In today's episode, Kip covers today's shakeout to end the week. While the markets ended on a low note, Kip emphasizes the importance of focusing on macro trends and long-term investment strategies. Tune in to learn how to turn market shakeouts into strategic investment opportunities and find out why Kip remains confident in the long-term growth prospects for this innovation revolution.

Don’t look back because the market is closed. Good Friday afternoon everyone. Kip Herriage here with the Daily VRA Investing podcast. Hope you had a good day, hope your week is good as well. This is the holiday shortened week we just finished here. Listen, not the way you want to finish the week. Markets finished pretty much at the lowest of the day. But it’s what’s happening around it that is just fascinating.

Obviously if you’re on this podcast today, you’re probably a regular and we always appreciate you. And so you know a lot of what we’re going to say as far as the mood and the kind of the big, you know, macro topics that we’d like to talk about because you know, that’s what matters is the macro. Not the primary trends matter, not the counter trends. Unless you’re a day trader. But if you’re a medium to long term investor, a position builder, as we are, of course we use ETFs to trade more short term. But what we’re looking for is our macro trends and our primary trends, right, the macro theme and our primary trends and those don’t turn on a dime, right? These are longer term lasting, especially the ones we have now, the big ones that really matter most. The innovation rebel, just getting started, right? The, the Trump economic miracle 2.0 just getting started again. So these are the kind of things that we, we pay attention to and they keep us grounded, you know.

[00:01:15]:
But it really is interesting, I gotta say. On Wednesday, I, I mean it really is funny, on Wednesday we had all time highs in the SPF 100 and Nasdaq 100 with the Dow Jones and regular Nasdaq less than 1% from all time highs. That, that was Wednesday of this week. You probably know I’m going with this today. The sky is falling, people are panicked. It’s just, you should see my inbox, you see my direct messages, my Twitter account. People are really concerned now because of one day’s action essentially. So the market, look, the market hasn’t been rip roaring.

You know, we had a great run up after Trump was, was elected and then, then we had, okay, here come the terror fears, right? And now here comes the Fed. The fear of the Fed. Oh, what are they going to hike? What going to do? So yeah, there’s some, there’s some drama around it. But does it, does it justify, does it justify the fear and greedy next day falling to 35 all time highs on Wednesday. Fear green index at 35 today, that’s solid fear territory. Five points away from five points away from extreme fear. Is that right? Anyway, yeah, solid fear territory to me that, that is astounding. And I, I, you know I, I think that I fall back to what we’ve talked about a lot here which is there is a sigh up in negativ been in place.

[00:02:36]:
Whatever reason you want to say it’s there, not that it’s not earned and justified. We had the worst two decades in American history. A lot of pain from this. Right. A lot of the country is still in really bad shape and just going to take, it’s going to take a while for that to go away and to fade away if you will. But it is in place. So whenever we have a bad day or a bad week or a bad month, it’s the, you know, the wheels have come off the car and we are in serious trouble. It doesn’t help by the way that we got yesterday, Walmart missed, right? They missed on their earnings with some, with their outlook not being fantastic.

I think way too much is read into that. Walmart’s only up 80% over the last year. Gave some back and then this morning we got the University of Michigan Consumer Consumer sentiment survey and that missed on the downside. But if you know us, you know the way we look at surveys, certainly these kinds of surveys, any sentiment survey like this, unless there’s a trend that it goes with it, we just ignore it because again it’s a sentiment survey. And if you ever read about how these things are compiled and how they’re put together, it’s not that much different from the monthly employment data. It’s a nightmare when you dig into these and you say it makes no sense. We had five states that didn’t even submit their data. How did they compile this? That’s about the average three to five states do not submit their data for these monthly employment results that we get.

[00:04:09]:
So it’s bottom line is this, if it’s a one month short term, in other words not a trend, we look for at least three months before there’s a trend, then we essentially ignore it. It gets our attention. But when it has an impact like today done the market today, then we’re like, we throw it out because it just doesn’t matter. It just really doesn’t matter. One month. We’ve seen this too often. You know, we had this one day, five day shakeout and then here we go, we’re off to all time highs again. So that’s been the trend from the bear market lows of October 13, 2022.

Kip Herriage [00:04:41]:
The other thing that was interesting today was that when the market really turned. If you, if you’re online like, like we are, you saw this news break out of China of another coronavirus, fear of a pandemic. And they have, even though it’s very early, they, they again, it’s hard not to laugh about this. The last one was such a scam. They, they, they link this. And by the way, before you’re gonna go kip. But so many hundreds of thousands of people died. No, they really didn’t.

They were killed. Right. Remdesivir ventilators. Right. Not getting any care whatsoever. You told to go home and good luck or given the wrong medications, et cetera. And fear is a powerful motivator if you think you’re sick and gonna die. Let’s say you’re elderly and guess what, what you think about your brain about.

So anyway, different topic for different time. But what, what got people’s attention with this latest pandemic concern out of China was I said this looks like it could be most similar to sars, which kills one out of three people. Again, that’s what the article said. I do not know if that’s true. I think I’ve heard that before. So that sense of fear rolling through the markets because of course, remember what happened happened last time. You know, we had a, what, a 38% decline in one month in NASDAQ in when the 2020 pandemic hit. So it does, it does make sense to at least be aware of this stuff.

[00:06:06]:
But you know, how many times have we seen this since the pandemic? How many other strands or concerns about a different kind of coronavirus have we seen? It seems like they happen pretty often. And we do have Trump in office and he was here last time it happened. So again, it’s something to pay attention to. Obviously we do. But I’ll tell you, we put almost no stock in this at all as far as a reason we would make an investment decision and we didn’t. You know, we have a policy here about we like to add to our position, certainly our VRA Ted Baggers, our favorite growth stocks. We add to those on a monthly basis, part of monthly dollar cost averaging plan. This is what I pretty much done my entire career and it’s paid off in spades.

And then again with our ETFs. We do use those as trading vehicles. And we are long the market right now. We’re long semis for long NASDAQ 100. These are all leveraged ETFs. We’re long housing and we’re along small caps. And again you know, from the, from the bear market lows, this approach has served us very well over the last 10 years. We have gains of I want to say 2400% just from ETFs trading.

So we like to be on the right side of the market. We’re trend followers and then, and we don’t react, you know, day to day or short term. The chart, the very investment trusting system has to tell us do this before we react to it. So like no one likes to see us on a Friday, certainly on a Friday going into weekend. Look, we’ve had a couple of rough Mondays. We had two back to back. This is over the last month, right? A month ago we had the deep seat shakeout which was a pretty brutal Monday. That was the low though.

[00:07:48]:
That was the buying opportunity. Never sell on a Monday. And then it followed up the very next week we had the shakeout from Trump’s tariffs which he announced on Sunday from the Oval Office. So and that was a rough open. That too though was the low. So again all time highs on Wednesday in the S 500 and Nasdaq 100 and then a shakeout today. Let’s get the markets first and then we’ll break it down for you. Dow Jones today finishing down 748 points, down 1.7% S P500.

Exactly the same 1.7%. Small caps got hit hard this afternoon. They finished down 2.9% of the day and NASDAQ down a big 438. That’s down 2.2% on the day of. Note the action in the bond market. Remember just a month ago, okay, just a month ago the economists saying oh it looks like the Fed may have to raise rates, they flip back, right? So that, that rate cuts are gone. Forget about that. There’ll be no rate cuts this year.

[00:08:45]:
You all heard that. You’ve all heard this pitch. There’ll be no rate cuts and actually they’re probably going to have to raise rates. That was, that was, that was, that was a month ago. Well today that all changed. Walmart started it Yesterday again, Universal Ms. Consumer Sentiment survey today, slow down in housing sales. It is, it is January, February, not a great, not, not a great season for home sales.

But the 10 year yield today, and this is what our forecast has been plummeted down to a 4.42% for the, for the 10 year. Let me just check a chart on this because okay, so it hasn’t broken the recent low which was a four point, exactly 4.4%. But we’re not far from it. Right? And then, then from there, you know, you’re talking about 4.12 would be next support. And that’s what we think it’s going. We believe rates will continue to fall, not because of a weak economy, but because inflation has been dealt with. Again, the innovation revolution, it’s all about innovation, innovation and disruption. And that brings costs down.

[00:09:50]:
That’s the really cool part. Besides the gadgets and the new tech we get and the growth in industries because of innovation and disruption, the other cool part of that is it brings prices down. So innovation is extremely disinflationary. And that’s again, very few people are talking about that story, which again is another reason that we love to tell that story, because this is a contrarian story that makes all the sense in the world. So we’ve been telling you rates are going to fall. They are. They’ll continue to. We’ve been telling you inflation was going to fall.

It will and it will continue to. Again, these one to two month bumps of a 10% simply don’t matter to us. And there are concerns obviously about Trump’s tariff plan. Will it have short term inflationary concerns? I don’t know, maybe. Don’t care, could care less. I just remember that Trump did this exact same thing in his first term and he left. Over his four years in office, inflation averaged 1.9%. We think we’re pretty confident when we say that Trump knows how to handle inflation.

[00:10:51]:
This is not going to be difficult, not for him. I was on Wayne Roof show last night. I’ll just tell you this quick story and when he said, so Trump’s been in office for a month, what do you think and how’s he done? What do you think? You know what? As much as anything, what’s really impressed me are the people, the talent that he’s assembled around him. This is so much different than his first term when he was surrounded by vipers in his own cabinet. They really hated him and they were conspiring from jump street to try to get rid of this guy or at least slow him down, keep him off track, which hasn’t been hard to do in the past. Trump was easily distracted by punching down, et cetera. This Trump is very different. He’s got extraordinary people surrounding him in his cabinet and his other picks that he’s made, these are, I think the key point is this.

These are mostly billionaires, right? So they’re, they know how the game is played. They are winners they’re extraordinarily good negotiators. Right. And that’s how they win. And so that’s who he’s surrounded by. And these are all very pro Trump people. You know, these are not again, vipers, pit vipers that are trying to take him out on a daily basis. So this is, this is why I could tell you this and I rarely say something this strong, but I’m going to go and say this.

[00:12:11]:
I can get, I’m going to guarantee you I’m. And I, if I regret it, I regret it. I just don’t ever. I’d never do this as title. I never ever do this. I’m going to guarantee you that the economy is not going to slow down again. I’m not talking about a week or a month. I’m talking about, I’m talking about anything more than a quarter.

Right. Which would be a trend that matters. I guarantee you that the economy is going to grow rapidly from here. Again, it’s Trump and it’s the innovation revolution. So the short term counter trends, we use those as buying opportunities. Right? Always good to have some cash on the sidelines or to rejigger your portfolio. You know, maybe you’ve got too much of one thing and it’s time to take some out and add to a different position something that’s low, buy low, sell high. And that’s what we, that’s what we do.

That’s how we rebalance our portfolios. Because again, stocks like Tesla have had such a big move, Bitcoin has had such a big move. We have pretty enormous gains in these positions. But those gains tend to give you outsized positions, probably too large to have a properly diversified portfolio. So when you see something like this happen and say, you know, okay, man, I tell you what, I’m looking at housing and I believe that Trump is going to be able to really revitalize the housing market. We know the supply demand story is fantastic and we look at long term, it’s in fantastic shape. And 40% of Americans own their home without a mortgage. 40%.

[00:13:35]:
Again, very few people talking about this. It just blows my mind. Net equity in homes is at an all time high. Okay, Both of these, all time high. So we have a shortage of homes. So, you know, this is going as the economy continues to grow. And I’ll guarantee you that as well, the economy is going to rock and roll under Trump. Well, I’ve said it now for, since he was elected, within the first 12 to 18 months, US GDP growth will be at 5% plus, so housing is our most important economic, leading economic indicator.

It’s the most important asset by far. Not close second. So it’s what we track most closely. So maybe an idea would be like, I’ve got, I hate to sell anything. I hate to say I got a lot of big gains in bitcoin, got big gains in Tesla, whatever the case may be. And I think I’m going to go ahead. Gold, got huge gains in gold, right? And maybe I’m going to take some off the table there and reallocate to positions. Maybe a housing position, maybe something that’s really cheap.

[00:14:32]:
Now this is, this is the key to turning a portfolio as we do here, that could simply beat the market. You know, we average 35% or so returns a year going back a decade. If you’re a portfolio beating the market 18, 21 times, this goes from a portfolio that just beats the market to one that really destroys the market by making those kind of portfolio adjustments. Now, if you’re like me, I, I like to hold my winners. All right? This was really the key to success in the 95 to 2000 bull market. The, the melt up, the, the, the dot com melt up. The key was holding your winners and selling your losers, especially specifically in the world of tech. So I don’t like selling winners.

But the smart thing is to do to re. So my point is, if you’re looking for, maybe you don’t have any extra cash right now. Maybe you don’t want to sell gold. I never sell gold. But maybe you want to, maybe you want to be able to add to positions. You think I don’t have any extra cash right now? Well, you do. You have some positions you probably don’t want to sell. So I think that’s a great strategy here over the weekend to revalue, take a fresh look at your portfolio.

[00:15:40]:
You know, you may have two or three positions that just out far bigger than other positions. And by the way, I like doing that as well, frankly. But there comes a point where you go, this is probably too big a position. And I want to add, I want to, I want to be able to add to this. So that’s just an idea. And that’s how we take advantage of these downdrafts and these shakeouts, because that’s what this is. It’s a shakeout. And again, I’ll just say one more time, from the birth of the bull market, the smartest of smart money strategies has been to buy the dip.

And this is barely a dip, first of all, again, all Time highs on Wednesday as we told you. Then Tyler said it on his podcast because I heard him. Several of our major indexes hit extreme, not extremely, but they hit heavily overbought levels on our short term momentum oscillator stochastics. And so that’s pretty common. Where you see a bit of a pause like this doesn’t surprise us at all. That’s why I’ve been writing about it. That’s why I’ve been talking about it. But again, these are, these are short term only.

There’s nothing long term about this, nothing that would impact our medium to long term views whatsoever. And that’s how we take advantage of these shakeouts to be able to add the positions that simply are too cheap. Right. Okay, let’s take a look under the hood today. I think again, I think 10 years going a lot lower here. Rich Ross was out this morning. We shared with our members this morning. Rich Ross is the Aquant, the tech guy over at Evercore.

[00:17:04]:
And you know we always feel more confident when we’re in agreement with Rich when he’s in agreement with us. We were, I don’t even get into it. We tend to agree a lot of the time and right now we’re in complete agreement. He loves semis. He loves someone got hit today. He loves the semis. He loves tech stocks, as do we. He likes gold and again he’s very long this market looking for this move higher to continue as are we.

So I just thought I’d throw that out there. Okay. Under the hood today. This is not pretty day. By the way. The internals today were not great. Here we go. We had as far as advanced decline, NYSE 3 to 1 negative again, not horrible, not good.

Nasdaq exactly the same 3 to 1 negative volume for NYSE was not, not good. It was 76 down volume day. Again that’s not, that doesn’t concern us but it, it gets your attention. Anything over 75% get your attention. We start getting to the 80s and you go okay, what’s going on here at 90s then you’re like that, that’s probably a bottom because you rarely see a 90% down volume day. NASDAQ volume today was down. Excuse me, it was down volume of 63.7% and our advanced decline as far as 52 week highs and lows came in with just a slight, slight loss. Nothing big here.

[00:18:17]:
We had 220 stocks, 52 week low to 153 stocks heading into 52 week high sector was watch was much worse than this 10 of 11 sectors finished lower in the day, led the downside by consumer discretionary down a better two and a half percent. Same with technology down 2.4%. And again not a pretty day here. There was some selling here today and it was fairly, fairly distributed across many sectors today in our commodity watch today again, what a move, what a move this has been in gold. The miners are starting to participate again. Starting to. We got about 30% gain so far in GDX, the gold miner ETF to start the year. It’s not bad for a month and a half, right? We think it’s going to be one of those years that the miners we love.

We wrote it up this morning, our new buy rack on Snowline Gold. This is an elephant. We found the next one and we are very excited about owning this stock in the down market today. It still clubs up 2%. It’s up 400% in the last two and a half years. And we had an interview yesterday, a zoom meeting yesterday with the CEO and head of investor relations, Scott Berdahl is his name. Father, son, team. It’s a very compelling story.

[00:19:28]:
Very excited about this. And again the junior miners, even though this stock has this junior miner has really ramped most junior miners yet to do anything. And then it’s very similar to our views on the stock market until, until the junior miners get going. This bull market has even started yet in precious metals and miners. This is the nature of how these bull markets work. The same analogy works for the stock market. Until we get to a red hot IPO market. We haven’t even tasted that yet.

Until we get to a red hot mergers and acquisitions market. Nowhere close to that. So small caps really start to run that hat. They’re getting better but haven’t done that yet. Again they were down today but until that happens, then you go, okay, this is still early innings. That’s all the signs are still there, early innings. And again the fear of greed index, the fact that it’s back to 35 and then we had over 40% of the AAI. Investor sentiment surveys were bearish, just blowing away the percentage of bulls.

[00:20:25]:
You know this is not how markets top now, not when they just hit an all time high two days prior. And yet somehow the fear and greed index is Already back to a 35. We talk about a lot here because it just, it doesn’t make sense. And these are the kind of things that tell us again we’re very early in this bull market. So the commodity watch again, gold has a heck of A run now did finish down a little bit yesterday off the highs down a little bit today but we’re still 40 bucks away from an all time high. 2949 now down 6 bucks an ounce today. Silver today down a little bit more. Down 66 cents now it’s at 3282.

Copper today also down same same percent down 1.4%. Same as copper. Silver down at 4.53. That’s a pound. Crude oil today got a hit today down 3%. Of course Trump wants oil prices to go lower. I think we should pay attention on that. Doesn’t mean the energy stocks have to go a lot lower but it does mean that oil prices will.

[00:21:25]:
We think there’s a floor in the $60 area, not a prediction. It’s going to get there because demand is so strong, especially with China coming back and it is, we’re about to folks. The reason European stocks have been going up is they, because there’s always, you know, it’s a discounting mechanism. They know what’s coming. German stocks all time high had a rip roaring year. Chinese stocks just up 35% to start. Tech stocks up to start the year. So they’ve been doing really well as far as European markets and why they’ve by and large been doing very well is they know what’s coming.

This war or conflict, whatever you choose to call it, between Russia and Ukraine. We call it a money laundering operation because that’s what it’s been among three countries, us, Russia and Ukraine, making the oligarchs even wealthier. But what’s really going on there is they know this is ending. Okay, this is ending. So you know what comes next. It’s time to rebuild Ukraine. What are we going to spend starting? We’re going to, we’re going to take a trillion, two trillion. What’s it going to be? Because we the bankers are lined up.

[00:22:31]:
This is the banker. This is when they salivate big time. This is when they get paid and they probably help start these things, foment these things. So yeah, they’re lined up. They get all the money in the world because they know it’s backstopped by the imf. It’s backstopped ultimately by central banks. And so the World bank, they’re all going to be there to make sure the money’s backstop. So Ukraine’s going to get at least, they’ll probably start it saying it’s going to be a $500 billion rebuilding program, folks.

It’ll be $2 trillion over a decade and are probably on the low side. So that is big time liquidity float into Europe. So you know, like it or not, Europeans that are investors in the markets are going hey, bring it on, let’s rebuild Ukraine. As long as I keep making 5% a month of my portfolio, I love it. Right? That’s how upside down our planet is today, folks. But yeah, that’s what’s going on there. But because all this money flow and because the global economy is going to follow the U.S. it won’t be as strong as we’re going to be under Trump, but it will move higher because of demand for US products, excuse me, for our demand for global expenditures.

[00:23:45]:
And again the US leads, the world follows. That’s a fairly simple statement that holds up pretty well. But oil prices, I really don’t think we’ll get to 60. That’s a floor. I’m saying I wouldn’t be surprised if they traded to 65 for a while. But energy stocks, as long as oil’s above 60, gas has done very well. Of course again nat gas is 425 at mcf. Anything over 250 in mcf, 225 in the mcf.

And these companies are making money, a lot of it. So right now these pipeline companies, of course, oil service companies and the E and P companies again, they’re doing very well now, so don’t feel too bad for them. But with the data centers, with the growth of AI, it just takes so much electricity to power these things that gas is the play, nuclear energy is the play and yes to some degree oil is as well. And finally today for cryptocurrency, you know, this morning bitcoin opened at 99,000, looked really good. Then here came the risk off move lower when it finishing again it is. Bitcoin is more volatile than gold is. We’ve always known that. And it’s a day like today that really makes it clear it’s not really a store of value.

[00:24:58]:
It’s a store of value from a different point of view, right, that they’re only going to have 21 billion minds and that supply demand is going to make it have a constant uptrend. But it’s not a true store of value. It’s just not. Not like gold is, not like other assets, but it is a very risk on risk on asset. High beta if you will. And today we sold that again, went up finishing down 2.7% of the day to 95,000. All right folks, that’s it for today.

Hey hope you had a great day, an even better weekend, and we’ll see you back here again Monday after the close.