Welcome back to the VRA Investing Podcast with your host, Kip Herriage! In today’s episode, Kip Herriage dives into the latest market action and unpacks the volatility that kicked off the week. He shares timeless investing wisdom from his first mentor—like why you should never sell on a Monday—and analyzes the intriguing rally patterns we've seen, even on days when the market seemed ready to sink. Kip breaks down Warren Buffett’s headline-making SEC filing, revealing Buffett’s substantial new stake in Google (Alphabet) and explaining why this is a major vote of confidence for tech stocks and the broader bull market. From Buffett’s value investing legacy to his “weapons of mass financial destruction” warning on derivatives, Kip provides candid insights on what these moves mean for everyday investors.

Kip Herriage [00:00:02]:
Don’t look back. The market is closed. Good Monday afternoon everyone. Kip Herriage here with the daily VRA investing podcast. Hope you had a good day today. Hope everything was fantastic as well. Let’s get right to it. Lots going on.

Weak market action again today. You know, the old, the lesson my first mentor Ted Parsons taught me was to never buy on a Friday and to certainly never, ever, ever sell on a Monday. And you know, look, we’ve had a couple of weird Fridays, you know, where the, the markets bottom. Friday had bad week opens on a Friday. This happened this past Friday, the Friday before it. And then big intraday rallies. And today we got a little bit of a soft open and then a rally and then all of a sudden, you know, the bottom fell out. So, but we did, we did finish off the lows.

Nasdaq was down 320 points with about 20 minutes left. Finished down 192. So Nasdaq rally over 100 points in the last 20, 30 minutes. Dow Jones was down over 800. Finished down 557. So we saw again a good smart money rally today. But again, there’s a lot of trepidation in the markets and we think we know what it’s from. Because here’s the thing.

In the short term, in the very short term, technicals matter. Technicals matter because they tell you something’s either really wrong, something’s really right, or there’s a lot of anxiety, a lot of questions and people are nervous. Right? That’s what we see now. The technicals are certainly telling us that. But we don’t base our medium to long term work on the technicals. We base our means long term work, which is basically the basis of the VR investing system, on what’s happening in the fundamentals. And the fundamentals look incredibly good. As a matter of fact, they continue to look even better.

We learned over the weekend, of course, that, oh, granddaddy Warren Buffett, who over the years I’ve not been all that kind to because there, there, there are some skeletons in his closet that people don’t like to talk about, generally speaking. But look, there’s no doubting his brill and his staying power. He is the modern day father of value investing. Again, these are all known knowns. And so we’ll, we’ll, we’ll stay with the positives today. Although he’s boy, he’s one of the best insider trading guys in the history of the business and yet he’s never really been tied to it because his footprint is so smooth. And he again he’s had tight relationships with Democrat presidents in the past that have made that possible. Remember I said I wasn’t going to get negative, but I have to say this.

[00:02:21]:
Warren Buffett came up with the term weapons of mass financial destruction to, to, to, to coin, to talk about derivatives. Weapons of mass financial destruction, that was Warren Buffett’s phrase. And then what happened? The financial crisis happened in 2008. And then, you know, the water went out and everybody found out, Holy shit, this guy’s got $40 billion of exposure to, to guess what? Derivatives. The same things he called weapons of mass financial destruction, he owned aggressively. And folks, I’m telling you, I did the math at the time. Had the, had the, had the market not bottomed in March of 2009 when it did, which we called, by the way, we called it within, I called it within five minutes of the bottom. Okay, well, well documented.

Okay, but had the market not bottomed, it was basically a double bottom. Have we, had, we kept going lower. Had the market fallen another 10, 15%, it could have consumed Buffett’s entire portfolio at Berkshire Hathaway. Now knowing him, he would have had plenty of fallbacks. I’m just saying that $40 billion in derivative losses would have grown substantially. So the bottom that took place in March of 2009 helped Warren Buffett as much as, well, not as much as anybody because it helped the whole economy. But you get my point. Okay, let’s move on now because now we have something good to talk about Warren Buffett with.

And that is of course his SEC filing. You all know about it by now. His fund at Berkshire Hathaway, just a big hedge fund really, isn’t it? $1 trillion worth. Bought 17.8 million shares of Google after the announced after the close on Friday. Of course he’s owned the position for some time. The SEC filing just took place on Friday afternoon. It’s about a $4.3 billion stake that after today’s move is worth probably over $5 billion already. Google today hit an all time intraday high on that news closing up today.

3, 3% it was off, off the highs as was pretty much everything, but still up 3%. Up 9, 9 bucks on the day. Again an intraday high before the, before the market started selling off. But as we wrote up this morning, this is, this is a big, this is a big vote of confidence for the bull market. And not just for the bull market, but for the tech led bull market. Look, how many times have we heard the bears because this has been their big RALLYING CRY Warren Buffett has owns more T bills than anybody in the country. Warren Buffett’s the largest holder of T bills because he can’t find anything to buy. Warren Buffett is essentially predicting a crash.

Warren Buffett is calling on what we’ve called a generational bull market. That’s what is, that’s how it’s been. Well, those bears got very quiet after Friday’s announcement. And again, it’s, it’s not like he put half the fund in it, but it is his 10th largest position now. And if you know Warren Buffett, how he operates, this is the beginning. He’ll continue, I would imagine, every quarter as he did with Apple when he finally bought Apple. Every quarter we’ll learn that he’s increases the, the, the, the size of a stake in Google or Alphabet. And so this is a big vote of confidence for the, for the, again for the bull market, for big tech.

:
It’s a big bull market for of course, the innovation revolution as we called it, or the AI boom as others call it. And we know, we know about Buffett is he doesn’t chase hype. He doesn’t do hype, right? When he invests in something, he’s there to stay. He’s a molt, a moat digger, right? He believes in moats and basically giving your, your business an unbreakable advantage. Things that can’t be threatened or not easily anyway. Of course, you know, we don’t own Google here, but everyone pretty much knows that they own, they own the ad market, like 90% share of ad revenue. YouTube of course, has no competition. They’ve already announced in the last year a total of $100 billion in CapEx going towards AI data center commitments.

Okay, so they’re fully in and that’s why Buffett’s in. He missed once on Google like 8 years ago and he missed it and he’s been kicking himself ever since he said that publicly. Well, now he’s on board. And I’ll tell you folks, I think that it’s not just Warren Buffett. Stanley Druckenmiller, right. It’s George Soros. I could, I really could keep going. Some of the names you may not know, but you’re seeing industry long term legends, right, that are now finally coming out and aggressively building their positions in, in these AI names.

And look, we also saw by the way, last week that Christian Bell, I’m sorry, not, not Christian Bell. Michael Burry. Michael Burry closed down his hedge fund. Well, that day actually marked the highs for NASDAQ that day marked the highs for his positions which I don’t know if he’s closes that or not. His shorts and Palantir and Nvidia. And so sometimes you see these weird things where like in this case Buffett comes out with a big announcement. Everybody thought the market would soar today and of course the market goes lower. So the market’s going to do what the market’s going to do.

Look again, to get back to the technicals versus fundamentals. Look, we have, we have, we have 12 screens in the VR investing system, right. And I’ll run these again after the close and everything upstate updates. But over the weekend I ran them and folks we’re still at nine screens bullish and three screens bearish. The technical screens are showing some, you know, a little bit worse for wear. But the fundamentals could not be stronger. We’re seeing in earnings, we’re seeing it in, in forward earnings projections. We’re seeing it in profit growth.

Kip Herriage [00:07:49]:
I covered this this morning. But we’re, we’re looking at 5 to 11. This is for the third quarter. 5 to 11. SPF 100 sectors have reported double digit year over year earnings growth led by, this is kind of hard to believe actually. Information technology, tech, a growth of 27%. Right. So this is not how bubbles end.

This is how they start to be formed. Remember NASDAQ from the, from the lows, okay. From the October 13, 2022 lows which we called to the day. That’s a lot of flight evidence on that one there. And we’ve talked, we also talked about it a lot because who wouldn’t, right? It was a good call. It was a good call and we just saw there’s too much fear in the market. It’s a bottom. And it was, it was the, it was a bear market low.

Kip Herriage [00:08:36]:
But from that date NASDAQ has rallied even with this correction. We just had 125 plus percent. I think it’s like 127 now. Right. Which isn’t bad. You know, call it three years, that’s not bad. That’s pretty good. Right? But remember, if you think this is going to be A bubble market like dot com was, the dot com bull market 1995-2000 rallied 575%.

So four times more than we are now, folks. We are early, we are early in this bull market. It doesn’t mean shakeouts can’t happen. They always suck when they happen. But you know, it helps to, it’s healthy, it’s normal. It gets the it gets the masses, the weak hands if you will, out of the market. And we just saw some more evidence of this right now. Tyler and Sam just gave me a heads up on this intraday now.

Kip Herriage [00:09:30]:
The Fear Greed Index has hit a low today of 13. Right. It can only go to zero, right as it 13 this morning or this afternoon. And you know that’s extreme fear. Obviously the lowest we’ve seen it was two. All right. And that was in the fourth. Also Jerome Powell calls fourth quarter of 2018 the Christmas from hell.

It went to two and that was an exceptional buying opportunity obviously. Is this going to go to two this time? You know, who knows of these things? I sure don’t think so because that would mean we’ve got some rough days ahead of us. I think more than anything, if you’re a contrarian and you see this fear and greed index at 15, you see the AAII investor sentiment survey that has 49 bears like 34% bulls. Okay. These are extreme readings that just, you don’t see them very often. You certainly don’t see them when you’re four days away from an all time high in, in the Dow Jones and you’re 13 days away from all time highs in the SPF 100 and NASDAQ. So you know, again seasonally speaking we’ve entered the best time of the year. It may not feel like it but you know, January effects back start kicking in the, the very best days of the bull market, meaning the year end first quarter are about to start kicking in.

[00:10:50]:
And something Tyler and I just talked about that I think, I don’t know that it can be talked about enough because next year’s the midterms and if you know Trump, you know, you know, and, and his, his entire administration really, you know how hyper focused they are on, on the midterms and Republicans winning. It’s not going to be easy. The, the, the income, the incoming administration doesn’t tend to do well in, in the first midterm. It’s just, that’s just, it’s for both sides. It works that way. The difference here being, I believe we talked about this a fair amount. The last since the communist in New York City was elected Mayor Mamdani is that he’s going to be the face of the entire midterms there. I can’t imagine Republicans being more stupid not to do that.

You have to use it because you know, again, go vote Republicans or this could be your mayor or this could be your next governor. So I think that turnout should be very high. As long as they don’t just completely screw it up. And Republicans certainly have been known to do that. Trump gets, he pivots pretty quickly when he needs to. There’s been some infighting in the Republican Party. You probably saw over the weekend with Marjorie Taylor Greene and you know, it’s, you never want to see that. But we saw with Elon Musk too.

[00:12:08]:
And now no one talks about that anymore. Right. That that’s all behind them. So I, Trump’s good at pivoting. I think that’s what’s going to happen because he wants to. He knows he keeps his eye on the price. And the price here is the midterm. So they’re going to pull out all the stops.

Folks. Remember, we’ve got $1 trillion still sitting in the treasury general account that can only now start coming out because the shutdown is ending. Okay. That’s just a process that starts rolling out. I saw, I believe the first 300 billion should be rolling out starting on Wednesday. So again, that’s liquidity and it’s very little matters more to the markets than liquidity. That’s the whole supply, demand quotient right there. And so we’ve had a lack of liquidity.

[00:12:49]:
It’s come from the shutdown. Again, Kevin Hassett last week, by the way, this didn’t help the markets. Okay. Kevin has is saying, yeah, this is a shutdown is going to get in effect a fourth quarter GDP by 2%. All right, that, that I was surprised to hear him say that that may well be the case. But I was surprised to hear him say it. And then you probably also heard last week, SEC Treasury Secretary Scott Besant said that the housing market is already in a recession. He didn’t say it might be in a recession.

He said it’s in a recession and the challenging stocks are certainly trading like that is the case. So again, it’s that acknowledgment from the administration that the economy is weakening and the shutdown it certainly is and rates are too high. There’s just no question that that is the case. It certainly impacted the, the housing market. But again, the point being this too shall pass because the fundamentals are far, far more important than these short term technicals. And again, we’re in a very, very bullish time frame. I think we’ve got some great bargains coming up here. You know, look, my mentor again, Ted Parsons, said never sell on a Monday.

We were wondering if that was, if that, if that was going to be still hold up. It’s held up throughout my career. You just don’t want, you don’t want to sell on a Monday. And again, we got a good smart money hour. I think the odds are decent tomorrow that we have turnaround Tuesday. I hate to try to pick a bottom and say that today’s lows could be the bottom, but we, we did hold the lows of the last two weeks. Kind of a retest today. Matter of fact, almost exactly a recess of those today.

I wish the semis had traded better. The semis did rally into the close, but they were down at one point today, 2.4%. They only finished down 1.3%. So again, the smart money hour was healthy today. But I think by and large the fundamentals are just going to carry the day. And those fundamentals are based on our big three, our big three we’ve had now for some time, which are the Trump economic miracle again, 2026, one big beautiful bill again. Jay Powell’s leaving rate cuts will be much more aggressive. The midterms, you can see the fundamentals along with the liquidity, again that’s going to be flooded into the market is going to have a powerful impact on the midterms and next year, no doubt about it.

[00:14:59]:
So it’s the Trump economic miracle. It’s the innovation revolution again. Buffett confirmed it. We are right there at the beginning of this thing. We’re just getting started, folks. And then the third, of course is the, this, this ocean of liquidity that’s out there. And I know I just talked about a lack of liquidity, but again, that’s a short term function of the shutdown. Longer term, we have US and global M2 money supply at all time highs.

And that’s, that’s saying a lot. Okay, we’ve had a lot of money printed over the years, but now they’re all time high. We still got seven and a half trillion dollars sitting in money market accounts. All the, all the things you’ve heard us cover so much here, Fortune, Americans have no mortgage, average home equity, 70%, $37 trillion sitting in home equity. Again, that has to be loosened up. So for that to happen, rates have to fall. But that’s a 2026 story and I just will be very surprised. This is me speaking personally here.

[00:15:52]:
40 years of doing this. I will be unbelievably surprised if the markets in this most bullish seasonal period are going to look past what’s about to happen in 2026 and have a hard sell off during November and December. I just don’t see it instead. I think that we’ve got a great buying opportunity here. I also point this out. We’re going to write this up in the morning. We have another season seasonally bullish trade coming up here. You’ll want to make sure and read your very letter tomorrow because small caps, right, their best months and there’s no comparison.

Small caps typically catch fire about this time in November and then January and then December and January. Between the three months they’re up like 4 and a half, 5% combined for the three months. By far their best three month stretch there is. The January effect kicks in. And so in addition, the small, small caps IWM, the small cap ETF Rust 2000 ETF has pulled back to exactly its 100 day moving average. You’ll see it in the chart tomorrow again for our very letter members. You’re going to see that it’s also hitting, it’s almost hitting extreme oversold on steroids. I’m not iwm.

It’s getting very, very close to it. I don’t think it’s going to hit it by the way. I think right now we’re at extreme oversold. But again, when all of our momentum oscillators hit extreme oversold, we call that extreme oversold on steroids. Steroids. That is our thing. We’re known for this ask Rock. And if that happens, then that’s when we back up the truck.

[00:17:24]:
You know, as long as you have an ETF or it works for stocks as well. Of course, as long as you have an ETF or a stock that’s trading above the 200A and then it’s in an uptrend and then it hits extreme oversold on all of our momentum oscillators. That is the strongest, that is essentially the strongest buy signal that you’re ever going to see. And we’re right there for small caps just as people are giving up on them. So we’ve got some trade ideas. We’ll share that with you tomorrow both for VRA and for our parabolic option members. Pretty excited about this trade. Think it’s high probability success.

But again, it wouldn’t work unless the entire market’s going to rally. So that’s what we want to see. We want to see small, we want to see NASDAQ rally. Want to see small cap the semis rally. Of course. Also share another chart with you tomorrow morning. Our favorite relative strength chart of the semis, the SPF 100. Right when the semis are leading the market.

You want to be long when the semis are leading the market. Lower. You want to be out of the market or at least raising cash. And we’re now approaching that lower trend line that’s been in place from the April 7 lows of this year, the tariff mania lows. We’re now approaching that lower trend line that’s been in place. It’s been hit three times. It’s about to be hit a fourth time now. It’s getting very near to it.

In the past that has also marked the buy signal. So we’ll share all that with you tomorrow morning. Again, you see where I’m going with this. I find it very hard to be bearish right now and Buffett certainly helps confirm it. So welcome aboard to we don’t own Google, but you know what, you’re now in the AI trade. Warren Buffett, he wasn’t really purely in it with, with Apple, of course because they’ve been laggards on this whole movement. Google, you can’t call them a laggard. They are, they are front and center of the AI trade.

And now Warren Buffett is right there with us. And that’s, I think that’s a decent company. I think, I think that’s pretty decent company. All right, what else today? Let’s take a look under the hood. So I’ve got any other notes here I want to talk about. You know what, let’s, let’s take a look under the hood today. Not good. Again, fear ingredient index 15.

[00:19:24]:
That’s this, that’s something else. Today the internals we had five to one. That’s not good. This is the worst reading we’ve had in some time actually 5 to 1. A negative advanced decline for NYSE. NASDAQ much better. 3 to 1. 81.1% down volume day in NYSE.

You do not want to see back to back 80 down volume days. I don’t think that’s going to happen tomorrow but it’s something to be aware of. Nasdaq much better. 61.1% sector watch today. Pretty much what you’d expect. Nine of our 11 sectors lower on the day led to the downside by financials down financials to hit all time highs last week. I would not be concerned about that group. I think that group has broken out and I think that I’d be, I’d be very surprised if the financials have much more downside in front of them.

I think this group, we don’t really like this group. Banks are boring to us. But again now you have, you know, financials are much different now than they used to be with, you know, not just owning the banks. Right. You’ve got a lot of like Sofi, you’ve got a lot of these that are just online. And it’s really changed the whole really marketing perspective, if you will. The financial is still not our favorite group, but again today they doubt they were down 1.9%. Energy today also down 1.9%.

[00:20:42]:
Materials down 1 1/2% to the upside. Communication services. There’s Google by the way, up just over 1%. Utilities also up 8 cents of 1%. And a commodity watch. Today again, this was a everything must go rally. The only thing go day. The other only thing that finished higher today were bonds.

This is a kind of a classic flight to safety day. 10 year bond yields 4.13% down three ticks. Not, not, not, not a big deal. But at least there was some strength there. That’s classically what you see in a day like this. But a goal today again, it was a day everything must go. When you see gold down 1.2, down 49 bucks when it was up early this morning, down now a bit, but again it’s trading above that support level, 4,000 we think it’s, that’s a great base for it here. But when you see gold and silver fall like this on a day that they really shouldn’t, again, it’s a day where everything must go.

It’s a liquidity day. My educated guests, and I say this with a high level of confidence, these are the kind of days that get Scott Bessant and Donald Trump’s attention because when you start getting liquidity led sell offs, it tells you there’s something mucked up in the system and it’s got to be fixed by adding liquidity. And that’s where that treasury general account comes in. Scott Besson, get to work, my man. Government’s reopening. Let’s get that money back to work. We need to oil the machinery, my man. Let’s do that now.

Gold down 49 bucks at 4045. Silver also down about the same 1.2% at $50.55 an ounce. Holding at 50 again. We love, love silver. Silver’s going to 100 on this move. I, I just don’t know exactly. I would say within six months. Silver looks fantastic here, as does gold, of course.

[00:22:26]:
Copper today down 1.4%. Back below just barely $5 a pound. 498 a pound right now. Crude oil today down 4/10 of 1% just barely back below 60 bucks a barrel. 59.68. And finally Bitcoin. Bitcoin broke support. Support for bitcoin was in the 98, 000 range.

Once it broke there, boom. Another liquidity issue. When you see bitcoin and Nasdaq and the semis and gold, when you see these all trading the same way, that is a liquidity issue. That doesn’t mean it’s got to evolve into something where we’re having a liquidity crisis. I’m not saying that. I’m just saying that’s what that signifies. There’s a liquidity issue in the economy and in the markets. And it’s got.

Besson is half the treasury secretary that I know him to be. Then this is what he’s going to get fixed real quick. And I think that’s what’s going to happen. I would look for bitcoin to get back to its support level 98, to get back above the 200 day moving average. Those levels are important. Remember, it’s only important that they, they can break below the 200 day and not be a big deal. But you don’t want to see them hang below the 200 day for very long. And so that’s why it’s important.

The bitcoin rallies or now you’re going to see a 200 day for Bitcoin become a resistance level instead of a support level. Let me tell you exactly what it is. Yeah, okay, so like the big. The 200 day for Bitcoin is 110 grand. So we need a significant rally to get back to that level. But if you know bitcoin, you know, that’s how it trades. It sucks everybody out. The weekends leave.

[00:24:01]:
I will tell you that on all of our momentum oscillators, bitcoin is now hitting extreme oversold. Yes, that’s extreme oversold on steroids. This is when rallies happen. But again, it’s so far below the 200 day. Can take a pretty good rally to get back to that level. But at least get back to that prior, prior support level, which is around 98,000. That’s only 6,000 from here, I would think. Again, once, once, once liquidity comes back into the system, I would think that’s exactly what’s going to happen.

We are buyers of bitcoin here, remember? I mean, maybe down 26, 27%. But you know, if you know bitcoin, you know, that’s nothing. This, this has always been a very volatile asset. And so far I don’t think a whole lot’s changed. Except there are a lot more buyers now. And this. And this. I’m in on this.

Kip Herriage [00:24:49]:
95% of all the bitcoins that will ever be in existence have already been mined. 95% of the 21 million. So just keep that in perspective. This is why we’re long term investors. And that’s why we are buying this dip in bitcoin. All right, folks, that’s it for the day. Hope you had a great day and even better night. We’ll look forward to seeing you back here again tomorrow after the close.