Joe Fahmy On Why The 10-Year Bull Market Is ‘Nonsense’
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Joe Fahmy On Why The 10-Year Bull Market Is ‘Nonsense’

okay hello everybody and welcome to
investing with IBD for October 23rd 2019 I’m your host Irusha Peiris with me in
the studio today is Joe Fahmy managing director of Zor Capital thanks for
being here thanks for having me appreciate it on today’s podcast we will
talk about the current markets the psychology of investing and then we will
end the episode with three current stocks so let’s get into the current
market right now we are in an uptrend but we have eight distribution days
other NASDAQ and S&P it’s been a fun I won’t say fun but it’s been a choppy
market yeah indexes are are they’re still above the 50-day but the amazing
thing is the overall index is at least are resilient they continue to be
resilient they can continue to refuse to go down as opposed to some of our stocks
yeah yeah I mean it some resilience the best word to describe because over the
last few years no matter what news is thrown at the markets it continues to I
joke with my friends the market goes down just doesn’t stay down it just
seems to just always bounce right back I think overall we’re in a great
environment with fundamentals are strong interest rates earnings are good
sentiments been you know pretty poor so the environment is is good for his
equity friendly yeah and now a couple of years ago on one of your blog’s you were
talking about this right before Trump got elected yeah you made the prediction
that you were we’re still in a bull market or about to start a new you know
rally do you see anything like that right now or any any thoughts on just me
yeah so let’s just open up the can of well
let’s just go straight to it one of my pet peeves is this whole ten-year bull
market I think it’s bullshit yeah I I think I think people it’s the stupidest
definition that the SP has to correct 20% because in 2011 we had a 21 percent
correction but closing it was like nineteen point eight or so it’s so dumb
yeah and then from mid 2015 to mid 2016 I don’t care what anyone calls it that
was a brutal bear yeah you had yeah the SP was down like
15 or 16 percent but you had small and mid caps down 27 percent ROI absolutely
energy down 50% biotech down 40 financials down 30 I don’t and some of
the best in the business we’re down 20% that so that’s a brutal bear market yeah
and then the third one is the fourth quarter of 2018 where that was a bear
market the problem is people think that a bear market has to be oh wait oh nein
it has to be a disaster where everyone loses half their money everyone loses
their job and jumps out the window it doesn’t have to be that brutal the
average bear market six to nine months 27% correction that’s average some of
them are a little bit longer like we had no 809 and some of them like we had last
year it could be three months you know similar to summer of 98 with long-term
capital Russian debt crisis it was around beginning when I started invest
that was a three month bear market right so and another brutal brutal bear yeah
and we had the same in the fourth quarter of 2018 so this whole ten-year
bull market is nonsense we’ve had three bear markets as far I mean within the
whole secular trend and on top of it when you really look at the major
averages they haven’t gone anywhere for 13 to 21 months yeah so the S&P and the
Nasdaq are roughly the same as where they were in September of 2018 so it’s
about 13 months of maybe a little bit 1% higher right so they really have it so
this whole nonsense if we’re going up every day we never go down this is just
gonna end any day now what’s gonna end I mean we haven’t got anyone you know the
Dow is a hundred or 200 points above January of 2018 which it also made a big
move from let’s say whatever it was like 18,000 to 26,000 roughly and similar to
after a stock or after an index makes a big move and needs to digest it needs to
consolidate so we’ve had a huge move and we’ve been in a range for 21 months on
the Dow yeah and so those are the indexes but where some stocks have gone
over the last few months have been down yes for the leading cloud stocks or for
these growth stocks they have gotten hammered over the last few months and
even this past week they just kept kept getting yes yeah that that’s the
challenge with the market right now is the averages my theory is the averages
are holding up because of sector rotation so this is sort of a theory
I’ve come up with where and I could not come up with it but it about ten years
ago you could sell a stock and then it would sit in cash and you could earn
four five six percent not that long ago yeah now when your money moves to cash
or money market reserve you’ll get like ten cents and interest so you don’t get
anything so my theory is these money managers are saying well instead of
having it earn nothing let’s rotate into utilities let’s rotate it into energy
let’s rotate into financials so that keeps the indices propped up but these
growth stocks beneath the surface recently have just I mean they’re down
thirty to sixty percent off their highs yeah and you mentioned 2015 2016 that
timeframe reminds me of what’s going on right now I’d call that time frame you
called it a brutal bear market I called it the stealth bear market yes where
it’s a better term yeah it’s thing that everyone people weren’t really following
our strategy are looking for growth stocks what the markets are okay but the
ones who are falling are kind of stocks like oh my god I can’t believe hard
stocks urgh yeah same same thing right now it’s interesting you bring that up
because I’ve found from back testing and looking I do a lot of post analysis of
my work I find that the O’Neil stuff and in active managers correlate a lot more
with the Russell and with the S&P mid cap 400 so we talked about those three major
indices the Dow NASDAQ and S&P but go look at the Russell IWM or a look at the
SP 400 mid cap mdy and they have been in bear markets for a long time like
they’re not near their highs and I have found that it’s especially the Russell
is and is an indicator of risk appetite so if if the Russell’s doing well that
means money managers are putting money to work in risk in growth and breakouts
and that hasn’t worked for a long time long time
yeah speculation that exactly that’s when the speculation is on at that point
okay Joe so since speculation clearly is not on right now with the Russell’s
struggling so given to this type of environment what should investors be
doing right now yeah it’s important to be usually they correlate so when the
markets are breaking down the stocks are breaking down but this is a different
market where the the averages are holding up better than
a lot of the growth stocks so I think it’s important to be super patient you
have to definitely keep smaller positions maybe test some positions to
see if they start to work out because if you notice breakouts aren’t working out
well for the most part they’re going and they’re failing all right so I think
there’s either you watch them or you take a smaller position than normal to
sort of put your toe in the water and see if they start to work out because
eventually if this is sort of a late it might be a late 2016 scenario where the
dow kept going up but growth stocks weren’t working eventually growth stocks
will work but it’s important to be super patient keep your stops in place because
some of these like you mentioned the cloud stocks some of them you know keep
in mind they’ve gone up three four five hundred percent so if they’re down they
could they could take some time you have to give them time to form proper basis
keep your stops in place and one other way I’m adapting is maybe own a little
bit more of the index until this the growth stock starts setting up again and
then when more growth stocks set up you can maybe reduce the index and move more
into stocks perfect so Joe let’s let’s get into how you got started now yeah
you you made an interesting choice kind of like me you went to Tufts University
jumbo here yeah I have fellow jumbo graduated in 1995 I actually do you look
familiar I remember you back I’m back on campus by then you add more hair today
the big program and you’re also also one of the big men on campus they’re
superstars right right there but but it was so it’s really funny that when I saw
you on Twitter and when he came and visited us that okay that you ended up
kind in the same space then yeah right yeah it kind of ended up I think it just
goes to show it doesn’t matter what you majoring in college it’s very very few
people use that it’s true and what did you major in college in economics and
religion and really good which is very tough stipends yeah and I did bio so
yeah I know and here we are talking market right so so how did you get
started so after Tufts or or what got you interested in during toast even what
got you interested in the stock market yeah I was always interested in the
markets and my dad kind of got me interested in a couple of stocks I
remember my first couple buys were Sara Lee and Gillette
which Gillette got bought out I think by Procter and Gamble and Sarah Lee is no
longer but my point it’s like I just bought a few shares whatever I could
afford at the time I was just fascinated and it was sort of buy and hold and all
that and then after college I went to work for a software reseller one of
those big catalogs that had all the different software yeah and I remember
there was huge demand for certain products yeah and I was just fascinated
in the market so I’d go look up in the stocks were going through the roof and
you remember any of those I remember I Omega was one of them I Omega the zip
drive exactly the stock went up 5% because we were always sold out yeah it
was a joke in the call center like how someone else going or backordered sorry
Microsoft people were into you know maybe at the time Windows 95 but yeah
Visual Basic and C++ as a whole the whole .com was darling yes so visual
basic makes yeah sequel server all that stuff and for databases so so I was so
fascinated because all these I would notice the products there was a definite
kind of relates to you know products and earnings and sales growth and all when
you’re when you have a new product that’s usually correlates to a stock
doing well and some of the products were super hot and I just got involved in you
know just really fascinated in the markets because I would see the
correlation between their sales and how how they went up and then I went to work
for a firm in New York and then just you learned a lot and went off on my own
I’ve been kind of just trading on my own and managing money on my own since then
and and so so you’re managing money and then things started to change even a
little bit more or get a little bit more exciting for you when social media
really started to take off yeah that was a different I had actually been sending
notes emailed notes to a lot of my friends okay
that maybe 20 30 friends that I traded with and just you know mutual friends
whatever and I got introduced to Howard Linden yeah and someone’s and I sent him
my notes and he said you’ve been blogging this whole time you just don’t
realize you’ve been blogging so he said you know buy your you know I actually
recommend that to everyone if you can buy your name like I bought Joe Fahmy
Joseph Fahmy like by your name if you can yeah or if you have to throw a middle
initial whatever if you have a common name but by your name and he said take
your notes that you’ve been emailing him and put him on a blog and
you know did that through stock to it so that actually really helped to get my
name out there and get my thoughts out there and I’ve been doing videos for
eight ten years now on the sites and so forth so I guess I had been blogging for
a long time but I just didn’t organize it on an actual blog it was all done
through email until my blog opened up right right and and then then you
started getting that popularity and and then you kind of took a next step
further by yeah by meeting some people in and and joining a firm right yeah
yeah my friend Frank Zorrilla I’ve met him at a stock to its meetup and and he
had the structure in place because a lot of people said okay we like your ideas
we like your thoughts you know I’ve an old IRA or I’m interested in managing
money yeah so I connected with him and you know we have a small RA in New York
New York based RA where we manage money and individual accounts for four people
that’s that’s yeah it’s pretty incredible just the evolution especially
and you’re not the only one who’s kind of experienced a story with social media
and people getting their knowledge out there all sudden you have the the these
stars just come through and you know maybe they get a larger different of a
platform yeah yeah you develop a presence in people I think people after
a while I always say through social media they get an idea of you know if
you’re genuine if you’re good if you’re trying to do you know I’m trying to do
my best for clients and put some good information out there and I think people
pick up on that for people who are like genuinely doing good things and there
are some great writers out there and then when people pick up on that they
say can you help with managing money whether it’s active or passive there’s
different there’s a lot of different people doing that yeah perfect so the
indices continue to hang in there but a lot of former great growth stocks
continue to struggle let’s take a quick break but when we
return we’re gonna talk about the importance of investor psychology stay
tuned hey everyone its Alissa Coram with investor’s business daily here and I
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now Joe Fahmy are guest on investing with IBD okay Joe let’s get into
investor psychology and the importance of getting your head straight before
investing in the markets you know I think that is something that has not
talked about enough I think this is I think having the right process and the
right strategy is maybe 20% of it and 80% of it psychology I went to a
conference recently lost on you earlier about traders for cause and I noticed
there was a lot of talks about technicals fundamentals this great
conference but that talks about psychology we’re the ones that no one
wanted to leave people were hanging on to every word they didn’t want them to
end there were some psychologists that we’re talking just some other traders
who were talking about their experiences because one thing no one wants to talk
about it’s not talked about enough is cuz we’re all so we all struggle at
times I mean that’s just normal but the problem is no one especially on social
media no one social media is I like to say is is it’s not who we are to we want
to be you know and we know it’s a lot of bullshit but the point is no one wants
to talk about I have a love-hate relationship with social media because I
love the people I’ve met and the information but the thing that a lot of
people hate is these people who are like oh you know just never lose money and
you know some guy the other day said oh I buy a thousand shares every day I make
a dollar and I and 250 trading days I make quarter of a million a year and I’m
like oh I didn’t know is that easy I’m like I just think I’ll be like why are
you telling us I know keep that money machine rolling but the reason to go
volume digressing the reason to go back to psychology is I think this when
people struggle and they want to connect and and try to have help to get through
that part because again it is so important to have your mind sharp to get
be mentally tough because when you trade you’re dealing with
decision-making you’re dealing with emotions you’re dealing with so many
fears and and it’s not talked about enough because those are that’s 80% of
it it really is and I mean I’m I’m not a psychologist but I can maybe talk about
some things that I think help yeah to keep calm your mind and keep your
mind sharp something as simple as gratitude is something that’s you know I
know people want to talk about charts in the markets and some but this is
actually very important because if you take 5-10 minutes in the morning just to
be grateful for whatever you’re breathing you have a roof above your
head whatever that puts you in a calm state of mind so you’re not making
emotional decisions when you’re training because I don’t care who you are if you
don’t have five or ten minutes to pause and some people meditate whatever helps
to put yourself in a calm state of mind before the trading day you you you
definitely have at least ten things you can be grateful for right because one
great thing I’ve learned is the the mind is incapable of being grateful and angry
at the same time like that yeah yeah so when your gratitude you’re not saying
I’ll hate this person yeah you’re not you know it’s impossible so when you my
point is for trading how this relates to trading is when you’re in a great state
of mind it’s really gonna help you from dealing with that anger and frustrations
when you’re trading and the emotions that we deal with the ups and downs yeah
now one thing that a lot of people have to go then I definitely go through this
plenty of times is when you get hit in the markets or you know those first few
years are really tough you’re not making a lot of progress yeah you know a lot of
people are going why are you bothering with this but picking yourself up
especially I’ll go throw a correction or you get you have a number of losing
trades and you’ve given back a lot of profits or you’re down you know I’m big
or something like that picking yourself up you know and and trying to get back
going and getting that motivation going mental toughness is it just involves a
lot of discipline it of a lot of consistency you know not just the
gratitude but I mean even like working out is a simple thing I know I’m a big
fan of Tony Robbins and he says people pay me seven figures to coach them I’m
gonna tell you for free the first thing I tell them get your ass in shape that’s
what he tells them he’s like I don’t care if you’re already an athlete I
don’t care for your trader if you’re whatever you do for a living
you had that mental toughness by you know and again I struggle with I try my
best but I’m really good at giving advice I’m not the best about it so I’ll
tell you what to do I won’t necessarily do it but the point is that you know by
keeping yourself into shape even if you do a walk or three times a week whatever
that actually helps with what you said picking yourself up and you know with
that resilience now another thing is reading another thing is feeding your
mind with strongly the right stuff though yes of course yeah yeah I don’t
read like you know Twitter yeah I think it’s not just the great investment books
but it’s a lot of the self-help books there’s a lot of audio books podcasts
you know like great ones like this one yeah
there’s a lot of you know I’m a big like I mentioned Tony Robbins even if it’s a
spiritual stuff YouTube is just an amazing resource I mean like David got
David Goggins I’m a huge fan it’s so fun everyone’s a fan how can you not be one
of the greatest life transformation stories yeah because if you think I
think of mental toughness I think of someone who is I mean it’s impossible to
watch one of his youtube videos and not want to break through a wall seriously
like it wasn’t within ten minutes you were you were just so fired up because
he’s not any and I what I love about him is he’s telling his story but he’s not
saying you have to do this or imposing his beliefs or ideas he’s just saying
this is what I do did and this is what I do
and it’s the consistency it’s the discipline to you know again the
gratitude the workouts the the reading the feeding your mind like you said with
good ideas great ideas to keep yourself sharp and and then one last thing I’ll
add is who you surround yourself with you they say you become like the five
closest people you surround yourself with so if your significant other
smoking you might be smoking you know if you’re stinking significant other goes
out to work out you’re probably working out right you know if they’re a
crackhead guess what you’re probably a crack we can edit that out but anyway
but the point is that who you surround yourself with to be around great
positive people who are supportive who are gonna pick you up and who are also
gonna challenge you a little bit too right so that’s all part of and some
people will say yeah great you know make me a bicycle clown I want to look at
charts like they don’t really care but the point is like that person is
probably most likely in New York exactly exactly and I get called that
all the time but the point is nothing will work you can have the greatest
system in the world I can hand you a great setup on a silver platter if your
heads not right you know I’ll give you two quick examples 2017 was an amazing
year with one of the few years where we didn’t have less than a 3% correction it
was like an x equals y line markets of 20% friend of mine was down 35% that
year and you know why he was going through a brutal divorce oh so his head
wasn’t straight and he hated the market and he shorted it and he was also angry
he was an angry to market is you know we all have different things going on in
your life if you don’t have that in check and you don’t have that mental
toughness and have that then you shouldn’t be trading or you shouldn’t be
attacking the market without that clear head yeah you know so that’s one example
and other examples a sports example with golf a few years ago the number one
player on the PGA Tour his average score was 69 and a half for the number one
average score for the whole p.j season you want to take a guess what 50 was the
fiftieth 70.2 it’s that it’s that less than one stroke that has in one stroke
the number one person outside of endorsements I think made 12 million in
prize money and the 50th I think they gave him a box of Titleist or whatever
made like less than unlike a half of whatever but you’re telling me between
the number one and the 50th is less than one stroke that’s amazing it’s not the
mechanics it’s not the process it’s not the you know the the equate to trading
it’s not the you know whatever your strategy is it’s all up here
yeah they can all drive the ball 300 yards and hit a 40 foot putt but you can
even see it if you’re a golf fan when they you know you watch the Masters on a
Sunday or whatever you can see in their body language who’s confident who’s
mentally tough you’re like you’re not gonna make that putt well talk about or
they will make that point yeah belief right you also have to believe you have
to increase that belief in yourself belief in what you’re doing yes and and
the belief that okay I’m putting I’m gonna execute this strategy it might not
work but the only control I have is actually being there at the right time
you know and if it works good if it doesn’t I cut my losses that’s a great
point because just to have that mental fortitude to actually give it a shot
like if I say okay here’s a great setup you still have to have that mental
toughness to say I’m to click on the mouse and actually buy it yeah and even
if you start small because you make such a great point about confidence if if you
start small and you see a little bit of success you
can build it from there but even if you’re wrong you can cut your losses
with hopefully you know and maintain your portfolio right right now let’s
talk let’s talk briefly about sentiment yeah because this goals in a psychology
and there’s a whole psychology with the market and you can really use sentiment
in your favor to the downside when when the markets are coming in when that fear
is coming up right yeah then and there are a number of sentiment indicators out
there which ones do you like to look at to give you an idea I’m a big fan of naa
I am which is a National Association of active investment managers it’s roughly
zero to one hundred of how invested they are so when when you gets over ninety
ninety-five there may be two bullish and when it gets below in the 50s or lower
that’s a good sign of – from a contrarian point of view equity put –
call ratio I love because I don’t like the index one because sometimes people
will own a lot of equity but they’ll buy a lot of puts as a hedge so that’s not a
directional trade yeah but when they’re specifically buying puts on individual
stocks I like to look for readings above point nine or higher for example we
talked earlier about the the correction big correction or bear market whatever
you want to call it in fall of 2018 it ended December 21st with a 1 point
something reading on the equity only 1 point 1 something yeah so that was
really an off-the-charts reading and usually when you get that above 0.9 on
equity only you’re within a day or two of at least a rally or short-term low
yeah and and then but usually also that time even if you’re out of the market
your psychology is probably well this markets may they may never go up again
yeah you get conditioned – it’s amazing how how easily at least for me how
conditioned you get over the last few weeks that’s all I remember
yes the markets are really going down it’s recent you buy yeah it’s hard to
think that it could ever go up again but that’s where you have to kind of catch
yourself manage your mental state yeah at that point and then go back to that
belief that hey these markets are gonna turn around I’m gonna look for that
falter day I’m gonna look to see when these markets oh that’s a chance and
absolutely have to be on things it’s at such a great point because recency bias
and you just got killed in the mark everything looks like garbage you know
just to really quickly some other sentiment measures
AIII look at the investors intelligence as well the survey the newsletter
writers that’s not as important though because the put to call is what people
are actually doing but the survey writers are what they’re just telling
people and bullish or bearish it’s not what they’re actually doing but anyways
when you have those really extreme bearish readings you’re absolutely right
that’s when you should actually the word acceptance should come into mind except
that we’re gonna have bull markets and we’re gonna have bear markets we’re
gonna have up trends Corrections whatever you want to call them during
those down trends that’s when you need to be ready and be fresh and say okay
it’s getting too extreme here keep in mind we will have another uptrend and
that’s when you need to be prepared because around end of December if you
just threw in the towel you missed the January fourth follow-through right
exactly yeah and and we’ll end with one more sentiment indicator sure twitter
twitter is a great sentiment indicator it could briefly explain why it’s a
great i mean it’s you know what one of them one of my say one quick thing when
i look up a stock and no one’s mentioning it i like that yes because if
the ones you put in the cash tag and you put in a symbol and no one’s mentioned
it for a few days that’s a great thing when you put it in and there’s like 50
mentions in the last hour that means everyone’s watching the same stock yeah
and it’s almost a herd mentality and those can never work almost you can use
that from a contrarian point of view I mean I love the George Carlin quote
think of how dumb the average person is now think half the world’s dumber than
that it’s like hilarious and sad at the same
time but the average person’s an idiot and that’s why I pay attention to
sentiment because if the average person’s pretty dumb they don’t half the
world’s dumber than that you kind of want to know what everyone’s thinking
and I’m not saying I’m smart I just want to know I want to make sure I’m not
thinking like everyone else on the right side of that so managing our mental
capital in the market is essential for success
coming up next Joe and I will talk about three current stocks in this market
we’ll be back hey guys if you really enjoy listening
in the podcast every week we’d love it if you could rate and review the show on
iTunes your review and ratings really help out the show and we would love to
get your feedback thanks so much for listening we are back with Joe Fahmy
okay Joe let’s get into some current stocks in this market and the first one
is one that I don’t know if a lot of people have heard about Joe Google give
me the symbol yes exactly so Google here so right now it’s forming a base which
is pretty amazing in this kind of market right and it’s a tech stock too
a lot of tech stocks haven’t been doing that well but it’s forming a really
large couple with handle right here they’re reporting earnings in five days
yeah and what do you see in this stuff well we talked earlier about how a lot
of the major averages have been consolidating for a while when you look
at some of the Fang stocks or some of the big caps they’ve also been doing the
same Google’s been whatever it is 13 months something like that base 16 was
something like that almost like that yeah exactly like the markets I mean I
consider it I don’t even consider it I consider it like an ETF basically
they’re involved in so much stuff now it’s not just search and Google Ventures
and so many other things but um so it makes sense that it’s correlating to the
markets but you know one of the points I want to stress is not only is a big
consolidation but they’re earning an insane amount of money so you have that
institutional support worried this is a growth and a value stock and you know
part of the reason I picked is because you know as far as we talked about right
now and grow stocks the you know there’s not that many great setups but I do like
the bigger base I think you’re always gonna have that institutional support
from growth growth and value managers but yeah one thing because I started
investing you know mid to late 90s where there were so many of these coms and so
many companies where they made no money they were trading on eyeballs they’re
trading clicks and so all sorts of ridiculous measures and even the ones
that did well would be you know 2 cents versus a loss of 1 or 1 cent for us a
loss of 3 these guys are earning over $50 a share so that’s what I mean by
some of the when people say overvalued or the you know
– like these companies like Google and Priceline are now booking but all these
companies Apple and so what they’re making an insane amount of money you’re
talking between 50 to 300 billion in the bank Microsoft all these big caps so
it’s something when people say oh this is a bubble or this and that the
difference now between back then is these companies are not only huge
conglomerates but like their balance sheets their the financials and
fundamentals are incredibly incredibly stable they’re making an insane amount
of money yeah and you mentioned earlier you know they have their hands and a lot
of different things yeah one thing obviously is is the cloud they obviously
Amazon’s the leader there but you know Google very rapidly grabs some of that
market share right and these guys they also have self-driving cars self-driving
that could potentially eventually become another huge business for them yeah that
and Google Ventures is something no one really very few people talk about
they’re involved in a lot of different things but self-driving cars is
something they’re very big in as well and I just think by spreading out more
than just search it kind of gives them diversification that’s why I joke it’s
kind of like an ETF because it’s it’s they’re involved in so many different
businesses and they also own the second-largest a search behind right with YouTube I think that’s the sacrum yeah it’s got to be
one of the top five acquisitions of all time right and granted they embedded
YouTube into Google to help but it mean was like 1.6 billion they say it’s worth
40 billion or something on its own which is greater than so many SMP companies
but if the markets are to move out of this range and we’re in a good interest
friendly environment and so forth and we are going to propel higher I can’t see
the market going up without Google because if they’ve all been
consolidating and I could see this one going higher you know over the next year
or two yeah I pulled the Google up on a monthly chart and it’s building this
really big large cup with the handle there – yeah and it’s just been just a
nice steady trend I’m kind of like the market it’s just slowly yeah and we
talked about earlier whenever a stock or an index makes a big move it’s normal
for it to consolidate and it made a huge move back and I think 16 into 17 so this
sort of whatever year year-and-a-half long base makes sense that it’s been
consolidating and again if the markets cooperate I could see this one going are
perfect let’s go to the second stock and this is an oldie from 2016-2017 but
a goodie at least on a fundamental and expectation levels Nvidia intersymbol
NVDA and now these guys they’re on a technical level not as constructed right
now you mentioned big moves Nvidia had a super large move in 2016 and then also a
pretty solid move in 2017 and now maybe they’re consolidating that move maybe
they’re building large base or maybe not but what do you see with these guys yeah
I think as far as the chip leader used to be Intel and it’s now Nvidia as far
as the world shifting from CPUs two GPUs with and again you mentioned so many
different things that Google’s involved with but they’re their chips are not
just AI and machine learning and obviously pcs and gaming and so forth
but also driverless cars they recently did a 5g contract with some so they’re
involved in basically everything the world you know Jeff Bezos talks about
all these things being the future everything all those different I know
they’re all great buzzwords but everything that’s involved with that
invidious chips are involved with everything the world is moving forward
too so I again you know one lesson I will say real quick from the past when
it did go from 20 to 60 and I remember asking a friend who was involved in tech
and and he said he said this thing is going is going much much higher so the
lesson there is just when you think something can’t go higher it usually
does right same on the downside in a bear market we think something doesn’t
go lower it usually does but I remember one from 20 to 60 and I traded a couple
times and I friend it’s like this is just in the infancy stages and then it
went to six from 60 to 300 so the lesson there is if you can get into something
early and you have the patience depending on your timeframe and you can
ride some of those trends I remember it made a big huge base around 100 and then
took off and went from 102 to 300 so moves and the markets can go on longer
than we expect now obviously I think part of the reason it’s the liquid
stocks were being you know sold off in the fourth quarter of 18 and NVIDIA and
Amazon some of the big ones were like that but I think they’re you know and
they’re earning slowed down a little bit but still earning over 78 dollars in the
next couple of years I think at the valuations reasonable and I think just
being involved in so many amazing you know industries and verticals I think
they’re gonna do well yeah it’s it’s always one that you should
have on your radar at least it might not be actionable at this point or maybe not
for for a while but it’s it’s at least it gives you an idea of if though that
those type of stocks are back in favor yes right just a the larger
semiconductor stuck some in conduct when somebody’s do well it’s usually because
the markets and industry is doing well as semies pretty much going to
everything yeah appliances to everything right and and that’s almost another form
of speculation right there or form of how well the economy is doing when this
some I suggest exactly yeah let’s go to the third and final stock
here and this is intuitive surgical and now intuitive search of obviously these
guys have been a game-changing company for for many many years they reported
earnings last week and they had a nice earnings gap but like a lot of other
earnings gaps so far gave it I immediately sold off so it kind of came
back felt filled in the gap but it’s still hanging in there and and they’re
they’ve been building a large kind of consolidation here and it looks like
it’s just going through that process of just building a consolidation kind of go
maybe exchanging those shares from we cants a strong handsome ya know this is
also play not only a medical devices but also on AI I think in one of the AI
ETFs it’s one of the biggest holdings and all interesting yeah so it’s and
again same thing as I mentioned before after a huge move that it made from
again whatever it was you know two hundred two five six under wherever it
was and then it just went sideways similar to the markets I mentioned
earlier this week that it’s consolidating after the big earnings it
could still continue to consolidate for a little while so I just want to stress
the point might not be actionable you know today is it’s a point but these are
just sort of these three stocks or you know that I still think have good growth
prospects and great earnings behind them because as we know what drives big
winners and what drives stocks is earnings in sales growth and and it’s
what’s amazing about some of these companies is how big they are and
they’re still growing earnings in sales yeah at double-digit rates you know for
even like a Google or Intuitive Surgical twenty some some fifteen twenty thirty
percent it’s been it’s impressive for companies that large yeah and as almost
the normal and these companies when companies in the past would get up this
large they can’t really grow anymore but seems
some of these companies and Amazon’s a great example they just they’re kind of
defying the odds maybe things are shifting a little bit or maybe these
companies are just so powerful there’s so much data and they can just pinpoint
their customers so well these days that they’ve really gotten the the selling
down to a science yeah I I think it’s I mean that’s why
they talk about government wanting to break some of this up because they’re
too big that is one risk you run into but I mean as far as it’s impressive
when you do talk about the fangs and even outside of the things some of the
big financials some of the payment processors and so forth they continue to
grow as a lot of them are still expanding internationally so there’s
still that revenue coming in you know sometimes when people say I don’t want
to get you know if you’re involved in S&P companies and I need international
exposure I say you don’t need international because whatever like 40
50 percent of the revenues are coming from international they continue to grow
used to be 20 now it’s closer to 45 or something but these companies have
enough international international exposure and continue to expand in
emerging markets that I think it gives you good diversification as far as the
earnings just keep coming in yeah excellent so there are three stocks to
consider during this uptrend and and at least to keep in your watchlist and and
buy them when the markets are better I’m trying to and when they are more
powerful breakouts so remember the most important thing though is to manage your
risk and as we spoke about in a segment to manager mental capital thanks Joe for
joining us – thanks for having me a lot of fun that’s it for this week on
investing with IBD next week we are going to have Bruce Frazier on the show
Bruce is a longtime professor of Golden Gate University and an expert on one of
the pioneers of technical analysis Richard Wyckoff and Bruce has spent
three decades investing using the Wycoff method and he’s going to come on the
show and give us some great insight on the market so we’re looking for to that
so that’s it I’m Irusha Paris and thanks for listening and for this week’s Milton
charts make sure to go to slash podcast where you’ll find details
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3 thoughts on “Joe Fahmy On Why The 10-Year Bull Market Is ‘Nonsense’

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