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VRA Investing Podcast: S&P 5000! Navigating Investing In the Roaring 2020s – Kip Herriage – February 08, 2024

In today's episode, Kip discusses the recent milestone of the S&P 500 hitting 5000 for the first time, shedding light on the current economic climate and market sentiment. He delves into the indicators of the roaring 2020s and the ...

Posted On February 08, 2024Episode 1321
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About This Episode

In today's episode, Kip discusses the recent milestone of the S&P 500 hitting 5000 for the first time, shedding light on the current economic climate and market sentiment. He delves into the indicators of the roaring 2020s and the structural bull market, emphasizing the potential for generational wealth opportunities.

Transcript

Don’t look back because the market is closed. Good Thursday afternoon, everyone. Kip Herriage here with the daily VRA investing podcast. Hope you had a good day today. Drum roll, please. It finally happened yesterday. We weren’t able to have our podcast yesterday.

Sorry about that. Some late day complications and meetings. But what happened yesterday was. Was trying to happen today. Yesterday, as I’m sure you may have seen, the SB of 100 got within a fraction of a point, a 13th of a full point to hitting 5000 for the first time. And then today, my wife and I were out running some errands today, and we’re watching on my phone. Tick, tick, tick. It’s a point away.

It’s a half point away. It did the same thing again today. And we’re like, okay, it’s not going to happen. Then it backed off a little bit. And finally, with about a minute left in trading, a small buy program came in and the SP 500 finally ticked just above 5000. The high for those wondering, the high for the SP 500 now is the high 5000.40. But it did tick at 5000. So we have a first time ever for this 100 at 5000.

[00:01:17]:
And of course, as our theme remains, this is another indication of things that happened in the roaring two thousand and twenty s, of course, which is where we are. And these are the things that happen, right, that happened in the roaring 2020s. Tech earnings go ballistic. We have the innovation revolution. We have all the bottom line balance sheet financials we talk about here, which is incredible to me because it’s not talked about. You can’t find this anywhere in the mainstream media. The things we’ve been reporting to you here for over a year now, as we outlined in our book, the big bribe, too. But now we have even more information coming available again, home prices, all time high.

Net equity in homes, all time high. Consumer net worth, all time high. Credit scores, all time high. One in three homeowners own their home without a mortgage on it, of course. All time high. Consumers have reduced debt by 25% to disposable income from 15 years ago. We learned from the financial crisis, right? We learned we didn’t want to be in that position again, where banks could take our shit. And so we stay on top of things.

[00:02:24]:
We didn’t get leveraged too greatly and corporations did the same thing. Corporate debt to market cap is at a 50 year low. All of that combines to tell you we’re in the roaring two thousand and twenty s. And here’s why that matters. Yes, it’s fantastic that we’re taking care of that we’re making more money, our homes are worth more, consumer net worth is all time. All these all time highs. That’s all fantastic, right? But at the end of the day, here’s what really matters to the stock market when we talk about this being a structural bull market of size and scope, which has been how we’ve tagged this now for, again, over a year, when we released the big bribe about 1416 months ago, when we tagged this as the roaring two thousand and twenty s, and that it’s a structural bull market of size and scope. And this is a generational bull market.

[00:03:11]:
As I wrote up today, as we’ve talked about here so often for so long now, the reason all that matters is that the balance sheet fundamentals mean that Americans and american companies have a lot of ability to leverage up, to lever up. And here’s why that’s significant. The leveraging up process. That’s what happens at the end of economic expansions. That’s when economic expansions are turning into a decline and recessionary environments. That’s when that happens. It doesn’t happen when people barely have debt. And I’m sorry.

I know, kip, what are you talking about? Credit card debts is an all time high. Yeah, that’s a number. That’s a number. But it doesn’t matter relative to consumer net worth and to disposable income. Those are the things that matter. It’s not the total figure. It’s just like people. Oh, we’ve got $33 trillion in debt.

[00:04:05]:
Yeah, we do. Yeah, it’s a big number. But as it relates to our gross domestic product, it’s about 123%. That’s not low. Okay. That’s like World War II era high. It is high, but again, it’s all relative, is it not? In this age of financial engineering that we live in and this debt based economy that we live in, it’s important, I think, to remember that both Japan and China had debt to GDP of better than 250%. China is, without question, over 300%.

Who believes they’re accounting anyway? Okay, it’s a paper tiger. No one believes they’re accounting. This is why it’s been so easy to take this communist country down. Trump started it. Believe it or not, Biden has continued it. And look at what’s happened. Although we do like chinese tech stocks here, I got to tell you, I like them a lot because they’re trading, like, 20 to 30 year low valuations based on earnings and other metrics as well. And so we think that the chinese tech stocks actually are a good play here as a theme of the market will continue to broaden that.

[00:05:07]:
The roaring two thousand and twenty s is not just in the United States, a strong global economy. Again, that’s where we’re leaning on that. But the ability for individuals to lever up. Right. And the fact that America, again, compared to our competition, we’re in about half, we’re less than half of China and Japan’s debt to GDP. So again, I think it’s important. The reason we share this is it’s not that these aren’t scary numbers. Of course they are.

Right. It’s not that we’re not aware of it, not concerned about. Of course we are. The point is the markets don’t care because the markets look at things with perspective. With perspective. And what matters most is the financial balance sheet of consumers and companies. And now that we’re in the innovation revolution, folks, this is when things start to get crazy. And we’ve been telling you here consistently, I might add, this is the time to stay locked in.

[00:06:01]:
Right? If you’re following us here, certainly if you remember the VRA, you’ve seen some of those results in our portfolio. We ended the year last year with gains of better than 50%. Beat the markets. We beat our bogey, which is the rust 2000, by three and a half times last year. That makes 17 to 20 years we’ve beaten the markets. And the point here now, again, past performance is no guarantee of future results. So again, none of that matters either, really, because we live like we’re baseball or football player. We’re athletes here.

That’s how we view ourselves. What I mean by that is we know that we’re only good as our last stock pick. We’re only good as our last quarterly, monthly, yearly returns. We have to be making money for our folks every day. This is why I’ve made the parallel so often to 1995, to 2000, because folks then, I was a stockbroker. If we weren’t making, and I said this on Charles Payne’s show, I’ve said it often over the years. It’s true. If we weren’t making our clients 10% a month, they were shopping for another broker because that’s how locked in we had to stay.

[00:07:04]:
That was the market environment that existed then, and it’s coming back. I think you can all feel it, right? If you’ve been following us here, then you know we’ve been locked into this and we’ve been forecasting pretty much exactly what’s happening now. But again, none of that matters. What matters is what happens from here going forward. That’s why we have the VR investing system. That’s why we play so close attention to the internal workings of the markets. Again, the structure of the market and the health of that market. And folks, telling you straight up, this market is going a lot higher.

There are so many people that continue to doubt it. And that’s our biggest tell. I think if you’re a contrarian and if you don’t understand the importance and significance of investor sentiment and tracking that, yeah, people have gotten more bullish, but that doesn’t track the average person. I’m telling you, we hear it all day long here. What’s remarkable is people know how bullish Tyler and I have been for a long time, but we still hear almost on a daily basis from our own members, subscribers, and clients, the fear, the concern. People are frightened about this market. I wrote this up today. I’ll just repeat it here briefly for you.

[00:08:14]:
I get it. It’s not that I don’t get it. I absolutely get it. Okay. I understand that people are shell shocked. We had three bear markets in five years. Again, I don’t know why, folks, I really don’t understand this. No one’s talking about this.

I don’t hear anyone talking about this. I don’t know there’s anything more important than this single topic right here. We had three bear markets in five years beginning 2018. Trump was president in second year. That’s when the Fed crashed the market. Right. Because eight straight rate hikes, they hated Trump, blah, blah, blah. Right? All that drama, right? Who wants that? Again, my hand is up.

I do not want that drama again. I want someone that handles their business behind closed doors so that my life is not consumed by politics. That’s what I want. But we don’t have that now because DeSantis is gone. So anyway, moving forward, we’ve really stayed away from politics. But, boy, did you see the Biden stuff? Oh, my God. The Department of justice just admitted that he couldn’t prosecute Biden because he’s too senile. Now I’m paraphrasing.

[00:09:21]:
That’s what they said. And this guy may be our president again in the most powerful country on the planet. This is happening before. They’re laughing at us. They’re not just laughing at us. They’re laughing us in our face, right to our face, knowing that we won’t do anything about mean. What are we going to do? Look at what the Jan Sixers tried to do in Washington, DC. Right? Look what they tried to do they were invited into the Capitol.

The doors were open mysteriously, right. They removed the barrier so people could go in and then they lock them up. It’s just unbelievable. So if you raise your voice here, you can see your whole life will be destroyed. But anyway, again, getting off topic here. The biggest point I’m trying to make about this market right now right here, is that we had three bear markets in five years. The average stock fell 40% to 60%. It’s never happened before.

[00:10:14]:
I doubt it’ll ever happen again. Unprecedented. And investors again became shell shocked. I think they still are. Right. Even we are to some degree. We watch this every day. But I’ll tell you, every time there’s a big two, three day sell off, we’re still like on edge.

Like here we go again, right? I mean, it impacts all of us. That’s why the average person, and that doesn’t even include, again, the insanity coming out of Washington, DC. Right. The senile basement Biden president, 41 year highs in inflation we just had. Now we’ve got the military industrial complex acting unbelievably aggressively globally. So we can fault nobody for being hesitant on stocks. However, and this is the key point, this is exactly when powerful bull markets launch, especially with the backdrop I just laid out a minute ago of our financial situation, both consumers and for american companies, the best it’s been in decades. So this is when big bull markets start, when nobody expects it and they think stocks can’t keep going higher.

[00:11:21]:
That’s what people are still saying today, that this thing is going to crash. This is a house of cards. No, it’s not. No, our banking system isn’t going to repeat of 2008. No, the housing market isn’t going to repeat 2008. I hate banks, but the banking industry is in the best financial situation it’s been in decades. Housing market. Oh my God.

The structural strength of this housing market is unbelievable, folks. This is a housing market again. There’s no leverage here. People are paying cash for homes. One third of Americans own their homes outright. This is a housing market that could be setting up for a multi decade bull market. That’s what’s in front of us. This is why stocks are going up.

[00:12:08]:
This is why stocks are going up. Okay, let’s move on. I actually got to get to a meeting here, so I’m going to go fairly quickly here. Let’s talk about the Dow Jones today, finishing up just 49 points. So it’s a 10th of a percent. S 500 barely up, but again, it hit 5000. Rust 2000, our leader in the day. How about this? Up one and a half percent today.

Where has this been? Small caps, please don’t tease us. Make this a new pattern. It’s so ready to go. We’ve talked about it so often here. This market is not broadened out. This market has been thin. It’s been tech related primarily. Again, that’s what happened in 95 to 2000, although it did wind up dragging pretty much everything with it.

[00:12:46]:
Still, you never made the kind of money you made in tech stocks. And I don’t believe this time is going to be any different. You just got to suck it up again. Palantir, one of our big holdings, we’ve got a double in that now. The stock is up 40% in the last three days. Tesla is a great name to own here. Back below, just below 190. Love this stock here.

We’ve got, of course, our ETFs, leverage ETF strategy use. We’re very heavy into semiconductors. They’re up 500% from the October lows of 2022. And we owned exactly from that time. So there’s still a lot of cheap ways to make money in this market. And I think, again, this is just the time to stay locked in because this is going to be rocking and rolling for a number of years to come. This is generational wealth, folks. This is the opportunity to make generational wealth if you buy the right investments, public and private.

[00:13:41]:
And again, if you think, well, I haven’t been doing it and I don’t have enough money, and no, that’s not the mindset, start now and again, if you’re not a client of ours, we have a two free week offer. Take advantage of that. See what we’re doing. Read our daily updates, listen to these daily podcasts, see what our portfolio is doing every day. Again, all available to you for free@vraletter.com. You can sign up for two for weeks there. Okay, let’s take a look at the also, by the way, semis today. Nasdaq, by the way, is up 37 points and jump around a little bit.

Semis today up 1.4%. Another all time high in the semis today. Again, everything follows the semis. They are the tell. They’ve been the tell since the financial crisis and the birth of quantitative easing in 2008 2009. The semis have led in both directions. Don’t overcomplicate things. That’s what my mentor Ted Barson used to say.

[00:14:39]:
It is that simple. Follow the semis, you’ll have a really good idea. And just look at a chart of the semis in a relative strength chart compared to the SP 500, you’ll see it’s almost parabolic. So good, all the signs continue to flash. The lights continue to flash. They’re green. They’re not flashing. They’re bright green.

Yeah, we’re a little overbought. But again, I got to wrote this up this morning, too. This is how you know we have forever to go before we’re overbought. Okay, overbought. That would indicate, okay, we’re ready for a shakeout. Right. We only have 64% of the S and P 500 trading above its 50 day moving average, 64% over 90%. We start getting concerns, we’re forever from that.

[00:15:27]:
And on the 200 day moving average, only 71.6% of the SPF hundred is above its 200 day moving average. So again, it’s still backup the truck. Obviously, things are more expensive than they were just a few weeks and few months ago, but this is still backup the truck territory. Roaring 2020s big drive megatrends are all playing out. This is a great bullish setup. It’s a textbook bull market move higher. We think it’s going to continue for quite some time in our sector. Watch today.

Let’s do internals first. Okay. Pretty good reads today. Everybody’s bugaboo has been, what’s up with the internals? The market? Oh, we’re going to get in trouble here. This market is going to get in trouble if the internals don’t get better. Well, I don’t disagree with that, by the way. This is an important part of the bureau investing system. However, they are better than they were.

[00:16:27]:
And now the last two days have been some marked improvement. Today continued that. Again, fairly minor gains to the outside of rust 2000, again, up one and a half percent. Keep going, little guys. But everywhere. We had solid internals today, yesterday as well. So Nasdaq today. I’ll make it simple.

Both NYSE and Nasdaq both had almost two to one advanced decline positive. That’s a good reading. Up down volume today was also good. Nasdaq up down volume today was 71% positive. That’s a big reading for Nasdaq. We normally don’t see over 70% very often, and there are structural reasons for that that I won’t go into here, but that’s a big buy signal for Nasdaq right there. And also, NYSE had, what is this? One and a half to one positive on volume. And also another nice surprise, new 52 week high.

[00:17:20]:
Slos came in positively 403 stocks hitting 52 week high, just 132 hitting a new 52 week low. So the internals are looking better. We want that to continue in our sector watch today. We had six of the eleven sectors been retired today, led to the upside by energy. Boy, these stocks are cheap. Oil was up big today. Energy. Love energy stocks here.

Energy up 1% today. Real estate up half percent. Not a lot today, really. Utilities down eight tenths 1%. There was just not much happening elsewhere. Kind of a, kind of in between day here. And our commodity watch today also quiet here. Gold today on $2 an ounce, 2049.

[00:17:56]:
It is basing above 2000. Minimum target for gold this year is 2400. So $350 now it’s higher. The miners are going to catch fire. We’ll be ready when they do. Silver today up 1.3% at 22, 65. Copper down a penny at 371 a pound. Crude oil again, good move here today.

Up three and a half percent today at. Yeah, that’s right. Up three and a half percent today at 261 a barrel. 76, 47 a barrel. And finally, the day, bitcoin. Here we go again, 45,003. And on the day in bitcoin again, the story here. Look, it’s supply demand.

[00:18:42]:
There is no better supply demand story than cryptocurrency, specifically bitcoin. It’s the best supply demand story in existence today because they’re only going to have 21 million coins in existence. It’s going to take a number of years, probably like another seven, eight years to get there. But mining becomes more and more expensive because the next having is going to take place in about 80 days. Right. And that’s a very bullish event. These havings are very bullish. I think bitcoin continues to rally into that, just like bitcoin rallied into the SEC approval, which have been rumored for so long and finally happened, of course, last month.

So bitcoin had a big pop higher, and then it was buy the rumor, sell the news. And now we pull back and base and now we’re moving higher again. Love bitcoin here and I think it’s a great buy here. All right, folks, that’s it for today. Hope you had a great day, maybe night. We’ll see you back here again tomorrow. All after the close.

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Time Stamps

00:00 Corporate debt low, economy strong, generational bull market.
04:36 Chinese tech stocks offer good investment opportunity.
07:36 Investor sentiment remains divided and significant.
10:32 Global uncertainty, but potential for bullish markets.
13:41 Start now, free two-week offer available.
18:42 Bitcoin's supply-demand story fuels bullish outlook.

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