The Great Stock Market Shift

Summary

The video discusses a significant shift in the stock market where small-cap stocks outperformed the tech-heavy NASDAQ for the first time in 23 years. It attributes this to the rotation of investments as high interest rates may soon be reduced, benefiting sectors like real estate and industrials. The host suggests that diversification is key, and despite short-term fluctuations, the long-term growth of quality companies across various sectors is promising. The video also touches on historical trends and the potential for continued market growth, especially considering the upcoming election year.

Takeaways

• 📈 A seismic shift occurred in the stock market with small cap index outperforming the tech-heavy NASDAQ by the largest margin in 23 years for the first time.
• 📊 Major AI-related stocks like Microsoft, Google, Amazon, Nvidia, Meta, and Apple experienced a downturn, while financials, industrials, and real estate stocks rose.
• 💡 The rotation in the market was triggered by a combination of factors, including Federal Reserve Chair Jerome Powell's acknowledgment of the potential economic impact of high interest rates and a surprising negative month-over-month inflation rate.
• 🌐 Interest rates are a pivotal factor, with high rates favoring mega-cap stocks due to their low debt and ability to earn interest income, while small to medium-sized companies with more debt are negatively impacted.
• 💰 The expectation of the Federal Reserve cutting interest rates led to a shift in investor behavior, favoring sectors and companies that are sensitive to interest rates and have been underperforming.
• 🏢 Tech stocks went down not due to inherent issues but as investors took profits to rotate into other sectors that are expected to benefit from lower interest rates.
• 📊 The market's performance is not solely dependent on tech stocks; a diversified approach that includes various sectors can help maintain growth regardless of economic conditions.
• 💼 The speaker advocates for a diversified portfolio strategy, staying invested in high-quality companies across different sectors, rather than timing market rotations.
• 🔮 While past instances of the Federal Reserve cutting rates have sometimes been followed by market crashes, these were due to underlying recessions, not the rate cuts themselves.
• 📚 Historical data suggests that strong performance in the first half of the year tends to be followed by continued growth in the latter half, supporting the bull market narrative.
• 📅 The speaker mentions an upcoming live event called 'Beat the Market' for further discussion on market strategies and opportunities.

Q & A

What significant event occurred in the stock market for the first time in 23 years as mentioned in the script?

The small cap index outperformed the tech-heavy NASDAQ by the biggest margin for the first time in 23 years.

Which sectors were leading the market boom this year before the seismic shift?

The sectors leading the market boom were AI-related stocks such as Microsoft, Google, Amazon, Nvidia, Meta, and Apple.

What were the reasons behind the rotation in the stock market, favoring small-cap and other sectors over tech stocks?

The rotation was caused by a combination of factors, including the Federal Reserve's acknowledgment of the potential harm of high interest rates to the economy and the expectation of interest rate cuts, as well as a surprising negative month-over-month inflation rate.

Why are high interest rates considered unfavorable for small to medium-sized companies?

High interest rates are unfavorable for small to medium-sized companies because they usually have more debt, and therefore, higher interest expenses, which can hurt their profitability.

What sectors are likely to benefit from lower interest rates according to the script?

Sectors likely to benefit from lower interest rates include real estate, basic materials, utilities, industrials, and finance.

What does the script suggest about the long-term performance of tech stocks like those of Nvidia, despite short-term fluctuations?

The script suggests that tech stocks like Nvidia are still solidly profitable and are expected to continue growing in the long run, despite being slightly overvalued and potentially facing short-term downturns.

What is the potential impact on the stock market if the Federal Reserve cuts interest rates without a recession?

If the Federal Reserve cuts interest rates without a recession, the stock market is likely to continue going up, as lower interest rates make borrowing cheaper and stimulate economic activity.

What historical pattern is mentioned in the script regarding the stock market's performance in the first half of the year compared to the second half?

The script mentions that a strong first half of the year, with gains over 10%, historically tends to lead to a positive final six months, with an 82% chance of further gains and an average gain of 7 to 9%.

Why might the script's author not recommend selling tech stocks and buying only non-tech or small-cap stocks?

The author does not recommend this strategy because market rotations are unpredictable, and it is better to stay diversified across different sectors with high-quality companies rather than trying to time market rotations.

What is the potential source of funds for the stock market if money market funds become less attractive due to lower interest rates?

The potential source of funds is the large amount of cash ($6.1 trillion as of June in the script) parked in money market funds, which investors might move into riskier assets like stocks when interest rates decrease.

What concerns are raised in the script regarding the Federal Reserve's past actions on interest rates and their impact on the stock market?

The script raises concerns that in the past, the first rate cut by the Federal Reserve in a cycle has sometimes been followed by a market crash, but it clarifies that these crashes were due to recessions, not the rate cuts themselves.

Outlines

00:00

📉 Unprecedented Market Shift: Small Caps Outperform Tech Stocks

In an unusual market event, the small-cap index exceeded the tech-heavy NASDAQ by a significant margin for the first time in 23 years. The video discusses the reasons behind this shift, noting that previously, the market was dominated by AI-related stocks like Microsoft, Google, Amazon, Nvidia, Meta, and Apple. However, these stocks experienced a downturn while financials, industrials, and real estate stocks surged. The change is attributed to the Federal Reserve's indication of potential interest rate cuts, which could benefit sectors sensitive to interest rates. The video also suggests that this rotation could be a positive sign for the market, as it indicates a broadening of market gains beyond a few dominant stocks.

05:02

🏢 Sector Rotation and Interest Rate Sensitivity

The script explains the impact of interest rates on various market sectors. High interest rates have been favoring mega-cap tech stocks due to their low debt and cash reserves, making them safe havens. Conversely, small to medium-sized companies and sectors like real estate, industrials, and financials have suffered due to higher debt servicing costs. The recent hint from the Federal Reserve about potential rate cuts has led to a sector rotation, with money moving into rate-sensitive stocks. This rotation is seen as a healthy development for the market, as it allows for a more diversified growth across different sectors.

10:03

📈 Diversification Strategy Amid Market Volatility

The speaker emphasizes the importance of a diversified investment strategy, especially in the face of market volatility. They discuss their own portfolio, which is split between mega-cap tech stocks and other sectors, allowing for gains even when certain areas underperform. The video suggests not selling off tech stocks, but rather holding onto them for long-term growth, while also considering adding to positions in undervalued stocks that have been affected by short-term sentiment rather than operational issues.

15:04

💡 Identifying Undervalued Stocks Amid Market Shifts

The script highlights the opportunity to invest in high-quality, undervalued stocks that have been overlooked due to market focus on AI and tech sectors. The speaker mentions Monster Beverage as an example of a stock that has been unloved but is now attractively priced. They discuss the importance of technical analysis and valuation in identifying such opportunities and hint at further discussion in an upcoming event called 'Beat the Market.'

20:04

⚠️ Cautionary Tales: Nike's Management Missteps

The video addresses Nike's recent challenges due to management errors, which have led to a decline in the company's stock performance. The speaker shares insights from friends within the company and suggests that while Nike is a strong brand, it may take time for it to recover. They advise against adding more to a position in Nike until the company demonstrates a clear path to recovery.

25:07

📊 Historical Rate Cuts and Market Performance

The speaker examines historical instances of the Federal Reserve's first rate cuts and their impact on the market. They clarify that market crashes were not caused by rate cuts but by underlying recessions. The video suggests that if rates are cut without a recession, the market should continue to rise. The speaker also discusses the potential for the current market environment to mirror that of 1995, preceding the dot-com boom, and addresses concerns about a potential market crash following rate cuts.

🌐 Market Outlook and Investor Guidance

In the final paragraph, the speaker provides an optimistic outlook for the market, referencing historical trends that suggest strong performance in the latter half of the year, especially in election years. They also caution about potential volatility during the September-October period and advise investors to focus on high-quality names. The video concludes with an invitation to an upcoming webinar and a reminder to subscribe for updates on investment and trading strategies.

Keywords

💡Seismic Shift

A 'seismic shift' refers to a significant and sudden change, akin to the impact of an earthquake. In the video's context, it describes a major event in the stock market where the small cap index outperformed the tech-heavy NASDAQ by a large margin for the first time in 23 years, indicating a significant change in market dynamics.

💡Small Cap Index

The 'small cap index' is a stock market index representing the performance of small capitalization companies, typically those with a market capitalization between $300 million and $2 billion. In the script, it is highlighted that this index outperformed the NASDAQ, which is unusual and significant, suggesting a shift in investor preferences.

💡NASDAQ

The 'NASDAQ' is a major stock exchange for technology and biotechnology companies and is known for its high concentration of tech stocks. The video discusses the unusual event where the small cap index outperformed this tech-heavy index, indicating a potential change in market trends.

💡Interest Rates

Interest rates are the cost of borrowing money and are set by central banks like the Federal Reserve. The script discusses how high interest rates affect various sectors differently, with tech companies being less affected due to their low debt and high cash reserves, while small and medium-sized companies are more sensitive to these rates.

💡Federal Reserve (Fed)

The 'Federal Reserve' or 'Fed' is the central banking system of the United States, responsible for monetary policy, including setting interest rates. The script mentions that the Fed's potential to cut interest rates has a significant impact on the stock market, with lower rates benefiting certain sectors more than others.

💡Inflation

Inflation is the rate at which the general level of prices for goods and services is rising, and subsequently, the purchasing power of currency is falling. The video script discusses a decrease in month-over-month inflation, which is a key factor influencing the Fed's decision to cut interest rates and its impact on the stock market.

💡Sector Rotation

Sector rotation is an investment strategy where investors move their assets from one sector of the economy to another based on expected performance. The script describes a rotation where previously unloved sectors like real estate and industrials gained attention while tech stocks faced a sell-off.

💡Mega Cap Stocks

Mega cap stocks refer to companies with a market capitalization of over $200 billion, often considered 'safe havens' in the market. The script explains that these stocks, particularly those related to AI and technology, have been leading the market but experienced a downturn as investors rotated to other sectors.

💡Diversification

Diversification is a risk management strategy that involves spreading investments across various financial instruments, industries, or other categories to mitigate risk. The video emphasizes the importance of a diversified portfolio to withstand market fluctuations and benefit from sector rotations.

💡Money Market Funds

Money market funds are a type of mutual fund that invests in short-term debt securities with high credit quality. The script mentions that a large amount of cash is parked in these funds, and when interest rates fall, investors may shift this money into riskier assets like stocks, potentially fueling the market further.

💡Recession

A recession is a period of negative economic growth that lasts for at least two consecutive quarters, indicating a decline in economic activity. The video script discusses the potential for a recession and its impact on the stock market, noting that past rate cuts coincided with recessions but were not the cause of them.

Highlights

Seismic shift in the stock market with small cap index outperforming the tech-heavy NASDAQ by the biggest margin in 23 years.

Major AI-related stocks like Microsoft, Google, Amazon, Nvidia, Meta, and Apple were down while financials, industrials, and real estate stocks were up.

Interest rates being high led to money flowing into big tech companies known for being immune to high rates due to low debt.

Small to medium-sized companies with more debt were hurt by high interest rates, leading to a lack of attention compared to mega-cap stocks.

A rotation occurred in the market, with unloved stocks gaining attention after a statement by the Federal Reserve Chair acknowledging potential economic harm from high rates.

Inflation came in negative month-over-month for the first time in almost 4 years, impacting market expectations for interest rate cuts.

The probability of the Federal Reserve cutting rates in September rose to 92.7%, signaling a potential shift in market dynamics.

Lower interest rates are expected to benefit rate-sensitive sectors such as real estate, utilities, basic materials, and finance.

Investors rotated out of NASDAQ 100 and into Russell 2000 stocks, indicating a shift in market focus from tech to other sectors.

Tech stocks went down not due to poor performance but as investors took profits to rotate into other sectors.

The broadening of the bull market is seen as a positive sign, with all sectors participating in the rally.

Money market funds hold a record amount of cash, which could flow into the stock market if interest rates decrease, providing additional market support.

Diversification across different sectors is recommended to manage market rotations and maintain portfolio growth.

The potential for a short-term pullback in tech stocks is acknowledged, but the long-term growth outlook remains positive.

Historical data suggests that strong performance in the first half of the year often leads to continued gains in the second half.

Election years have an 83% probability of being bullish, with the potential for the market to end the year with significant gains.

Market volatility is expected from mid-July to October, particularly in election years, but a bullish finale towards the end of the year is common.

Transcripts

there was a seismic shift in the stock

market yesterday and something pretty

amazing happened for the first time in

23 years the small cap index

outperformed the tech heavy NASDAQ by

the biggest margin and at the same time

you can see that the stocks that have

been leading the boom Market this year

your AI related stocks like Microsoft

Google Amazon Nvidia meta Apple they

were all down yesterday and everything

else was up which were the financials

Industrials the RIS real estate stocks

so why has this happened and what does

this mean for the stock market for the

rest of the year and what should you do

about it let's find out in this

[Music]

video so so far the majority of the

Gaines in the S&P 500 has been led by

just about six stocks the AI related

stocks like your Nvidia your Apple your

meta your Microsoft and so and so forth

in fact year to dat the S&P 500 is up

something like about over 15% if you

take away these five stocks the rest of

the stocks are only up over

3% so why has this happened so far

because again one of the main concerns

is that interest rates are high and no

one knew when the FED would start

cutting interest rates everyone thought

they'll start cutting at the start of

the year but in the end it got pushed

back and no one knew when they were

going to cut rates right now as long as

interest rates remain

high money was flowing into these big uh

Mega tax stocks for two reasons number

one of course they're making the most

money because of their relationship to

the AI Revolution but number two because

these big tech companies are known to be

immune to high interest rates because

they've got very low debt so high

interest rates doesn't bother them in

fact they've got so much cash that high

interest rates means they earn a lot of

interest income

so in a high interest rate environment

these Mega cap stocks are known as the

safe havens everyone wants to hide in

the mega caps right and the other stocks

especially the small cap companies small

to mediumsized companies they usually

have a lot more debt so high interest

rates are hurt them a lot and other

sectors like real estate Industrials

financials um High interest rates are

not too good for them and so again for

the first part of the the boot Market

these guys were getting all the

attention all the love and the rest of

the stocks were getting No Love No Love

baby but something happened differently

yesterday there was a rotation where

what was once loved was no more loved at

least for one day all right and those

that were unloved are now loved again so

what happened to cause this seismic

rotation well a combination of things

right but it all started with the fat

chair a few few days ago for the first

time he acknowledged that high rates

could hurt the economy now remember that

for the Federal Reserve they've got two

mandates one is to kill inflation to

bring inflation down number two is to

support the economy and for the last two

years they were just focused on killing

inflation they say we don't care about

the economy economy can go into

recession too bad so sad it's killing

inflation but for the first time uh

Jerome powerwell acknowledged that now

they are concerned about the economy as

well because inflation looks like it's

under control and he said that if we

don't if we keep rates high too long

it's going to hurt the economy so in

other words he was hinting hinting that

I'm going to cut rates soon okay so that

was the first thing that went on and

then yesterday the market felt that the

deal of interest rates being cut in

September was sealed when inflation

shockingly came in negative month over

month for the first time since 202 for

the first time in almost 4 years so you

can see that the month-to-month growth

for CPI for June everyone expected a .1%

increase but we got a minus. 1% decrease

so that was pretty pretty amazing but of

course on a year on-year

uh thing CPI still grew of course 3% but

below the 3.1% estimate so other words

inflation looks like it is heading lower

so as a result what happened you can see

that the probability of the FED cutting

rates in the September meeting sh up to

92.7% so in other words it's more or

less a done deal they're going to cut

rates in September probably in November

again and maybe even in December so what

do lower interest rates mean it means

that companies that were suffering as a

result of the high rates for the last

two years now they should be doing a lot

better they should be rebounding and

that's why money started to flow into

these rate sensitive stocks example real

estate real estate doesn't do too well

when rates are high now rates are coming

down real estate rot back so you can see

for example yesterday uh which was the

one day performance boom real estate

gained

2.76% what else does well REITs if you

have been tracking re Real Estate

Investment Trust they had huge jump

yesterday and today in the Singapore

markets things like basic materials

utilities Industrials and finance they

all benefit from lower interest rates of

course again small to mediumsized

companies measured by the Russell 2000

Index will do better with lower interest

rates because these small to mediumsized

companies they don't have a lot of cash

they have a lot of debt and so with high

interest rates they pay a lot of

interest expenses that profitability

suffers but with lower rates they become

more profitable and that's why investors

started pouring into the Russell 2000

stocks yesterday uh rotating out of the

NASDAQ 100 which are the big cap tax

stocks so you can see this was

yesterday's uh one day uh iwm which is

the small to medium uh cap index

outperforming the S&P 500 and the NASDAQ

by the biggest margin in 23 years now of

course this is just one day just one day

right if you take a look at year-to date

of course year to date you can see that

the NASDAQ is still outperforming the

S&P 500 and outperforming the small to

medium siiz index but look at the

outperformance in that one day these

this guys kind of like I'm coming back

baby give me some of that love and they

are giving up some of the tremendous

love that they give sharing the

abundance with the small to mediumsized

guys so then the question would be okay

Adam I understand that small to

mediumsized companies benefit they're

going up Industrials going up real

estate going up but why did the tech

stocks go down what's wrong with the

tech stocks are high interest rates bad

for them no nothing wrong with them

these tech stocks and Amazon meta Google

Nvidia they are still solidly profitable

they still great companies the only

reason they came down yesterday is

because investors who are invested in

these companies they had to take profit

they have to sell to raise the money to

buy all these unloved companies so it

was kind like a short-term rotation you

can see what happened on this bar chart

so again just yesterday investors took

profit on the Magnificent Six stocks

over here which were concentrated in

technology and communication Services

your Amazon Nvidia Google Microsoft and

they use this money basically to rotate

into these other stocks driving real

estate utilities basic materials

Industrials a lot higher but of course

that's just one day on a year-to day

basis your AI meat Tech megatex are

still the leaders no doubt about that

they're not giving up their leadership

I'm not saying they're giving up their

leadership they are still leaders year

to date up there up 29% up 24% the only

thing is that for just yesterday and

maybe a few more days they will give up

some of their gains in order to in order

for money to rotate and to share the

love with these other guys all right so

it's kind of like these guys are way

ahead these guys were far behind so

right now some money is going out to

these guys so that these guys can catch

up so overall is this good for the bull

market is this good for the stock market

the answer is yes it is very good

because we call this the broadening of

the boo Market where initially the boo

Market was only being led by the

magnificent six and these two sectors

but now the rest of the sectors are

joining the boo Market they're catching

up so that all the sectors can uh

participate in this broad boom Market

rally and that's really good for the

boom market right now the question some

people would ask would be so Adam in

order for the rest of these sectors to

keep going up does it mean that the

technology the mega caps have to keep

going down not necessarily they can both

go up together for the rest of the year

then you may say then where's the money

coming from you know to because you need

money to go into buy these stocks for it

all to go up and the answer is is going

to come from the money market funds

that's right so in case you don't

already know as of June this year

there's a crazy record 6 .1 trillion of

cash pucked into money market funds so

ever since the start of um you can see

over here 20 especially

2022 right the money market funds

exploded well a lot of investors

basically pump all their Cash In These

funds to get attractive interest

rates now what do you think is going to

happen once the FED Cuts interest rates

once interest rates come down these

money market funds will not no longer

look so attractive right from getting 5%

you can get 4% and 3% and then people

are going to feel that hey not too

attractive they're going to then

sell uh or you know take out their money

from these money market funds and put it

into riskier assets like stocks all

right so we have a lot of dry powder a

lot of cash on the sidelines that will

come into the market once interest rates

go down propelling the boom Market even

higher so what should you do do as an

investor a common question I got

yesterday would be Adam should I sell

all my tech stocks and then buy all

these non- tech stocks the small cap

stocks the industrial and financial

stocks well that's not what I'm doing as

you guys know for me I don't bother to

time these rotations because you never

know when it's going to happen number

one number two you never know how long

it's going to last like was there any

way to predict yesterday's rotation no

it's because CPI came in minus 0.1%

if CPI came in stronger than expected

then the opposite would have happened

you get your tech stocks going even

higher small caps collapsing even more

so you can't predict such stuff right

and again people ask me so how long will

this rotation take again it may last for

a few days a few weeks or a few months

you you can't predict that because it

all depends on more incoming data so for

example the next data would be the pce

inflation data and if that comes in hot

then the rot May rotate back to tax

stocks going up again small caps going

down again so it's almost impossible to

predict the exact short-term moves of

the market and that's why as an investor

I don't bother to I simply stay

Diversified across great companies in

all these different sectors for example

currently 54% of my capital gain

portfolio are in these Mega cap TCH

stocks the AR related stocks like I own

Nvidia Microsoft meta Google these are

55 4% of my portfolio and 46% of my

portfolio are in non AI technology

stocks so these are example healthcare

companies like United Health Consumer

Staples company like Pepsi I own

industrial companies like pool

Corporation I own um uh small cap ETF

vbk so I'm Diversified so for the first

part of the year the 54% of my stocks

were flying like crazy but my 46% were

kind of like you not going anywhere

right so overall my portfolio still went

up right went up as of now about over

14% year to dat but yesterday my tax

stocks the 54% went down but then my 46%

were going up like crazy all right my

Pepsi my McDonald's my pool my real

estate reads are all going up like crazy

and again that pulls my portfolio up so

the important thing is to diversify your

portfolio in a way that it will do well

it'll continue to grow grow under all

economic situations whether High

inflation low inflation High interest

rates low interest rates no matter what

happens your portfolio keeps growing as

long as you're holding the highest

quality companies Within These different

sectors because the rotations can take

place at any moment so I'm not selling

my tech stocks why because in the long

run they will continue to grow they'll

continue to do very well but of course

in a short term they are bit

overextended which I mentioned

previously so in the short term I won be

surprised if they could go down a bit

more but I'm not going to sell it right

because I'm just going to write the

short term up and down long run I'm just

going to see it go a lot higher so for

example in the case of Nvidia which is

now my fifth largest position um I'm

holding it I'm not selling it uh but I'm

not buying more either because again

it's overextended it is slightly

overvalued right now my intrinsic value

uh for NVIDIA is with is within the

range of between $94 which is the

pessimistic valuation to my more base

case valuation of 122 So based on a

current share price 127 it is slightly

overpriced will I buy more Nvidia yes I

will uh but only if it gets more

undervalue if it

retraces uh right now you can see right

wave up wave down wave up right now it's

going a bit sideways if it can

retrace to this 20 Em a this red dotted

line you can see that has historically

been a pretty strong support uh at 105

below 105 and then it's you know Nearer

My pessimistic valuation yep I would uh

add more Nvidia if it could retrace to

that level uh when will it happen will

it happen happen that's something I

can't predict of course if it flies

again from here then I I won't add any

more shares that's the discipline right

so that's what I'm doing my tech stocks

I'm not I'm not selling I'm holding

holding but I'm buying more if they

retrace down to those support levels now

as I've mentioned many times before

while the Market's been making new highs

there are a lot of high quality stocks

that have been unloved that are actually

attractively priced so I've been adding

to some of these in the last couple of

weeks and I will talk more about it

during my upcoming live event which is

going to happen next week towards the

end of next week called beat the market

so make sure you enroll for that event

but I'll just share you some of the

things that I've been adding recently

one of them is Monster Beverage yep so

monster beverage is one of the stocks

that has been unloved so far this year

because it's not an AI it's not a tech

stock so if you look at a lot of the

beverage stocks like food and beverage

like you know McDonald's and Y Brands

and Pepsi and monster and salers they

have all come down why again it's all

about short-term sentiment it's all

about sector rotation because all the

love is going to AI but eventually these

stocks will start to rebound so I've

been buying them while they are still

attractively priced so again monster is

one that I recently added to and one of

the reasons is because I think that it

is undervalued my valuation for monster

is about

$56 there abouts and right now is at $50

so it is slightly undervalued and I

don't just look at valuation of course I

look at technical analysis and if you

take a look at Monster on the longer

term weekly charts you can see that this

was a previous resistance level all

right and this resistance uh it broke

out of that resistance made you know two

give me Excuse me made two uh highs over

there okay and recently it has retraced

back down together with a lot of food

and beverage stocks and it recently

bounced of the 200 day moving average

which is a very strong long-term support

whichever time frame that you look at so

this could be a potential bottom for

Monster again there are no guarantees it

could of course go lower uh in the short

term but I think there's a pretty good

chance that this may be the shortterm

bottom at least uh for it to start

rebounding so monster is one example and

again there are many more examples I'll

talk about during the beat the market

event so uh and rooll for that will be

telling you more about that for the

event coming up end of next week all

right now some of you have been asking

me a lot about Nike for example so Nike

uh has been

whacked recently and not just because

it's a non- AI stock but because there

have been executional problems with the

management in other words the management

really screwed up in the last couple of

years uh causing Nike to make uh a you

know all-time low I think 52 alltime

week low right so I do have a small

position Nike I think it's like 0.5% of

my portfolio and but I'm not adding more

okay so long term do I think that Nike

will recover yes it's a very strong

brand it's got you know the strongest

brand position and and financial

position among all its competition but I

think it's going to take a while for the

recovery because they really screwed up

one of the things that a management did

wrong was they cut out the wholesalers

the middleman they sold direct to

Consumer and that didn't work out so now

they're back peddling they realized

their mistakes now they're going back to

sell through wholesalers and um the

middleman again like Foot Locker and

stuff like that the other place they

screwed up was they really took their

eye off Innovation they have not been

innovating very much and they allowed

some of the smaller competitors to catch

up like on running and and so and so

forth so it will take some time for them

to start to grow again uh not immediate

you know the interesting thing is that

I've got good friends working in Nike

I've got good friends in working in all

the Fortune 500 companies and so even

they tell me uh you know I I I wouldn't

add at this level until management

proves that they are able to to turn the

ship around and I think they will but

it'll take uh some time so in the

meantime I rather allocate my money to

stocks that do not have these short-term

operational problems they are merely

down purely because of sentiment because

these will rebound a lot faster then

night that will rebound but it'll take a

bit longer than that right now there are

some people voicing their concern that

the last few times the FED cut interest

rates the stock market crash so this

time if they cut rates will the market

crash again

well let's explore that right so yes

there were instances in the past

whenever the fat made the first rate cut

the stock market crashed so this

happened in

1981 2001 and 2008 as I've indicated on

these uh red arrows here so um you can

see the one in kind of like this blue

call that blue these are the First Rate

cuts of a of a cycle right and these

ones uh in So-Cal like gold these are

the First Rate hikes so we're looking at

the blue the blue dots over here the

first time the fat cut rates uh in a

cycle right which is what we're going to

see in September so what can we expect

after September now again sure enough

when the FED first cut rates in 2008

what happened Market crashed when it cut

rates in 2011 Market crashed when it cut

rates in 81 Market crashed so you can

ask yourself this question was it the

cutting of the rate that caused the

market crash no it's like imagine the

last three times every time you took a

it rained does it mean that your

caused the rain no so similarly it

is not the First Rate cut that caused

the crash the crash was because of a

recession but the rate cut came in order

uh for the FED to stimulate the economy

hopefully to soften the recession right

so in the case of 2008 what caused that

recession it was the bursting of the

real estate bubble and then the fact

that had to cut rates in order to save

that situation right in 2001 it was a

dot bubble bursting that led to the

recession and again the FED cut rates in

order to save the economy from getting

worse so as long as the FED Cuts rates

without being a recession the market

will not crash the market will keep

going up and were there many instances

of this yes it happened in 1980 84 89 95

and 2019 these were all instances when

the FED cut rates not because of

recession they cut rates because they

felt that rates were long enough or high

long enough and they wanted to bring it

down and so that was soall a soft

Landing or a no Landing so again 1980

they cut rates and Market went up right

84 they cut rates Market went up 89 they

cut rates uh Market went up bit of a dip

continue going up and 95 they cut rates

Market shot all the way up okay so if

you ask me I think that where we are

today is very similar to

1995 that was the leadup to the do boom

and like I keep saying we are just at

the early stages of this AI Revolution

so my guess I think we are more 1995

okay now 2019 is pretty interesting 2019

they first cut rates then you may say

but Adam after they cut rates the market

crash Now understand that this crash was

caused by the pandemic the pandemic was

not caused by the rate cut this was just

a coincidence right so if not for the

pandemic you can see that after the cut

it actually went up and if not for the

pandemic it would continue to have gone

up so as long as we don't have a severe

recession coming from an unknown

Catalyst fear not the First Rate cut the

First Rate C card is not a bearish

signal as some people will suggest so

are we going to get a severe recession

again no one can predict that you know

what even the top economists can't

predict when the next recession will be

remember they had a 100% probability of

a recession in 23 that never happened

right so you know no one can predict it

but looking at where the economy is

right now the economy is slowing but

it's still growing uh and there's no

severe recession inside again unless

there's an unknown Catalyst that no one

can predict right so this real GDP real

GDP has been growing although again at a

slowing rate and of course we had

recently the unemployment rate taking up

to 4.1% which is a sign that the they

labor market is cooling but it's not

collapsing because jobless claims and

initial claims just came in lower than

expected and we had uh more jobs created

than expected if you take a look at the

last 100 years the stock market averages

a 10% gain on average a year and so far

in the first 6 months it's already up

15% so is is there any gas left in a

tank for the next 6 months well the

answer is actually based on history yes

in fact history shows that a strong six

months tends to leave lead to a a strong

final 6 months as well so this was a

research done by Carson research and you

can see that these were all the years in

the past when the first 6 months of the

year was strong in other words the first

6 months gained more than 10% this was

1954 55 58 61 these were all the years

like that and so what happened for the

next 6 months you can see that out of

all those instances 82% of those

instances

uh were positive for the next 6 months

with an average gain of 7.7% and a

median gain of 99.8% so in other words

we've got 82% chance the next 6 months

we should see another 7 to 9% gain and

for the full year

2024 we should end the year positive

because based on history it has been a

100% probability that you get a positive

year when the first 6 months is more

than

10% with an average gain of 25 to 26% so

if you ask me to guess I would say we

should end the year at least above 20%

and especially since this is an election

year so whichever wins whether

Republican or Democrat election years

have always well I wouldn't say always

right but have an 83% probability of

being a bullish year so so far

everything is in favor of the Bulls

unless of course again there's an

unknown Catalyst that no one can foresee

all right having said that always

remember that we are entering the uh

second week of July and

historically uh from the uh third week

of July right third week of July to the

end of October you you can see some huge

volatility especially in the September

October period during election years the

market tends to be a bit bearish during

those two months before the the final

hurah the the grand finale bullish

finale towards the end of the year so

let's see if that would play out for the

rest of the year in the meantime stay

safe and remember stick to the high

quality names and you'll do really well

remember we'll be talking about our uh

event coming up next week end of next

week called beat the market so look out

for it and enroll and I'll see you guys

there for my live webinars take care me

and the markets be with you if you want

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you