend continues. People like to overcomplicate this. Markets are hard enough. Markets are hard enough. Like why overcomplicate this?
ian-guest404_20_10-25-2024_121311mean, here's when I go back and read, you know, November 11th, podcast description the breath thrusts lead to a substantial move?
david_18_10-25-2024_111312Yep.
ian-guest404_20_10-25-2024_121311It's, yeah, it's been a year of And it's been a good year for momentum,
david_18_10-25-2024_111312Yes.
ian-guest404_20_10-25-2024_121311which we will not take for granted.
david_18_10-25-2024_111312And momentum's the most prevalent factor in markets.
ian-guest404_20_10-25-2024_121311So when that's working, really hard to have a bear market.
david_18_10-25-2024_111312And the way to describe that is, is, you know, we all see those YouTube videos of guys that are sitting on top of a mountain and there's this big boulder and they decide to have some fun and push the boulder down the hill.
ian-guest404_20_10-25-2024_121311Yes,
david_18_10-25-2024_111312It just.
ian-guest404_20_10-25-2024_121311those videos. Yeah.
david_18_10-25-2024_111312start snapping trees on its way down. That's momentum. The ball, the boulder is rolling. Why get in the way? Why fight the trend? Why try to guess where the boulder is going to stop? I don't know where the high is. I don't know. But I'm not willing to step in front of the boulder. I'm not willing to short an uptrending market. That's a recipe for disaster. I'm not willing to stash cash in the mattress. When there's opportunity here. And we know that markets move in cycles. There will be a top, there will be a consolidation, there will be a correction at some point, and that will be the time to, you know there's different market environments. One of them is. The time to get return on capital and the other one is the preservation of capital. Right now we're on the return of capital environment. So why fight the trend? Why marry your opinions? You have a wife already. Leave your opinions at home. Save them for the officiating on a Thursday night football game. You can have opinions about that.
ian-guest404_20_10-25-2024_121311Can't have opinions about a missed face mask call in the end zone. I
david_18_10-25-2024_111312Yes. Missed it. They missed it. Just so happened
ian-guest404_20_10-25-2024_121311mean, they did.
david_18_10-25-2024_111312to be my favorite team, but they missed it.
ian-guest404_20_10-25-2024_121311You got to keep up with, I mean, we say it and we preach it and I will continue to do it because for some people it clicks, for some people it takes years. Got to protect the purchasing power.
david_18_10-25-2024_111312Yep.
ian-guest404_20_10-25-2024_121311Inflation, right? We talk about, you know, and this is, so this is going to, I'll just approach this briefly. As technicians, we know that there is. And no one except that there are still other reasons why people buy stocks there are billions and trillions of dollars thrown around because people like ratio like oh, this is a good price to earnings ratio or this looks cheap on a price the book or it is, but we know that you know, earnings, like earnings per share, right? Investors are invested in earnings per share when there are things, when big things like inflationary periods happen, that means earnings per share go up. That's going to get passed on to the consumer.
david_18_10-25-2024_111312Yep.
ian-guest404_20_10-25-2024_121311Earnings per share are going up for a lot of companies out there. So even, I mean, is, yes, you are paying that at the store. But just also realize that is making companies more money. Just, you can be frustrated about it. then don't go home and say, Well, gosh, how These companies just make so, how do they just keep on making so much money and their stock keeps going up? Because they're passing it on to you.
david_18_10-25-2024_111312Right.
ian-guest404_20_10-25-2024_121311How, and how do you offset that? You might as well try to participate in some of it.
david_18_10-25-2024_111312Well, that's exactly right. If hamburger meat, if meat is going to jump in price,
ian-guest404_20_10-25-2024_121311Yeah,
david_18_10-25-2024_111312that means any dollar put in the mattress becomes worth less. Whereas if you buy stocks or equities or whatever the instrument is that keeps pace with the price of hamburger, then you've protected your purchasing power. And so let's use price to determine timing, not. some opinion about hamburger costs, which are real. I'm not saying that they didn't happen. I'm not here sitting. They missed a face mask call. It happened, but my opinion on the face mask call has no negative financial impact on my family. But the minute I start having an opinion that I think is smarter than the market, I immediately put my family apparel financially. Why not participate in a trend, then try to fight it? Don't fight trends. That's the simplest phrase I can deliver today is why fight trends?
ian-guest404_20_10-25-2024_121311it'll eventually end,
david_18_10-25-2024_111312You will.
ian-guest404_20_10-25-2024_121311it'll suck, and it'll be painful, it'll be worth it. It'll be worth riding it out to the end. Like, well, riding it out through till the trend changes.
david_18_10-25-2024_111312Right. We don't have to participate in downtrends, but we should be participating in uptrends. When we're in uptrends, we're buy and hold investors. When we're in downtrends, we're not, it's okay. We don't have to know all the information all the time because all the information all the time is actually reflected in price. You know, you bring up someone being involved in something because of earnings per share. Someone might be involved in something because they love the product.
ian-guest404_20_10-25-2024_121311Yeah,
david_18_10-25-2024_111312might be just blindly buying an S and P 500 fund that happens to buy that stock because it's a 401k contribution that's going in. Someone might be selling something cause they don't like the dividend. They also might be selling something cause I got to put a kid through college. All opinions are reflected in price. Everything is in there. So why not study that rather than one opinion in a vacuum? Why not study all the opinions of all market participants that's reflected in price? That seems like a more quality process and system than your sole opinion about one sole data point. Why not take all the data points, all the opinions, pile them up and put them, which they are, piled in price and study that instead. Right. And
ian-guest404_20_10-25-2024_121311the CCO just sold three million dollars worth of stock. Okay, what about the hedge fund that just bought ten million? Like, so where, like where, like, cause I can play that game and yeah, it's all not like, no one cares unless you're going to go interview everyone that made a transaction on that stock. And I guess if you did that and 90 percent of them said, yeah, I just, I don't like, I don't like it. Okay. Maybe you got something, but you're not going to do that. No one's going to do that. So we take what we get. We get closing prices every day. And we use that information whether buy this? Should I own it? Should I just hold it? sell it? Should I buy more?
david_18_10-25-2024_111312that's, in the end, isn't that what a price is? It's a weighing machine. It's a voting machine. Like your You're taking the opinions of everybody and measuring it. So you don't have to go out and take the survey because it's already reflected price is the survey.
ian-guest404_20_10-25-2024_121311Yeah,
david_18_10-25-2024_111312And is,
ian-guest404_20_10-25-2024_121311and yeah and all the volume, you know it's just free like free markets like someone whose opinion with Someone's opinion with 10 10 million dollars matters more than someone's opinion with 500
david_18_10-25-2024_111312yep,
ian-guest404_20_10-25-2024_121311Just us
david_18_10-25-2024_111312yep,
ian-guest404_20_10-25-2024_121311that will be reflected.
david_18_10-25-2024_111312exactly. And you brought up momentum before, and this is where I want to highlight the supporter of this podcast, the adaptive select ETF listed on the NYSE under ticker ADPV, which helps investors access to the most prevalent factors in markets. One of them momentum and the other relative strength using proprietary identification methods. The adaptive select ETF. Attempts to own the strongest 25 large cap stocks when the market is in an uptrend. And since not all market environments are the same, adaptive select seeks to prevent extended clients by moving to short term treasury bills and cash during long term market downtrends. Investors can find out more, including how to invest in ADPV by visiting ADPVETF. com or calling 1 833 880 5200. Investing involves risk, including possible loss of principal. Distributed by Quasar Distributors LLC. So you did a great job on Fox Business with Charles. We've highlighted quite a bit of time to price and equities. You mentioned bonds, fixed income. What other areas do you want to pivot us to that our listeners would find valuable?
ian-guest404_20_10-25-2024_121311You know I had the SP workbook yesterday kind of the same sentiments of it's just I can find a smattering of sub industries From electric utilities to, home builders to industrial machines, there's just, it goes with, I mean, you can go fun, like, you don't have to go do the work for sure, but there are things, I mean, even we talked about health care, as bad as health care is, you've got the, what did we talk about, like medical equipment yesterday,
david_18_10-25-2024_111312Yeah, medical devices, yeah.
ian-guest404_20_10-25-2024_121311medical devices. Insurance getting hit today But you got some and then you got things like not to get too old school We've got Oracle all time relative highs. Yes above the 22, 000 highs
david_18_10-25-2024_111312A 24 year base?
ian-guest404_20_10-25-2024_121311And that's an amazing route of chart.
david_18_10-25-2024_111312No one talks about Oracle anymore.
ian-guest404_20_10-25-2024_121311IBM trying to make a move.
david_18_10-25-2024_111312IBM and Oracle.
ian-guest404_20_10-25-2024_121311right?
david_18_10-25-2024_111312Yeah, IBM and Oracle, man. Those are some oldies. Well,
ian-guest404_20_10-25-2024_121311It's yeah, there are you've got and then of course you've got to your point earlier I mean you've got apple all time highs this week. Like what are you gonna? What why how are you gonna bet against the market? When how much of the S& P is Apple now? I don't know off the top of my head
david_18_10-25-2024_111312I know that, you know, NVIDIA was, NVIDIA also working on new all time highs, and that had been encroaching on Apple's space as the largest component. But to your point, when you look at the S& P 500, Apple represents it's the largest piece. I mean, it's 7%, 7 percent of the entire index, and you're talking about 500 stocks, so you take 100 divided by 500 doesn't equal 7%. So Apple is larger than, you know many components of the S and P 500. And if that's going out to new all time highs,
ian-guest404_20_10-25-2024_121311probably large. It's probably larger than like the smallest 300 components There's some wild stat like that.
david_18_10-25-2024_111312right. So are you really going to fight new all time highs in Apple and NVIDIA, which represent 14 percent of the index? That's really hard. That's a hard life. Why get in an argument with Mike Tyson? Not worth it.
ian-guest404_20_10-25-2024_121311the S& P is Mike Tyson. I just give him my money.
david_18_10-25-2024_111312Right. Make Mike Tyson work for you.
ian-guest404_20_10-25-2024_121311Yeah
david_18_10-25-2024_111312So, what about Bitcoin? What about crypto? We haven't spent too much time on that, and for good reason, right? We've had Bitcoin moving sideways for months.
ian-guest404_20_10-25-2024_121311It's continues to try though trying here been Gosh, a couple weeks in this 66 to 70, you know, okay, we'll call it 69, 000 range, above a 200 day. You know, we look at something like micro strategy, which I think most would agree a Bitcoin proxy. I mean, for, I mean, I, in layman's terms, they're just a, Company that buys Bitcoin. That's the way I view them at least.
david_18_10-25-2024_111312Yeah, no I agree.
ian-guest404_20_10-25-2024_121311like a, you know, like any revenue. I'm sure they probably have some type of revenue. I mean, other than like, they hope that value of Bitcoin goes up. But that, I mean, that keeps on going higher. Golly, if Bitcoin gets out of this to the upside, can, been consolidating since March, holy cow. We're talking a pretty big potential move on deck.
david_18_10-25-2024_111312Well, the base using the depths of 2022, that base, a measured move would be about 280 percent in Bitcoin. If you were to clear 70, 000, that's how you can measure risk reward. If it's back below 75, 000, don't be involved. But above 70, 000, the targeted move is, you know, we're talking about 280%, which people, I mean, you say a number like that in people's eyes roll because, well, that seems ridiculous. Well, was it ridiculous in prior years when it made those type of moves? Was it ridiculous when from the COVID lows? Bitcoin moved three hundred, or a thousand three hundred percent.
ian-guest404_20_10-25-2024_121311No it's not ridiculous when it makes sense to me and it happened under my candidate's
david_18_10-25-2024_111312Ha. Yeah, you got, yeah.
ian-guest404_20_10-25-2024_121311I
david_18_10-25-2024_111312don't.
ian-guest404_20_10-25-2024_121311and if I was participating,
david_18_10-25-2024_111312Right.
ian-guest404_20_10-25-2024_121311but like if I was sitting on the sidelines, no, it was a stupid move.
david_18_10-25-2024_111312True story. Human biases.
ian-guest404_20_10-25-2024_121311Bias is a real
david_18_10-25-2024_111312Biases are real. They keep us alive, yet they hurt us. Right? You touch a stove and it's hot? The bias tells you not to touch the stove again. The beauty about price is it can tell you when to touch the stove. When is it hot? When is it not? And that's, the price overcomes our biases. It checks our biases. And allows our biases to work when it's appropriate to work. Biases aren't bad. It's just when they become overwhelming and make us make irrational decisions. When the data is saying elsewise, if the stovetop is cold or cool or not hot, it's okay to touch when we have uptrends, it's okay to touch the market. It's okay to be involved with it.
ian-guest404_20_10-25-2024_121311Like that's a bias to
david_18_10-25-2024_111312Right. So don't fight trends. Don't do it. You know, you know, they had these programs when you're in grade school, just say no to drugs. Just say no to shorting up trends. Just say no to,
ian-guest404_20_10-25-2024_121311financial media
david_18_10-25-2024_111312right.
ian-guest404_20_10-25-2024_121311tv televised financial media Go i'm not saying I mean people might consider us financial media, but We don't talk about the headlines talk about the news feel like we're a little bit more realistic
david_18_10-25-2024_111312Yeah. Cause we're focused on price. You know we're not focused on creating narratives that are entertaining. I get it. You can listen to this podcast and be like, dude, these guys don't give me the gravy. They don't give me like the, all the down and dirty on why Latin American stocks are going out to fresh all time lows while
ian-guest404_20_10-25-2024_121311I
david_18_10-25-2024_111312Argentina is going out to fresh all time highs.
ian-guest404_20_10-25-2024_121311don't have, I don't have any economic policy. I mean, I know they really liked the guy they elected down there. And here you go. Argentina was going up well before that.
david_18_10-25-2024_111312Correct. Argentina moved many percentage points higher before their election. And what's interesting is Argentinian stocks using ARGT is heavily tilted towards financials. So why don't we pay attention to, is there something going on in financials that we should be paying attention to? And you have JP Morgan going out, you know, just continue to make new highs in an uptrend. Berkshire Hathaway. I'm not saying either of those companies are domiciled in Argentina. My point is that financial stocks across the globe continue to participate to the upside. What's that?
ian-guest404_20_10-25-2024_121311And let's say don't be the person that you get to 65 and your wife's ready to do what you've dreamed about. And you say, well, we're not there because. I don't know Joe Biden got elected and I just got nervous about the economy. Or so and so got. So we missed out on an 80 percent three year rally in stocks. Don't be that person.
david_18_10-25-2024_111312Don't fight,
ian-guest404_20_10-25-2024_121311is. I know it is so hard to, I mean, you could do it. You could log in. I mean, pull up a chart once a week. Are you above the 200? I mean, pick your, pick whatever you want to pick as a trend. You don't have to pick a 200 day moving average. Come up with some, Like one or two really simple rules and
david_18_10-25-2024_111312participate in the trend.
ian-guest404_20_10-25-2024_121311participate. And other than that, go play golf or go
david_18_10-25-2024_111312Right.
ian-guest404_20_10-25-2024_121311to the, go hop on the boat, go on vacation.
david_18_10-25-2024_111312That's a great analogy. Why get in a boat and try to paddle upstream? That's not very fun.
ian-guest404_20_10-25-2024_121311go on vacation. I mean, I know a guy, I know a guy, and he literally does, it's weekly, monthly charts, and he literally logs in maybe twice a month to kind of see where his stuff is at retired guy in Texas, and that's the way he follows trends. And then he just goes on about his life.
david_18_10-25-2024_111312Right.
ian-guest404_20_10-25-2024_121311And he's kept up. He is, like, he is, he's built wealth off of that. He has kept up in the market. He has avoided downtrends. And he spends about two hours a month on it. Cause he's, you know, he owns four or five things and all he needs to really look at is a weekly, monthly chart.
david_18_10-25-2024_111312Yeah. The daily price moves in a microscope, if you're just looking at daily price moves, I'm not going to give you any information. It's the trend over time. It's the accumulation of price over many periods. That's why, you know, you mentioned any timeframe we use 200 days. If that's rising, demand has been outpacing supply for 200 days. The river continues to flow that direction. So don't be that guy. Don't be the one that fights the trend. Anything else, Ian, as we bump up against the end of our time, I always appreciate doing these with you. It was great to have you in the office last week. We had a great education event with our clients. Anything else you want to highlight before we sign off?
ian-guest404_20_10-25-2024_121311I don't have anything.
david_18_10-25-2024_111312So the main message is don't fight trends. Don't be that guy. Yes. And elections coming up, participate in that election, how you see fit. I know I will be,
ian-guest404_20_10-25-2024_121311Yeah,
david_18_10-25-2024_111312but I'm not going to let,
ian-guest404_20_10-25-2024_121311Go out and vote. Don't care who you vote for. If you want to vote early Yeah, do it. Just vote. It is super important part of being an American citizen. And remember, if you don't vote, if you don't vote,
david_18_10-25-2024_111312you know, get to complain,
ian-guest404_20_10-25-2024_121311you don't get to complain for four years.
david_18_10-25-2024_111312Participate in the process, participate in trends and participate in the process.
ian-guest404_20_10-25-2024_121311Yeah?
david_18_10-25-2024_111312It's a good way to end it. If you like listening to this, please give us a high ranking, share it with your friends. That helps us get the word out. We appreciate it. Otherwise, Ian, always great to have you on here.
ian-guest404_20_10-25-2024_121311Have a great weekend, everyone.