May 4, 2025 • 46 mins
The market is sending clear warning signals that shouldn't be ignored. Technical analysis expert Vincent Randazzo reveals how deteriorating market breadth—a critical measure of market health—suggests we've entered a bear market that could persist longer than most anticipate.
Drawing on over two decades of experience in technical analysis, Randazzo explains that market breadth essentially represents liquidity: how much money is flowing into how many different companies. A healthy market shows broad participation across companies of all sizes, while an unhealthy one features concentration in fewer names. At February's market peak, only 53% of stocks in the Russell 3000 were trading above their 200-day moving averages despite major indices hitting all-time highs—a classic divergence pattern that has preceded major market tops throughout history.
Small cap underperformance has been particularly telling, with the Russell 2000 effectively experiencing a "lost half-decade" already when accounting for inflation. This divergence between small caps and large caps represents one of the most significant warning signs in current market conditions and could be foreshadowing a potential "lost decade" for equities similar to 2000-2010.
For investors accustomed to the "buy and hold" approach that has dominated the last 15 years, this environment demands a tactical, risk-aware strategy. The value of avoiding major drawdowns while still capturing upside becomes paramount for effective long-term compounding. Diversification needs to extend beyond asset classes to include different strategies with varying signals and time horizons.
Whether you're managing your own investments or working with an advisor, understanding these technical signals could make the difference between protecting your capital and suffering significant losses as this bear market potentially unfolds. Visit viewright.ai to learn more about navigating these challenging market conditions with discipline and systematic risk management.
Sign up to The Lead-Lag Report on Substack and get 30% off the annual subscription today by visiting http://theleadlag.report/leadlaglive.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Yeah, that's what our work tells us that we are in a
bear market.
It could last longer than a lotof people think.
I think a lot of people believethis is about just the news and
this is about tariffs, and Iwould make the counter argument.
That, which is what I saidearlier, is that every major
bear market starts in kind ofthe same way, which is, you get
these divergences, you get ahollowing out of participation
(00:22):
in the market.
There's fewer stocks to choosefrom, fewer stocks going up,
less liquidity go around.
I mean, these are justhallmarks.
Classically, you look at thelast hundred years or more.
This is how tops are formed.
So I think you know, regardlessof what happens with the
tariffs and the news around,that I think that this market
has a lot of challenges ahead ofit and I think that market has
(00:43):
a lot of challenges ahead of it,and I think that you know this.
I would call this a bear marketand I think that's that's the
only the only fair moniker atthis point that I would apply to
, at least on a cyclical basis,my name is Michael Guy, a
publisher of the Lead Lager Pour.
Speaker 2 (00:57):
Joining me here is Mr Vincent Randazzo, who is a CMT.
I'm a CFH order holder.
He's a CMT.
Both are good designations.
Um, Vincent, uh, you and I hadgone back before a few times in
the past, but it just up to theaudience.
Who are you?
What's your background?
Speaker 1 (01:18):
What have you done for your career?
What are you doing?
Yeah, yeah, Thanks, Michael, Iappreciate that.
No, it's good, but again,thanks for having me.
I really do appreciate it.
Yeah, a little bit about me.
I am a charter markettechnician.
I've been so since 2008.
I started my career in summer of2002.
So anybody who knows what thatwas like it was.
Basically, market was downpretty much every day and it was
(01:43):
a great time to start, but sortof formed my thought process
around the market in terms of,like, wanting to defend the
downside right, Wanting toreally work around risk.
And, of course, I found for meformerly run and owned by Paul
Desmond, who was, you know, alegend in the industry and be
(02:09):
out there.
Talk about 90% downside, upsidedays.
That's him right.
So I had the opportunity to bementored by Paul and work with
him and, as of January of thisyear, I started out on my own
with ViewRight Advisors.
This is my own endeavor.
It is a risk management andmarket intelligence firm and
(02:31):
what we do is we provide signalsto keep you in the market when
it's time to be in the marketand out of the market when you
shouldn't be in the market.
So very simple, but it's allbased on breadth.
It's quantitative but it'sbased on uh, you know my, my
full, you know, 25 years ofexperience, uh, on the topic and
(02:52):
uh, so you should get very highprobability signals, high
probability outcomes, and uh,you know, this is just my, my
way of doing it, that you know.
Speaker 2 (03:01):
I found that that works very very well, I feel
like we should.
Um, we'll get into the signals,but I feel like we should
define breadth.
I point for the better part oftwo years I keep saying on X,
small caps hold the key, becausethere's many more small cap
companies and large capcompanies.
I view that as breadth, but alot of people don't view it as
breadth.
Speaker 1 (03:19):
Yeah, no, you're absolutely right.
I mean, that's how I view it.
If you think about and the wayI like to describe it to to
macro guys or fundamental guysis that breath is liquidity,
right, if you think about it?
Right, all this philosophy istelling you is how much money
you have in the market and howmuch of that is flowing into how
many different companies.
Right, the more money flowinginto the more companies, that is
(03:44):
the healthier market condition,right?
So it just goes back to the oldgenerals and soldiers.
If you're running an army, youdon't want just the generals
going out on the field, you wantthe whole force.
Right, you want the leaders.
They're out in front, okay,those are your big dogs, but
behind you, you want your fullclass, you want your full
support of your big dogs, butbehind you, you want your full
class, you want your fullsupport.
(04:05):
And when you don't have thatand this is what we've seen over
the course, certainly in ourwork we indicated it as early as
January of this year thatbreadth was becoming a major,
major issue because thosegenerals were just running out
on the field by themselves.
They didn't have any supportand have any cover.
So that makes the market reallyvulnerable and if you think
(04:26):
about it from a liquidityperspective, it means that
liquidity is drying up.
I like to use the advanceddecline line and a few other
indicators, but the advanceddecline line is just a simple
addition equation, right?
It is basically just takingevery single day in the market
and saying how many stocks wereup versus how many stocks are
going down, and you just netthat number up, right, and then
you just add it to the daybefore.
(04:46):
So if you think about what adivergence means we talk about
divergences as technicians a lot.
We like to use these wordsDivergence is basically telling
you breadth is going down, sothat advanced decline line is
going down and the price of themajor index is going up.
Well, how does that happen?
Well, it happens because smallcaps are not participating,
(05:06):
right?
And what that means is that,mathematically, on average every
single day, there are morestocks going down during that
period than are going up duringthat period.
And you tell me, as a portfoliomanager, is that kind of the
environment that you're going tobe really, really, you know,
knocking it out of the park?
(05:27):
No, it's not.
And I'll add real quick on thatit's a good point, because it's
very hard to beat the S&P 500when it's the only game in town,
when breadth is as weak as ithas been, because anything you
try to position into will almostautomatically underperform
Right right, oh yeah, and thenthere's all the you, you know
(05:50):
the math and the waiting, andthat's more your, you know your
belly wick, but uh, but you mean, it really just becomes a
question of you know, at thatpoint, okay, you've got a
withdrawal in liquidity, right,and what happens after that?
Well, it's going to lead tovolatility because you have you
have a fragile environment.
Right at that point you'd onlyhave a few stocks going up.
I mean not literally a few, buta few compared to the thousands
that are out there, right.
So in that scenario, bad news,when it hits, is exaggerated.
(06:15):
Right, if you have a goodbreath environment, you can get
hit by all sorts of bad news.
It really doesn't matter, itdoesn't stick as bad news, uh.
But if you get hit with it in afragile environment where
breath is weak, then you haveproblems.
And that's kind of where we,you know, that's where we were,
that's how we started the yearand a lot of people really were
(06:35):
kind of oblivious to it.
Speaker 2 (06:37):
So part of my um thesis for the last two years
which also has been very wrongand really wrong, particularly
in 2023.
I backed off from a lot of thatand I'm now bringing it back to
the forefront is small capshave been weak, which is why I
was so anti-NVIDIA for a longtime, because, to your point,
the generals fault the soldiers.
(06:59):
My original thesis back thenwas small caps clearly were
diverging with large caps and Ithought that the Mach 7 would
converge to.
Small caps clearly werediverging with large caps and I
thought that the Mach 7 wouldconverge to small caps and
obviously they haven't right.
It was just totally in its ownorbits as the AI narrative took
over.
Do you think we could have amoment where some of these AI
(07:19):
names very suddenly collapse tothe message of small caps?
Or is that AI narrative sostrong that and the earnings are
so strong that that's notreally a possibility?
Speaker 1 (07:31):
Yeah, I mean, I think , listen, history is a guide for
this right, and we can talkabout this later.
We talk about, you know,potential for a lost decade and
how those start.
You know they start withextreme valuation and then, of
course, you have structuralissues that are introduced that
just take a long time to workthrough and that's why you get
these lost decades.
But yeah, no, I think youstarted to actually see with the
(07:52):
bigger drawdown.
If you look comparatively, thedrawdown the S&P versus the
drawdown in the NASDAQ comp hasactually been a bigger drawdown
from the NASDAQ comp, whichtells you that maybe there's a
little bit of a catch downeffect, which may be what you're
sort of referring to Now.
All in all, small caps are stillunderperforming year to date
and that's sort of been the case, like you said rightly.
(08:15):
But I do see there is someearly evidence of kind of a
catch down effect in those inthose mega cap and those mega
cap names.
And I think you look at NVIDIAand NVIDIA hasn't made new high
like a, like a, a really strongnew high, I would say, since,
you know, almost a year it'sbeen I think July, you know July
, maybe of, of of last year.
(08:36):
So I think it's, it's apossibility.
It's not exactly what I do, butbut certainly, you know, I
could, I could see, I could seethat happening.
Speaker 2 (08:44):
You talk about divergence.
I tend to look at a lot ofdivergences from both a bullish
and bearish perspective, becausedivergence just tell you where
there's a disconnect betweendifferent asset classes and
different parts of themarketplace.
What are some of the biggestdivergences that you're seeing
right now?
Speaker 1 (08:59):
So you know right now versus you know where we were.
So you know right now versusyou know where we were.
So, like kind of how we gothere is through the divergence,
and that's sort of a very keypart of you know what I do.
And I started studyingdivergences in a really big way
in 2006, 2007, 2008.
And of course it was reallytimely and it helped me at that
(09:20):
time.
But a technician by the name ofPeter Lee, who was at UBS at
the time and so was I, we hadkind of worked together to some
extent while I was on the equityresearch sales desk and I got
really really deep into theweeds on breadth and these
divergences and I studied themthrough history and I said, wow,
these divergences are presentpretty much at every major
(09:41):
market top into every majormarket top.
And that kind of leads me tothe structure I created my, my
own system on, which is is basedprimarily on this observation
that just divergences are kindof hold the key and, like you
said, small caps hold the key.
I mean that's totally true inmy work and to the point where
you know we, we, we did get amajor sell signal.
You know that I give out to you, know out to my subscribers as
(10:04):
of February 21st.
So that was just two days, twodays after an all-time high in
the Russell 3000, the Russell1000, s&p 500, s&p 1500, all
these new highs in these majorindexes.
And then, just two days later,breath went weak, into the point
for us where we said listen,this is time to take risk off or
start to take risk off.
Of course, we got another, moredefinitive sell signal in our
(10:28):
service in the middle of Marchwhich basically said that okay,
now this is getting to the pointwhere we'd say this we would
call this bear market typebehavior, right.
And that's just based on someof the divergence that we saw,
not only between the AD line,but also if you look at, for
example, the percent of stocksabove their longer-term moving
averages, if you look at thepercent of stocks in the Russell
(10:48):
3000 at the time of theall-time high so I'm talking
about February 19th you onlyhave 53% of stocks in that huge
index.
That's so vitally important asfar as determining, again,
liquidity how much money is outthere, how much it is going into
, you know, going into stocks.
Yeah, only 53% of stocks.
(11:09):
At that time, when the indexwas making new highs, were
actually even above their200-day moving average, and
that's even.
You know.
We're not even talking aboutnew highs, we're just talking
about holding a basic, you knowuptrend.
So I'm not really looking atany positive divergences right
now.
That, like you said, is theother end of it.
There were some people out therewho were sort of calling out oh
(11:33):
, there's a positive divergencein the percent of S&P 500 stocks
above their 50-day movingaverage.
A few weeks ago and I didn'treply to that person but as an
announcement people should beaware of I put a note out on
Twitter and basically said becareful, because the slope of
the moving averages reallymatter.
Right, people don't understandthis.
(11:55):
So if the slope, in other words, if the slope of moving average
, is negative, then you're goingto have at some point on that
curve.
You're going to have a timewhere you can see positive
divergences that aren't reallypositive divergences and the
point that I made there, notonly with the slope, because a
lot of the slope.
At that point I think there wasless than half of stocks in the
(12:17):
S&P 500 above their 50-daymoving average, which
demonstrates that you probablyhave a negative slope, but also
half of them.
When I did check, half of themdid have negative slopes indeed,
so that would tell you thatthat's kind of a false positive,
in addition to the fact thatyou basically have to get a
(12:38):
reaction to the upside to reallycall it a positive divergence.
Also, none of the otherindicators were confirming a
positive divergence.
So if you just have one, youknow one of these indicators
saying positive divergence,you're not getting confirmation
anywhere else.
You don't trust it, right, andI think that sort of held true.
So for right now, I'm notseeing anything on the positive
divergence side.
(12:58):
I think that's something that Iwould watch for and something
in my work that I do look for.
But we looked for longer term,more confirmatory positive
divergences when we're lookingfor them and more along the
lines of stability.
First right, you need to have afoundation from which to jump
from and I think it's reallypremature for people to say, yep
(13:19):
, that was the bottom, that wasit, and I'm talking about last
week or the other week.
It's just too soon for theamount of damage that we've seen
to this point.
Uh, the internals are kind of awreck and historically you
don't just go vertically up fromthat.
That kind of damage it takestime to even find a bottom.
In this situation and in ourexperience and historically
(13:41):
again, my work is only based onprobability and history.
Um, it takes a long time fromthis point to rebuild.
Typically, you know, there areof course always counter
examples, but those are therarities.
Speaker 2 (13:55):
Yeah, and I would tend to agree as much as that
Wednesday call I had where Isaid you know you're going to
see one of the most epicintraday reversals for the stock
market history, which thenhappened when Trump did the
pause on the terrorist.
I myself then said I suspectthey're going to rally for two
weeks and then it doesn't meanattack lower lows, right,
(14:15):
because path behavior is veryconsistent with what you see in
bear markets, right, which Iguess is sort of a good question
.
I mean, do you believe that weare actually in a bear market?
Speaker 1 (14:26):
Yeah, that's what our work tells us that we are in a
bear market.
It could last longer than a lotof people think.
I think a lot of people believethis is about just the news and
this is about tariffs, and Iwould make the counter argument.
That, which is what I saidearlier, is that every major
bear market starts in kind ofthe same way, which is, you get
these divergences, you get ahollowing out of participation
(14:48):
in the market.
There's fewer stocks to choosefrom, fewer stocks going up,
less liquidity go around.
I mean, these are justhallmarks.
Classically, you look at thelast hundred years or more.
This is how tops are formed.
So I think, regardless of whathappens with the, with the
tariffs and the and the newsaround that um, I think that
(15:08):
this market has a lot ofchallenges ahead of it and I
think that you know this.
I would call this a bear marketand I think that's that's the
only um, the only fair monikerat this point that I would apply
to, at least on a cyclicalbasis.
Speaker 2 (15:21):
It's a question from somebody watching on YouTube
noting that the mag seven wentup 600% this decade.
I don't know if that's right ornot, but could be right.
But what do you expect on magseven?
So we're going to touch on thetheme of a lost decade, but are
we talking about lost decade inevery stock or in the mag seven,
(15:42):
which is what's driven the inquotes bull market?
Right, yeah, hey, no stock?
Or in the mag?
Speaker 1 (15:44):
seven, which is what's driven the in quotes bull
market, right, yeah, hey, no,it's a great question.
I wish I, I wish I knew.
Um, as far as you know the magseven, uh, I would say that
there are probably structuralforces in play that are going to
deflate those valuations.
Um, you know, I talked to waltdeemer about this kind of topic,
(16:05):
about major tops and the kindof weird things that you can see
in the many, many years thatfollow when you have these mega,
huge, dominant, dominantcompanies, where you had a
company that would trade up,trade up to a certain level,
(16:25):
multi-year highs, and everythinglooked great and the
fundamentals are great and themultiple, you know, reflected
that right.
And then you know, whatever, 35, 40 times earnings or whatever.
And you know, in the examplesthat he gave, he said you know
the fundamentals actuallycarried out exactly how the
(16:45):
company had said they would.
Right, I mean, they kept, theykept crushing it on the numbers.
But guess what happened?
The stock cratered in the yearsthat followed, simply because
you had these structural forcesin play, ie interest rates.
Ie, interest rates had gone updramatically such that that
(17:06):
valuation premium shrunk, shrunk, shrunk, shrunk, shrunk, to the
point where the stock wastrading in a fraction of what it
was in its heyday, but thefundamentals were as good as
everybody ever thought they weregoing to be.
And that's what makes themarket really, really difficult.
But I can see something likethat happening and I think
(17:27):
Walter, in our conversations hesaid that you could see
something like that happeningwhere there's still great
companies, they're still doinggreat work, they're still
executing.
It's just that the multiple iscompressed to the point where
these are not good stocks to own.
They might be amazing companies.
The point where these are notgood stocks to own.
They might be amazing companies, but they are just not good
stocks to own.
Speaker 2 (17:48):
You mentioned the work with Lowry Research and
your own signals.
You touched on breadth a littlebit.
What signals do you typicallylike to look at that you find
have the least prevalence offalse positives?
Speaker 1 (18:02):
Yeah, I look for extraordinarily high probability
outcomes like to look at thatyou find have the least
prevalence of false positives.
Yeah, I look forextraordinarily high probability
outcomes.
So what I'm looking for whenI'm building a system and this
is taking me 20 plus years to dothis right but what I look for
is extraordinarily highprobabilities.
So something that happens morethan 90% of the time, with an
outcome that is predictable morethan 90% of the time.
(18:25):
As a result, I get very fewsignals and when you get them,
you need to really pay attention.
So I tend to look at indicatorsthat are relatively immutable.
There's really no opinion aboutthem.
I don't want to put any realtransformations on them.
Opinion about them.
I don't want to put any realtransformations on them.
(18:46):
I don't want to make them myown.
I want to look at the raw dataand then, throughout history,
understand okay, what is thedata that's being presented now?
Okay, what does that data feellike and what does it look like
and how does that comparehistorically to market regimes
in the past?
So what I do is I justbasically say, okay, given these
conditions, what is my regime?
(19:06):
And, based on that regime, whatdid my return and risk profile
look like?
And then, what's my optimumlevel of equity exposure based
on?
Based on those factors, right?
So, in a way, it's it's simple,because my assumption is always
and it will always be hasn'talways been, but it will always
be that the market is justinfinitely smarter than me,
(19:28):
right?
So the only thing I can do islook really, really careful at
the cues that it is giving me,not somebody else, not some
transformation on some indicatorthat could sort of bastardize
it in a way.
Right the pure, you know thepure data, right the pure
numbers, and then historicallycompare those things.
So that's really what I'm afterand what I'm doing.
Speaker 2 (19:50):
Another question which might be nuanced, although
it's interesting maybe from atechnical perspective Any
consequential differences inthis cycle due to the change in
the character of the S&P 500'sownership.
About 20-25% of the S&P 500 wasforeign-owned in 2007, versus
40% today.
This is, by the way, aninteresting thing only because I
think it also has driven a lotof the over-evaluation.
(20:12):
A lot of money from foreigninstitutions, foreign high net
worth, has gone into NVIDIA, hasgone into a lot of the AI names
because they don't haveanything in their local
countries that are equivalent,and we've never been in a cycle
where it's been so easy to movemoney around so quickly.
Speaker 1 (20:30):
Yeah, that's a really good point.
I think that's exactly right.
And also think about it from arelative strength perspective.
It's been like 15 years atleast that you've had just
massive relative strength in inthe U S market.
So it's sort of like it's aself-fulfilling prophecy.
I mean, money's going to go towhere it's treated best, right,
(20:52):
I mean a lot of the relativestrength guys that you know you
speak to, um in in technicalanalysis, will tell you that.
So to me it's not anythingspecial to hear.
But I think again this sort ofbegs the question of structural
forces and what is that going tomean for valuation and
innovation and the way capitalis deployed?
(21:14):
And again, I think this is morelike in line with you, michael,
in terms of your background onthe CFA and just being the macro
person that you are.
But, um, but that that would bemy answer is that you know I
could, you can see that go theother way for a lot of different
reasons.
Um, might, you know, maybe tothe point of what they're trying
(21:35):
to bring up here.
It might exacerbate that thefact that you do have so much
more foreign money, you know, inthis market.
But you have to have a validplace to put it elsewhere.
So if there's a proven,demonstrable relative strength
trend that forms elsewhere inthe world over a long period of
(21:57):
time that people can reallytrust and get behind, well then
that money is going to flow towhere that benefit is right.
Speaker 2 (22:04):
I'm curious to hear your technical take on
international markets broadly.
You mentioned valuation in theUS, which we'll get into as it
relates to possibly the lastdecade.
But yeah, there's been somereally good relative
outperformance right in theinternational stock market side
of things.
How are you viewinginternational market here?
Speaker 1 (22:23):
The way that I would view it, I guess from my lens,
would be more along the lines ofpeople probably see relative
value there from a fundamentalperspective, and if that is true
, then you also usually get arelative strength benefit and
then you get momentum benefit.
The issue I have when it comesto relative strength style
(22:48):
analysis is like what's theperiod of your look back?
I mean, you can say that yeah,there's been a great trend in
relative strength on theinternational side of the
equation for the last whateverthree months, six months,
whatever you want to say, butlike is that adorable trend?
And the question is like I haveno idea, right, like you just
(23:10):
don't know if that's going topersist and how long it's going
to persist for.
And oftentimes, when it comesto relative strength, what I
found is that you know by thetime it gets to be the point of
like popularity or being reallywell known or widely regarded or
widely respected as a trend,you kind of get there and then
it goes a different way.
You know this often have on,happens more like on a single
(23:32):
stock basis, but it can happenthis way too.
Um, again, I think it comes downto what is the sustainability
of those trends I don't foresee,you know, if this is a true
bear market.
I don't.
I don't.
It's hard for me to imaginethat.
You know there are going to bebig.
(23:53):
There might be really small,small markets that this could
happen in, but it's unlikelythat you would see a very, you
know, major, major, majorinternational markets really
massively outperform.
If the us is, you know, if theus capital market isn't a doubt,
isn'ta major down friend orbear market.
It's just it's difficult for meto kind of square those things.
(24:16):
Um, it could happen, sure, um,again, with some of the smaller
markets.
I could see that.
But uh, by and large it'd bedifficult thing to imagine, just
because of that liquidity.
You know that whole, that wholequestion around liquidity and
you know within the capitalstructure where is money being
treated best.
Speaker 2 (24:34):
You know it's just a difficult one to for me to get
my head around, but open-minded,you know any any particular
international markets that Idon't know if you're tracking
them, look better than othersmeaning yeah, is it contrarian
trade China?
Is the contrarian trade Germany?
I mean what looks moreinteresting to you?
Speaker 1 (24:53):
Yeah, I mean, it's not work that we do, you know we
don't do anything on, you know,beyond the US market.
But you know, I would say thatthere's a high degree of
correlation historically betweenthe U?
S market and most markets inthe world.
I think China is probably onethat is there's like literally
no correlation, uh, most of thetime.
So, uh, that doesn't mean it'sgood, it just means that there's
(25:16):
no correlation.
So maybe that's something youwould look at.
You know, you would look at, um, you would look at markets
around the world thathistorically have very little
correlation to the US market,and then that would be to me,
that would be the place I wouldstart, if that's an angle I
wanted to take.
But it's just not in the workthat we do.
We focus on, you know, breadthin the US market, because that's
(25:40):
just where I have the edge.
Speaker 2 (25:42):
Edge is an interesting word, um, because
it's as you know it's like theproblem is very hard to, in
quotes, beat the market Rightand a lot of technical
indicators will work for certainperiods and then not work.
They'll get whipsawed.
Because it's ultimately aboutthe cycle.
You know, if you have atailwind, you have a tailwind,
(26:06):
you're less likely to bewhipsawed.
If you don't have tailwind,you're more likely to be
whipsawed.
So is it the cycle or is it theindicator?
All right, there's all thesekind of interesting, yeah, base
people we can have, but, um,what tends to give traders an
edge?
I mean it.
I don't think the answer is assimple as technical analysis
broadly right, you're right,it's not.
Speaker 1 (26:19):
The answer is discipline, right, you know, and
I think you you portray that inyour work, um, and also in the
way you live, like with, withthe fasting and the exercise,
like I'm the same way.
I don't fast like you, uh, Ican't.
I just I love food too much, um, but but you know I do.
I do have a regimen that Ifollow and I and I translate
(26:40):
that into my process.
That's just how I am.
I'm systematic, I'm verydisciplined in that way.
So I think, in order to be asuccessful trader, you need that
, you need to be disciplined.
It's not about willpower oranything like that.
It's about discipline, andthat's something that anybody
could form.
Speaker 2 (27:01):
It just takes, it takes time, but, yeah,
discipline and process, that'swhat I would tell you every
single time, which is reallyhard um, it is right because,
like, I've always had an issuewith the idea that, uh, people
who say that you know, if mystrategy is not working, I
switch strategies, well, thenyou're not disciplined, right?
(27:21):
I mean, you know, just becauseit's not working in the
environment that you're alreadyin doesn't mean you shouldn't
keep doing it.
Now some will counter and saywell, the definition of insanity
is doing the same thing overand over again, expecting a
different result.
Well, but then explain to mehow people get healthy, explain
to me how people get stronger.
Right, I mean, you do need tohave a degree of repetition,
even though it may seem likeit's not working in the now.
Speaker 1 (27:43):
Right, that's absolutely right.
It's persistence and like andyou know this and I know this as
system followers is that evenwhen you think, and maybe even
especially if you think it'swrong, you have to follow your
system.
You have to, otherwise you havenothing.
Then you're just like everybodyelse and you're a you're.
You're, you know, a victim orof your own emotions, and that's
(28:06):
what we want to cut out.
I mean, emotions are not goodfor investing.
I mean, this has been proven somany times, so many studies, in
so many different ways, I don'tneed to say it again.
But but yeah, I mean that'swhat I think it.
Just you know, following thatsystem, even when you think it's
wrong.
Some people will call thatpersistence, some people call it
(28:27):
insanity.
I would call it persistence, Iwould call it strategy, I would
call it, you know, beingsystemized.
And and again.
If it's something that youbelieve in and you've tested
thoroughly right, then there's areason that you're doing, why
you're doing it, and you have toremember that All right, let's
(28:47):
get into this the topic of thelost decade.
Speaker 2 (28:50):
It's not a very comfortable topic, although I've
been tagged as like aperma-bearer because I keep
saying small caps, small caps,small caps.
You look at Ross 2000,.
They're basically halfwaythrough a lost decade already,
sure, at least on a nominalbasis.
I mean, when you look at itafter inflation, oh yeah, it's
(29:13):
way worse, right, it's nobody'sthinking, they just don't get a
chart.
But the chart is is notadjusting for inflation, right?
So we've had this really weirdenvironment where typically a
rising tide lifts a boat and ithas it.
And let's first outline whatare the characteristics of a
lost decade, what are the thingsthat you tend to see in the
(29:34):
early stages of one, and how dowe know if we're in one, except
with hindsight?
Speaker 1 (29:44):
in one, uh, except for the hindsight.
Yeah, I know, I mean this is anawesome question and I love
just the the idea of talkingabout it, because I think
there's just this religionthat's been formed around uh,
buy and hold, uh and buy the dipand uh, honestly, I just think
that there's a time foreverything.
That was the right thing forthe last 15, 16 years now.
(30:10):
Right, that was the right thing.
But as far as the way,historically, you see lost
decades start, you see themstart with extreme valuations,
so you can check that box.
You see them start usually withvery long negative divergences
(30:31):
between some of the breathindicators and the major indices
.
I wouldn't call this one thatwe've seen most recently uh, fit
into that category, but only.
But remember, you talk aboutlost decades.
There's not a huge sample here,so these are really just
tendencies.
What I think is more importantand I think you should speak
(30:54):
more to this because you havethe background too is that those
lost decades, they're driven bymassive structural forces.
So whether that be deleveraging, whether that be demographics,
whether that be inflation, andthen I think most importantly
probably is the direction oflong-term rates.
(31:14):
So I think there's a lot ofreasons why you should at least
consider the possibility that wecould be entering a lost decade
for equities, much like what wesaw between 2000 and 2010.
And again, that's how I startedmy career and I remember in 2010
(31:37):
or even 2013, when the marketwas just getting back to
all-time highs.
In 2013, when the market wasjust getting back to all-time
highs, um, people saying thatyou know, buy and hold, you know
buy and hold is dead and youknow this doesn't work anymore.
And I think you've got theopposite now, where it is this,
it is this religion that it'sbuy and hold and you have to buy
and hold and you can't miss,you know you can't miss the best
(31:59):
days, even though they'rethey're clustered around the
worst days, by the way.
Um, I just think that people'sthinking has been so, you know
now, one-sided, in addition tothose extreme valuations that we
could, all you know, we've allobserved, right, um, that I
think this is a real possibilityand what you would expect to
see is is you know more of a bigrange.
(32:20):
You know where you get.
You still get bull, right, youstill get cyclical bulls, then
you get cyclical bears.
The problem is, you don't makemuch progress over a very long
span of time and, as you broughtup rightly earlier, in real
terms, when you account forinflation, this is a massive
(32:41):
misallocation of capital, ofcapital right, because you're
losing money effectively, insome of these cases for a decade
or many, many years.
So, uh, it just makes the assetclass as a whole something that
is something that it'stypically not and that's
difficult for people to gettheir heads around and adjust to
.
But, um, again, that's why youlook at the data and you're just
(33:04):
open-minded to the possibilitythat, hey, this could be it, we
could be an environment whereyou need to be more tactical.
You cannot just buy and hold.
You need to know when to selland you know when to buy.
And that's why you know one ofthe reasons why I think is a
great time for you know myservice and services like yours,
because I think people need tosort of wake up to that
possibility.
Speaker 2 (33:24):
I see a question here from somebody which I think is
worth mentioning, given thatyou're a CMT charter holder.
I'm a CPA charter holder.
For someone trying tounderstand the macro side of
things, would you recommendgoing to college, and if so,
would you recommend economics orfinance?
Let's talk about self-education, because one thing is to see
that we're talking about marketsyou and I understand what we're
(33:46):
saying to each other.
A lot of people may not have aclue right, and a lot of the
stuff is hard to understand forpeople that are engrossed in
this daily right.
So let's talk about some of theeducation that you went through
.
So I mean, I have an economicsdegree.
Speaker 1 (34:01):
I was, you know, very interested in Wall Street from
a, you know, college age, youknow, and that's kind of the
route that I want to take.
So it helped, you know ithelped.
And of course, I think, the waythat I think about technical
analysis and maybe this is aresult of that, but also my
career to this point it reallyis about supply and demand.
(34:23):
If you think about it, what'sthe force of the buyers versus
what's the force of the sellersor what's the liquidity behind
each of those forces.
Getting insight intopsychological tendencies and
improving your emotionalintelligence I think would be
(34:46):
really great advice for somebody, especially who is young and
very interested.
Because again, it kind of goesback to that idea of discipline
and being able to have a processand know yourself and know what
works for you.
Are you a swing trader, are youa long-term investor, are you a
day trader?
What makes sense in your brain,and then having emotional
intelligence around that.
So that would be sort of myadvice and of course I mean
(35:09):
there are so many books that youcould read that will help you
kind of get up that curve inachieving those and finding
those things out about yourself.
Um, but that's.
That's what I would suggestyeah and listen.
Speaker 2 (35:23):
I mean, like I made this point many times before, no
amount of intelligence canincrease the clarity of one's
crystal ball.
So even if you're highlyintelligent and highly well
versed in in the topic ofmarkets and investing doesn't
mean that you're necessarilyoutperforming right, because
this is one of those domains inlife where it's hard to know if
it's skill versus luck, good orbad right when it comes to the
(35:44):
outcome.
But it's still good toobviously at least have the
basics down right and havingstructure around that, as
opposed to just looking atrandom posts.
On X yeah, I think you see itreally quite a bit.
You mentioned we're probably ina cycle for tactical and active,
which is music to my earsbecause the reality is, ever
since QE3, that's where I myselfpin it it's been in an
(36:07):
environment of just passive buyand hold Yep.
Any hedge funds that have beenout there have massively
underperformed.
Any active tactical strategieshave underperformed.
And again I go back to is itthe signal?
Is it the cycle?
Is it the cycle?
Is it a combination?
The challenge with active andtactical, I think, is that there
(36:29):
aren't that many vehicles leftthat are active and tactical
Right.
I mean, I have certainstrategies that are, that have
survived throughout a very nastyenvironment, almost a
decade-long environment, wherethere's plenty of historical
reason for why.
Strategies that are, um, thathave survived throughout a very
nasty environment, almost adecade-long environment, where
there's plenty of historicalreason for why those strategies
do what they do.
But, um, for those that aretrying to do it themselves, how
(36:50):
do they even go and go aboutbeing active and tactile?
Speaker 1 (36:53):
yeah, I mean that's tough, I mean it really is
difficult in this environment.
Um, the one thing I would andthe one thing that's really
disappointing, to mean it reallyis difficult in this
environment.
And the one thing that's reallydisappointing to me and this is
just my own experience and I'veworked with a lot of financial
advisors or wealth managersthrough the years and there are
very few that actually do take atactical approach to markets
and that, to me, is verydisappointing.
(37:14):
And it's actually reallysurprising to me too, because if
you think about what the ETFindustry has done to investing
over the course of the last 10,20 years, they've told you
explicitly and implicitly thatbuy and hold investing is worth
(37:35):
you paying about three basispoints for, because if you look
at the index ETFs, that's kindof what they're selling for.
So what's shocking to me andkind of disappointing is that
there are a lot of financialadvisors out there and wealth
managers out there that arecharging fees well in excess of
(37:56):
100 basis points.
So it's sort of like I mean Iknow my generation and younger
is probably asking like ifyou're not going to be tactical
and you're not going to be riskaware, then what you know, what
am I really paying you for,right?
So I think that if we do gointo an environment again with
this current demographics thatwe have, where you do have the
(38:18):
younger population that is nowsort of inheriting those older
portfolios from the priorgenerations, I think you will
have a shift back into activeand I think services like yours
and services like mine are goingto benefit from that.
What I believe is going to be amulti-year trend, if not longer
, because it just makes too muchsense.
(38:40):
I mean, if you can avoid the uh, the major drawdowns, and you
can still participate in most ofthe upside or all of the upside
, you know what that does.
To compounding.
I mean you, you, you tell us asa CFA, but I mean that
supercharges compounding,because you're basically just
cutting the negative part of theequation out and uh, and you're
basically just cutting the, thenegative part of the equation
(39:00):
out and uh, and you're not, youknow, going off the textbooks in
the textbooks on compoundingsay like, oh, it's, you know,
it's nine percent a year, everyyear.
That's just, that's how it isand it's great and it goes like
this, it's like all right, butin real life, in real life, guys
, uh, it doesn't go like thatright, because you'll have a 20
year year and another 20% yearand then you're going to have a
negative, negative 40% year.
(39:22):
It's like okay, well, how doesthat change?
Well, it really depends also onyour own path, how old you are,
and your own path to retirementand that experience that you're
going to go through.
So I just think at this point,you know, listen, we are, you
know, 16 years into this kind ofenvironment where sort of like
buy and hold is king.
(39:43):
At some point it's going tochange, probably sooner than
later, and we're all gettingcloser to retirement every
single day.
So, at a minimum, you know,sequence of return risk is a
very big deal.
That, again, I don't thinkanybody really talks about or
thinks is relevant to them untilit's too late, and I think
that's something we need to bemore careful about in the way we
(40:05):
think about risk.
Speaker 2 (40:08):
Yeah, which goes back to a line I've said as part of
my own brand, which is pathmatters more than prediction,
which is the sequence ofassurance and the end point.
Because, sure, we can zoom outand say stocks will in the long
run and don't worry about it,that's all fine.
But it's like, if somethinghappens tomorrow, that where you
need that capital hopefullyobviously you have an emergency
(40:29):
fund that's in cash, it's not inequities.
But what if you need capitaland you have to sell equities at
the wrong time?
There's other dynamics whichhave to be considered.
Right, then just sort of zoom meout and look at 100 year chart,
so to speak.
Sure, um, right, so okay, now Iam curious to hear your
(40:49):
thoughts on diversificationwithin being active and tactile,
right?
So I am of the mindset thatdiversification comes from more
than just asset class.
It comes from strategies, whichmeans maybe you have a portion
of your portfolio that's tradinga very specific set of signals.
Maybe you have another portionof your portfolio that's got a
totally different operating seton the same signals.
Maybe it's another portfolio,totally different signals, right
?
Talk to me about how do youdiversify when you're active and
(41:13):
tactical, when the risk couldbe the signal itself?
Speaker 1 (41:17):
Yeah, I love that.
I love that.
I think that makes a lot ofsense.
Having diversity in yourstrategies itself yeah, I love
that.
I love that.
I think that makes a lot ofsense.
Having different, havingdiversity in your strategies, it
absolutely makes sense because,like you said earlier, you can
go years without a tendency thathistorically was very valid
working out, but then all of asudden it starts working again.
(41:37):
So you don't want to be tootethered to one strategy or
another.
So to me that makes a lot ofsense.
I mean, I would totally agreewith that.
Um, and a lot of people will dothat, even in time, in in time
relevance.
So they'll say, okay, well,this is my long-term money, this
is my long-term strategy, thisis my shorter term money is my
shorter term strategy.
I think that's, I think that's,I think that's smart.
(41:58):
Um, you know, I think it's a.
You know, for me as an equityguy, um, I think that's a better
approach than, oh, 60, 40.
And you know, this is just howit is and it's like uh, that's
another thing that I thinkpeople have to rethink is 60, 40
, because, um, you know, ifthere's a structural
inflationary force, then 60-40is not going to be what you want
(42:19):
to pursue.
Speaker 2 (42:21):
Yeah, I think that's right, Vincent.
As we start to wrap up here, alot of people have been
listening playing comments.
Nice viewership overall Forthose who want to learn more
about your work, your analysis.
Where would you point them to?
And then maybe any sort ofpiece of advice as far as how to
think about what, what to do inthe very short term at least
yeah, yeah.
Speaker 1 (42:41):
So my, uh, my site is view right, dot ai, right.
So the idea is we get themarket view right.
That's what matters, right?
So view right, dot ai.
And uh, I'm, I'm on x at cmtrandaz.
And as far as what, in the shortterm, you should be doing, I
(43:02):
think you really need to examine, um, the mindset that you're in
and if it is a, if it is a buythe dip mentality, I think you
need to probably rethink that,um and think about the
possibility at least or be opento the possibility of it that
maybe you should be sellingstrength and certainly be a
(43:24):
little more careful about wherethings are.
And I think for me, I would saymoving a portion into T-bills
is kind of what makes sense.
Keeps them powder dry, wait forthe right pitch.
There are plenty of people outthere that will tell you really
really successful investors thatwill tell you and you know,
(43:45):
warren Buffett maybe is a greatexample, or the perfect example
of this is like just wait, waitfor the wait for the conditions
to be right, you know, um, andthen make your move.
You don't have to do somethingall the time right, especially
not as a non-professional.
You don't have to.
So you have that luxury of time, use it.
Speaker 2 (44:05):
I think that's very well said.
Everybody learn more about whatVincent does on that website.
Stay tuned, I've got anothertwo back-to-back.
You'll see that streaming inabout seven minutes.
And, vincent, I appreciate thepatience with the technical
difficulties.
Speaker 1 (44:18):
No, thanks for having me.
It was a lot of fun.
I hope we can do it again.
Thank you, buddy Cheers, takecare.
Yeah, that's what our work tells us that we are in a
bear market.
It could last longer than a lotof people think.
I think a lot of people believethis is about just the news and
this is about tariffs, and Iwould make the counter argument.
That, which is what I saidearlier, is that every major
bear market starts in kind ofthe same way, which is, you get
these divergences, you get ahollowing out of participation
(00:22):
in the market.
There's fewer stocks to choosefrom, fewer stocks going up,
less liquidity go around.
I mean, these are justhallmarks.
Classically, you look at thelast hundred years or more.
This is how tops are formed.
So I think you know, regardlessof what happens with the
tariffs and the news around,that I think that this market
has a lot of challenges ahead ofit and I think that market has
(00:43):
a lot of challenges ahead of it,and I think that you know this.
I would call this a bear marketand I think that's that's the
only the only fair moniker atthis point that I would apply to
, at least on a cyclical basis,my name is Michael Guy, a
publisher of the Lead Lager Pour.
Speaker 2 (00:57):
Joining me here is Mr Vincent Randazzo, who is a CMT.
I'm a CFH order holder.
He's a CMT.
Both are good designations.
Um, Vincent, uh, you and I hadgone back before a few times in
the past, but it just up to theaudience.
Who are you?
What's your background?
Speaker 1 (01:18):
What have you done for your career?
What are you doing?
Yeah, yeah, Thanks, Michael, Iappreciate that.
No, it's good, but again,thanks for having me.
I really do appreciate it.
Yeah, a little bit about me.
I am a charter markettechnician.
I've been so since 2008.
I started my career in summer of2002.
So anybody who knows what thatwas like it was.
Basically, market was downpretty much every day and it was
(01:43):
a great time to start, but sortof formed my thought process
around the market in terms of,like, wanting to defend the
downside right, Wanting toreally work around risk.
And, of course, I found for meformerly run and owned by Paul
Desmond, who was, you know, alegend in the industry and be
(02:09):
out there.
Talk about 90% downside, upsidedays.
That's him right.
So I had the opportunity to bementored by Paul and work with
him and, as of January of thisyear, I started out on my own
with ViewRight Advisors.
This is my own endeavor.
It is a risk management andmarket intelligence firm and
(02:31):
what we do is we provide signalsto keep you in the market when
it's time to be in the marketand out of the market when you
shouldn't be in the market.
So very simple, but it's allbased on breadth.
It's quantitative but it'sbased on uh, you know my, my
full, you know, 25 years ofexperience, uh, on the topic and
(02:52):
uh, so you should get very highprobability signals, high
probability outcomes, and uh,you know, this is just my, my
way of doing it, that you know.
Speaker 2 (03:01):
I found that that works very very well, I feel
like we should.
Um, we'll get into the signals,but I feel like we should
define breadth.
I point for the better part oftwo years I keep saying on X,
small caps hold the key, becausethere's many more small cap
companies and large capcompanies.
I view that as breadth, but alot of people don't view it as
breadth.
Speaker 1 (03:19):
Yeah, no, you're absolutely right.
I mean, that's how I view it.
If you think about and the wayI like to describe it to to
macro guys or fundamental guysis that breath is liquidity,
right, if you think about it?
Right, all this philosophy istelling you is how much money
you have in the market and howmuch of that is flowing into how
many different companies.
Right, the more money flowinginto the more companies, that is
(03:44):
the healthier market condition,right?
So it just goes back to the oldgenerals and soldiers.
If you're running an army, youdon't want just the generals
going out on the field, you wantthe whole force.
Right, you want the leaders.
They're out in front, okay,those are your big dogs, but
behind you, you want your fullclass, you want your full
support of your big dogs, butbehind you, you want your full
class, you want your fullsupport.
(04:05):
And when you don't have thatand this is what we've seen over
the course, certainly in ourwork we indicated it as early as
January of this year thatbreadth was becoming a major,
major issue because thosegenerals were just running out
on the field by themselves.
They didn't have any supportand have any cover.
So that makes the market reallyvulnerable and if you think
(04:26):
about it from a liquidityperspective, it means that
liquidity is drying up.
I like to use the advanceddecline line and a few other
indicators, but the advanceddecline line is just a simple
addition equation, right?
It is basically just takingevery single day in the market
and saying how many stocks wereup versus how many stocks are
going down, and you just netthat number up, right, and then
you just add it to the daybefore.
(04:46):
So if you think about what adivergence means we talk about
divergences as technicians a lot.
We like to use these wordsDivergence is basically telling
you breadth is going down, sothat advanced decline line is
going down and the price of themajor index is going up.
Well, how does that happen?
Well, it happens because smallcaps are not participating,
(05:06):
right?
And what that means is that,mathematically, on average every
single day, there are morestocks going down during that
period than are going up duringthat period.
And you tell me, as a portfoliomanager, is that kind of the
environment that you're going tobe really, really, you know,
knocking it out of the park?
(05:27):
No, it's not.
And I'll add real quick on thatit's a good point, because it's
very hard to beat the S&P 500when it's the only game in town,
when breadth is as weak as ithas been, because anything you
try to position into will almostautomatically underperform
Right right, oh yeah, and thenthere's all the you, you know
(05:50):
the math and the waiting, andthat's more your, you know your
belly wick, but uh, but you mean, it really just becomes a
question of you know, at thatpoint, okay, you've got a
withdrawal in liquidity, right,and what happens after that?
Well, it's going to lead tovolatility because you have you
have a fragile environment.
Right at that point you'd onlyhave a few stocks going up.
I mean not literally a few, buta few compared to the thousands
that are out there, right.
So in that scenario, bad news,when it hits, is exaggerated.
(06:15):
Right, if you have a goodbreath environment, you can get
hit by all sorts of bad news.
It really doesn't matter, itdoesn't stick as bad news, uh.
But if you get hit with it in afragile environment where
breath is weak, then you haveproblems.
And that's kind of where we,you know, that's where we were,
that's how we started the yearand a lot of people really were
(06:35):
kind of oblivious to it.
Speaker 2 (06:37):
So part of my um thesis for the last two years
which also has been very wrongand really wrong, particularly
in 2023.
I backed off from a lot of thatand I'm now bringing it back to
the forefront is small capshave been weak, which is why I
was so anti-NVIDIA for a longtime, because, to your point,
the generals fault the soldiers.
(06:59):
My original thesis back thenwas small caps clearly were
diverging with large caps and Ithought that the Mach 7 would
converge to.
Small caps clearly werediverging with large caps and I
thought that the Mach 7 wouldconverge to small caps and
obviously they haven't right.
It was just totally in its ownorbits as the AI narrative took
over.
Do you think we could have amoment where some of these AI
(07:19):
names very suddenly collapse tothe message of small caps?
Or is that AI narrative sostrong that and the earnings are
so strong that that's notreally a possibility?
Speaker 1 (07:31):
Yeah, I mean, I think , listen, history is a guide for
this right, and we can talkabout this later.
We talk about, you know,potential for a lost decade and
how those start.
You know they start withextreme valuation and then, of
course, you have structuralissues that are introduced that
just take a long time to workthrough and that's why you get
these lost decades.
But yeah, no, I think youstarted to actually see with the
(07:52):
bigger drawdown.
If you look comparatively, thedrawdown the S&P versus the
drawdown in the NASDAQ comp hasactually been a bigger drawdown
from the NASDAQ comp, whichtells you that maybe there's a
little bit of a catch downeffect, which may be what you're
sort of referring to Now.
All in all, small caps are stillunderperforming year to date
and that's sort of been the case, like you said rightly.
(08:15):
But I do see there is someearly evidence of kind of a
catch down effect in those inthose mega cap and those mega
cap names.
And I think you look at NVIDIAand NVIDIA hasn't made new high
like a, like a, a really strongnew high, I would say, since,
you know, almost a year it'sbeen I think July, you know July
, maybe of, of of last year.
(08:36):
So I think it's, it's apossibility.
It's not exactly what I do, butbut certainly, you know, I
could, I could see, I could seethat happening.
Speaker 2 (08:44):
You talk about divergence.
I tend to look at a lot ofdivergences from both a bullish
and bearish perspective, becausedivergence just tell you where
there's a disconnect betweendifferent asset classes and
different parts of themarketplace.
What are some of the biggestdivergences that you're seeing
right now?
Speaker 1 (08:59):
So you know right now versus you know where we were.
So you know right now versusyou know where we were.
So, like kind of how we gothere is through the divergence,
and that's sort of a very keypart of you know what I do.
And I started studyingdivergences in a really big way
in 2006, 2007, 2008.
And of course it was reallytimely and it helped me at that
(09:20):
time.
But a technician by the name ofPeter Lee, who was at UBS at
the time and so was I, we hadkind of worked together to some
extent while I was on the equityresearch sales desk and I got
really really deep into theweeds on breadth and these
divergences and I studied themthrough history and I said, wow,
these divergences are presentpretty much at every major
(09:41):
market top into every majormarket top.
And that kind of leads me tothe structure I created my, my
own system on, which is is basedprimarily on this observation
that just divergences are kindof hold the key and, like you
said, small caps hold the key.
I mean that's totally true inmy work and to the point where
you know we, we, we did get amajor sell signal.
You know that I give out to you, know out to my subscribers as
(10:04):
of February 21st.
So that was just two days, twodays after an all-time high in
the Russell 3000, the Russell1000, s&p 500, s&p 1500, all
these new highs in these majorindexes.
And then, just two days later,breath went weak, into the point
for us where we said listen,this is time to take risk off or
start to take risk off.
Of course, we got another, moredefinitive sell signal in our
(10:28):
service in the middle of Marchwhich basically said that okay,
now this is getting to the pointwhere we'd say this we would
call this bear market typebehavior, right.
And that's just based on someof the divergence that we saw,
not only between the AD line,but also if you look at, for
example, the percent of stocksabove their longer-term moving
averages, if you look at thepercent of stocks in the Russell
(10:48):
3000 at the time of theall-time high so I'm talking
about February 19th you onlyhave 53% of stocks in that huge
index.
That's so vitally important asfar as determining, again,
liquidity how much money is outthere, how much it is going into
, you know, going into stocks.
Yeah, only 53% of stocks.
(11:09):
At that time, when the indexwas making new highs, were
actually even above their200-day moving average, and
that's even.
You know.
We're not even talking aboutnew highs, we're just talking
about holding a basic, you knowuptrend.
So I'm not really looking atany positive divergences right
now.
That, like you said, is theother end of it.
There were some people out therewho were sort of calling out oh
(11:33):
, there's a positive divergencein the percent of S&P 500 stocks
above their 50-day movingaverage.
A few weeks ago and I didn'treply to that person but as an
announcement people should beaware of I put a note out on
Twitter and basically said becareful, because the slope of
the moving averages reallymatter.
Right, people don't understandthis.
(11:55):
So if the slope, in other words, if the slope of moving average
, is negative, then you're goingto have at some point on that
curve.
You're going to have a timewhere you can see positive
divergences that aren't reallypositive divergences and the
point that I made there, notonly with the slope, because a
lot of the slope.
At that point I think there wasless than half of stocks in the
(12:17):
S&P 500 above their 50-daymoving average, which
demonstrates that you probablyhave a negative slope, but also
half of them.
When I did check, half of themdid have negative slopes indeed,
so that would tell you thatthat's kind of a false positive,
in addition to the fact thatyou basically have to get a
(12:38):
reaction to the upside to reallycall it a positive divergence.
Also, none of the otherindicators were confirming a
positive divergence.
So if you just have one, youknow one of these indicators
saying positive divergence,you're not getting confirmation
anywhere else.
You don't trust it, right, andI think that sort of held true.
So for right now, I'm notseeing anything on the positive
divergence side.
(12:58):
I think that's something that Iwould watch for and something
in my work that I do look for.
But we looked for longer term,more confirmatory positive
divergences when we're lookingfor them and more along the
lines of stability.
First right, you need to have afoundation from which to jump
from and I think it's reallypremature for people to say, yep
(13:19):
, that was the bottom, that wasit, and I'm talking about last
week or the other week.
It's just too soon for theamount of damage that we've seen
to this point.
Uh, the internals are kind of awreck and historically you
don't just go vertically up fromthat.
That kind of damage it takestime to even find a bottom.
In this situation and in ourexperience and historically
(13:41):
again, my work is only based onprobability and history.
Um, it takes a long time fromthis point to rebuild.
Typically, you know, there areof course always counter
examples, but those are therarities.
Speaker 2 (13:55):
Yeah, and I would tend to agree as much as that
Wednesday call I had where Isaid you know you're going to
see one of the most epicintraday reversals for the stock
market history, which thenhappened when Trump did the
pause on the terrorist.
I myself then said I suspectthey're going to rally for two
weeks and then it doesn't meanattack lower lows, right,
(14:15):
because path behavior is veryconsistent with what you see in
bear markets, right, which Iguess is sort of a good question
.
I mean, do you believe that weare actually in a bear market?
Speaker 1 (14:26):
Yeah, that's what our work tells us that we are in a
bear market.
It could last longer than a lotof people think.
I think a lot of people believethis is about just the news and
this is about tariffs, and Iwould make the counter argument.
That, which is what I saidearlier, is that every major
bear market starts in kind ofthe same way, which is, you get
these divergences, you get ahollowing out of participation
(14:48):
in the market.
There's fewer stocks to choosefrom, fewer stocks going up,
less liquidity go around.
I mean, these are justhallmarks.
Classically, you look at thelast hundred years or more.
This is how tops are formed.
So I think, regardless of whathappens with the, with the
tariffs and the and the newsaround that um, I think that
(15:08):
this market has a lot ofchallenges ahead of it and I
think that you know this.
I would call this a bear marketand I think that's that's the
only um, the only fair monikerat this point that I would apply
to, at least on a cyclicalbasis.
Speaker 2 (15:21):
It's a question from somebody watching on YouTube
noting that the mag seven wentup 600% this decade.
I don't know if that's right ornot, but could be right.
But what do you expect on magseven?
So we're going to touch on thetheme of a lost decade, but are
we talking about lost decade inevery stock or in the mag seven,
(15:42):
which is what's driven the inquotes bull market?
Right, yeah, hey, no stock?
Or in the mag?
Speaker 1 (15:44):
seven, which is what's driven the in quotes bull
market, right, yeah, hey, no,it's a great question.
I wish I, I wish I knew.
Um, as far as you know the magseven, uh, I would say that
there are probably structuralforces in play that are going to
deflate those valuations.
Um, you know, I talked to waltdeemer about this kind of topic,
(16:05):
about major tops and the kindof weird things that you can see
in the many, many years thatfollow when you have these mega,
huge, dominant, dominantcompanies, where you had a
company that would trade up,trade up to a certain level,
(16:25):
multi-year highs, and everythinglooked great and the
fundamentals are great and themultiple, you know, reflected
that right.
And then you know, whatever, 35, 40 times earnings or whatever.
And you know, in the examplesthat he gave, he said you know
the fundamentals actuallycarried out exactly how the
(16:45):
company had said they would.
Right, I mean, they kept, theykept crushing it on the numbers.
But guess what happened?
The stock cratered in the yearsthat followed, simply because
you had these structural forcesin play, ie interest rates.
Ie, interest rates had gone updramatically such that that
(17:06):
valuation premium shrunk, shrunk, shrunk, shrunk, shrunk, to the
point where the stock wastrading in a fraction of what it
was in its heyday, but thefundamentals were as good as
everybody ever thought they weregoing to be.
And that's what makes themarket really, really difficult.
But I can see something likethat happening and I think
(17:27):
Walter, in our conversations hesaid that you could see
something like that happeningwhere there's still great
companies, they're still doinggreat work, they're still
executing.
It's just that the multiple iscompressed to the point where
these are not good stocks to own.
They might be amazing companies.
The point where these are notgood stocks to own.
They might be amazing companies, but they are just not good
stocks to own.
Speaker 2 (17:48):
You mentioned the work with Lowry Research and
your own signals.
You touched on breadth a littlebit.
What signals do you typicallylike to look at that you find
have the least prevalence offalse positives?
Speaker 1 (18:02):
Yeah, I look for extraordinarily high probability
outcomes like to look at thatyou find have the least
prevalence of false positives.
Yeah, I look forextraordinarily high probability
outcomes.
So what I'm looking for whenI'm building a system and this
is taking me 20 plus years to dothis right but what I look for
is extraordinarily highprobabilities.
So something that happens morethan 90% of the time, with an
outcome that is predictable morethan 90% of the time.
(18:25):
As a result, I get very fewsignals and when you get them,
you need to really pay attention.
So I tend to look at indicatorsthat are relatively immutable.
There's really no opinion aboutthem.
I don't want to put any realtransformations on them.
Opinion about them.
I don't want to put any realtransformations on them.
(18:46):
I don't want to make them myown.
I want to look at the raw dataand then, throughout history,
understand okay, what is thedata that's being presented now?
Okay, what does that data feellike and what does it look like
and how does that comparehistorically to market regimes
in the past?
So what I do is I justbasically say, okay, given these
conditions, what is my regime?
(19:06):
And, based on that regime, whatdid my return and risk profile
look like?
And then, what's my optimumlevel of equity exposure based
on?
Based on those factors, right?
So, in a way, it's it's simple,because my assumption is always
and it will always be hasn'talways been, but it will always
be that the market is justinfinitely smarter than me,
(19:28):
right?
So the only thing I can do islook really, really careful at
the cues that it is giving me,not somebody else, not some
transformation on some indicatorthat could sort of bastardize
it in a way.
Right the pure, you know thepure data, right the pure
numbers, and then historicallycompare those things.
So that's really what I'm afterand what I'm doing.
Speaker 2 (19:50):
Another question which might be nuanced, although
it's interesting maybe from atechnical perspective Any
consequential differences inthis cycle due to the change in
the character of the S&P 500'sownership.
About 20-25% of the S&P 500 wasforeign-owned in 2007, versus
40% today.
This is, by the way, aninteresting thing only because I
think it also has driven a lotof the over-evaluation.
(20:12):
A lot of money from foreigninstitutions, foreign high net
worth, has gone into NVIDIA, hasgone into a lot of the AI names
because they don't haveanything in their local
countries that are equivalent,and we've never been in a cycle
where it's been so easy to movemoney around so quickly.
Speaker 1 (20:30):
Yeah, that's a really good point.
I think that's exactly right.
And also think about it from arelative strength perspective.
It's been like 15 years atleast that you've had just
massive relative strength in inthe U S market.
So it's sort of like it's aself-fulfilling prophecy.
I mean, money's going to go towhere it's treated best, right,
(20:52):
I mean a lot of the relativestrength guys that you know you
speak to, um in in technicalanalysis, will tell you that.
So to me it's not anythingspecial to hear.
But I think again this sort ofbegs the question of structural
forces and what is that going tomean for valuation and
innovation and the way capitalis deployed?
(21:14):
And again, I think this is morelike in line with you, michael,
in terms of your background onthe CFA and just being the macro
person that you are.
But, um, but that that would bemy answer is that you know I
could, you can see that go theother way for a lot of different
reasons.
Um, might, you know, maybe tothe point of what they're trying
(21:35):
to bring up here.
It might exacerbate that thefact that you do have so much
more foreign money, you know, inthis market.
But you have to have a validplace to put it elsewhere.
So if there's a proven,demonstrable relative strength
trend that forms elsewhere inthe world over a long period of
(21:57):
time that people can reallytrust and get behind, well then
that money is going to flow towhere that benefit is right.
Speaker 2 (22:04):
I'm curious to hear your technical take on
international markets broadly.
You mentioned valuation in theUS, which we'll get into as it
relates to possibly the lastdecade.
But yeah, there's been somereally good relative
outperformance right in theinternational stock market side
of things.
How are you viewinginternational market here?
Speaker 1 (22:23):
The way that I would view it, I guess from my lens,
would be more along the lines ofpeople probably see relative
value there from a fundamentalperspective, and if that is true
, then you also usually get arelative strength benefit and
then you get momentum benefit.
The issue I have when it comesto relative strength style
(22:48):
analysis is like what's theperiod of your look back?
I mean, you can say that yeah,there's been a great trend in
relative strength on theinternational side of the
equation for the last whateverthree months, six months,
whatever you want to say, butlike is that adorable trend?
And the question is like I haveno idea, right, like you just
(23:10):
don't know if that's going topersist and how long it's going
to persist for.
And oftentimes, when it comesto relative strength, what I
found is that you know by thetime it gets to be the point of
like popularity or being reallywell known or widely regarded or
widely respected as a trend,you kind of get there and then
it goes a different way.
You know this often have on,happens more like on a single
(23:32):
stock basis, but it can happenthis way too.
Um, again, I think it comes downto what is the sustainability
of those trends I don't foresee,you know, if this is a true
bear market.
I don't.
I don't.
It's hard for me to imaginethat.
You know there are going to bebig.
(23:53):
There might be really small,small markets that this could
happen in, but it's unlikelythat you would see a very, you
know, major, major, majorinternational markets really
massively outperform.
If the us is, you know, if theus capital market isn't a doubt,
isn'ta major down friend orbear market.
It's just it's difficult for meto kind of square those things.
(24:16):
Um, it could happen, sure, um,again, with some of the smaller
markets.
I could see that.
But uh, by and large it'd bedifficult thing to imagine, just
because of that liquidity.
You know that whole, that wholequestion around liquidity and
you know within the capitalstructure where is money being
treated best.
Speaker 2 (24:34):
You know it's just a difficult one to for me to get
my head around, but open-minded,you know any any particular
international markets that Idon't know if you're tracking
them, look better than othersmeaning yeah, is it contrarian
trade China?
Is the contrarian trade Germany?
I mean what looks moreinteresting to you?
Speaker 1 (24:53):
Yeah, I mean, it's not work that we do, you know we
don't do anything on, you know,beyond the US market.
But you know, I would say thatthere's a high degree of
correlation historically betweenthe U?
S market and most markets inthe world.
I think China is probably onethat is there's like literally
no correlation, uh, most of thetime.
So, uh, that doesn't mean it'sgood, it just means that there's
(25:16):
no correlation.
So maybe that's something youwould look at.
You know, you would look at, um, you would look at markets
around the world thathistorically have very little
correlation to the US market,and then that would be to me,
that would be the place I wouldstart, if that's an angle I
wanted to take.
But it's just not in the workthat we do.
We focus on, you know, breadthin the US market, because that's
(25:40):
just where I have the edge.
Speaker 2 (25:42):
Edge is an interesting word, um, because
it's as you know it's like theproblem is very hard to, in
quotes, beat the market Rightand a lot of technical
indicators will work for certainperiods and then not work.
They'll get whipsawed.
Because it's ultimately aboutthe cycle.
You know, if you have atailwind, you have a tailwind,
(26:06):
you're less likely to bewhipsawed.
If you don't have tailwind,you're more likely to be
whipsawed.
So is it the cycle or is it theindicator?
All right, there's all thesekind of interesting, yeah, base
people we can have, but, um,what tends to give traders an
edge?
I mean it.
I don't think the answer is assimple as technical analysis
broadly right, you're right,it's not.
Speaker 1 (26:19):
The answer is discipline, right, you know, and
I think you you portray that inyour work, um, and also in the
way you live, like with, withthe fasting and the exercise,
like I'm the same way.
I don't fast like you, uh, Ican't.
I just I love food too much, um, but but you know I do.
I do have a regimen that Ifollow and I and I translate
(26:40):
that into my process.
That's just how I am.
I'm systematic, I'm verydisciplined in that way.
So I think, in order to be asuccessful trader, you need that
, you need to be disciplined.
It's not about willpower oranything like that.
It's about discipline, andthat's something that anybody
could form.
Speaker 2 (27:01):
It just takes, it takes time, but, yeah,
discipline and process, that'swhat I would tell you every
single time, which is reallyhard um, it is right because,
like, I've always had an issuewith the idea that, uh, people
who say that you know, if mystrategy is not working, I
switch strategies, well, thenyou're not disciplined, right?
(27:21):
I mean, you know, just becauseit's not working in the
environment that you're alreadyin doesn't mean you shouldn't
keep doing it.
Now some will counter and saywell, the definition of insanity
is doing the same thing overand over again, expecting a
different result.
Well, but then explain to mehow people get healthy, explain
to me how people get stronger.
Right, I mean, you do need tohave a degree of repetition,
even though it may seem likeit's not working in the now.
Speaker 1 (27:43):
Right, that's absolutely right.
It's persistence and like andyou know this and I know this as
system followers is that evenwhen you think, and maybe even
especially if you think it'swrong, you have to follow your
system.
You have to, otherwise you havenothing.
Then you're just like everybodyelse and you're a you're.
You're, you know, a victim orof your own emotions, and that's
(28:06):
what we want to cut out.
I mean, emotions are not goodfor investing.
I mean, this has been proven somany times, so many studies, in
so many different ways, I don'tneed to say it again.
But but yeah, I mean that'swhat I think it.
Just you know, following thatsystem, even when you think it's
wrong.
Some people will call thatpersistence, some people call it
(28:27):
insanity.
I would call it persistence, Iwould call it strategy, I would
call it, you know, beingsystemized.
And and again.
If it's something that youbelieve in and you've tested
thoroughly right, then there's areason that you're doing, why
you're doing it, and you have toremember that All right, let's
(28:47):
get into this the topic of thelost decade.
Speaker 2 (28:50):
It's not a very comfortable topic, although I've
been tagged as like aperma-bearer because I keep
saying small caps, small caps,small caps.
You look at Ross 2000,.
They're basically halfwaythrough a lost decade already,
sure, at least on a nominalbasis.
I mean, when you look at itafter inflation, oh yeah, it's
(29:13):
way worse, right, it's nobody'sthinking, they just don't get a
chart.
But the chart is is notadjusting for inflation, right?
So we've had this really weirdenvironment where typically a
rising tide lifts a boat and ithas it.
And let's first outline whatare the characteristics of a
lost decade, what are the thingsthat you tend to see in the
(29:34):
early stages of one, and how dowe know if we're in one, except
with hindsight?
Speaker 1 (29:44):
in one, uh, except for the hindsight.
Yeah, I know, I mean this is anawesome question and I love
just the the idea of talkingabout it, because I think
there's just this religionthat's been formed around uh,
buy and hold, uh and buy the dipand uh, honestly, I just think
that there's a time foreverything.
That was the right thing forthe last 15, 16 years now.
(30:10):
Right, that was the right thing.
But as far as the way,historically, you see lost
decades start, you see themstart with extreme valuations,
so you can check that box.
You see them start usually withvery long negative divergences
(30:31):
between some of the breathindicators and the major indices
.
I wouldn't call this one thatwe've seen most recently uh, fit
into that category, but only.
But remember, you talk aboutlost decades.
There's not a huge sample here,so these are really just
tendencies.
What I think is more importantand I think you should speak
(30:54):
more to this because you havethe background too is that those
lost decades, they're driven bymassive structural forces.
So whether that be deleveraging, whether that be demographics,
whether that be inflation, andthen I think most importantly
probably is the direction oflong-term rates.
(31:14):
So I think there's a lot ofreasons why you should at least
consider the possibility that wecould be entering a lost decade
for equities, much like what wesaw between 2000 and 2010.
And again, that's how I startedmy career and I remember in 2010
(31:37):
or even 2013, when the marketwas just getting back to
all-time highs.
In 2013, when the market wasjust getting back to all-time
highs, um, people saying thatyou know, buy and hold, you know
buy and hold is dead and youknow this doesn't work anymore.
And I think you've got theopposite now, where it is this,
it is this religion that it'sbuy and hold and you have to buy
and hold and you can't miss,you know you can't miss the best
(31:59):
days, even though they'rethey're clustered around the
worst days, by the way.
Um, I just think that people'sthinking has been so, you know
now, one-sided, in addition tothose extreme valuations that we
could, all you know, we've allobserved, right, um, that I
think this is a real possibilityand what you would expect to
see is is you know more of a bigrange.
(32:20):
You know where you get.
You still get bull, right, youstill get cyclical bulls, then
you get cyclical bears.
The problem is, you don't makemuch progress over a very long
span of time and, as you broughtup rightly earlier, in real
terms, when you account forinflation, this is a massive
(32:41):
misallocation of capital, ofcapital right, because you're
losing money effectively, insome of these cases for a decade
or many, many years.
So, uh, it just makes the assetclass as a whole something that
is something that it'stypically not and that's
difficult for people to gettheir heads around and adjust to
.
But, um, again, that's why youlook at the data and you're just
(33:04):
open-minded to the possibilitythat, hey, this could be it, we
could be an environment whereyou need to be more tactical.
You cannot just buy and hold.
You need to know when to selland you know when to buy.
And that's why you know one ofthe reasons why I think is a
great time for you know myservice and services like yours,
because I think people need tosort of wake up to that
possibility.
Speaker 2 (33:24):
I see a question here from somebody which I think is
worth mentioning, given thatyou're a CMT charter holder.
I'm a CPA charter holder.
For someone trying tounderstand the macro side of
things, would you recommendgoing to college, and if so,
would you recommend economics orfinance?
Let's talk about self-education, because one thing is to see
that we're talking about marketsyou and I understand what we're
(33:46):
saying to each other.
A lot of people may not have aclue right, and a lot of the
stuff is hard to understand forpeople that are engrossed in
this daily right.
So let's talk about some of theeducation that you went through
.
So I mean, I have an economicsdegree.
Speaker 1 (34:01):
I was, you know, very interested in Wall Street from
a, you know, college age, youknow, and that's kind of the
route that I want to take.
So it helped, you know ithelped.
And of course, I think, the waythat I think about technical
analysis and maybe this is aresult of that, but also my
career to this point it reallyis about supply and demand.
(34:23):
If you think about it, what'sthe force of the buyers versus
what's the force of the sellersor what's the liquidity behind
each of those forces.
Getting insight intopsychological tendencies and
improving your emotionalintelligence I think would be
(34:46):
really great advice for somebody, especially who is young and
very interested.
Because again, it kind of goesback to that idea of discipline
and being able to have a processand know yourself and know what
works for you.
Are you a swing trader, are youa long-term investor, are you a
day trader?
What makes sense in your brain,and then having emotional
intelligence around that.
So that would be sort of myadvice and of course I mean
(35:09):
there are so many books that youcould read that will help you
kind of get up that curve inachieving those and finding
those things out about yourself.
Um, but that's.
That's what I would suggestyeah and listen.
Speaker 2 (35:23):
I mean, like I made this point many times before, no
amount of intelligence canincrease the clarity of one's
crystal ball.
So even if you're highlyintelligent and highly well
versed in in the topic ofmarkets and investing doesn't
mean that you're necessarilyoutperforming right, because
this is one of those domains inlife where it's hard to know if
it's skill versus luck, good orbad right when it comes to the
(35:44):
outcome.
But it's still good toobviously at least have the
basics down right and havingstructure around that, as
opposed to just looking atrandom posts.
On X yeah, I think you see itreally quite a bit.
You mentioned we're probably ina cycle for tactical and active,
which is music to my earsbecause the reality is, ever
since QE3, that's where I myselfpin it it's been in an
(36:07):
environment of just passive buyand hold Yep.
Any hedge funds that have beenout there have massively
underperformed.
Any active tactical strategieshave underperformed.
And again I go back to is itthe signal?
Is it the cycle?
Is it the cycle?
Is it a combination?
The challenge with active andtactical, I think, is that there
(36:29):
aren't that many vehicles leftthat are active and tactical
Right.
I mean, I have certainstrategies that are, that have
survived throughout a very nastyenvironment, almost a
decade-long environment, wherethere's plenty of historical
reason for why.
Strategies that are, um, thathave survived throughout a very
nasty environment, almost adecade-long environment, where
there's plenty of historicalreason for why those strategies
do what they do.
But, um, for those that aretrying to do it themselves, how
(36:50):
do they even go and go aboutbeing active and tactile?
Speaker 1 (36:53):
yeah, I mean that's tough, I mean it really is
difficult in this environment.
Um, the one thing I would andthe one thing that's really
disappointing, to mean it reallyis difficult in this
environment.
And the one thing that's reallydisappointing to me and this is
just my own experience and I'veworked with a lot of financial
advisors or wealth managersthrough the years and there are
very few that actually do take atactical approach to markets
and that, to me, is verydisappointing.
(37:14):
And it's actually reallysurprising to me too, because if
you think about what the ETFindustry has done to investing
over the course of the last 10,20 years, they've told you
explicitly and implicitly thatbuy and hold investing is worth
(37:35):
you paying about three basispoints for, because if you look
at the index ETFs, that's kindof what they're selling for.
So what's shocking to me andkind of disappointing is that
there are a lot of financialadvisors out there and wealth
managers out there that arecharging fees well in excess of
(37:56):
100 basis points.
So it's sort of like I mean Iknow my generation and younger
is probably asking like ifyou're not going to be tactical
and you're not going to be riskaware, then what you know, what
am I really paying you for,right?
So I think that if we do gointo an environment again with
this current demographics thatwe have, where you do have the
(38:18):
younger population that is nowsort of inheriting those older
portfolios from the priorgenerations, I think you will
have a shift back into activeand I think services like yours
and services like mine are goingto benefit from that.
What I believe is going to be amulti-year trend, if not longer
, because it just makes too muchsense.
(38:40):
I mean, if you can avoid the uh, the major drawdowns, and you
can still participate in most ofthe upside or all of the upside
, you know what that does.
To compounding.
I mean you, you, you tell us asa CFA, but I mean that
supercharges compounding,because you're basically just
cutting the negative part of theequation out and uh, and you're
basically just cutting the, thenegative part of the equation
(39:00):
out and uh, and you're not, youknow, going off the textbooks in
the textbooks on compoundingsay like, oh, it's, you know,
it's nine percent a year, everyyear.
That's just, that's how it isand it's great and it goes like
this, it's like all right, butin real life, in real life, guys
, uh, it doesn't go like thatright, because you'll have a 20
year year and another 20% yearand then you're going to have a
negative, negative 40% year.
(39:22):
It's like okay, well, how doesthat change?
Well, it really depends also onyour own path, how old you are,
and your own path to retirementand that experience that you're
going to go through.
So I just think at this point,you know, listen, we are, you
know, 16 years into this kind ofenvironment where sort of like
buy and hold is king.
(39:43):
At some point it's going tochange, probably sooner than
later, and we're all gettingcloser to retirement every
single day.
So, at a minimum, you know,sequence of return risk is a
very big deal.
That, again, I don't thinkanybody really talks about or
thinks is relevant to them untilit's too late, and I think
that's something we need to bemore careful about in the way we
(40:05):
think about risk.
Speaker 2 (40:08):
Yeah, which goes back to a line I've said as part of
my own brand, which is pathmatters more than prediction,
which is the sequence ofassurance and the end point.
Because, sure, we can zoom outand say stocks will in the long
run and don't worry about it,that's all fine.
But it's like, if somethinghappens tomorrow, that where you
need that capital hopefullyobviously you have an emergency
(40:29):
fund that's in cash, it's not inequities.
But what if you need capitaland you have to sell equities at
the wrong time?
There's other dynamics whichhave to be considered.
Right, then just sort of zoom meout and look at 100 year chart,
so to speak.
Sure, um, right, so okay, now Iam curious to hear your
(40:49):
thoughts on diversificationwithin being active and tactile,
right?
So I am of the mindset thatdiversification comes from more
than just asset class.
It comes from strategies, whichmeans maybe you have a portion
of your portfolio that's tradinga very specific set of signals.
Maybe you have another portionof your portfolio that's got a
totally different operating seton the same signals.
Maybe it's another portfolio,totally different signals, right
?
Talk to me about how do youdiversify when you're active and
(41:13):
tactical, when the risk couldbe the signal itself?
Speaker 1 (41:17):
Yeah, I love that.
I love that.
I think that makes a lot ofsense.
Having diversity in yourstrategies itself yeah, I love
that.
I love that.
I think that makes a lot ofsense.
Having different, havingdiversity in your strategies, it
absolutely makes sense because,like you said earlier, you can
go years without a tendency thathistorically was very valid
working out, but then all of asudden it starts working again.
(41:37):
So you don't want to be tootethered to one strategy or
another.
So to me that makes a lot ofsense.
I mean, I would totally agreewith that.
Um, and a lot of people will dothat, even in time, in in time
relevance.
So they'll say, okay, well,this is my long-term money, this
is my long-term strategy, thisis my shorter term money is my
shorter term strategy.
I think that's, I think that's,I think that's smart.
(41:58):
Um, you know, I think it's a.
You know, for me as an equityguy, um, I think that's a better
approach than, oh, 60, 40.
And you know, this is just howit is and it's like uh, that's
another thing that I thinkpeople have to rethink is 60, 40
, because, um, you know, ifthere's a structural
inflationary force, then 60-40is not going to be what you want
(42:19):
to pursue.
Speaker 2 (42:21):
Yeah, I think that's right, Vincent.
As we start to wrap up here, alot of people have been
listening playing comments.
Nice viewership overall Forthose who want to learn more
about your work, your analysis.
Where would you point them to?
And then maybe any sort ofpiece of advice as far as how to
think about what, what to do inthe very short term at least
yeah, yeah.
Speaker 1 (42:41):
So my, uh, my site is view right, dot ai, right.
So the idea is we get themarket view right.
That's what matters, right?
So view right, dot ai.
And uh, I'm, I'm on x at cmtrandaz.
And as far as what, in the shortterm, you should be doing, I
(43:02):
think you really need to examine, um, the mindset that you're in
and if it is a, if it is a buythe dip mentality, I think you
need to probably rethink that,um and think about the
possibility at least or be opento the possibility of it that
maybe you should be sellingstrength and certainly be a
(43:24):
little more careful about wherethings are.
And I think for me, I would saymoving a portion into T-bills
is kind of what makes sense.
Keeps them powder dry, wait forthe right pitch.
There are plenty of people outthere that will tell you really
really successful investors thatwill tell you and you know,
(43:45):
warren Buffett maybe is a greatexample, or the perfect example
of this is like just wait, waitfor the wait for the conditions
to be right, you know, um, andthen make your move.
You don't have to do somethingall the time right, especially
not as a non-professional.
You don't have to.
So you have that luxury of time, use it.
Speaker 2 (44:05):
I think that's very well said.
Everybody learn more about whatVincent does on that website.
Stay tuned, I've got anothertwo back-to-back.
You'll see that streaming inabout seven minutes.
And, vincent, I appreciate thepatience with the technical
difficulties.
Speaker 1 (44:18):
No, thanks for having me.
It was a lot of fun.
I hope we can do it again.
Thank you, buddy Cheers, takecare.
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