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Let's talk about the market and where the money is moving this year. Last year we saw the Nastak take a hit thirty three down thirty three percent for the year. A lot of the companies we talk about in Love come from the nastag obviously is full of tech companies. So let's talk about where the money is moving. We've seen companies like in Vidio have a great start to twenty twenty three. We've seen Microsoft have a pretty good start. Apple, same thing. Where's the money going this year?
Right now?
Yeah, it's so strange. There's this barbell thing going on. It's a little offense defense going on right now. First of all, a half a trillion dollars in the money market funds in just the past several months. I think one hundred billion of that, guys, was last week in the middle of the bank freak out. Guess what people were doing. I'm taking money out. I'm putting it in money market funds. I'm taking money out of the stock market if I still had it there, I'm going money
market funds. Four percent on the money market fund is beautiful. Boring is beautiful right now. So that's where a lot of defensive money is gone. CDs, money market funds, government bonds. You see the yields on bonds moving around a lot. That's a lot of people running for safety. Gold actual gold gold, gold, gold box that's up like six seven or eight percent so far this year. That's a typical flight to safety trade that a lot of people do.
They're freaked out about the stock market, they go to gold, they go to bonds, they go to cash. But also we mentioned bitcoin. Now, I don't believe that's a lot of retail investors, although I buy it every few weeks, just a little bit fifty bucks, fifty bucks. We're not moving the market on bitcoin. That's big whale money moving the money on bitcoin. But where's why is the Nasdaq one hundred right? This is the one hundred biggest stocks in the Nasdaq. The ticker for that for the UTFS
is QQQ. Why is that up so much this year? I think that's up something like fifteen to sixteen percent, right, qqq's up sixteen percent quarter. That is driven by the biggest stocks with the biggest market caps on the Nasdaq.
And what are those?
Apple and Microsoft the two most widely held stocks on the planet, right, and those have become the safety trade for a lot of investors, don't you think, Ian A lot of people are like, I'm freaking out everything. Let me go with these two guys that I know really well, because they're really big really well a ton of cash?
Yeah, I agree thousand percent. Have you heard about Bloggis insight on bigcoint and going to a million bucks? What do you think about that? And also, if I wanted to research creditor false swaps, where could I actually track that stat to see if the it's going up or going down on the site?
Right? Great question.
So there are some research shops and newsletters that track credit default swops every single day. But you can check on some banks that offer credit default swaps. You can look at the pricing and you could put in the ticker just like you would for a stock, and you can look at the price for what it would cost to buy a credit default swop. Individual investors can buy, and you need to be a little bit more accredited.
You need to have a lot of money to actually do something, and you actually need to have a lot of money to make a lot of money. So this is not for retail investors to play with. I would say I would recommend, but you can track, just buy ticker what the credit default swap price is right now now and when it expires, because like insurance contracts, these have a term to them, so like an option too, Right, it's a derivative, it's an option. There's a term to
that insurance deal. So you've got to look at the pricing, and you got to look at the data of expiration, and you could see where the vulnerability is.
Just Deutsche Bank. I mentioned that last week.
It's like the fourteenth biggest or no. Twenty first big bank in the world. It's a huge bank. It's got a million and trillion and a half dollars and it is Germany's biggest bank, and that's one of the biggest
manufacturing economies in the world. That bank is fine, but the credit default swaps went up like thirty percent last week because people got worried about it because of credit squeeze and because of the fact that if we go into some global recession, Germany is going to feel it's a it's a really big manufacturing economy.
So somebody put in a chat, what is the fall on case safe.
Up to two hundred and fifty thousand dollars it is that's insured again. That is if you're a broker goes down, if your broker gets taken over or goes into.
Receivership with the s I p C. Right, but not if you make a bad decision within your four one K that's your problem.
But your money that you have in there right now is in shured up to two hudred and fifty thousand dollars should your broker fail.
Is there a historical precedent set for a brokerage account a brokerage going out of business and people losing money like that? Has that ever happened?
Yeah? You heard about Celsius. Have you heard about FTX? Well, I mean like.
Like a real broker, no real broker, like a chop shop shops all day long, chop shops out on Long Island all day long, like.
The Wolf of Wall Street. Yeah, Wolf of Wall Street type chop chops, but not a not like squab that they usually get acquired. They usually don't write people want those accounts.
And a bear Stearns is different, right, That was a you know, global bank that was having super liquidity problems and a huge run on the stock and the Fed did not let it go under.
They were a broker too, but they're really an investment bank.
So nobody, nobody of that scale. Oh, chop shops go out of business every single day.
God, you brought up gold and so it makes me, wonder, are there other commodities that we should keep our eye on? In twenty twenty three?
Are are the ones that we should keep on our watchless? Absolutely? Chocolate, guys.
I was looking at stocks at fifty two week highs just before we got on because I like to see, as Ian knows, trends in motion. Sometimes stay in motion until something breaks. There are two chocolate companies.
That are at all time highs fifty two week highs, Hershey, and what's the other Monoliuese? Maybe that makes chocolate as well. I was blown away by that. So chocolate.
Keep an eye on that. Keep an eye on sugar, Keep an eye on copper. Everybody makes a big deal about gold because it's the shiny object in the room.
We call copper doctor copper erners. What's up?
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For for a reason, copper is a great leading indicator of where the economy is going and often where the market will follow, because we use copper in all kinds of things, right We use have been phones we's been manufacturing, use them in our dental equipment. We use copper all the time. So that's a great leading indicator to watch. And I would keep an eye on lumber prices as well. You guys, remember we were talking back in twenty twenty one or twenty twenty under prices were.
Sky high and then they crashed.
Watch lumber prices to see if we're going to get some sort of a rebound in the housing life.
That hershon's at ninety three dollars and twenty eighteen it's aid two fifty ninety.
Right now, go figure. I don't even know.
No, I was saying, Lemon prices are great for people who you know in construction or building.
Go they they know the price of a board right now.
They can tell you right now to the penny.
If I'm watching the show that I'm terrified, I'm seeing all the bank of news, I'm seeing FTX blow up and seeing SCV blow up. What three pieces of advice which you give to someone who's watching that wants to invest but it feels like it's the most terrifying time to do.
So that's a great question. And I get scared.
I've been in this a long time, and I get scared sometimes too. So I have a couple of rules, and I think I've heard in say this too. What's your threshold? What's your threshold for losses?
For me? That threshold and.
I'm fifty two, right, I've got about thirty four and hopefully thirty years of investing left in front of me, and that's a long time. My threshold probably for losses is around fifty percent until I'm just like, I can't. So I you know what my pain point is, right? What can I recover from? What do I have the time to recover from? So you got to determine that right. Then realize that these things happen a lot, right, These cycles happen. They may feel like they're happening a lot
quicker these days, time is compressed. Social media is giving us the echo chamber. It feels like it's all coming at us at once. Last week felt like six months. You know, I was talking about this NonStop. So if these things happen, and they're happening faster, but eventually they resolve.
We go through cycles.
This is a pure product of massive inflation coming out of the pandemic, a huge rise in interest rates to tamp down inflation, and all the broken pieces that we're going to discover, or as Warren Buffett likes to say, when the tide goes out, we're going to see who's swim and naked. There's a lot of bank swimming naked. There's a lot of tech companies swim and naked right now. Right there's a lot of companies that binged on cheap money.
Right But this cycle is going to end at some point, and you can actually see it in the FEDS dot lot and in their summary of Economic projections. Road's going to slow this year a lot, it's going to pick up a little next years, are going to come down to around three percent by the year twenty twenty five. That is a much more normalized oper environment for investing. And by the way, while we're all worried about a
bear market, we're not in one anymore. And the Nasdaq gets on its way to a bull market, so there's always a place to invest.
Cycles happen.
You got to stay with it and you got a dollar cost average because if you were smart and I heard you in saying this, I heard you guys saying in the last couple of shows, you've been dollar cost averaging into your favorite stocks for the past eight to ten months. You're smart, and you've been getting great deals, and your average price is low, and you're probably sitting on games right now.
So that's what I would say.
These things pass and then we resume, we normalize, and then something else happens. But long term investors, right the tortoises, they're the ones that usually win the race.
You said a Nastac is headed towards a bull market. Yeah, well, elaborate on that as far as the long term. So it's high was fourteen, six hundred and forty six. It's currently at eleven thousand, seven hundred and sixty eight backhand math, that's probably still thirty percent off of his peak.
Right, But you want to look at where it is off of it's low.
No, No, I'm just saying so, So what I'm saying is that, what's the outlook for it? What's the outlook for the nasdack next year and a half?
Well, Because the Nasdaq is a market weighted index, right, market cap weighted index. In other words, it's moved by the size of the biggest stocks in the index. It's going to move wherever Microsoft and Apple and a Nvidia want to take it. Right, So as investors are thinking the Fed's going to eventually pause, that's.
One of the reasons we've seen this rally. One.
Apple and Microsoft feel like safe stocks. They pay dividends, they're massive, they have a lot of cash. But also as interest rates cool start to cool a little bit, maybe after May, after June, they're going to either stay kind of at these levels or they're going to come down. Over the next two years, these tech companies are going to benefit. So the Nasdaq's going to do well because it's market weighted and the biggest stocks drag it around.
And as long as investors are piling into the safety of big tech stocks right now like they are, the nazak's going to keep rising. Now we get another shock to the system that could change everything. But right now you're seeing this bifurcation right of what was hot is no longer hot, but also the twenty twenty stocks, those are long gone, but the leadership is back in the big, the big strong tech stocks, so that NAZAC should continue
to do pretty well. It's already separated from the SMP five hundred aut I don't know sixteen percent or so, so that I would I would probably think that that's going to continue unless we get another shock in the FED goes for raisin rates a full percentage point, which they won't do because that'll break everything. So I like the trend of the NAZAK right now, and I buy the qqq ETF and I buy it all the time, up, down,
all time highs, you know, fifty two weeks low. I keep buying it because I believe in that, like you guys, growth long term.
My graduates from my school being forced bad drops rop rock back drop, back drop,