Stock Market at New Highs? Here's What I'm Buying Part 1 of 2

Summary

In this financial analysis, Adam discusses the S&P 500 reaching a new high, emphasizing that all-time highs are historically bullish signals, not reasons to sell. He compares the current market with historical data, highlighting the importance of earnings support for stock prices. Adam advises against buying at the peak of a wave, suggesting patience for a pullback to add positions. He also addresses sector performance, noting that while some stocks soar, others lag, creating opportunities for value investors. The video concludes with a teaser for a follow-up on identifying undervalued stocks.

Takeaways

• 📈 The S&P 500 reached a new all-time high of 5,500 points, marking the 31st time in 2024, and is up over 15% year to date.
• 🤔 Despite new highs, there's a common fear of market downturn, with experts often warning of a bubble and potential crash, but history suggests otherwise.
• 📊 Historical data shows that since 1950, the S&P 500 has set 1,250 all-time highs, averaging about 16 highs per year, which doesn't indicate a bearish market.
• 📚 The 1990s had the most all-time highs with 310, and it was a bullish decade with a 32% market gain, while the 2000s had the least with only 13, marking a bearish decade.
• 📉 The fear of selling at a peak is common, but all-time highs are more of a bullish signal, reflecting market and economic strength.
• 🚀 Companies leading the market today, like Nvidia, Microsoft, and Apple, are fundamentally strong with significant earnings growth, unlike the dot-com bubble.
• 💡 Earnings per share are supporting the S&P 500's rise, indicating a healthy market not driven by speculation alone.
• 📉 Market corrections are normal and expected; investors should look for key support levels to add to positions during retracements.
• 💸 Sector performance is uneven, with technology and communication services leading gains, while some sectors like real estate and basic materials lag behind.
• 🧐 Diversification can lead to underperformance in the short term if certain sectors are not in market favor, but it's key for long-term outperformance.
• 🔍 Investors should distinguish between unloved stocks that are undervalued due to temporary issues and those with long-term structural problems.

Q & A

What milestone did the S&P 500 reach on Thursday?

The S&P 500 reached a new all-time high of 5,500 points on Thursday.

How many times has the US market set an all-time high in 2024 according to the transcript?

According to the transcript, the US market set an all-time high 31 times in 2024.

What is the average number of all-time highs the S&P 500 has made per year since 1950?

Since 1950, the S&P 500 has made an average of 16 all-time highs per year.

Which decade had the most all-time highs in the S&P 500, and what was the market gain during that period?

The 1990s had the most all-time highs with 310, and the market gained 32% during that decade.

What is the difference between the market condition during the dot-com bubble and the current market, according to the speaker?

During the dot-com bubble, stock prices were driven by hype and speculation without strong earnings, whereas today's leading stocks like Nvidia, Microsoft, and Apple have strong earnings supporting their share prices.

What is the speaker's view on all-time highs as a signal for market behavior?

The speaker believes that all-time highs are a bullish signal, indicating market and economic strength, rather than a bearish signal to sell stocks.

What is the speaker's strategy for buying stocks or ETFs?

The speaker prefers to buy on a pullback or retracement, not during a wave up pattern, and waits for significant support levels to average in or add to positions.

What are the three key support levels the speaker identifies for the S&P 500?

The three key support levels identified are the 20 EMA at 5173, the previous swing low coinciding with the 40 EMA at 4954, and the 50 moving average on weekly candles coinciding with the previous swing high.

Why might an investor's portfolio not be performing as well as the S&P 500, despite the market being up?

An investor's portfolio might not be performing as well if it is not heavily weighted in the sectors or companies that are driving the market gains, such as AI-related hardware companies.

What is the speaker's approach to investing in companies that have not participated in the AI Bull Run?

The speaker advises to evaluate these companies individually; some may be great companies down temporarily for non-fundamental reasons, while others may have long-term structural problems and should be avoided.

What does the speaker suggest for investors who are not currently outperforming the S&P 500?

The speaker suggests that short-term underperformance is not a sign of poor investing skills, as market rotation and sector performance can vary. Instead, focusing on long-term investment in quality businesses will likely result in outperforming the S&P 500 over time.

Outlines

00:00

📈 S&P 500 Reaches New High Amidst Bubble Concerns

The S&P 500 has achieved a new record, hitting 5,500 points and marking the 31st all-time high of 2024, resulting in a 15% increase year-to-date. Despite common fears of a market downturn following such highs, historical data since 1950 shows an average of 16 all-time highs annually, with the 1990s seeing the most highs and the 2000s the least, correlating with market performance. Financial experts often warn of a bubble, but the speaker argues that all-time highs are signs of strength, not reasons to sell. The current market is contrasted with the dot-com bubble, where stock prices were driven by speculation rather than earnings, unlike today's leading companies like Nvidia, Microsoft, and Apple, which are financially robust.

05:01

🤔 Market All-Time Highs: Bullish Signal or Cause for Concern?

This paragraph delves into the historical significance of all-time highs in the stock market, suggesting they are bullish indicators rather than warnings of an impending crash. The speaker uses the example of the 1990s, which had 310 all-time highs and a market gain of 32%, to argue that such highs are positive. The current decade has seen 104 all-time highs, indicating a strong market. The speaker also addresses concerns about market crashes, comparing the current situation favorably to the dot-com bubble and the 2008 financial crisis, emphasizing that today's market leaders are backed by strong earnings.

10:02

📊 Earnings Growth and Market Valuation Analysis

The speaker discusses the importance of earnings growth in supporting market valuations, using the S&P 500 as an example. As long as the market's price trend remains close to its earnings per share, there is no bubble. The speaker anticipates that earnings estimates will continue to rise due to the benefits of AI, which can increase productivity and profit margins. However, the speaker also advises against buying during a market upswing, preferring to invest during pullbacks or retracements for better entry points.

15:03

📉 Market Corrections and Investment Timing

The speaker outlines a strategy for investing during market corrections, suggesting that investors should be patient and wait for a market pullback to buy in at better prices. The speaker identifies potential support levels for the S&P 500, including the 20 EMA, previous swing lows, and moving averages, as areas to consider adding to positions. The speaker also notes that while the market is up 15%, some investors may not be experiencing similar gains due to sector-specific performance.

20:05

😕 Individual Stock Performance and Portfolio Diversification

The speaker addresses the disparity between the overall market performance and individual stock performance, noting that gains in the S&P 500 are concentrated in a few sectors, particularly technology and communication services. The speaker shares their own portfolio performance, which, despite being diversified, is slightly underperforming the S&P 500 due to the underperformance of certain sectors. The speaker emphasizes that short-term underperformance does not indicate poor investment skills, as market rotation and sector performance can vary significantly.

25:06

🚀 Investing in Overvalued and Undervalued Stocks

The speaker provides guidance on how to approach investing in overvalued and undervalued stocks. For overvalued stocks like Nvidia and Apple, which have led the market rally, the speaker suggests holding but not buying more until prices become more attractive. For undervalued stocks that have been left out of the rally, the speaker advises caution, as some may be down for valid reasons, while others present a good buying opportunity. The speaker promises to cover more on this topic in a follow-up video.

🛑 Avoiding Emotional Decisions in Stock Investments

The speaker concludes by warning against making investment decisions based on emotions such as fear of missing out or fear of losing profits. Instead, investors should think logically and act like business owners, considering the long-term growth potential of their investments. The speaker also promotes their own investment program, offering live buy and sell notifications, updated intrinsic values, and portfolio reviews.

Keywords

💡S&P 500

The S&P 500, or Standard & Poor's 500 Index, is a stock market index that measures the stock performance of 500 large companies listed on stock exchanges in the United States. It is often used as a proxy for the overall U.S. stock market. In the video, the S&P 500 hitting a new milestone of 5,500 points signifies a new all-time high, indicating a strong market performance.

💡All-time High

An all-time high refers to the highest price or value that an asset, such as a stock or index, has ever reached. In the context of the video, the mention of the 31st all-time high in 2024 for the U.S. market suggests a bullish trend and investor optimism, despite concerns about potential market corrections.

💡Year-to-Date (YTD)

Year-to-date (YTD) refers to the period starting from the beginning of the current calendar year up to the present date. It is used to measure the performance of investments over the course of the year. The video mentions that the market is up over 15% YTD, showcasing the market's growth from the start of 2024 until the time of the video.

💡Bubble

In financial terms, a bubble refers to a situation where the prices of goods or assets rise significantly above their intrinsic values, often due to speculation or hype. In the script, experts warning about a 'bubble' suggest the possibility of an unsustainable market rise that could lead to a crash.

💡Bearish

A bearish sentiment or outlook anticipates a decline in market prices. In the video, the discussion around all-time highs being a reason to get bearish explores whether market peaks are signals to sell and expect a downturn, contrasting with the historical data presented.

💡Bullish

Bullish refers to a positive outlook on the market, expecting prices to rise. The video uses the term 'bullish' to describe decades with a high number of all-time highs, such as the 1990s, indicating strong market performance and investor confidence.

💡Earnings Per Share (EPS)

Earnings Per Share (EPS) is a measure of a company's profitability on a per-share basis. It is calculated by dividing the company's net income by the number of shares outstanding. In the video, the script discusses how the S&P 500's EPS is supporting its rise, suggesting that the increase in stock prices is justified by the companies' actual earnings growth.

💡Dollar-Cost Averaging (DCA)

Dollar-cost averaging is an investment strategy where an investor consistently buys a fixed dollar amount of a particular investment, regardless of its price. In the video, the speaker suggests using DCA when adding to S&P 500 ETF positions during market pullbacks, aiming to reduce the impact of market volatility on the investment.

💡Sector Rotation

Sector rotation is an investment strategy that involves shifting investments across different sectors of the economy based on their expected performance. The video mentions that different sectors perform well in rotation, affecting the overall performance of diversified portfolios.

💡Intrinsic Value

Intrinsic value is an estimate of the true value of a company based on its fundamentals, such as earnings, growth, and cash flows. It is used by investors to determine if a stock is overvalued or undervalued. The video discusses intrinsic value in the context of evaluating whether to buy more of a stock like NVIDIA, suggesting waiting until the stock price falls below this value.

💡Overbought

Overbought is a term used to describe a security that is considered to have been driven to a disproportionately high price based on its current fundamentals. In the script, the speaker refers to NVIDIA as being overbought and overextended, indicating that its price may be due for a correction.

💡Support Level

A support level is a price level where an asset's price tends to find stability and is likely to rebound. It is where buyers are expected to enter the market, preventing the price from falling further. The video mentions specific support levels for the S&P 500, suggesting these are good entry points for investors during market dips.

Highlights

The S&P 500 reached a new all-time high of 5,500 points, marking the 31st time in 2024.

Despite market highs, there's a common fear of a market downturn leading to a temptation to sell and take profits.

Financial experts often warn of a bubble and market crash when the market reaches new highs, but history shows different outcomes.

Since 1950, the S&P 500 has set 1,250 all-time highs, averaging about 16 highs per year.

The 1990s had the most all-time highs with 310, coinciding with a 32% market gain.

The 2000s had the fewest all-time highs with only 13, marking a bearish decade.

All-time highs are generally a bullish signal, indicating market and economic strength, rather than a reason to sell.

The 2020s have seen 104 all-time highs so far, making it a strong bullish decade for stocks.

Companies leading the market, like Nvidia, Microsoft, and Apple, are making significant profits, unlike the dot-com bubble era.

Stock prices are supported by earnings, which is a healthy market indicator, unlike the dot-com bubble where prices were driven by speculation.

The S&P 500's rise is currently supported by earnings per share, indicating no bubble formation.

Analysts are raising earnings estimates for companies due to the benefits of AI deployment, suggesting continued market growth.

Investors should avoid buying during a wave up pattern and instead wait for a pullback or retracement for better entry points.

Support levels for the S&P 500 have been identified for potential investment opportunities during market corrections.

Some investors may not be benefiting from the market's rise if their portfolio is not heavily weighted in the leading AI-related hardware companies.

Investors should not be discouraged by short-term underperformance compared to the S&P 500, as long-term performance is more indicative of skill.

There are still undervalued sectors and companies that have not yet participated in the AI bull run, presenting potential opportunities for investors.

Transcripts

so the S&P 500 just hit a new Milestone

on Thursday hitting 5,500 points and

making a new all-time high before

pulling back slightly on Friday and the

interesting thing is that on Thursday

this was the 31st time the US market

made an all-time high in 2024 and it's

up currently over 15% year to date now

whenever the market makes new all-time

highs people get nervous because they

think it's going to come down and

there's this overwhelming temptation to

want to sell and take profits be before

the market comes down and increasingly

more and more financial economists and

analysts and experts start to come out

and they start to scream bubble bubble

bubble the Market's going to crash right

they always do that whenever the market

reaches an all-time high but does it

mean that all-time Highs are a reason to

get bearish in the market is it a reason

to sell your stocks in the market or our

all-time highs actually less bearish

than we think well again as always we

like to go back to history and learn

from history and what is interesting is

that since 1950 this is the S&P 500 from

1950 to the present day 2024 during this

period as you know the market always

goes up in the long run and over this

journey of the market going up to its

current level the S&P 500 has set

1,250 alltime highs since 1950 and

that's an average of 6 16 all-time highs

a year that means in any given year the

market makes 16 alltime highs and if you

break it down by decades these are the

decades this is the 1950s 1960s 1970s

1980s right and if you look at the

decades with the most all-time highs

they were actually the most bullish for

example if you look at 1990s from 1990

to 1999 the market made 310 all-time

highs and during this decade which was

from right here 1990 to

1999 the market gained

32% making 300 all-time highs the decade

with the least all-time highs was the 2s

which was the year 2000 which was

somewhere uh here to 2010 which was

somewhere around there right so during

this period the market only made 13

all-time highs and it was was a bearish

decade if you can see that so in other

words all-time highs is a bullish signal

it's a signal of Market strength

economic strength and it's not a bearish

signal it's not a reason to sell your

stocks and in fact this year again we've

had uh 31 all-time highs and since the

start of the 2020s decade we've had 104

alltime highs so so far this has been a

very strong bullish decade for stocks

now of course you've got people saying

that well in 2000 made all time high and

it collapsed why is this any different

well there are couple of reasons why

this is very different from 2020 uh the

Doom crash and 2008 October the great

financial crisis if you look at a dot

bubble if you're old enough to remember

it and like me I was in the Market at

the time it was a very different Market

because at the time stock prices were

going up like crazy on companies that

were not making money the companies were

not making money but today the stocks

that are leading the market like Nvidia

Microsoft and Apple they are making a

lot of money and this chart shows you

the big difference so again in a dotom

bubble you can see

that this uh blue line over here is the

NASDAQ the the the the share price of

the NASDAQ versus the S&P 500 so the

market the the NASDAQ was going up but

the earnings of the company they were

not really making much money so we call

this a bubble stock price is going up is

driven by hype and speculation and

stories okay but it's not backed by

actual earnings of the company and sure

enough uh companies have to make money

if not eventually the Hy will collapse

that's what happened to R ETF you look

at R ETF a lot of the stocks that they

own the companies don't make money or

they make very little money and you know

the price was supported by hype back in

2021 before it collapsed right but in

today's market you can see that that

although the stock stocks have gone up

of the NASDAQ companies the one in light

blue but the earnings of the companies

have actually been supporting the share

price and I've said this before that if

you look at Nvidia for example Nvidia in

the last year also the share price went

up over 200% but the earnings grew at

600% and that's why Nvidia is actually

cheaper today than it was a year ago you

know I said that before that you know

when a stock price goes up it doesn't

mean the stock gets more expensive the

stock can actually get cheaper if the

price goes up if the earnings are going

up stronger than the price it's the same

thing with the S&P 500 so again you can

see that currently the Blue Line S&P 500

is going up and up and up and just hit

5,500 points but it is actually

supported by the earnings per share and

the black line is the forward 12 months

earnings per share so as long as the

blue line is close to the black line

there's no bubble but if the Blue Line

gets far above the black line then it's

over stretched price is way above the

earnings that's when a bubble forms and

the blue line will eventually crash back

down to the black line so as of now um

that's not the case now the question is

moving forward do we expect the earnings

of companies to continue growing or to

contract well as of now you can see that

earnings

uh per share of the S&P 500 this is

based on the calendar year 2023 which is

already over 24 this is the current year

and this is next year 2025 and then 2026

so moving forward to the next uh three

years you can see that analysts have

actually been raising the earnings

estimates of companies as they

benefit from deploying AI because if AI

it increases their productivity reduces

their cost increases their profit

margins so as long as earnings estimates

are rising the stock market can continue

to go up now although I say the S&P

remains bullish and will continue to go

up over the medium to longer term does

it mean that I'm going to jump in right

now to buy more S&P 500 ETF no okay I'm

not and I don't suggest that you know

anyone does it why because again the

market does not go up in a straight line

the market moves in wave patterns I've

said this many many times before and

what I never like to do is I never like

to buy during a wave up pattern I like

to always buy on a pullback on a

retracement on a wave down pattern that

will happen once in a while so you've

got to be patient to add on Wave Downs

then you get in at uh better prices so

again as you guys know you can just look

at the wave patterns right you've got

you know wave up wave down wave up wave

down wave up wave down wave

up wave down and right now we are on a

wave up pattern okay now again I like to

buy on a wave down so when will we start

waving down no one knows everyone tries

to guess no one can predict the absolute

future but it will wave down eventually

maybe in July maybe in August maybe in

September so usually as you guys know

August September tend to be the

seasonally weaker months is it a

guaranteed of course not but it's just a

guess right so don't be surprised that

maybe in in in July August September we

get a bit of a wave down all right if he

waves down to this red line over there

the 20 EMA on weekly candles that could

be a level to add if you're looking to

average in dollar cost average in to the

uh S&P 500 let me kind of like draw a

line there somewhere around there you

know 5173 could be a level to add shares

right and you never know sometimes you

could get an even bigger retracement

that be another uh potential level of

Support over there which was the

previous swing low let me just get rid

of this that uh so you can see clear

right previous swing low there right and

then if we get a much bigger correction

which usually remember that in a

year the market tends to drop

5% at least

two to three times a year right on

average and the market tends to drop 10%

at least once a year when it happens no

one knows all right but it will happen

so when as an investor I always like to

identify a key support levels and these

will be the key support levels first at

a 20 EMA at

5173 second support level at the

previous swing low that coincides with

the 40 EMA at

4954 and finally at the 50 moving

average on weekly candle that coincides

with the previous swing high so these

are three very very strong support

levels and again like I said as and when

the market corrects down this would be

levels where I would add I would add

into the S&P 500 if I was you know

dollar cost averaging and these are

intelligent levels to add because you

never know where the bottom is in a

correction right it could hit this level

and then go back up or this level go

back up so we can never pick the bottom

and that's why it makes sense to always

average in our position now I hear some

people saying to me that Adam the S&P

500 is at an all-time high it's up 15%

but the stops I own are are barely up in

fact some of them are even down and my

portfolio is not doing too well this

year now you are not alone the reason is

this that so far the gains in the S&P

500 are skewed to just a few companies

bringing up the entire index so if we

take a look at the the 10 sectors that

make up the index right you've got

technology communication Services

financials Healthcare and so and so

forth and of of all these sectors are

they all going up equally as much no you

can see that most of the gains are

driven by you guested technology and not

all the technology companies only some

of them which are the AI related

Hardware companies those are the ones

that are driving all the gains in the

market and there are some technology

stocks for example like IT consulting

Essentia or software companies like

sales force that are barely up this year

in fact some of them are down this year

and the other one that's up a lot would

be communication Services driven by

Google and meta the two biggest

contributors of communication Services

financials are up as well but only up 8%

Healthcare also up up 7% consumer

defense is up 6.9% it Industrials up

6.4% utilities up

5.85% energy up 4% but consumer

discretionary also known as consumer

cyclicals of which I've got quite a bit

myself is only up 3% this year and basic

materials down 1% and real estate down

5% so unless your portfolio of stocks

are heavily

weighted into Nvidia or asml or apple

those few Hardware AI related companies

chances are your portfolio is not that

exciting this year it is probably

underperforming the S&P 500 and you know

something it's fine no matter how great

you are as an

investor you can't always beat the S&P

in the short term and I can tell you

that even myself the first 6 months of

the year I'm not beating the S&P 500 I'm

not right I I always beat the S&P over

the medium the long run but short term

there are times when I underperform the

S&P why because although I have

Microsoft I've got Apple I've got asml

I've got Nvidia I I do have all these

companies but I also diversify into

other companies I've got Pepsi I've got

McDonald's I've got Hershey so because

I'm so

Diversified uh my other sectors or the

stocks that I own in other sectors like

consumer discretionary or defensives

they're not up as much and so my

portfolio is uh not beating the S&P year

to date so well let me just show you

this is my uh returns year today where

is

that ah there we are okay so year today

the S&P is up 15% my portfolio is only

up 12% so I'm slightly trailing the S&P

500 and again reason is because if you

take a look at my portfolio allocation

by the way this is my actual portfolio

I'm not going to reveal all my stocks to

you unless you become uh unless you're

in my private Community then you can see

every single position every single

allocation right but you can see that

technology makes up 31% of my portfolio

so this is the one that's driving my

portfolio all right again not all stocks

I I own Salesforce that's down uh but

it's my Nvidia that's up it's my

Microsoft that's up right and I've got V

which is technology that's down as well

so I've got quite a number of tech

companies that are down this year as

well all right I've got 24% into

consumer discretionary so I've got a

heavy weightage into this and this has

not been outperforming so far this year

as I showed you earlier on consumer

discretionary also known as consumer

cyclicals that is only up 3% year to dat

and that's why that is in a way pulling

down my portfolio

returns okay uh let's go back to that

and I've got uh my next biggest chunk

would be healthare that's up as well but

not as much I've got financials 11%

again up as well not that much I've got

10% communication so that is helping me

a lot I own meta I own Google so that's

pulling up my portfolio as well I also

own 6% of consumer staples like

McDonald's like Pepsi like Hershey's and

and and that's not been up so much this

year

okay so as an investor if you are not

outperforming the index does it mean

that oh you suck you're lousy investor

no I can tell you that in the short term

whether you outperform the index or not

in the short term in a few months or

even a year it's not skilled it's luck

it's completely luck right because it

depends on which sectors are in rotation

for example if you happen to have most

of your stocks in technology and AI

Hardware of course you beat the market

you do really well right because that

sector is what we call in

rotation so different sectors in the

market they take turns going in and out

of rotation right so when you are when

you have a diversified portfolio in

different sectors certain sectors will

outperform certain years and certain

sectors will underperform certain years

for example in

2022 it was the complete opposite right

in 2022 if you H any technology stocks

whoo that dropped significantly in 2022

but which sector was in rotation in

2022 energy if you recall in 2022 energy

did very well energy was uh double

digits right whereas technology

was uh minus you know 20% now of course

we would love to predict exactly which

sector will outperform this year which

sector will underperform

but there's no way you can predict

there's no way to know until it happens

all right but like I said if in the in

the longer term in over 1 three 5 years

it's not about luck if you hold great

companies regardless of the sectors you

will beat the S&P 500 right so for

example just in a onee time frame uh the

S&P is up let me just show

you um let's see let's bring up trading

view okay this's as

so like I said for year to date it's up

15% right so my portfolio is trailing

slightly at

12.25% but on the 12 month time frame

the SNP is up 24% for the last 12 months

but my portfolio in the last 12 months

is

up 26% right so I am

outperforming uh the S&P in a one-year

time frame and in a threeyear five 10

year I am way outperforming the S&P 500

right so like I said no matter how good

you are you can't beat the market all

the time in the short term but medium to

long term you will always beat the

market if you invest in the high quality

businesses regardless of which sectors

they in because again different sectors

will take turns going in and out of

favor of Mr Market but in the long run

great companies regardless of sectors

will do really really well now the fact

that not all sectors not all stocks have

joined this AI Bull Run so far this year

is that good news or bad news well I'm

the comp person who always says it's

good news there's always a blessing in

disguise there's always a silver lining

and the Silver Lining is that even

though the market is near all-time highs

there are still certain sectors and

certain companies that are undervalued

that are cheap and as a as an

intelligent investor instead of chasing

those stocks that are running that are

you know now overprice why not look at

the ones that are still relatively

attractive so that's my next focus in

this video and I can't cover everything

in this in this video so I'll do a part

two where I'll go into more specific

companies for you guys to consider again

not a recommendation for you guys to buy

but just to think about what kind of

companies I look for and you could also

look for your your own type of companies

that suit your investment

criteria all right so again uh the

million dollar question is what do you

do right now with markets near all-time

highs now for those of you who are just

investing in the ETF like I mentioned

earlier would I buy the SNP ETF or the

triple Q ETF right here and right now no

I won't all right so one of my

disciplines again is I never buy after a

wave up even though the wave up could

still wave up even more you can never

tell when is the exact point when the

wave up will end and you wave down

there's no way to predict for certain

there's no way to predict right so what

what I would do if I was again just

buying the ETF would be I'll just wait

for the wave down whether it comes in

July comes in August comes in September

when it comes then I'll start to um

dollar cost average and add to my ETF

positions when it hits these significant

support levels and that is if I'm buying

the ETF so how about individual

companies so I divide them into two

groups number one would be those

individual companies that are leading

the rally this year they up double

digits and they are overvalued that's

one group right then another group are

very good companies but they have been

left out of the rally for whatever

reason and they are currently

undervalued so let's talk about the the

the first category which are great

companies but they overvalued because

they are leading the AI RAR a good

example is NVIDIA so Nvidia currently is

my fourth largest position in my

portfolio and for

NVIDIA I hear half the people in my

communities uh getting nervous and say

it's got up so much it's got to come

down it's got to come down it's

overpriced and they want to get out they

say you know they want to sell right

then I've got another group who are

saying it keeps going and and I'm not in

the store and you know should I buy so

got half the people wanting to get into

Nvidia they up wanting to get out so

what to do right so again never allow

emotions to drive your decisions whether

is it for more the fear of missing out

or the fear of losing profits so always

think logically like the owner of a

business so what am I doing for my

Nvidia position the answer is I'm not

selling why am I not selling because

long run I expect it to continue to grow

and compound but neither am I buying

more right now why because although I

expect it to uh double in the next 5 to

6 years because it's a long Runway we at

the start of the AI Revolution but

shortterm Nvidia is slightly overvalued

and it is slightly overextended and so I

I won't buy until it gets a bit more

attractively priced so again

overextended basically means overbought

as you know prices move in wave patterns

which I keep saying right you've got to

wave up wave down wave up wave down wave

up wave down wave up wave down wave up

so right now it's on this wave up

pattern and it's getting a bit

overextended and eventually it's going

to wave down no one knows exactly when

it could be waving down right now it

could be waving down in in July August

September we don't know right so the

whole thing is I never like to buy I

never like to so chase the girl you know

I always like to wait for the girl to

run into my arms when there's fear in in

in the market right so for me I'm

waiting for NVIDIA to retrace at least

nearer to this red line This 20 EMA on

weekly candles before I want to add more

to my position yeah that's based on the

on the technical perspective now on the

fundamental perspective is all about

valuation so my recent valuation and

again bear in mind that valuations

change all the time every every time the

company releases its new earnings

results New I've got new free cash flow

and growth projections I have to revalue

the stock and Nvidia is a one of the

unique companies that every time they

announce their new earnings results I

have to revalue it very very fast but

based on their last report my intrinsic

value for NVIDIA which I mentioned

earlier on is between $1 and $22 my base

case valuation to my more pessimistic

valuation of $94 so this is my what my

my valuation range so my discipline as a

value investor is to never buy when it's

overpriced no matter how great it is

right I want to wait for the price to

drop below the intrinsic value which is

122 so it must get below 122 before I

would add more to my position and

ideally not only drop below the

intrinsic value but drop to a

significant

support level of which I've identified

the closest support where I may add

start adding more to my early fourth

largest position is

101 okay and then uh if it even retraces

even more to uh what's the next level uh

87 then of course you know I'll add even

more to my position so this is an

example of a stock that has let this

rally another example of a stock that

read LED this rally is of of course

apple apple is in my portfolio but it's

it's not uh a very big position I wish

it was but it's not uh because I didn't

get a chance to buy enough before it

started flying up really really fast so

in the case of Apple you can see that my

intrinsic value is 166 okay so and right

now it's 207 so you know it it's

overpriced you know so again Apple I own

Apple am I selling it no because Al

although shortterm it is overpriced

slightly it is OV extend ended slightly

but long run Apple I believe would

continue to compound and grow my wealth

because it's got such a dominant uh

position uh but would I buy more Apple

now no I won't right so again I'll only

buy Apple if it gets below my 166

intrinsic value for example right and

again if you take uh the whale investor

call you will learn how to calculate the

intrinsic value for all these kind of

companies and and if you're if you want

me to do it for you yeah subscribe to

the ultimate investors Playbook where my

subscribers they get uh my live uh uh

buy and sell notifications every day

they get my updated intrinsic values my

updated support levels you know every

single month my updated portfolio

reviews now how about the stocks that

have not participated they have been

left out of this AI buun here today for

example in the Dow Jones index that's up

this year but you know what they've got

some components like Cisco down 6% Intel

down 36% you've got Boeing down 31%

Salesforce down 5.9% United Health down

8.4% McDonald's down 12% Nike down

99.69% if you look at the NASDAQ uh over

here right this is a NASDAQ 100 index is

up tremendously this year but look at

Adobe is down 9% Tesla is down 26% over

here Lululemon down 38% year today so

should you buy these unloved stocks that

have been forgotten by Mr Market or

should you stay away from them because

something's wrong with them well it

depends some of these stocks I think are

great companies and are just down

temporarily for all kinds of stupid

reasons and it's a great opportunity to

add these stocks but on the other hand

there are some stocks that are down a

lot this year that I wouldn't touch with

a 10- foot pole because I think there

are some long-term structural problems

with these companies so how do you tell

the difference well I'll cover a lot

more in part two of this video if you're

interested to watch part two be sure to

um you know subscribe and click on the

notification button so they get notified

once the next part of this video is up

thanks for watching guys see you in the

next video May the markets be with you

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