Kip Herriage joins "Making Money with Charles Payne" on Fox Business. In this clip, Kip talks to Charles about the Bull Market, Financial Engineering, and our Economic Outlook for 2024

Charles Payne
If you missed it the first time, folks, don’t worry, because my next guest says investors will get a second shot@the.com. Like meltup. Joining me now, vertical research advisory managing partner, Kip parriage. Kip, listen, we have been in this strong bull market, of course, led by these mega cap names, and you were actually in it before almost anyone, right? You really were pounding the table on this rally. And, and here’s the thing. I saw an interesting piece from Matt Yardeni suggesting that you can look at this two ways. You can say, well, it’s expensive because the blue line is above the yellow line on that chart, or you can say, it’s extraordinarily cheap because last time that blue line went to 50. I’m talking about the PE ratio.

You think it’s still early, right? You still think these stocks are cheap?

Kip Herriage [00:00:43]:
I do. Charles, thank you for having me. On October 13 of 2022, that was a clear capitulation bottom. And nobody knew at the time that that was the bear market bottom. But it sure looked like one to us. Went aggressively long, the semiconductors and housing stocks. We stayed long. Those groups.

It has paid us big dividends for our clients. And then all of a sudden, we started looking at this structural fact of the structural market of size and scope, driven by corporate, corporate earnings, corporate bottom line, consumer bottom line, really? Consumers in the best financial shape they’ve been in in decades, although no one’s talking about that. We’ve got ten different metrics that prove that’s the case. So that’s what’s driving this. We think. And again, I was a broker in 1995 to 2000. If we were making our clients 10% a month, we were fired. So we had to stay on top of our game.

This looks just like the beginning of that. We think we’re early innings of that. We think this extends to 2030. We think this is going to be a bull market that’s going to make people a lot of money, and we’re locked in. We recommend investors stay locked into this.

Charles Payne [00:01:43]:
You mentioned the housing part, Dr. Horton. Getting smacked around pretty good today. Are you still long those stocks?

Kip Herriage [00:01:50]:
No. We actually took profits in housing about a month ago, but we are looking to get back. We’re kind of very antsy to get back. In. The first buy signal we get, our investing system will be long. Housing again.

Charles Payne [00:02:00]:
All right. Hey, kip, it’s OD. Because essentially what we’re really doing is we’re watching and we’re rooting for financial engineering, mostly by the Federal Reserve, to continue to save the day. It seems kind of nuts. You talk about 1995. Back in the day, it was mostly fundamentals. It feels like fundamentals to a degree are out the window and it’s all about the engineering. And then bring it up because you wrote this great book, the big bride book on this topic, very topic.

Charles Payne [00:02:24]:
Explain how it’s playing out right now. And is this something that everyone’s got.

Kip Herriage [00:02:28]:
To learn, is we’ve heard for a long time, don’t fight the tape. Don’t fight the Fed, folks. That’s where we are. It’s just a reality. You don’t have to like it. But look, our job is to make money. Our job is to build money for our retirements. That’s what our job is, to beat inflation.

That’s what our job is. So we got to go where the action is. This is where the action is. The difference now, though, Charles, I think, is that the 1995 to 2000 melt up, those companies didn’t have financial backing of the kind of size and scope we have today. Right. But the other thing that’s happening that’s different is the financial engineering is not just happening at the Federal Reserve. It’s happening throughout society now. It’s happening throughout society.

That’s something I think, people, if you read our book, you understand this better. This is going to be an interesting meltup, we believe, over the next at least five years.

Charles Payne [00:03:15]:
Real quick, I’m going to tout my own book, too, unbreakable investor, because I put a chapter in there to your point, comparing Cisco, which was the poster child of that market meltup, to Nvidia, and completely different fundamental story, without a doubt. Hey, I want to ask you, Kip, because we’re running out of time. 30 seconds. But you wanted DeSantis. You were really a backer. DeSantis, you voiced your disapproval about President Trump for several reasons. Where do you stand now? I mean, if it looks like it’s going to be a Trump or Biden, who do you think would be better for the economy and the markets?

Kip Herriage [00:03:47]:
First of all, nobody should listen to me. I got it wrong in 2020, 2022, I’ll probably get it wrong again this time. But, yeah, I voted for Trump twice, and then he’s just not a conservative, so I can’t continue to back him. Trump would be far better for the economy than Biden, unfortunately. I think Trump is unelectable. I believe that’s going to be more and more clear in the polling as we go forward, unfortunately.

Charles Payne [00:04:09]:
So which one would be for the economy in the stock market?

Kip Herriage [00:04:13]:
Definitely Donald Trump. No question about it.

Charles Payne [00:04:15]:
All right. Hey, Kip, you’ve been killing it, my man. Keep going. I appreciate it. And by the way, if you change your mind on those home builders, let us know. We’ll bring you back on.

Kip Herriage [00:04:24]:
Thank you, Charles. We’ll do appreciate it, my man.

Charles Payne [00:04:26]:
All right, folks,