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VRA Investing Podcast: Robust Fundamentals Supporting a Long-term Bull Market – Kip Herriage – May 30, 2024

In today's episode, Kip breaks down the resilience of today’s market despite downticks, effective contrarian investing strategies, and the robust fundamentals supporting a long-term bull market. Stay tuned for an in-depth analys ...

Posted On May 30, 2024Episode 1394
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About This Episode

In today's episode, Kip breaks down the resilience of today’s market despite downticks, effective contrarian investing strategies, and the robust fundamentals supporting a long-term bull market. Stay tuned for an in-depth analysis of recent market trends, surprising economic indicators, and Kip's latest thoughts on commodities and Bitcoin.

Transcript

Don’t look back because the market is closed. Good. Thursday afternoon, everyone Kip Herriage here with the daily VRA investing podcast. Apologies for my voice. I may have to pause for a second, take a drink, or maybe even blow my nose. I feel great. I’m at least 90%, probably closer to 95, but, yeah, I’ve got some kind of a head thing going on here, so, hey, I’m taking a few maybe 40vitamin C a day. That’s probably too few, frankly.

When you’ve got a cold like this, you just have to go with it. Okay. And colloidal silver, you know, and maybe a couple. Maybe a couple of advil every 4 hours. That’s really the cure for things like this. In our experience, this has been our remedy for a long time. But anyway, I feel good.

[00:00:50]:
Thank you for listening, and I’ll try to make sure my voice didn’t crack too much. Also, just want to start this by saying what a huge thank you. You know, when Tyler and I do these podcasts, you know, you never know who’s listening. We have a. We have a. We actually have a large and growing audience is fantastic. But, you know, you’re kind of speaking into a vacuum, and. Yeah, but we get your feedback, and I just can’t tell you how much we appreciate it.

Lou, thank you for your email today. Mike, thank you, Joseph. Your email last night and many others. And it’s not just the compliments, right? We like hearing it all because it helps us grow. But thank you for listening. First of all, thank you for your feedback. And if it’s something you want to hear us talk about more, something that you agree, please, you’re not gonna hurt our feelings. We look at it as an opportunity for growth, so keep it coming.

It’s how we all learn from each other. And I mean that more than you know. I know a few things. There’s a lot of things I don’t know. And I’ll just tell you that my mentor told me this a long time ago. Ted Parsons told me a long time ago. He said, kip, if you’re not already humble, the markets will make you humble. And that stuck with me.

[00:02:01]:
Tyler and I just talked about this. He’s like, because Tyler’s locked in right now. If you heard his podcast yesterday, you know what I’m talking about. This kid’s gotten good, okay? He’s come a long way in the last six, seven years, and certainly since we started our podcast. But he is locked in right now, and he’s got a really good feel for these markets. He has stayed long and strong and I mean that in every way possible. He is absolutely a dip buyer. He practiced what he preaches and that’s his view right now.

So look, I’m going to cover some important things today. What an interesting day today was, folks. The internals, I tweeted this out. I sent it to our parabolic, folks. I’m going to talk about it in the morning. The internals today were really remarkable for Dow Jones. It was down 330 points at a Nasdaq, down 180, and was not a good smart money hour specifically for Nasdaq. As you may have seen, a couple of tech companies, Dale reported the close stocks getting hammered 60 and 70% yesterday.

Of course, it was salesforce, which is what set the Dow lower this morning. But we started talking about this last week that we reached extreme over bottom steroids on the Dow Jones only. No other index really got there. Nasdaq 100 got close. Nobody else got there. But that is when bad things happen. But, you know, do we think that’s a significant topic, a significant reading of extreme overbought? No, we don’t. And the reason is really simple.

[00:03:38]:
We just go back to what we wrote in the big bribe and what we’ve been, you know, reporting here to you for so long, which is this is, this is going to be a runaway bull market. This is 95 to 2000 part two. We think it’s going to be stronger, lasting longer than 95 to 2000 was well into past 2030. That’s really the way this setup is. Anything can go wrong. You can have a black swan event. Look, all of that, it goes without saying, right, but this is a structural market. I think if people are missing something, and again, I apologize for clearing my throat there.

If people are missing something and there are a lot of people missing, this, I believe. Look at these sentimental surveys coming back in now. Just extraordinary fear. And green index is one point away from being in fear. We hit all time highs, what, two, three days ago. It is remarkable and we’re almost in fear territory. The AAI investor sentiment survey came back last night, bulls down big. We only have 38% bulls, 27% bears and 34% are neutral.

Again, just off all time highs. That tells you as a contrarian, it makes you want to salivate. It really does. You hardly find a stronger buy signal than what we’re seeing with these sentiment surveys because there will come a time. This is bad, isn’t, I apologize. There will come a time. Think of a drink likely. I don’t know at this rate three years from now, maybe longer, where declines won’t be met with sentiment surveys that are having bears jump like this and all the negativity jump, they’ll come a time when we have a 5% pullback, which is not nothing.

[00:05:31]:
There’ll come a time when we have that and these sentiment surveys won’t budge. People will be buying the dip and that’s when we’ll be concerned. This ate that time again. This ain’t that time, just to be clear. So we’re seeing a lot of things that tell us that, remember, this is also different. Again, last Monday we started telling you that we were extreme about steroids on the Dow. What’s happened since then? The Dow Jones has dropped close to 2000 points from last Monday. That was also, by the way, when Mike Wilson of Morgan Stanley, the chief market strategist, that’s when he capitulated.

He’d been a bear for years, right? Literally for almost three years. He’d been a bear. He was right for one of those years, by the way. But from the lows of October 2022, which is when we turn bullish, he remained bearish until last Monday. Not this Monday. The one before that marked the high for the Dow Jones that morning when he capitulated. And this is buddies. It’s how the markets work.

All we need now, all we need now is for Mike Wilson to come out and capitulate again. Right? To come out again and say, okay, I’m back to being bearish again. So, you know, I don’t think that’s going to happen. No, I don’t. I think they probably run him out of more instantly if you try that. But anyway, the point being, these are the signs we look for as contrarians. And I don’t know that there’s been a better time to be a contrarian when it comes to investing or really with life. I don’t know that there’s ever been a better time to be a contrarian.

[00:07:12]:
Call us a conspiracy theorist or whatever. I’m on record of saying this at least 100 times you’ve heard here before. I’m sure that since 911, the only people that have been consistently right are the conspiracy theorists. Everybody else has been consistently wrong. So I’m proud to be in that group of a contrarian, or if you will, a conspiracy theorist, because we actually have been incredibly right. Again, back to our base case. This is a bull market of size and scope. It’s a structural bull market, which means it’s going up because it should be going up.

It’s going up because corporate earnings are rising. It’s going up because we have a great business environment. Yes. Even with Biden as president. And again, for people that go, kip, how could they? What are you talking about? Look who’s president. What do you mean we have a great business environment? Well, I’m sorry, but we do. Look, Biden has not touched the vast majority, 90%. Plus, he hasn’t touched Trump’s tax breaks.

Right? Those are still in place. He hasn’t touched. Matter of fact, he’s gotten even more tough with China. On Trump’s china tariffs, those are in place on steroids. And Trump’s deregulation, which over 1000 cuts to regulation for Trump’s four years, just remarkable. 90% of those are still in play. You know, Trump helped put all this in place. It remains in place.

[00:08:35]:
We have a structural bull market because not only is corporate America strong, but the consumer is strong. And I have to ask you again to ignore the propaganda, to ignore the SIop of negativity, because if you weren’t on social media and if you didn’t watch tv, be it Fox or CNN, it’s all the same as far as I’m concerned. If you didn’t watch that and if you weren’t kind of locked into social media with all the negativity, if you just looked around, you would say, man, life is good, right? Life is good for our new folks. It’s been a while since I’ve talked about this. I probably should write it up again. But we used to feature this pretty much every day just because so many people couldn’t believe what we were saying. Well, we have all the data to back this up again. Home prices, all time high.

Net income, net equity in homes, all time high. Consumer net wealth or worth? Consumer net worth, all time highs. One third of Americans own their home with no mortgage. These have never happened before, and they’re all happening now since in the last 15 years. Again, we learned from what happened in 2008 and the financial crisis. In the last 1516 years, Americans have cut their debt to disposable income by 25%. That’s a huge number. Right? And then companies have done the same.

Corporate debt to corporate market cap is at 50 year lows. So not only have we yet to leverage up, we haven’t even started. Right? This is, these are the, this is the financial data that you see at the birth of economic expansions, not the end at the birth. So again, this is structural in nature, which is why by the dip has remained as the smartest smart money strategies for the entirety of this bull market last, what, 2021 months. And we think that continues. That’s why buy the tip will continue to work. And also, remember this, again, as I said earlier, the Dow Jones led the way lower. Well, why is that significant? Because the Dow didn’t lead the way up.

[00:10:41]:
Semis and tech led the way up. If they’d been the first to fall, they have. They weren’t. Right. They’re only now starting to crack a little bit. If they’ve been the first to fall, then I would have said, okay, that’s a telltale sign that concerns us. That’s not the case. The trannies, right.

The trannies were the first to fall. The Dow Jones then followed behind it. And now look what’s happening with trannies. Tyler just pointed this out to me. The Dow Jones transports today after we focus on this this week, they hit a double bottom yesterday where they actually, just by Smidgen, took out the lows of 2024. The chart of the, of the trainings doesn’t look great. Trump was convicted of 34 penalty counts. This has just come across the wire.

Now what? Wow, that’s interesting. I did not see that coming. Trump convicted of 34 felony counts. Is that even real? He was convicted on all counts, every count. I’m stunned. Obviously he’s going to appeal this, okay. And he’ll win an appeal. But that wasn’t their point.

[00:12:00]:
Of course, their point was get the conviction to tell the public we can’t elect a felon as president. And that’s their message. That’s their message. Well, what are you going to do, right. I think the Americans are going to rally behind him. I really do. Look, I’ve been, I’ve been, after being one of his biggest fans, I’ve been one of his hardship critics because of the pandemic, because of the jabs, right. And because everything associated with that.

And now he’s capitulated on other things. Again, one thing you can’t call Donald Trump is a conservative. There’s nothing about him as spending conservative. There’s nothing at all about him that’s conservative. Doesn’t mean he’s not Maga. He is, he’s the father of MAGa, certainly the near term, but he’s not a conservative. And he has compromised a lot of things that frankly, I never thought he would compromise on. But again, the point being Americans, I believe will see this and they will rally behind him.

Will the left be able to get enough people motivated to go and vote for Biden with this remains to be seen. I’m a little stunned. I imagine everyone will listen to this, is stunned as well. Okay. But again, the trannies of the Dow Jones have led lower. They’re now, listen to this. The Dow Jones is now, after hitting all time highs over 40,000. What was that last week? The Dow Jones has now hit extreme oversold on stochastic, which is our leading momentum oscillator.

[00:13:37]:
Getting close to it on RSI. And that’s a waterfall decline, which probably means it’s very close to being over. But again, we’ll see how the markets handle this news of Trump. Again, my personal opinion is I think America is going to rally behind him. Will Biden’s base rally? Probably. Will it be enough? Not unless they rig it again. Not unless they rig it again. And I’m on record saying that I think the establishment, the state is now wants Trump to win because they think that he can be controlled.

I covered this in a podcast last week. I’m not early this week. I’m not going to Tuesday. I’m not going to cover it again. Yeah, I’m a little taken aback by that. Wow. Did not see that coming. But here’s what’s also interesting.

I’m going to get right to the, to the good stuff here. Again. Dow Jones today down 330. Nasdaq down 183. Right? That’s right at, let’s call it 1% for both. They’re just kind of rounding. Okay. Same time, though, Russ.

[00:14:42]:
2000 a day, small caps up 1%. This is a weird bifurcated kind of a day. But here’s what really matters. Let’s get right to, I’m going to jump around a little bit today. Let’s get right to the, to the internals because, and the sector watch talk about this. This is big. With this kind of decline today, you would have rightfully expected the internals to be horrible. Right? Listen to this.

They’re anything but the internals today, Nasdaq, excuse me, NYSE advanced decline positive by three to one. Three to one. That’s incredibly rare with a market down, let’s call it getting 1%. Nasdaq was positive by 700 issues. So not two to one, but solidly positive. With the Nasdaq down 1.1%. Advanced decline for Nasdaq. Right at two to one positive with big trading volumes.

Okay. NYSE again, right at two to one positive, matter of fact, just a little bit better than two to one positive against decline, just slightly positive. But it was positive. So you look at this, you go, that’s, there’s something off about this. Right. There’s something off about this. And I know some of these internals are increasingly hard. That’s primarily Nasdaq.

[00:16:00]:
It’s hard to make sense of because of some of the penny stocks that are getting traction, that trade in there. Right. The big volumes and everything. And again, roast 2008 up 1%. That stands out. Right. That’s not the sign of a weak economy. Russ, 2001% says US economy is in good shape.

Again, small cap companies, 70% of their revenue approximately comes from domestic business. That’s why that’s important. And the ten year today was down pretty big today, ten year yield down to 4.54%. Again, we believe that the internals, excuse me, we believe that rates are going to continue going lower and that every spike is just going to be a lower high. So far, that’s been the case. We think it continues to be the case. But again, really strong internals today on a market down big. That’s a tell.

That’s a tell. We’ll see what happens tomorrow. We’ll see what happens tomorrow. I think we’re going to have, tomorrow we get the inflationary data, the PCE data. I think it’s going to be good news. We had sector watch today, nine of eleven sectors up on the day. Again, another tell. Right? This stands out, doesn’t it? You’d expect to be just the opposite.

[00:17:15]:
We had nine sectors higher, two finished lower. Real estate up one and a half percent. Utilities of 1.4%. Again, across the board gains. Technology, again, leather, we lowered today down 2.4%. But again, I repeat, if tech had started this decline, then you would have seen, you would hear me saying something different than you hear me say today. And now we have the Dow reaching what looks to be extremely oversold, met maybe in just a day or two. And there’s no, there’s no rule that says it has to matter of fact, in big bull markets, you never get there.

So again, we’ll be looking to buy this stuff. There’s just no doubt about that. There’s just no doubt about that. I’m still a little shaken by this news of Trump. I got to tell you, I met, again, it’s a friendly jury for the left, obviously. But this judge’s instructions, I’m almost certain the judges instructions has something to do with it. We look forward to seeing the breakdown of this. My goodness, is that going to dominate the news or what? Wow.

By the way, DJT Donald Trump stock is down 8% on the news. Trump media last trade down 8% at 47. I don’t know why this is actually bad news. I think more people would be using. It’s just in sentiment. It’s just in sentiment with the news today. Okay, I would normally at this point probably talk about a few other things, but with my voice the way it is, I’m going to get to our commodities and talk about bitcoin a little bit and then we’ll wrap it today. Commodities, they were actually pretty flat.

[00:18:55]:
We had a pretty good weekend for gold after it got smashed. Again, that was a short term situation. We are very bullish on this group. We continue to be very bullish on this group. Gold today right now is flat at 23 64. It had been up as much as five $6 announced. But again, kind of quiet day. Silver remaining over 31, 31.34.

Down a buck on the day. It’s down 3%. Silver’s been a house on fire. Copper today also down thirteen cents a pound, down 2.8% at 465. Also a house on fire. Again, this group has been very friendly to investors. Crude oil today also down $1.35 a barrel at 7788. And finally today, bitcoin.

What a great looking setup. The chart looks fantastic. This is actually a bull flag pattern that has broken to the upside. Now we want to see a move over 70, over 71. And then we’re right back to all time high at 73. Four right now. Last trade, 68,300. And we’re getting, I think we’ve had now twelve straight days of inflows into these ETF’s.

[00:20:02]:
And again, they’re only mining 450 bitcoin a day. At some point this blastoff is going to happen. If it weren’t for futures trading. Right now, short term price action is being dominated in the futures markets. And those are short term traders. They’ll flip on a dime if they get caught on the wrong side, which I expect they will, and they’re forced to cover overnight or next day you’ll see this thing not only blast through to new all time highs, you’ll see 80, 90,000. I think that’s what we’re going to see. Our target for year end remains 100,000.

We’ve had a pretty good feel for this and it’s still very confident about that call. Over 100,000 by year end. And I think, frankly, it could happen pretty quick. All right, folks, that’s all for today. Hey, always appreciate you listening. Hope you had a great day. Near better night. We’ll see you back here again tomorrow after the close.

Podcast Newsletter

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Time Stamps

00:00 Tyler is locked in and impressive.
03:38 Bull market expected to last past 2030.
08:35 Strong corporate and consumer bases drive market.
13:37 RSI suggests a near end to decline.
16:17 Small cap companies: 70% revenue domestic. 10-year yield down to 4.54%.
17:15 Stocks mostly up, tech down, Dow oversold.
20:35 Confident about over 100,000 by year end.

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