In today's episode, Tyler covers the market's continued climb and explores key topics from the innovation revolution, including a look at Tesla’s Robotaxi event at SXSW in Austin, TX. Whether you’re new to investing or a seasoned listener, Tyler breaks down the market’s current state, discusses investor sentiment, and shares valuable data and trends to help you navigate the generational bull market of the roaring 2020s.

Don’t look back because the market is closed. Good Tuesday afternoon, everyone. Tyler Herriage here with you for today’s VRA Investing Podcast. Hope you all had a fantastic day out there today. We got a continuation of yesterday’s gains, Monday’s gains to start off the week. Not quite on the same level of gains as we saw yesterday, uh, but still a good day of continuation here, uh, as Kip covered yesterday on his podcast. A fantastic podcast if you haven’t had a chance to listen to it yet. Uh, we’ll cover a few of the same topics today.

I’ve got a bunch of great screen shares for you here today. We’re working on a a few different projects, some big ones here for you. So stay tuned and you’ll forgive me if I bounce around a little bit today because like I said, we’re working on some exciting stuff right now and looking forward to bringing it to you here. And you’ll get a little bit of a glimpse here today, especially for our newer listeners out there. We’ll recap a few of our favorite topics and expand on them with some new information. So there’s plenty to go around for existing listeners as well. As you can tell, I’m a little amped up today, going to have some fun with it. So thank you as always for being here with us every day at the market close for the VRA Podcast.

[00:01:39]:
We’re very grateful for the opportunity to do it. We love being here with you every day, and it’s always nice to get it on— to get the podcast on an update. Every day is great, but, uh, you know, we like what we’re seeing. From our markets right now. We’ll cover a few of those topics, uh, and what we’ve seen to start the year so far, how it stacks up to previous years a little bit. I won’t dive into all of it here today, but again, for our existing listeners, you know these themes that we are in the midst of a generational bull market that is the roaring 2020s meets the innovation revolution. And despite all of that, and despite all of these exciting factors out there, sentiment, and especially investor sentiment, remains extremely fearful at these levels. Now, market bottoms are always messy, but along the way, and as you’ll see through a few of the analytics in today’s podcast, the, the opportunity and the real risk is not always to the downside.

Sometimes it’s in missing the move going forward. Um, we’ll break all that down and more today. Um, so again, thank you for being here with us. Uh, again, markets were higher here today. We’ll cover a few AI improvements that we’ve seen recently. I’ll kick it off with that here in a second. And then of course sentiment our major indexes, internal sectors, and the VRA commodity watch is what we’ll wrap with here today. I know everyone’s always anxious to talk about commodities the last few weeks and what we’ve seen from the price of oil with the conflict in Iran going on.

[00:03:28]:
Of course, it’s the biggest news headline out there, um, but part of what we do here at the VRA is when everyone is looking in one direction, uh, super hyper-fixated on a single story We like to look at the broader picture a little bit, and that’s what we have the VRA Investing System to thank for that as well. So we will break it down, the oil market and the latest there. But yes, I’ll get to that here in a minute. First off, right now going on in Austin, Texas, well, as you can see, we had a big cold front blow through here in Texas the last couple of nights. I know it’s in Houston as well. But right now we have South by Southwest. Going on, uh, big events all over. There’s— it really runs across a lot of different industries.

You know, there’s speakers from businesses, um, big music live events and movie events as well. A good friend of mine just aired his first, um, short film at South by Southwest last year. That was my first time going to the movie experience there, um, but it was his first attempt at a short film and got accepted into South by Southwest. So of course you’ve got to go and support. Um, and one thing that was going on this weekend, as is happening here in Austin with the Tesla factory and headquarters here, uh, where they make the Cybertrucks, uh, and will be making the CyberCabs as well, they had a pop-up event for the CyberCab. So I had a few photos that I wanted to share here with you today. Uh, it wasn’t a huge event or anything like that. But we did get a look here at the Robotaxi.

[00:05:18]:
So this is from the event on Friday. I’ve seen one in the wild so far, but notice here on this, it’s Robotaxi. On the one that I saw right in front of it, it had engineers and it actually had a steering wheel inside of it. So this was no steering wheel, off the floor there. They had a few Tesla employees to talk to. Uh, you know, of course we snuck around a little bit and talked to some of the guys who are responsible for the vehicles there. They’re driving an, you know, all-black CyberCab. Uh, one thing I don’t have a photo of here was the setup they had for another version of the Robotaxi with Optimus inside of it.

But we were talking to those guys and just, you know, trying to get whatever inside scoop we could for Tesla. Uh, let’s just say that they’re very excited about what’s ahead. And it’s always great to meet somebody who works for a company, uh, where they believe in the mission. They’re very excited to work there and excited about what they’re working on right now. Um, so we also got a look here from the inside. Uh, the trunk does open. You can’t see the trunk from any of these photos here, but it is more spacious than you might expect for sure. I know a lot of these, these photos are available online.

[00:06:40]:
And then of course I’ll give, uh, our Josh Foley a little shout out there. I hope he doesn’t mind me sharing that photo, but that was one of the latest, uh, iterations of Optimus there. You know, honestly would have loved to have seen more interaction from it, um, the day of there. But like I said, talking to the Tesla employees who have seen some of these things in action, they’re very excited about what’s coming next. Uh, so That really does segue pretty well into what I wanted to talk about and kind of got me on this topic beyond just the South by Southwest event, because earlier today Elon Musk tweeted, by this weekend, XAI will have 3 Grok build models in training simultaneously. And let me just say this, you know, if this is, you know, kind of the way with the evolution here of what we see happening in the innovation revolution, I think we’re going to see a Tesla-like moment for the whole industry, really, and specifically a full self-driving moment. Okay, where you’ve heard Kip talk about this a lot, where just a couple of years ago where self-driving was, was really good. You had to keep your eyes on the road very, you know, they tracked that very heavily.

[00:08:02]:
Um, Couldn’t look away for too long, could only use it in certain places. Uh, it may have a few hiccups along the way where you might have to grab the steering wheel, right? Uh, but it also might avoid some incidents that you never would have seen coming, right? And that was again a couple years ago. Fast forward to today and what we’re seeing from full self-driving. I know we both— Kip and I both talk about this a lot, but if you haven’t experienced it yet, uh, go to a Tesla dealership and and give it a shot because it really is that impressive. Uh, you know, again, from having to monitor it so closely a few years ago, I’ve seen it. I can say that I’ve seen proof of this with Kip in the car, him just letting the Tesla, or as he calls it, Jetson, take control and take it from point A to point B for just about every bit of the drive. So bringing it back to what this Elon Musk tweet kind of means for Groq and the other AI systems going forward is, you Everybody’s of course been impressed to some extent of what you can do with these AI tools now. You know, if you’re not paying that close of attention though, maybe you just kind of use it as a Google alternative, right? Uh, which can be very helpful because to do some bigger tasks, you know, it wasn’t that long ago where you had to be a prompt engineer basically.

And by that I mean what you would type in to the AI, you know, to give it, you know, details, parameters, your goals, all of that, in order for it to really give you a— the outcome you were looking for. There’s a lot of hand-holding and babysitting in that process. Um, now, and you’ve likely heard about this by now because it has become a phenomenon with Claude and what they can do and how you can let AI agents, which really is just multiple versions of the AI attacking the problem from different angles to come up with a final result. Uh, a lot of that, and I’ve played with a good amount of it, and for anybody watching You know, correct me if I’m wrong here. If you’ve had a different experience, I would love to hear about it and make sure I’m utilizing all these tools the best way possible, right? You want to stay on top of it, and it helps us to find, um, you know, maybe not even necessarily from the AI side, but what companies are going to be the winners. You know, obviously with Tesla and the partnerships that they will have and already have with SpaceX and xAI, this is a big topic that we want to stay on top of. And so the evolution that we’re seeing here, you know, with these multiple AI tools working at once, it’s like FSD was not too long ago where, you know, it’s going to make some awkward movements along the way or some decisions you’re like, I don’t know if I would have done that one. But again, it might save you in some incidents as well.

[00:10:49]:
Now to today, that’s okay. So that’s exactly what those tools are like today. I don’t think we’re very far away. And Kip and I were just talking about this before the call. It feels like something big. Is on the horizon. And it’s stuff like this— I know it kind of might seem a little esoteric, like, what does this mean for me now? But it means the difference between having to tell an AI everything about yourself to having an AI that really is an employee, a personal assistant to you, can aid you in any aspect of your life that you want it to with simple voice commands, not long drawn-out prompts to get it to do what you want to do. And then not only delivering a product that is usable, but almost or at finished product level, right? Whether that’s your grocery list to, you know, developing a digital product, project, an app you’ve been dreaming about for a long time.

All of those things in the digital sphere will be at your fingertips, which— oh man, I, I can’t wait to get to my next point here because I’ll get to it in a second. But that’s the digital AI side. We’ve seen huge innovations in it. But from the Tesla event, as you saw, there’s also the physical AI side. So stay tuned here with me for a few more minutes because we will get to that. Uh, and that’s one of the things I was really excited to get to here today. But First and foremost here, with all of that excitement going on and all of the bullish factors fundamentally under the surface that we talk about here, you know, so much at the VRA, we try to go through them all the time because it even helps us to be repetitive about these things, whether it’s our Big 3 themes or going back to the Big Bribe, our 5 Big Bribe megatrends, which all are still in place here. Um, but the Big 3 for us lately, because we wrote that book before Trump even got into office.

[00:12:49]:
Now, you know, the expectations for our book only increased after that took place. Um, but our big 3 megatrends right now being, you know, an absolute ocean of liquidity in this market right now that isn’t talked about, right? We talked about it last week with M2 money supply hitting all-time highs, global money supply hitting all-time highs. Um, you know, Homeownership. 40% of homeowners own their home outright right now. We’re not seeing homeowners tap into any equity. I think the average rate of capital in the home right now is roughly 70% of their mortgage value. So no, people aren’t tapping into that money. Kip talked about this yesterday.

So again, I could go on for days and days about our major topics here that we expect in this innovation revolution, generational bull market, you know, dot-com on steroids era. Uh, we talk about it a lot. The NASDAQ rallied 585% during the dot-com era. As of today, from the bear market lows to today, we’re at roughly— it’s been really in this range for a while now— 125%. So if this is a bubble, as so many people wanted to say a few months ago, right, before AI was going to take their job, and then before the Iran conflict. Um, uh, this would be one of the most mundane bubbles of all time. Point being here, and we’ll break it down here in a second, that all of these headline stories, fearmongers are going to use that as an opportunity to scare you out of the market. And again, that’s why we have the VRA Investing System, so we can remove our emotions from this.

[00:14:37]:
Because despite, again, all of these bullish factors that I just touched on briefly, um, we talk about them here every day on the VRA. I’m sure I’ll talk about more as we go. But despite all of that, take a look at this here. Fear and Greed Index at a 21. It actually fell today despite yesterday’s rally. Today’s rally was a little less, sure, extreme fear, right? We saw the huge spike in AI last week. Um, this is when, you know, you’ve heard the old adage, right? You want to be greedy when others are fearful and fearful when others are greedy. Uh, because what we’ve seen so far, you know, pullback in the S&P 500, you know, let’s just call it 5% for, for off the top of my head numbers here.

Okay, you see a 5% this is called basically a mild correction— 3, 3.5 times per year. That’s what we’re in the midst of right now. Uh, even a 10% pullback occurs every 13 months, and over that level, you know, roughly every year and a half to 2 years. So these certainly aren’t uncommon, okay? That gives you a reference point of how common they are. But let’s talk about now how big these price moves are. I got a great chart here for you. Um, let me get it ready. There we go.

[00:16:09]:
Um, yes, here we go. Okay, so before I get into this, right, because it actually— let me take a second, uh, because I do want to make sure this doesn’t scare anybody, uh, because it’s certainly not scary. We look at this only as bullish here, uh, to talk about what pullbacks look like and what to do in them. When most oftentimes when I’m talking to a new investor, a new trader, somebody who’s really, uh, I mean brand new in so many ways, uh, you know, from month one up to even a year plus, many times longer as well, it’s tough not to get swept up in the fear of everything. And this simple fact alone helps, you know, to ease a lot, a lot of fears during that time, even, even for myself, you know, that if— let’s look at it like this, because we just, just had all-time highs not too long ago. If that was your first taste of getting into the market or into a certain stock, right, cryptocurrency, whatever it may be, and then you got the exact all-time highs, okay, so for this situation we use the S&P 500. If you’d bought at the exact all-time highs and you’re wondering, should I get out before anything worse happens or something like that? Every time in history that the S&P 500 has hit an all-time high, it was eventually followed by another all-time high. And I know that seems really broad speaking, right? But let’s look at it from an even more impressive angle, okay? If you had just bought the all-time highs in the S&P 500 Throughout, you know, the last, let’s say, 30 years— some stats go out longer, 40, 50 years— if you’d bought every single time you hit an all-time high and just held through everything, you’d be one of the greatest to ever do it.

[00:17:59]:
Uh, you know, that’s— and that’s, that’s, you know, maybe a slight bit of an overstatement, but the same is true for so many different stocks as well. They’re really quality names that, as long as nothing changes in the story fundamentally speaking, then, you know, the ability to handle pullbacks with grace becomes incredibly important. And here is exactly why. So we know roughly how often you get pullbacks like this, but what is the peak to trough average decline? And here’s, here’s the answer. I just saw this earlier today. Peter Malag is a great get on data here. So I am going to scroll a little bit to see exactly what it is. Okay, uh, but the Intra-year peak to trough decline on average, right? Average drawdown is what this is.

I know there’s a lot of red, but that’s all it’s looking for, right? It’s not looking for any updates. Okay, the average drawdown for every year is 13% for the S&P 500. Now look, there’s plenty of years where that— look, the biggest drawdown there is 2.8%, right? Trump’s first term is rocket ship. Uh, after he was inaugurated. You know, we’ve seen some big ones though here. Obviously 2022 is a rough year, the Biden bear market where we did finish down 18%. But so many of these scenarios— look, the average annual return is still positive as you would expect, um, but if we’re at roughly 5% on the S&P 500 at this point, that’s even below a run-of-the-mill yearly drawdown in percentage terms. Like I said, a pullback of 13% if we’re looking at just that stat, happens roughly every, you know, 12, 13, 14 months, about 13 to 14 months really.

[00:19:45]:
So again, it has to be put in perspective, and that’s the point that he’s making here as well. So I hope that helps anybody if you’re new to the market here. That being said, let’s go ahead and take a look at our market action on the day today. Um, we were led by the Russell 2000 here today, was our leader as far as indexes go. Up just shy of 0.7%, may have been helped slightly here by yields as we have gotten a bit of a reprieve here in yields. I’ll go ahead and share this briefly because we can go back over a year and a half. You could go back further. You’ll see a series of lower highs and lower lows, but specifically this is from Trump’s inauguration.

Our call from then was yields would head lower. You know, we think they obviously, in our view, if you’ve been here with us for a while, think they should be much lower right now. But look, the move lower has still been impressive. And again, if you zoom out, you’ll see more, uh, lower highs and lower lows going back decades, really. Um, but this is what we expect to see continue. We got to the top end of here, that would be a lower high to this. We want to see this move lower continue here for yields. And small caps are the most yield-sensitive group.

[00:21:06]:
Um, all right, next up here, um, quick look. All right, the next up here is the NASDAQ, up about half of 1% on the day today. Um, and just what you want to see, the semiconductors leading the way, up 3/4 of 1%, 0.75% on the day today after finishing up 1.7% yesterday. That’s exactly the outperformance you want to see. Textbook bull market action. Um, and we’ve continued to see, as Kip covered yesterday, many of our FIFO names, the names that we saw getting hit first, still continuing to the upside. Software not quite as high as semis, we wouldn’t expect it to be necessarily, but still led the NASDAQ up almost 0.7%. Uh, next up there, the S&P 500 up 0.25% on the day today, and the Dow Jones was our laggard on the day, still positive up 0.1%.

Also point out here, the transports led higher, up 1.1%. And really, at the lows there, we’re not far away from hitting extreme oversold on steroids. Uh, even despite, you know, the commodity fears for oil, we want to see our transports going up. That would tell us also, in addition to the backwardation we’re seeing from oil that’s still in the 70s, uh, when you look later out in the year telling us that the markets are expecting lower oil prices to come. And all the stats that we’ve laid out here a few times, that we’ve seen likely a top in oil for all the volatility that we’ve seen. Um, transports continuing higher is another sign that energy prices won’t be too extended for too long, or also that these companies are hedged in the right way for a bet like this. We saw that from the airlines, uh, in the early 2010s when oil prices were $100 a barrel plus going into, you know, 2014. They’d hedged their bets.

[00:23:08]:
They had bought oil futures a long time ago and were, you know, some of the airlines exceeded exceptionally for that reason. Anyway, that’s the story for another day here. Um, one other fast factor here on the sentiment side that I wanted to talk about, uh, Kip talked about this yesterday, but it’s a fantastic chart. Put this out to VRE members yesterday as well, that asset managers’ net position is at, I mean, again, the lowest levels here since the pandemic, you know, below tariff mania, below the 2022 Biden bear market. Uh, those are— these kinds of extreme readings take place at market lows, not at market tops. Uh, again, we’ve talked about it so much. I don’t mean to, uh, go back to sentiment and jump around too much here, but if this was a market top, we believe we’d be seeing the opposite right now, where you have a less-than-run-of-the-mill pullback, right, 5 to 7% or so, and we remain in greed mode. AII remains with more bulls than bears.

Everybody, every headline is talking about buying the dip. Uh, oh man, Let me see if I can find one more for you because we got one last week as well. I know I have it in my notes, hopefully not too far away, because we got— all right, I do have it here. Give me one second because this is also frequently, in addition to other headline makers, a sign of a market bottom, not a market top. The Economist headlines, right, an attack on the world economy, heading lower. Those are usually signs, again, of a market bottom, not a market top. We saw it, you know, headlines over the past from the US dollar, you know, whether it’s saying the US dollar was going to take over the world, and then, you know, similar to yields in Trump’s first term to today, the dollar moved lower after inauguration day. Same thing we’re seeing right now.

[00:25:19]:
They published an ad or a headline, um, the COVID of their publication was that the US dollar taking over the world just imploded. Then it was the US dollar was never coming back, and the US dollar started heading higher. Uh, so again, another little— that’s more of a fun sentiment signal than anything else. Obviously not a, uh, um a whole reason, a whole thesis to invest, to base your investment portfolio off of. Um, sorry, having a little fun here today. Uh, Kip did cover the Nvidia event yesterday, uh, as well, which was, you know, phenomenal. But if you don’t pay attention to this industry, a lot of it can go over your head. Uh, so working on a report on that right now.

Uh, if you’re not already a VRA member and you want that full report, come and join us. We’ve got a 14-day free trial going on right now at vraletter.com. You’ll receive access to everything that we have to offer, absolutely risk-free for 14 days. So come and join us back there. You’ll also see our special reports, our full VRA portfolio, and every update published, uh, going back decades. So, uh, we hope to have you here with us. We love what we do. We’re excited to do it.

[00:26:37]:
and we’d love to— again, love to have you here with us. Um, all right, let’s start to wrap it up here on the day. Internals, good day overall here, and a few bright spots. Uh, advanced decline coming in over 2 to 1 positive on the NYSE. Good to see, especially after the weakness we saw last week. Also positive on the NASDAQ, not quite as, uh, um, as impressive of outperformance, but still good levels. Solidly positive on the day. 52-week highs and lows did come in positive for the NYSE, was negative on the NASDAQ, but this is a lagging indicator.

So oftentimes when you’ve seen, you know, move lower, um, or a big move higher, this— and this indicator will move at a much slower rate because it is accumulative. You know, if the stocks open higher and they hit all-time highs but finish lower on the day, it still gets counted as a 52-week high. There’s all kinds Always there’s rationalization to data, um, but I got a quick refresh here I want to take a look at for volume. Good numbers here on the day for both the NYSE and the NASDAQ, uh, you know, a little bit better than 2-to-1 beats on the NYSE, just shy of that level on the NASDAQ here today, but overall headed in a positive direction there. After the pullback that we have seen. Um, all right, next up here, looking at our sectors on the day today. Also a good day here. 8 of our 11 S&P 500 sectors finished higher on the day, led by energy, uh, hitting another all-time high here for energy stocks.

[00:28:26]:
Um, obviously with oil at these prices, they’ll have some pretty good quarterly earnings. Um, coming up here. But as Kip and I both talked about, we don’t see oil staying elevated for a— it’s a short-term phenomenon still in our view. Uh, we’ll update you if anything changes there, um, and we’ll continue to discuss it as always. Uh, now on the day, gold last trade $5,000. Sorry, let me take a— I jumped, uh, jumped a little ahead there talking about oil. Uh, our other leaders on the day for sectors, consumer discretionary and communication services. Laggards on the day were the defensive sectors: healthcare, consumer staples, and utilities.

That would be looked at as textbook action. Sorry, one more sentiment factor: put-call ratio also finished the day above a 1. Excessive bearishness. We’re finally seeing that in this market. All right, here finally for today, our VRA commodity watch. Gold, last trade just above $5,000 an ounce, $5,008 an ounce. Silver just below $80 an ounce, $79.29. Copper at $5.76 a pound.

[00:29:40]:
Oil, excuse me, here still in about the mid-90s range, $94.36 a barrel. Um, let’s see here, one more that is down slightly on the day. Overnight basically was at, um Ah, just shy of the $76,000 mark. Again, another one of our FIFO themes, uh, has performed well over the last couple of weeks, so we want to see that continue, especially in the last few sessions. Uh, but Bitcoin now at $74,500— $580 a Bitcoin, folks.

That’s all that we have time for here today. Please be sure to subscribe to receive— subscribe to receive our podcast every day at the market close. You can sign up at vraletter.com, click the podcast link at the top, and we’d love to have you with us. Thanks again for tuning in. Until next time, we’ll see you back here tomorrow for The Close.