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VRA Investing Podcast: Semis Surge to Fresh ATH’s. The Power of the Roaring 2020’s – Kip Herriage – January 19, 2024

In today's episode, Kip shares his insights on the current market conditions, and today's all-time high in the S&P 500 and the semiconductors. Kip also discusses the impact of the innovation revolution and its influence on corpora ...

Posted On January 19, 2024Episode 1312
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About This Episode

In today's episode, Kip shares his insights on the current market conditions, and today's all-time high in the S&P 500 and the semiconductors. Kip also discusses the impact of the innovation revolution and its influence on corporate earnings. As Kip sees it, investors Are Getting a Second Shot at a "Dot-com-like" Melt-up

Transcript

Don’t look back because the market is closed. Good Friday afternoon everyone. Kip Herriage here with the VRA investing podcast. I hope everyone had a good day today because if you’re long this market, I believe you probably did look at things could always be better. But pretty good day, pretty good finish the huh? And let’s get right to it. Took two years, took two years for the S&P 500. Just closed at an all time high today. Not an all time high, all time high, but a closing all time high today.

At least if my math is right. That’s right. Anyway, I can tell you for certain is it is a closing all time high today joining the Dow Jones which has had a closing all time high and an all time high period, as have the semiconductors, the tech sector, XLK, Nasdaq 100, the Q’s as they call it, all of these at all time highs. So as my mentor, first mentor Ted Parsons. Rest in peace, Ted. As my first mentor Ted Parsons would like to say, the real bull market doesn’t start until we get to all time highs. That’s when the real party starts. And I think he’s got a great point.

[00:01:11]:
We’ve talked about it here often and now we’re there. Because when an index or a particular stock is at an all time high, what does it tell you more than anything else? No one that owns that has a loss. If you own that particular investment, you are in the green. And that’s when magical things start to happen. Because once you’re in the green, why would you sell? Now you’re profitable now, again, let the party start. This is when the shorts, and the shorts, by the way, short sellers have been coming in aggressively again. Not to be a broken record, folks who have been joining us here, you know that we called the bear market low on October 13 of 2022. We wrote a book.

It came out just about the same time, saying that we were in the roaring two thousand and twenty s and this was going to be a bull market like similar to or better than the 1995 to 2000 melt up. We’re on record saying this for some time now. So look, this is the way big bull markets happen. It’s a process. Now we’ve got to get these other indexes all time high. What is not there? Nasdaq still not an all time high. I got to rerun the numbers here. I think we’re at 5% away on Nasdaq from an all time high.

But the Russell 2000 is still going into today was 20% to 21% below its all time high, it was up 1% today. So we’re still again, rust 2000 small cats have got to jump 20% just to get to all time highs. This is a gift. This is a gift. And again, this has been our approach until the markets hit all time highs. It’s a freebie. It’s a freebie the markets are giving you. That’s been our approach, and it’s going to continue to be our approach.

[00:02:55]:
What’s magical about this? And there is no clear roadmap, really, it’s like a crystal ball. As I wrote it up this morning, the particular investments, the particular sectors that are giving us these all time highs, they’re exactly the ones you want to see doing it. Because again, semis lead everything, folks. Today, the semis were up 4%. SMH, semi etf up 4% on the day. It was up, what, 3% yesterday. I mean, it’s just been on a serious tear. Of course, we went aggressively long.

This group, on the day after the October 13 bear market bottom is when we went aggressively long and have been pounding the table ever since. So look, this is the sweet spot for this market. Know this. This is the sweet spot. We’re in it now. We’re in the sweet spot. And this innovation revolution is powering everything. We’re in the first inning of a massive bull market that has years to run.

[00:03:57]:
I should say it’s the first inning of the innovation revolution. This is just starting. I believe this is going to be far more powerful than.com was. And I’ve made this case before. I remember we were looking at each other as these companies were coming out, going public. What do they do? They do what? How are they going to make money from that? This is before companies like Facebook learned how to monetize people. Right? And monetize us. There wasn’t a process for that yet.

These were just ideas. And again, 90% of those companies wound up going out of business within a decade. This is a different era, folks. What we’re going through now, these are established companies, not just that magnificent seven, okay? Not just these mega cap tech stocks. This is a different kind of market that is filtering down very quickly. I guess a lot of people are calling the artificial intelligence boom. It’s much broader than that. AI is playing only a role.

[00:04:56]:
And I think this is what people are missing. We focus on this in our book, the Big Bribe. This is about innovation. Kathy Wood has been a big leader on this. The innovation that’s taking place throughout multiple, multiple industries and even new industries like space exploration, innovation is taking place is going to have, we believe, is going to have really incredible impact on the most important thing for the markets, and that is corporate earnings. This revolution is forcing earnings higher again. We believe it’s got years to run. Our view has been to 2030 or so for this.

Move higher, and that investors that have the vision to see this are going to make fortunes. This is the time to stay locked in. This is our second shot@a.com. Like melt up? Move higher. I took three companies public during the 1995 to 2000 melt up. As I said before, if we weren’t making our clients 10% a month, they were looking for another broker because they were out there and they were doing it. People have no idea what’s coming. Folks, think about this for a second.

[00:06:00]:
In case you think I’m crazy, let me give you some facts here. Ipos are in the toilet. When’s the last time we’ve had a hot ipo? They’re nowhere to be found. We’ve yet to get to hot ipos. Remember, we were having over 195 to 2000. We were having over 100 ipos that came out each year that on the very first day of trading were up more than 100%. We had years where there were more than 100 ipos that came out that were up more than 300% on the first day of trading. We’ve not seen anything like that yet.

The IPO market is Deadsville. Mergers and acquisitions. Now, mergers and acquisitions had an offer last year. And again, it’s not as weak as the IPO market has been, because investment banking, of course, rules the roost on Wall street. But still, it’s nowhere to where it’s going to be once these ipos and these private companies start going public. And again, the other part of this, again, we’ve spoken a lot about this is the financial engineering that’s taking place. This is going to have major impacts throughout every industry. As companies go private, as companies go public, as mergers and acquisitions take place, as new things happen, there are going to be new inventions.

[00:07:20]:
Remember when email came out? I remember sending my first email going, okay, that was fun. Wow. We can do this to anybody. You get of an ISP and an email address you can send to anybody around the world. Wow. Right? It kind of hits you, right? And all of a sudden, here came the ability to shop online. And it was so backwards at first, but to us, it was unbelievable. And then, of course, came wireless communications.

So all of that has paved the way for where we’re going. And I don’t know exactly what the inventions? Maybe you do. Maybe some of you listening know what the inventions are going to be. I can tell you one that we already know about cryptocurrencies. They’re now legitimate. I know cryptos have been weak following the SEC approval of spotbitcoin ets. For folks, this is just the beginning of that bull market. So what we’re seeing is a global melt up based on innovation, based on liquidity, and based on good ideas that are now about to start becoming reality.

[00:08:18]:
This is going to be a magical time to be not just an american, a magical time to be a person on this planet that has, and you don’t have to be wealthy, just have some money, and more than anything else, have an open mind and the ability and the desire to do some research and find out about these companies. This is what we do here. We call them our VRA ten baggers. And so this is all just now beginning. And so when you see all time highs in the most important equity index on the planet, the SB 500, that’s sending big alarm bells all over the planet to investors, what do you think investors are going to be doing this weekend? Looking at the 401 ks going, what was I thinking? I was so proud of myself for getting 5% in a money market, and now the market is going to melt up again. Last year, Nasdaq up over 40%. We put up returns of 50.26%. Last year.

Folks, I really believe that we’re going to have a year where the VR portfolio is up over 100% and maybe by a lot. Our best year, I believe, was. I have to go back. I had to speculate too much. I believe our best year was about 220%. We had a couple of companies that are bought out. But I think we’re going to go through a period of time here where again, and by the way, you know what? There are a lot of you, because this is a very smart audience here, a lot of you listening to this will probably do better than we are, because you know what? You work in a very specific industry, in a niche market, and you’re going to find a company that you get, that you understand, and you can invest heavily in. Maybe it’s a company you work for, and you’ve got it in your cetera.

But please, if you have that idea, you have no idea how much we want to hear about that, right? We have subscribers here, VRA members, that are talking to us right now about some amazing ideas. One of those, of course, we’ve been active with, with this lost soldier oil and gas, which looks to be one of the largest natural gas discoveries in a very long time. It might be the largest in the history of the state of Wyoming, maybe one of the largest in the Rocky mountains ever. Who knows by the time it’s done, how big this is going to be? We have other clients working with some cryptocurrency ideas, and again, look at the returns that people have made in bitcoin and so many of these various cryptocurrencies. This is the era we live in. And this is, for me, again, just a personal observation here. I get very frustrated, and if you know me at all, I get very frustrated with the perma bears and the psyop of negativity that’s out there. And all the people, these so called, I don’t know what they call themselves, frankly.

They think they’re smarter than everybody else. And what they do is they read zero hedge and they read Gateway pundit and they glob on to the most negative ideas. These may not be good things happen in our country. For example, what’s happening across the border is horrible, right? There’s a flip side to that coin, too. I’m not going to get into that here today, but there’s a flip side to that coin, and it’s a very bullish flip side of the coin for the broader american story and the american population and certainly for american economics. But the point I’m trying to make is this. I really recommend that people, especially in this time frame we’re in now, from now till again, the roaring 2020s. That means we got another six years here, folks.

[00:11:48]:
I recommend that you find a way to block out some of that negativity, maybe watch a little bit less of Fox News. And I’m not picking on Fox. All of these mainstream media networks, of course, it’s all negative 24/7 but focus instead on the wonders of what’s happening here. Again, the innovation revolution. We talk about the five megatrends that we’ve locked onto here in the VRA, and again, there will always be wrongs that need to be righted. But this is a special time to have money. It’s a special time to have money in this country, and doesn’t mean you got to have a lot of it. But a little bit goes a long way.

If this is the bull market that we believe it is, and look, the evidence is starting to appear before our eyes, is it not, that this is that bull market, just as everybody got so negative? Joe Biden’s president, as a reminder, if you read the big bribe I wrote. I think there’s two or three pages in the big bribe that Joe Biden might just have a Bill Clinton moment. Bill Clinton, of course, was the. Oversaw the greatest stock market boom in the history of the United States. Again, the.com melt up, that five year period of the Nasdaq, 583%, I think it was. Bill Clinton was president for all of it. Over his eight years, the SB 500 had an average return of 26 point something percent. Again, we cover all this in the book.

[00:13:21]:
People laughed at me, gave us a pretty hard time when we put that in the book. But look at what’s happening. Could the sky fall out tomorrow? Sure. But that could happen to any of us at any point in time. That’s why diversification is so important. This is why we diversify your precious metals, and we use cryptocurrencies. And of course, we have diversification in oil and gas, diversification in real estate and housing. This is why that’s so important.

If something gets hit hard, something else is going to make up for that. But again, the point I’m making here is that we are just at the beginning. As Ted Parsons would say, the bull market really only starts when you get to all time highs, and that’s where we are now. All right, let’s take a look on the hood today. Good, but not great internals again today. The Dow Jones, by the way, might want to cover this as well. Dow Jones finishing up at the highs of the day, pretty much up 404 points, just up over 1%. SP 500 up 1.2%, up a big 58 points.

Russell 2000 was up just right at 1% today. Nasdaq up 1.7%. And again, semiconductors, SmH, up 3.88% today on the day skyrocketing. The news yesterday from Taiwan, Simi, the earnings, it wasn’t the numbers so much that got people’s attention. It’s, they’re talking about what’s happening in their space, the demand boom they’re seeing because of artificial intelligence and what’s happening there. And again, folks, this is just getting started. Who knows what’s going to come from this? Who knows the inventions that are going. Something big is going to come from this.

Something big is going to come from this. One of those, of course, is probably cryptocurrencies of bitcoin. I think something else big is coming. We actually wrote several ideas up in the big bribe, but this is what the markets now are anticipating as the best discounting mechanism on the planet. The markets are telling us something special this way comes. And that means, by the way, a strong economy as well. Okay, let’s take a look on the hood today. Eternals.

Today we’re going to round up a little bit. It’s that kind of a day. Why not round up two to one positive advanced decline for Nasdaq. It actually was better than two to one positive for NYSE. But again, these are not phenomenal numbers. Matter of fact, for new 50 highs or lows, we actually had. I don’t understand this at all. Nasdaq is up 255 points, but we had more 52 week lows in Nasdaq than highs.

Someone helped me understand that we had 223 stocks in new 52 kai to 200, hitting reverse. 200 new 52 kai to 223, hitting a new 52 week low. Vance. Decline for NYSE was positive by what? Is that just better and better than two to one volume today? NYSE 69% of volume. Nasdaq just a bit better at 70. Those are pretty good readings. 70% of volume for Nasdaq in our sector. Watch.

[00:16:13]:
This was better. But again, not all eleven. We still had two sectors finished lower, just barely. Okay. But we had nine sectors finished higher. Of course. Technology up 2.3%. Financials up 1.6.

Also, communication services, which essentially is a technology. Okay. Netflix is the world, also up 1.6%. Again, very strong day today. These internals were a little weird. But again, remember, we’ve gone through a rocky patch after the parabolic melt up into year end. Just markets went straight up, and then we started the first couple of weeks of the year with weakness. So it’s going to take probably a little bit of time for the internals to wash out and become better for the market to be broadening out a little more.

[00:16:54]:
And I think that explains it more than anything. But again, the last two days, what they’re doing, folks, these markets know what’s coming next week. Next week, forget bank earnings. Again, we are not fans of bank stocks here. Financials may be a different story, but next week really kicks off. Q four earnings with tech stocks. Again, Taiwan semi gave us a snapshot of what’s about to happen in the world of tech, certainly in the world of semis. And again, it’s just getting started.

There’s going to be a time frame when you get into your uber or your Lyft or your taxi versus old schoolers, and they’re going to be giving you their top stock picks. How do I know this? Because I lived through it from 95 to 2000. We’re going to see, probably starting next year it’ll take probably another year before this. It’s coming, folks. Another year before this starts. When people start leaving their corporate jobs in droves to day trade that’s not started yet. Again, the IPO boom has not started yet. This is the infancy.

[00:17:57]:
And this is why we spend so much time talking about how strong the consumer is. And I know that people think I’m gaslighting. I get into arguments all the time. People, what are you talking about? Don’t you know inflation is sky high? Kev, how can you say that? The consumers have rarely have ever been in better financial shape. Well, because the data backs that up. You couldn’t be more crystal clear. And that’s why this matters, right? To have consumer net worth at all time high, home prices all time high. One third of Americans own their home outright with no mortgage on it.

There’s so many of these credit scores. All time high, blah. On and on and on. Consumers have reduced their debt by 25% to disposable income over the last 15 years. Corporate debt to market value is at 50 year lows. What does all that tell you? Again, we’re at the infancy of an economic boom time. These are the things that typically you only see at the beginning of a boom, not the end. We have yet to lever up.

[00:18:55]:
Consumers have yet to lever up. American companies have yet to lever up. And again, financial engineering is going to make that even more powerful. So, yeah, we’re pretty excited about it, and that’s why we think, and we’ve been saying this now, we’re broken records for about a year and a half. The smartest and smart money strategy is to continue to buy the dip. It’s hard to do, it’s hard to buy when the market’s going down. But I think, again, we believe in repeating patterns. It’s the basis of technical analysis.

And if you look at the biggest repeating pattern we’ve seen in this bull market, it’s buying the dip has worked every single time. I’m going to be on Charles Payne’s show Monday or Tuesday, they’re going to let me know Monday morning. And this is what I’m going to tell is everything I just said. I just kind of did a warm up for it. I’m going to see how much time he lets me talk because this is what I intend to say on this show on Monday, Tuesday. And of course, the first time I was on his show was just after the October 13 bottom of 2022, when we had just put our book out and we were saying exactly this so Charles has always been very nice to recognize that. Just a really good human being too, by the way, so big fans of Charles Payne all day long there. All right.

[00:20:09]:
In our commodity watch today. Again, all the actions in Equityville. So kind of quiet here. Bond market today. Again, ten year yield. One other point. The reason that the markets have been weak is that ten year yield bond market has been weak. Yields have been ratcheting up a bit.

Again, the fear mongers are saying, here comes inflation again. Oh my God, they’re so wrong. They could not be more wrong. It reminds me of the people that are saying, oh, we’re going through, we’re going to have another 2008 financial Cris. This time frame could not be more different than that was. I know because I was telling people to get out of the market, telling people to lighten up and make sure they weren’t over leveraged in real estate. I started doing that in 2006. People thought I was crazy because everybody wanted to be flipping homes and wanted to go buy ten homes.

[00:21:00]:
And so I’m on stage saying, don’t do that. I wasn’t the most popular guy in the room, but we follow our research, and that’s what it said then. What it says now is this is the time to be locked in for what’s going to be an explosible market for some time to come. And the fact that there are just these fear mongers and perma bears and doubters out there that every time you have a one, two, three, 4% pause or shake out, here they come telling you, next crashes around the corner, folks, we need more of that, right? We need more of that. So good for them. I hope they continue. But again, they’re not really investors anyway. They’re clickbait using list builders.

That’s what their business model is. Just know that. But again, the move higher in rates has hit precious metals and miners. This is temporary rates because of innovation and rates, because now we’ve had a great reset of a different kind. Rates will be falling for many, many years, in our opinion, and that’s very bullish for equities, but it’s been bearish in the short term for precious metals and miners. We think that’s about to change. I covered this this morning. In the last three rate cutting cycles, we’ve had, again, there haven’t been that many because rate cuts, you’ve had lower rates for 41 straight years.

[00:22:17]:
Right. But we’ve had these many periods where the feds hiked, of course, as they did from 2004, 2006. The hike rate 17 straight times. If you’re wondering why the financial cris happened, look no further than the Federal Reserve hiking 17 straight times over a two year period into a dramatically over leveraged housing market. The Fed caused this crash and it was not an accident. Okay, but this ain’t that, right? But the key point though is that rates are going to continue to fall. And this backup we’ve seen now in precious metals, which aren’t down that much, the miners have been hit worse because they do tend to lead in both directions. But we think this is going to be a phenomenal buying opportunity because in the three previous rate cutting cycles for the mining stocks, GDX is the gold miner ETF that we use to track this.

The average move higher in GDX has been over 180%. The 2003 rate cut cycle, before they started Hiking 2001, 2003, the miners were up 400%. And of course they continued on actually after the financial crisis as gold continued higher. But the point being, this is when you want to own precious metals and miners, is when the Fed is getting ready to change from a rate hiking cycle to a rate cutting cycle. And if you look at a chart of GDX, look at a one and a half year chart, you’ll see that clearly it doesn’t look as great on a short term chart, but look at a one and a half year chart, you’ll see. Okay, clear bottom. We’re in a bull market. Yes, we are below the 200 day.

[00:23:47]:
Now, we believe that’s temporary as well. I believe the miners are probably the best bang for your buck miners and small cap stocks right now. It is harder. I must tell you though, it is hard not to want to continue to buy the leaders. Okay, gold today up $10 an ounce, $2,031 an ounce. Silver today was down a quarter of a percent at 22 75. Copper today was up 1.2% at 379 a pound. I like copper here.

Global economy. I think it’d be a lot stronger going forward. That bodes very well for Dr. Copper. Crude oil today down fifty cents a barrel at 73 43. And finally, on the day again, one of our innovation revolution specialties. Bitcoin up today. 248, 41,005.

[00:24:35]:
Eightyat digesting some of those gains it’s had for the SEC approval. But in 90, I believe it’s 96 or 97 days. The next having is going to take place in bitcoin. This next move higher will begin to anticipate that by bitcoin on this pullback again. 41,000, 580. Folks, listen, always appreciate your listen. You guys are fantastic. Please keep your feedback coming.

Hope you had a great week. An even a weekend. We’ll see you back here again Monday after the close.

Podcast Newsletter

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Time Stamps

00:00 Stock market at all-time high, potential for profit.
06:00 IPOs in decline, no hot offerings seen.
08:18 Exciting investment opportunities ahead for open-minded individuals.
09:59 Excitement for new ideas in business.
13:45 Markets up, potential for bull market.
19:25 Bull market pattern: buying the dip works.
22:17 Fed's 17 straight rate hikes caused market crash.
23:47 Temporary uncertainty in mining and stock markets.

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