December 18, 2024 • 43 mins
Discover how an aspiring trauma surgeon, Adam Koch, turned a challenging life event into a thriving career as the president and founder of Libertas Wealth Management Group. Adam takes us through his unexpected journey from competitive Taekwondo to becoming a seasoned financial advisor, sharing how technical analysis and relative strength became the cornerstones of his investment strategy. His commitment to shielding clients from poor financial advice makes this episode a must-listen for anyone looking to enhance their financial acumen.
Unlock the secrets of effective trading strategies and risk management with Adam's insights into stock chart analysis. Explore how different trading timeframes—from ultra-short-term day trading to long-term investments—can be tailored to suit your financial goals, with a special focus on intermediate-term trading. Learn why having a disciplined approach is crucial for navigating market uncertainties, like election times, and how to avoid common pitfalls that lead to emotional decision-making.
Adam also shares his expertise on market trends and asset selection, emphasizing the potential of small-cap stocks and digital assets. He explains how trend-following models and relative strength calculations can guide investment decisions, helping investors to capitalize on emerging opportunities in both digital and traditional markets. From portfolio management strategies to understanding small-cap indexes and tax policies, this episode is packed with actionable insights that will help you confidently navigate the complexities of today's investment landscape.
if you enjoyed the show be sure to check out my info:
https://app.wingcard.io/ROB3SA64
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Hello, hello everybody.
So we have Adam.
Adam is a professional moneymanager and a fiduciary.
Me and him decided to just geekout over technicals, over
trading and charts and how themarket moves Me especially.
I do a lot of futures contracttrading on the side.
It was fun talking with Adam.
(00:21):
I got a lot of insights on howa fiduciary would look at the
new market.
So if you're looking atbettering yourself or improving
your investing skills,definitely listen in.
But also if you are anaccredited investor, definitely
give Adam a call.
I'm sure he would just love tochat in general about the market
(00:42):
.
Let's begin.
I'm sure he would just love tochat in general about the market
.
Let's begin.
Welcome to the Josh Bolton Show, where we dive into interesting
and inspiring conversations.
And now your host, josh Bolton.
All right, sure, adam, give usa quick introduction of yourself
, who you are, and we'll getright into this.
Speaker 2 (01:04):
Sure, so my name is Adam Koch.
I am the president, founder,senior financial advisor and
portfolio manager at LibertasWealth Management Group in
Columbus, ohio, so the BuckeyeCity Been in the business for 23
years.
I always say I haven't worked aday in my life, at least for 23
years anyway.
Those part-time jobs were rough, though before then.
(01:25):
I bet, I bet.
But yeah, we're a financialplanning firm first, investment
management firm second.
But probably what makes usreally unique is, aside from the
full-blown, comprehensive,all-inclusive financial planning
, retirement planning,retirement income planning, tax
planning, estate planning, youknow, insurance planning, all
(01:46):
that stuff and being a fiduciary, a true fee-only fiduciary.
The other thing that I thinkthat is probably going to be
interesting to those listeningor watching is the fact that our
important portfolio managementstrategies are all built around
technical analysis, relativestrength and things of that
nature, so the nerdy stuff thatonly certain audiences actually
care about.
So I'm really looking forwardto this.
Speaker 1 (02:07):
Yeah, no, I enjoy this stuff, so what specifically
did like inspired you to becomethis?
Speaker 2 (02:16):
To be a technical analyst or get into the
financial advisory services.
Both, both, all right.
Cool, we'll do the long onefirst and then, well, I don't
know, maybe they're both long.
I went to school.
I went to college to be atrauma surgeon.
This was not my path, I know.
There you go.
Don't choke on your drink.
There Is this audio, by the way.
(02:37):
Yeah.
Any video it can be, if youwant.
Speaker 1 (02:40):
I can be if you want.
Speaker 2 (02:41):
Okay, it's up to you.
I'm fine with it being a video.
Okay, totally fine.
So yeah, I was.
I didn't drink in college atall.
I DJed and I did plenty of youknow, I had plenty of fun.
But I was pretty clean becauseI competed for Ohio State in
Taekwondo and I was really,really all about, you know,
keeping my speed and fitness andall that stuff, and I always
(03:10):
joke.
That was about 60 pounds ago atthis point, so things have
changed since then.
But I guess that's life inadulthood.
But anyway, if I can make thisstory as short as possible, I
basically did really well whenin my sophomore and junior year
and I had these big, hugeaspirations of making it to the
Pan Am Games and to make againlong story short I broke up with
(03:30):
a girlfriend I was showing offat the gym trying to do the
splits on two chairs like VanDamme, and I tore my hamstring
halfway off my pelvic bone andended my fighting career.
So basically I can look back.
It's funny now, but I can lookback and say that in retrospect
I was absolutely depressed, notthat I, you know, I kind of
(03:52):
stopped caring about school,called my dad up one day walking
down through campus and said,hey, I've decided I'm dropping
out of the pre-med program.
And he's like well, what areyou going to do?
And I'm like, I don't know.
I've been thinking about it,I've got some ideas and we
exchanged some ideas and then hegoes well, why don't you become
a financial advisor?
I'm thinking financial advisor.
I'm like dad, I took one econclass in college Like why in the
(04:21):
world do you think I'd be goodat that?
And he's like well, you kind ofI want to keep saying long
story short and then make thestory long.
But I basically talked to hisfinancial advisor.
I went to a seminar back down inColumbus.
So I'm from Cleveland, but itwent down to Columbus.
So I went to a seminar for anational brokerage firm, decided
to give a shot, fell in love,ended up getting two degrees,
one in finance, one inpsychology.
(04:43):
So I always joke that I use thepsychology degree more than I
do the finance degree half thetime.
Um, but yeah and uh and yeah.
So, uh, it's, uh, I, I didreally well out of the gate at
this national brokerage firm,even though I was 21,.
Uh, it looked like I was 16 atthe time.
Um, I started 10 days beforethe world trade center went down
(05:03):
and was trying to get, you know, people three times my age to
trust me with their life savings.
And it was not easy, as youcould probably imagine.
So but I still worked my buttoff and, you know, pushed
through the rough times andstarted this company November
4th of 2004.
Libertas, that is, libertasWealth Management Group and our
website's libertaswealthcom, andbasically I kind of at this
(05:26):
point in my career, with itbeing 23 years in, what gets me
really pumped up every day andkind of keeps me really excited
and momentum going is savingpeople from bad advice and bad
advisors.
So that's kind of like mypersonal I don't I haven't been
talking about that till mayberecently, but that's something I
guess somebody asked me and soI'm making it a little bit more
public but that's what I thinkabout when I'm in the car, in
(05:46):
the shower, is that's whatreally kind of gets me out of
bed in the morning is savingpeople from.
The unfortunate fact of thematter is that this industry
there's too many bad apples, soanyway, so that's kind of how
that started.
I've got a couple othercompanies we can talk about, but
maybe today we just kind ofstick with the financial
advisory portfolio management,that kind of stuff.
Speaker 1 (06:07):
I like that.
Yeah, definitely.
Might have to talk to youanother time about those, though
.
So for the technical analysis,are you traditional analysis or
you blend a couple of the moremodern indicators too?
Speaker 2 (06:20):
I would say that first and foremost to make it
easy and simple for those thatare beginners and really don't
know anything about this stuff.
I'm not a fundamentalist, sothat's kind of the opposite of a
technician, so I don't reallyspend.
The only fundamental indicatorsor metrics that I look at are
occasionally I'll glance over atsales, and quarter over quarter
, year over year sales increasesis what I'm looking for or
(06:42):
earnings I'll look at earningstoo, but other than that,
probably the most, the biggestthings I'm looking at on a
day-to-day basis are trend, soprice trend, momentum and volume
.
So those four things are thebiggest.
And then if you put one big,all-encompassing thing above
them, it'd be relative strength.
So I always call it relativestrength.
(07:04):
People say relative strength.
What is that?
You know what's that even meanin the investing world?
And it's like, well, if youimagine every investment you
could possibly invest in wasthat all the teams in the NFL.
It'd be like.
Or now it's college footballplayoff season, right, so it's
all hundreds and some odd teamsin the NCAA.
It would be like investing ourmoney in the playoff teams and
avoiding all the rest.
So that's what investing in,that's what relative strength is
(07:27):
.
Speaker 1 (07:34):
Okay, yeah, honestly, I guess I would be more of a
hybrid, then I use, so are youfamiliar with.
Ken Roberts for futures trading.
No, he was a legend in thenineties so I found him through
my mom essentially, and so hetaught me essentially contrarian
, but he does the.
That's where I was saying.
It's um, it's like a one, two,like one, top, two, bottom,
three, mid, like the, the threepoint, okay, so he's that's
(07:57):
where his is like if you see thethose, and if it's a three high
, it's going down, three lowkind of thing.
So that's mostly what I use.
And then, yeah, the.
I don't use it for the actualtrade, but it's the parabolic
SAR and the ATR to confirm thatit's going down.
Speaker 2 (08:13):
Sure, yeah.
Yeah, I don't use parabolic orany of the indicators that
include the word parabolic, butstrength of trend is hugely
important.
Things like ADX.
Speaker 1 (08:27):
Yeah, so that's where I use Penn's method to call the
top and bottom and then I usethose indicators to prove that
was correct.
But it doesn't matter really tome, because I always get in
like three or four bars earlierthan the actual indicator
popping up.
Speaker 2 (08:45):
I mean, I think, at the end of the day, the great
thing about technical analysisis that it's huge and robust.
And there's about, you know,when they say there's a couple
ways, there's a few ways to skina cat.
In technical analysis, there'sprobably 200 ways to skin the
cat, and the bad thing, theterrible thing about technical
analysis is there's 200 ways toskin the cat.
I mean, so it's the great thing, is the same as the worst thing
(09:07):
about it.
I mean, you can kind of go downthe rabbit hole.
I'm sure you see these chartson Twitter, or X as they call it
now, where you know somebodyputs a chart up there.
Then they have, you know, threemoving averages.
Then they've got diagonal trendlines, then they've got
horizontal lines of support andresistance, then they've got a
cloud on top of it, they've gotvolume bars on the side, they've
got five indicators below itand it's like that's not going
(09:28):
to help you at all.
I mean, that's not going to doanything for you.
Yeah, Unless you understand the,the structure of what the chart
means, all that is just a bunchof distracting overlays it is,
it might look sexy, but to the,to the um amateur eye, but to
anybody who knows what they'redoing there is there is a such
thing as, um you know, a lotbeing too much.
Speaker 1 (09:49):
Anybody who knows what they're doing there is
there is a such thing as um, youknow a lot being too much so
for you um, especially doingthis 23 years and also being a
fiduciary.
What um are some of thestrategies like?
Especially with the last fewmonths with the election fears,
how do you choose to get in andout, especially with this
uncertainty in the market rightnow?
Speaker 2 (10:09):
Yeah, I think that that's a great question.
I think it's important that,before I answer it, to define
well, to make the point thateverybody needs to have their
own timeframe.
So you know, what I'm going toshare is my timeframe, and but
to define all of them.
Not all of them, but most ofthem, the main ones anyway,
first.
The first is you know ultrashort-term, like day trading.
(10:29):
You know these are where peopleliterally go to cash every day
at the close.
That would be one time frame.
Another time frame is calledswing trading.
You know swing trading.
You're owning positions formaybe a few days, up to three
weeks.
You know, one of the best swingtraders in the country, in my
opinion, has been my friend,brian Shannon over alpha
trendsnet.
He's amazing.
So if you're looking for helpwith with swing trading, go
(10:52):
check him out.
Um, subscribe to his service,but, um, I don't get anything
for it, by the way.
I'm just.
This is just selfless acts ofkindness here.
Um, the next timeframe would beshort term, which is, um, you
know, I'd say a month.
You know, month to two months,call it month to three months.
The next would be intermediateterm, which is like six to 12
months, and the last islong-term, which is, you know,
(11:13):
one to three years.
I'm in that intermediatetimeframe, so I'm I'm kind of
trading over a six to 12 month,uh, horizon, if you will.
And so, when the election wascoming up, you know my trends
that I'm following are a littlebit slower, say some, than a
swing trader might use, or evena short term trader.
(11:34):
So, and the reason I sit whereI sit is because I've tested
several strategies.
The great news is they all workif you follow your rules, I
mean.
So it's again, this goes back tothe whole 200 ways to skin a
cat, but, but the bad news is isthat when you're in the
business of managing money forother people, I think there are
optics you have to worry about,and what I mean by that is the
(11:56):
number one reason why clients orindividuals, couples, whatever
investors financial plans failis because they abandoned their
plan.
And the number one reason whypeople abandon their plans is
because the portfolio wasn'tallocated correctly, it was too
risky, the volatility was toohigh, and so, right along those
lines, if you have a timeframethat is too short, you can get a
(12:19):
lot of trading, and then, whenyou get a lot of trading and
you're making money, nobodycares.
But inevitably the market's notalways going to go up and
you're not always going to makemoney, and that seems obvious to
you and I not always going togo up and you're not always
going to make money and thatseems obvious to you and I.
but but I mean the second.
You start losing money andyou're placing a lot of trades.
You get that brain trash wherethe human beings are just
(12:39):
terrible investors and theystart going what are you doing?
You're placing all these trades.
It doesn't even cost themanything we pay for the trading
costs but they're going.
What are you doing?
What's going on?
I'm losing money.
You're placing all these trades.
You're just losing money.
And it's like well, nobody goesinto a trade and goes God, I
hope this goes down so I cansell it and make a loss.
Nobody does that.
But there is a such thing as agood loss and that is having
risk management in place,knowing what your exit strategy
(13:01):
is and, when you hit that exitstrategy, hitting the button and
walking away.
So my timeframe as the electionwas coming up, we didn't change
a whole lot.
I mean, oftentimes the markettells you or or or.
Well, yeah, the market tellsyou what to do, not the other
way around.
So I think that what, what wewere going to see with the
election is, we were going tosee um, in my opinion, the
(13:24):
market was still going to go up.
It didn't matter who gotelected.
Who got elected.
I just think the question wasreally where was that relative
strength?
Who are the playoff teams goingto be, you know, depending on
the president who won?
So I think we're alreadystarting to see.
You know, small caps arestarting to gain traction.
That makes a lot of sense, forinstance.
That's just one example.
Speaker 1 (13:40):
Right yeah, for me.
I was thinking the same thing.
It doesn't matter who gets in.
The only one I was thinkinglike with Kamala Harris was
really going to tax theunrealized capital gains.
I'm like that's going to betricky.
How do you plan for?
Speaker 2 (13:55):
that kind of thing.
That wasn't going to happen.
I mean, that was one of thereasons she lost the election.
But any advisor to her that hashalf a brain once she won would
be like look, you can't do that.
That was great, that was agreat talking point.
You know to get people uh, youknow thinking let's go after the
(14:16):
rich and take their money andpay off some of this debt.
But if you, if you taxedunrealized cap gains, um,
investment in this country wouldjust absolutely sink like a
rock.
That would.
That would be a terrible idea.
Speaker 1 (14:24):
No, and that's kind of what I was thinking too.
I'm like I think it was just abunch of lip service to get
everyone else really all excited, like oh yeah, robin Hood cake
from the rich.
I'm like it's not going tohappen.
The powers that be would belike yeah, no, you're not doing
that Exactly.
Or it's like are you going togive us a really nice loophole
if you are?
Speaker 2 (14:41):
Yeah Well, yeah, that's even worse.
Just more complication for theCPAs Right.
Right, and you do that toocorrect powers of attorney,
charitable planning, taxes, taxplanning.
But we're not.
We don't write wills, you know.
(15:17):
We don't write trusts, we don'tdo anybody's taxes.
We have a client, like onceevery few years, that'll say,
hey, can't you, could you hire aCPA and I'd love to have
everything done at your office.
And you know, twice in the last23 years I've surveyed our
clients to say you know, wouldyou be interested in that?
And the glaring kind of overallmessage is no, stay in your
lane, so we just stay in ourlane.
At least they're honest withyou.
True story yeah, no, it's good.
Best way to get better is toask the people who hire you,
(15:39):
right.
Speaker 1 (15:40):
Exactly.
So what are some of yourstrategies?
When there's a lot of fear?
Let me wait.
Let me rephrase that when whatis your, your stop point?
Where it's like at 2% loss orwhatever indicator I'm pulling
out Cause it's like I can'tafford to take more than this.
Speaker 2 (16:00):
Sure, yeah, and our trend following models.
So we have 18 portfolio modelswe manage and eight of them are
trend following models.
The others don't have stoplosses.
I would say that they haveranking stops.
So it's all relative strengthbased.
So what that means is goingback to that playoff team
analogy.
If a team has a few losses andthey have a losing streak going
(16:22):
on so they're not performingwell, a couple losses, even
three losses, that's not a trendyet.
But if the win-loss recordstarts to get to a point where
it doesn't make sense, wherethat team's not going to make
the playoffs this year, we wantto eject it and buy whatever's
at the top of the ranking system.
So the strategic models are notmeant to go to cash.
The tactical models are.
(16:43):
So they use that same relativestrength, stay invested with the
playoff teams but avoid therest strategy.
But there's also a trendfollowing filter for every
position in the portfolio foreach of those eight models, and
the one that I use is the 40week moving average.
So whenever there's a closebelow the 40 week moving average
on Friday, I'll typically giveit to the European close on
(17:05):
Monday, so 11 o'clock on Mondaymorning Eastern, and if it can't
reclaim that line in the sand,then we're out, 11 o'clock on
Monday morning Eastern.
And if it can't reclaim thatline in the sand, then we're out
and again.
So what you got there is, and astrategic portfolio would hold
on to that position, but you ownessentially the cleanest dirty
laundry.
Right, it might beoutperforming the market, but on
an absolute basis it's stilldropping in value, which the
(17:25):
whole purpose of tacticaltechnical analysis driven
portfolios is to.
You know, look at risk not asvolatility or just standard
deviation, but to look at riskmore along the lines as loss of
principle drawdowns, right.
So for in all those models,it's very simple 40 week moving
average close on Friday.
Again, we give it some time thenext week to see if it can
reclaim that line in the sand.
(17:46):
If it can't, it's out.
If it reclaims that line in thesand a few days later and it
closes above it on Friday andit's still in the ranking system
at the top, then we trade up,we buy it again.
That's where you have to benimble, follow your rules.
You can't be mad because, oh,it went up.
If I just would have held it, Iwouldn't have made more money
if I held it, but I've got thiscrystal ball in my conference
(18:07):
room that somebody bought me.
A client bought it for us as ajoke gift.
It doesn't work and anybodythat can tell you they're a
trend predictor is lying right.
I always say we're trendfollowers, not trend predictors,
so anyway, so yeah, that'sessentially our most common line
in the sand, which, again,every stock, every commodity,
every crypto, digital asset,bonds they all have their own
(18:30):
metaphorical line in the sand.
It's not like there's a switchthat goes off in the market and
then you sell everything in yourportfolio.
You treat every individualinvestment as its own.
Speaker 1 (18:40):
Speaking on crypto.
Is it a more aggressivestrategy or a similar one
modified, for crypto?
Speaker 2 (18:47):
No, Well, no, actually it's funny.
You asked that question becauseI'm in the process of
potentially building a couplemodel portfolios aimed at only
crypto, because, in my opinion,I think that the crypto asset
class is just that it's going tobe a new asset class.
To this point in the industry,there have only been six asset
classes there's US stocks,international stocks, currencies
(19:09):
, commodities, fixed income andcash, but now I think there's
the seventh asset class.
I think people are starting torealize that crypto is probably
here to stay.
So, as that happens, I thinkthat the way to do it, in my
opinion, is to, first andforemost, do a relative strength
calculation that ensures thatyou're buying the right I'll
call it the top ranked or thedigital asset with the most
(19:31):
momentum.
So if, first of all, you haveto look at the relationship
between them let's just sayBitcoin and Ethereum, so you
want to own the highest relativestrength position between the
two, let's just say, and thenthrow a trend following filter
on it, like the 40 week movingaverage.
Now, some people might want togo faster than that and,
honestly, I don't think there'sany problem with that.
Like, for instance, if you wantto use the 10-week moving
(19:52):
average instead and, by the way,the 40-week moving average is
very similar to the 200-daymathematically, and so the
10-week is the same as the 50,like the 50-day, so you could
use a faster moving average,which, and what's going to
happen is two things.
One, you're going to get insooner and out sooner.
(20:13):
However, and this is the mostimportant lesson here, there are
going to be way more whipsawswhere you get out soon, so to
speak, but as it comes back,you're going to have to pay a
trade up at higher prices,because it was just a whipsaw,
it wasn't an actual trend change, it was just call it a severe
pullback or mild correction.
Speaker 1 (20:34):
Yeah, I want to say, especially with all the gas fees
, if you're trading trading thestraight currency, not the
futures contracts that's goingto be you could be losing more
on the gas than the actual uhcurrency itself.
Yeah, sure, so that that wasgoing to be the next thing I was
going to ask are you going todo the actual like because they
have a couple bitcoin uh etfsfutures contracts?
Are you going to or wouldactual like because they have a
couple bitcoin uh etfs futurescontracts?
Are you going to or would youconsider trading the actual coin
(20:54):
itself?
Speaker 2 (20:56):
um, because of the the fact that I live and work in
the most highly regulatedindustry in the entire world, um
, and because I can't evenimagine how I would go about
setting up an institutionalinvesting company that had a
custodian, that was a digitalwallet, that I somehow
discretionarily managed digitalassets for clients.
(21:17):
I don't even know how you woulddo that.
I don't even know if it exists,to be honest, but I'll tell you
right now, I don't think thereis something for that?
I don't think so, and if therewas, I would want to do it
anyway.
So there's, as you mentioned,there's ETFs.
You know, gbtc GrayscaleBitcoin ETF was the first big
one that kind of came out.
It's got the most history, butit doesn't track really well
with the actual underlying, youknow, digital asset.
(21:39):
And then BITO came out, b-i-t-ocame out.
I'm trying to think when did itstart?
Let's see here I'll just pullit up.
So yeah, it launched on inOctober of 2021.
So it's been around for, youknow, three years at this point.
But there's another one thatjust launched earlier this year,
(21:59):
actually on the I think it wasthe second week of the year.
It's called the ARK 21 sharesBitcoin ETF.
It's, the symbol is ARKB, andwhat's really cool about it is A
it tracks the underlyingBitcoin asset pretty well better
than the others, I think.
And then B it's superinexpensive.
(22:20):
So, like GBTC, bido, they'repretty expensive ETFs.
This is 21 basis points.
Speaker 1 (22:26):
Okay, so then the other one is BITO, BITO, GBTC
and ARKB.
Speaker 2 (22:32):
Okay so then the other one is BITO, bito, gbtc
and ARKB Okay, but yeah, I thinkthat our strategies are
completely, you know, exchangetraded.
We're using ETFs, we're on thebroad market.
You know, we're not gonna we'renot gonna buy a digital asset
for a client.
That's.
That's a mess that I'd evenhave a hard time explaining.
Speaker 1 (22:50):
I was going to say just the regulations for your
industry to explain to thepowers of the government, like
why are you doing this?
It's like they asked me to andYep exactly.
So is there any particularsector other than like Bitcoin
and stuff like that you'relooking into?
Right now for investing, yeah.
Speaker 2 (23:11):
I mean at the moment we're.
I like small caps a lot.
Small caps have beenunderperforming for a long time.
I mean they showed kind of aglimmer of hope in, you know,
early 24.
And but when you look at achart, if you pull up a chart
like of IWM, for instance, andbut when you look at a chart, if
(23:31):
you pull up a chart like of IWM, for instance, you know the
iShares Russell 2000 ETF, it wasunderwater.
I mean.
I mean you could say, I meanyou could say it peaked out in
like November of 2021, but itwas.
I mean we're talking it waslike a one or two week breakout
and then it failed.
So I mean you can go all theway back to say I don't know
early 2021.
So I mean that's we're talkingthree and a half years ago.
(23:53):
It's been underwater untilliterally just a couple of weeks
ago.
So you, literally, if youinvested in in in small caps
back in early 2021, you were,you were a loser still just a
few weeks ago.
And that's as compared to, likethe NASDAQ or the S&P.
You know where.
(24:13):
You know S&P broke out a longtime ago.
I mean S&P broke out almost ayear ago at this point.
So you were profitable a wholeyear ahead of time and I think a
lot of that's had every well,not everything, but a lot of
it's had to do with interestrates being high.
When interest rates are high,small businesses struggle.
I think the election helped outa lot and is going to help out
(24:34):
a lot.
I think I think that thecurrent administration is going
to be very small businessfriendly.
I think rates are going tocontinue going down at the Fed,
so I think that's all going tohelp small caps and we might see
some outperformance there.
So, in other words, there mightbe an opportunity to outperform
if you have, you know, anallocation to, if not an
overweight, in the small capspace.
So I'd say that's a big place.
(24:56):
We've been Some others.
I mean we've been invested forquite a while now in you know,
industrials, technology, ai,things like that.
Some individual stocks we'veowned for a really long time
would be like NVIDIA I don'teven know how long ago I bought
that thing, it's been a whilebut NVIDIA, meta, broadcom,
(25:18):
netflix, intuitive, surgical,costco.
So those are some of the stockswe own right now and I guess I
already disclosed it, so Iwanted to make sure I disclose
hey, if I'm talking about this,we own it.
So yes, we own it.
Speaker 1 (25:29):
And this is not financial advice.
Speaker 2 (25:31):
That's right.
It's not financial advice.
Talk to you, talk to aqualified financial advisor,
ideally fiduciary, before makingany decisions about your
portfolio.
Speaker 1 (25:39):
Anyway, yeah, throw that in there, that's right.
Yeah, that's interesting.
Yeah, I actually bought anExxon and Costco.
I knew they were making money,so I just bought a couple shares
for the fun of it, and that'swhere I watched it go 100% and
I'm like, oh dang.
Speaker 2 (26:00):
Yeah, Costco was definitely a winner there.
But you know, with energy,energy is really struggling.
It's been struggling.
Speaker 1 (26:07):
Yeah, that's kind of where I bought in Gosh.
I think I bought in rightaround the same time with
Buffett and I didn't even knowit, okay.
So I rode Exx, even know it,okay.
So I I wrote x on with him but,um, I got out because it was
showing a lot of weakness.
It was like 90 and it'sdropping to 80 profits and I'm
like, yeah, it's probably gonnago down, so I'll just cut it,
take the money I'm looking at itright now, trading at 111.95
(26:30):
overnight, and it is literallytrading at the exact same spot.
Speaker 2 (26:34):
it was in October of 2022.
So two years ago nobody's madeany money, yeah.
Speaker 1 (26:40):
Yeah, and that's where I I like I said I got in
at that point I wrote it up like90% cut it and cause I'm like,
yeah, it's just showing a lot ofweakness now.
Yeah, but are there any othersectors like real estate you're
looking into or stuff like that?
Speaker 2 (27:00):
No, I'm not really looking at real estate a whole
lot.
I mean, real estate kind oflooks like small caps did to me
maybe a year ago where, again,if you look at real estate on a
chart, the peak in real estatewas literally the last week of
the year in 2021.
And, as of right, and that was,by the way, that was at $115,
(27:22):
$116 a share on the IYR, so onthe iShares real estate ETF and
it's traded at 97 right now.
So I mean it's down, you know,somewhere in the ballpark of you
know we'll call it 20%, maybe15, 20% off.
It's still off its highs andyou know, I think real estate's
also in my book, a relativelydefensive sector.
(27:45):
So I think it depends on whathappens with the market.
Interest rates, again, are goingto be a part of that discussion
.
But I think when you're in thiskind of environment where rates
are falling and could help realestate, I think that you also
have to look at all the otheroptions that are out there.
It's actually it's why Ibelieve so strongly in relative
strength and so strongly inconcentration to a certain
(28:06):
extent, as opposed todiversification, because if you
just buy some, you know somereal estate and food and
beverage, and some cyclicals andsome industrials and utilities,
and you just buy a little bitof everything.
So maybe some commodities,maybe large caps, maybe small
caps.
Eventually you've just builtyourself an index.
You just own the S&P 500 at acertain point, I mean.
So I think that it's importantto concentrate your holdings in
(28:30):
the best asset classes.
Or, if I were to say it anotherway, you want to concentrate
your holdings in the best stocks.
If you own stocks within thebest sectors and industry groups
, within the best asset classes,and stay invested in that way,
and then just stick with themomentum, stay with strength and
then, when things just thingsdon't you know start to fail and
roll over, understand that ifyou sell the top, you got lucky,
(28:52):
that's it.
That's all it was was luck.
Nobody sells the top, nobodybuys the bottom.
Speaker 1 (29:04):
So just when it starts to fail on you.
Stick to your rules.
Whatever your rules are forexit strategies, walk away.
And you know's relevantstrength and the trend of it.
Okay, are there other than the40-day moving average?
What are the indicators for you?
Is it like the 14-day moving 20to confirm or give signal to
(29:29):
the trend going up or down?
Speaker 2 (29:31):
Sure, I mean for, like you know, having a just
looking at a moving averagealone, it's important to
understand what direction it'sgoing.
Like, what direction is itsloping?
You know there is such a thing,by the way, as trendless.
You know it doesn't always haveto be an uptrend or a downtrend
, it can be trendless.
You know it can be choppy.
So that would be one.
I look at RSI, you know so,primarily like everybody who
(29:53):
looks at RSI usually looks atRSI 14.
So 14 period RSI, I look atthat quite a bit for look for
divergences.
You know I'm looking for, forinstance, when the market's
going up well in any all thetime with investments we own,
with the market as a whole.
When it's doing well, I'mlooking for reasons it's going
to turn over.
I'm looking for problemsconstantly, and when the
(30:15):
market's going down, I'mconstantly looking for positive
evidence.
So I think one of the biggestmistakes that investors make if
they're managing their ownportfolios is when things are
going well they get so euphoricthey don't spend as much time
Like they're enjoying it toomuch when, if you're going to
manage money, you can't enjoy it.
It can't be something that'sfun.
(30:36):
Fun is like going to managemoney you can't enjoy it.
It can't be something that'sfun.
Fun is like going to Vegas.
Managing your money has to be avery, very serious undertaking.
So, like I said, when themarket's going up, like the
stock market's been going up nowfor two years, I am always
trying to find reasons thatthere would be positive evidence
or, I'm sorry, negativeevidence on the horizon.
Positive evidence or, I'm sorry, negative evidence on the
(31:00):
horizon.
So like a negative divergencein RSI would look like higher
highs in the S&P but then lowerhighs in RSI.
Another example might be if I'mlooking at something really,
really short term so I'm lookingfor a short term entry or exit
I would look at RSI 5.
You know it's much faster, itgives you, you know, quicker
information.
But you got to understandyou're looking at a much, much
shorter time frame.
Then I look at it's similar toRSI, but MACD.
(31:24):
You know whether you're lookingat the highs and lows for a
divergence there, or if you'relooking at the histogram, that's
another.
You know the histogram isobviously the difference between
the signal line and the movingaverage, and so you can use that
for divergences as well, whichwill give you a hint of either
good things to come if themarket's going down or the
stock's going down, or badthings to come if it's going up
(31:44):
and you see a negativedivergence there.
When I look at the marketoverall, I like looking at
breadth indicators.
So, percentage of stocks abovethe 200-day, percentage of
stocks above the 50-day, newsix-month lows, new six week six
month highs, new 12 month highs, new 12 month lows, and I'm
(32:05):
looking for, um, you know, signsof weakness, or strength for
that matter, when the market'sgoing down, weakness when it's
going up.
So, because most people don'tknow this and I'm a person who
taught me, unfortunately passedaway I'm looking at a picture of
him on the wall over here.
Uh, um, um, oh, my god, I'mgonna stroke out here.
Come on, adam, I am strokingout, hold on okay, I call it
like the runway train.
We're gonna have to, we're gonnahave to cut this and go back.
(32:26):
Um, okay, it's been a long day.
I started at seven with the 730, with an interview with a
potential employee and then hereit is.
It's almost 730 right now.
Former president of LowryResearch, paul Desmond.
I didn't have to wait for it tofind it to pop up, I just knew
it was Paul.
Anyway, paul Desmond.
(32:47):
So if I start over and we cut inhere, one of my mentors over
the years was Paul Desmond, whowas the former president of
Lowry Research.
He's since passed and Paul wasthe person who taught me early
on that the way markets crash islike this small caps crash
first.
So what you have is the bigsmart money selling the small
(33:08):
caps and trading up into mid andlarge caps and mega caps.
So then they sell their midcaps and they'll start to head
downward and you do sellingpressure.
Then they they sell their midcaps and they'll start to head
downward and do selling pressure.
Then they start selling theirlarge caps.
And the reason markets crashthis way and the reason it's
it's such a on or such a call asecret in the business is
(33:29):
because most people don't knowthat all the major market
indices that people watch everyday, that see on TV, on the
radio, are cap weighted.
So the Dow is 30 large capstocks.
There's no small caps in it.
So if small caps and mid capsstart to go down, you won't see
it, because there's no smallcaps in the index.
If you're looking at the S&P,which is what probably most
people look at the S&P 500, it's502, 503 stocks and it's cap
(33:59):
weighted, which means whenMicrosoft has a big day or when
Apple has a big day, the S&P hasa big day.
So when you start to see smallcaps failing, they have such a
low representation on the S&P500, it won't even put a dent in
the index.
Same thing with mid caps.
Then when the smart money saysall right, that's it, I'm done,
and they start selling theirlarge caps, or stop buying large
caps, for that matter.
Now you see the market start toroll over and that's exactly
(34:21):
what happened between 2021 and2022 is small caps started to
fail in February, then mid capsand then you had, you know, kind
of like the hairpin on the topof the pile that caused the
avalanche you know which startedin November, december.
Speaker 1 (34:35):
Would the VIX and the value line gauge geometric also
be able to help gauge that too,or I think the value line is
interesting.
Speaker 2 (34:42):
I look at it um at least once, a quarter Um.
I don't use it as a main toolof my in my trading decisions,
but the value line is good forknowing kind of what the average
stock is doing.
Um and the VIX I think it'sgood to know if the VIX is
trending down.
That's obviously a good thing Ido.
(35:04):
There's a good friend of mine,andrew Thrasher, has won a
couple awards at the CharteredMarket Technicians the Dow Award
for Technical Analysis on VIXstudies specifically.
And I think when you start toget long periods of weakness
which is good, right in the VIX,you're that much closer to a
VIX spike which obviously wouldcause a pullback or a correction
.
So I think that I probably usethe VIX a whole lot more when
(35:25):
the market's in chaos ratherthan when the market's doing
well.
And I use Andrew's volatilityrisk trigger, the VRT, as just
kind of like to see when that'sgoing to happen, because I think
it gives a sign that you mightsee a volatility spike, say in
the next one to three weeks orso.
But yeah, I definitely look atthe VIX.
Speaker 1 (35:45):
Okay, yeah, for me, kind of like you, it is not the
heaviest weight in my analysisof everything, but it's kind of
like more of a pulse.
It's like, ah, everyone'sreally greedy right now, so
better wait on buying stuff,kind of thing.
Yeah, that makes sense, yeah,cool.
So you keep mentioning thesmall caps.
(36:07):
Is there a specific index thatyou look at, like the Russell
2000 or something?
Speaker 2 (36:12):
Yep, it'd be the Russell 2000.
I mean, I'd be looking at forsomebody who wants to get a pure
play on the small caps.
It would be, you know, iwm.
If you're looking for somethinga little bit more diversified
that gives you exposure butkeeps you in some large caps,
then I would look at like RSP,which is the equal weighted S&P
500.
Piece of cap weighted index andthat you know there's, the
(36:34):
small caps get no representation.
The RSP is the equal weightedindex.
So instead of, um, you know,having all the large caps get
the weight, every stock in theindex then gets an equal weight.
So it's equal representation.
Speaker 1 (36:47):
Okay, that's a good one.
I didn't know that, so I'lldefinitely look that one up,
yeah.
Speaker 2 (36:50):
The good analogy is uh, we're talking about politics
, right?
When you look at Congressacross the country, every state
has a different number ofcongressmen or congresswomen
depending on the size of thestate, right?
That's like the S&Pcap-weighted index or the NASDAQ
.
The equal weight is like theSenate Every state gets two.
(37:12):
That's it.
Speaker 1 (37:14):
Okay.
So yeah, like if you're I don'tknow some microchip company has
like eight or ten percent ofthe weight, it would just make
it like everyone gets like a onepercent representation kind of
thing, correct, yep, perfect, no, that would make more sense.
Yeah, if you have winners thatcan move the whole index, they
can also drop the whole index,kind of thing.
(37:36):
Yep, you got that right.
Nice, yeah, I'll definitelylook that up.
Is there anything in particularI might have glanced over or
missed that you want to talkabout?
Speaker 2 (37:48):
Maybe it's just a final note.
I'll just say it's and it's notgoing to be all that.
I'm going to warn you it's notgonna be a lot exciting.
But I think that one of thebiggest mistakes people can make
is that if they're investingand it's really exciting they're
probably doing it wrong.
But with that being said, allthis stuff's great, it's fun,
it's interesting, right,technical analysis I love it.
I mean, I live and breathecharts all the time, but at the
(38:11):
end of the day, none of itmatters if you don't have a plan
.
So I think it's above all, thisinvesting stuff that we talk
about, and how much fun it mightbe, how interesting it might be
, if you don't have a full blown, comprehensive financial plan
in place that tells you how muchyou need to be saving and what
types of accounts to get you toretirement on time so that you
(38:32):
can make work optional someday,then you're essentially driving,
you know, through a cornfieldin reverse at night, looking at
the rear view mirror, trying tofigure out what your path is,
and that's probably not exactlythe best, best plan in the world
.
So so my, my best advice isobviously, honestly, not all
that technical.
I mean, I could talk abouttechnical analysis and charts
and trend following and relativestrength all day long.
(38:54):
I love this stuff, but itdoesn't mean anything without a
path there.
It's like an engine withoutwheels.
You got an engine going, butyou need wheels to get you to
where you're going.
And, of course, if somebody sayshey, josh, I want to go on the
best vacation of my life, it'smy 40th birthday and I want it
to be huge and I want you tohelp me get there.
(39:15):
What's the best way to getthere?
Where should I stay?
You know how should I fly there?
You know what's the?
What are the best places to eat, things to do?
And you're like all right, well, cool, you know I'm down.
Where do you want to go?
And you're like well, I'm notgonna tell you that.
So how in the world am Isupposed to help me find my
favorite best vacation in theworld if I'm not going to tell
(39:35):
you where I even want to go?
It's maybe like going to thedoctor's office and saying I'm,
I need, I'm, I am in the worstpain of my life and I'm, I'm
fearing for my life right now.
And he's like well, where's ithurt?
And you're like I'm not goingto tell you.
They'll be like um well you camehere to tell us Right, I want
you to diagnose me blind, so yougot to have a plan.
Bottom line, you got to have aroadmap.
Speaker 1 (39:59):
Yeah, 100%.
No, it's true, Like the biggestone when I was studying my
analysis of the market and stuff.
They all just get there likeit's a cliche, but got to have a
plan or a goal.
And I like every single bookand I'm like but actually doing
it, like yeah, it makes sense,like I want to make a thousand
this week off the market.
When am I gonna have to wake up?
When am I gonna go in and outwhat?
(40:20):
What stops I'm gonna have toput in, kind of thing.
So it's like, yeah, it's notthe easy money.
The reason I laughed earlierwhen you said, uh, if you're
having fun like investing anddoing, uh, trading, it's
exciting, it's exciting andstuff like that, you're doing it
wrong.
My father is like he just keepshitting buttons and he's like
this is so great.
I'm like you have no clue whatyou're doing, do you?
Speaker 2 (40:42):
it's great today.
Speaker 1 (40:43):
It might be great today yeah, and then usually
like three weeks to a monthlater he's like why is it going
down?
The guy on reddit says it'sonly gonna go up.
Speaker 2 (40:52):
There's this uh, one of the people I really respect
in the business.
His name's Walter Deamer.
He's a legendary trader in thebusiness, and the I mean all
this is his quotes, and the bookis titled when the time comes
to buy, you won't want to it'sit's.
That's just one of the manyquotes in this book.
So, um, here's another one,peter Brandt, who is a wonderful
(41:15):
person.
I have the pleasure of knowinghim, but he said, when a trader
starts to feel real smart, he orshe is headed for a huge
drawdown.
And isn't that the truth?
Speaker 1 (41:26):
It really is.
Is there any place anyone likeyou want people to contact you
or check out your stuff?
Speaker 2 (41:32):
Yeah, sure, if you're interested in getting a hold of
me, linkedin is the first andbest place to go to get a hold
of me personally.
Yeah, sure, if you'reinterested in getting a hold of
me, linkedin is the first andbest place to go to get a hold
of me personally.
Connect with me there.
The second would belibertaswealthcom.
That's our financial advisoryfirm's website.
So Libertas sounds exactly likeit's spelled L-I-B-E-R-T-A-S,
like liberty, but it's Latin.
It stands for or it meansliberty, freedom and
independence in Latin.
(41:53):
So, libertaswealthcom, you canfind me there if you want to
shoot us a message or you knowanything.
I always say you don't have tobe a client to ask a question.
Speaker 1 (42:02):
That's awesome, though, yeah, just the fact that
people can reach out and belike hey, I saw you on the show.
Yeah for sure, man.
Thank you again for your time.
No, you're so welcome.
Have a wonderful day.
Hello, hello everybody.
So we have Adam.
Adam is a professional moneymanager and a fiduciary.
Me and him decided to just geekout over technicals, over
trading and charts and how themarket moves Me especially.
I do a lot of futures contracttrading on the side.
It was fun talking with Adam.
(00:21):
I got a lot of insights on howa fiduciary would look at the
new market.
So if you're looking atbettering yourself or improving
your investing skills,definitely listen in.
But also if you are anaccredited investor, definitely
give Adam a call.
I'm sure he would just love tochat in general about the market
(00:42):
.
Let's begin.
I'm sure he would just love tochat in general about the market
.
Let's begin.
Welcome to the Josh Bolton Show, where we dive into interesting
and inspiring conversations.
And now your host, josh Bolton.
All right, sure, adam, give usa quick introduction of yourself
, who you are, and we'll getright into this.
Speaker 2 (01:04):
Sure, so my name is Adam Koch.
I am the president, founder,senior financial advisor and
portfolio manager at LibertasWealth Management Group in
Columbus, ohio, so the BuckeyeCity Been in the business for 23
years.
I always say I haven't worked aday in my life, at least for 23
years anyway.
Those part-time jobs were rough, though before then.
(01:25):
I bet, I bet.
But yeah, we're a financialplanning firm first, investment
management firm second.
But probably what makes usreally unique is, aside from the
full-blown, comprehensive,all-inclusive financial planning
, retirement planning,retirement income planning, tax
planning, estate planning, youknow, insurance planning, all
(01:46):
that stuff and being a fiduciary, a true fee-only fiduciary.
The other thing that I thinkthat is probably going to be
interesting to those listeningor watching is the fact that our
important portfolio managementstrategies are all built around
technical analysis, relativestrength and things of that
nature, so the nerdy stuff thatonly certain audiences actually
care about.
So I'm really looking forwardto this.
Speaker 1 (02:07):
Yeah, no, I enjoy this stuff, so what specifically
did like inspired you to becomethis?
Speaker 2 (02:16):
To be a technical analyst or get into the
financial advisory services.
Both, both, all right.
Cool, we'll do the long onefirst and then, well, I don't
know, maybe they're both long.
I went to school.
I went to college to be atrauma surgeon.
This was not my path, I know.
There you go.
Don't choke on your drink.
There Is this audio, by the way.
(02:37):
Yeah.
Any video it can be, if youwant.
Speaker 1 (02:40):
I can be if you want.
Speaker 2 (02:41):
Okay, it's up to you.
I'm fine with it being a video.
Okay, totally fine.
So yeah, I was.
I didn't drink in college atall.
I DJed and I did plenty of youknow, I had plenty of fun.
But I was pretty clean becauseI competed for Ohio State in
Taekwondo and I was really,really all about, you know,
keeping my speed and fitness andall that stuff, and I always
(03:10):
joke.
That was about 60 pounds ago atthis point, so things have
changed since then.
But I guess that's life inadulthood.
But anyway, if I can make thisstory as short as possible, I
basically did really well whenin my sophomore and junior year
and I had these big, hugeaspirations of making it to the
Pan Am Games and to make againlong story short I broke up with
(03:30):
a girlfriend I was showing offat the gym trying to do the
splits on two chairs like VanDamme, and I tore my hamstring
halfway off my pelvic bone andended my fighting career.
So basically I can look back.
It's funny now, but I can lookback and say that in retrospect
I was absolutely depressed, notthat I, you know, I kind of
(03:52):
stopped caring about school,called my dad up one day walking
down through campus and said,hey, I've decided I'm dropping
out of the pre-med program.
And he's like well, what areyou going to do?
And I'm like, I don't know.
I've been thinking about it,I've got some ideas and we
exchanged some ideas and then hegoes well, why don't you become
a financial advisor?
I'm thinking financial advisor.
I'm like dad, I took one econclass in college Like why in the
(04:21):
world do you think I'd be goodat that?
And he's like well, you kind ofI want to keep saying long
story short and then make thestory long.
But I basically talked to hisfinancial advisor.
I went to a seminar back down inColumbus.
So I'm from Cleveland, but itwent down to Columbus.
So I went to a seminar for anational brokerage firm, decided
to give a shot, fell in love,ended up getting two degrees,
one in finance, one inpsychology.
(04:43):
So I always joke that I use thepsychology degree more than I
do the finance degree half thetime.
Um, but yeah and uh and yeah.
So, uh, it's, uh, I, I didreally well out of the gate at
this national brokerage firm,even though I was 21,.
Uh, it looked like I was 16 atthe time.
Um, I started 10 days beforethe world trade center went down
(05:03):
and was trying to get, you know, people three times my age to
trust me with their life savings.
And it was not easy, as youcould probably imagine.
So but I still worked my buttoff and, you know, pushed
through the rough times andstarted this company November
4th of 2004.
Libertas, that is, libertasWealth Management Group and our
website's libertaswealthcom, andbasically I kind of at this
(05:26):
point in my career, with itbeing 23 years in, what gets me
really pumped up every day andkind of keeps me really excited
and momentum going is savingpeople from bad advice and bad
advisors.
So that's kind of like mypersonal I don't I haven't been
talking about that till mayberecently, but that's something I
guess somebody asked me and soI'm making it a little bit more
public but that's what I thinkabout when I'm in the car, in
(05:46):
the shower, is that's whatreally kind of gets me out of
bed in the morning is savingpeople from.
The unfortunate fact of thematter is that this industry
there's too many bad apples, soanyway, so that's kind of how
that started.
I've got a couple othercompanies we can talk about, but
maybe today we just kind ofstick with the financial
advisory portfolio management,that kind of stuff.
Speaker 1 (06:07):
I like that.
Yeah, definitely.
Might have to talk to youanother time about those, though
.
So for the technical analysis,are you traditional analysis or
you blend a couple of the moremodern indicators too?
Speaker 2 (06:20):
I would say that first and foremost to make it
easy and simple for those thatare beginners and really don't
know anything about this stuff.
I'm not a fundamentalist, sothat's kind of the opposite of a
technician, so I don't reallyspend.
The only fundamental indicatorsor metrics that I look at are
occasionally I'll glance over atsales, and quarter over quarter
, year over year sales increasesis what I'm looking for or
(06:42):
earnings I'll look at earningstoo, but other than that,
probably the most, the biggestthings I'm looking at on a
day-to-day basis are trend, soprice trend, momentum and volume
.
So those four things are thebiggest.
And then if you put one big,all-encompassing thing above
them, it'd be relative strength.
So I always call it relativestrength.
(07:04):
People say relative strength.
What is that?
You know what's that even meanin the investing world?
And it's like, well, if youimagine every investment you
could possibly invest in wasthat all the teams in the NFL.
It'd be like.
Or now it's college footballplayoff season, right, so it's
all hundreds and some odd teamsin the NCAA.
It would be like investing ourmoney in the playoff teams and
avoiding all the rest.
So that's what investing in,that's what relative strength is
(07:27):
.
Speaker 1 (07:34):
Okay, yeah, honestly, I guess I would be more of a
hybrid, then I use, so are youfamiliar with.
Ken Roberts for futures trading.
No, he was a legend in thenineties so I found him through
my mom essentially, and so hetaught me essentially contrarian
, but he does the.
That's where I was saying.
It's um, it's like a one, two,like one, top, two, bottom,
three, mid, like the, the threepoint, okay, so he's that's
(07:57):
where his is like if you see thethose, and if it's a three high
, it's going down, three lowkind of thing.
So that's mostly what I use.
And then, yeah, the.
I don't use it for the actualtrade, but it's the parabolic
SAR and the ATR to confirm thatit's going down.
Speaker 2 (08:13):
Sure, yeah.
Yeah, I don't use parabolic orany of the indicators that
include the word parabolic, butstrength of trend is hugely
important.
Things like ADX.
Speaker 1 (08:27):
Yeah, so that's where I use Penn's method to call the
top and bottom and then I usethose indicators to prove that
was correct.
But it doesn't matter really tome, because I always get in
like three or four bars earlierthan the actual indicator
popping up.
Speaker 2 (08:45):
I mean, I think, at the end of the day, the great
thing about technical analysisis that it's huge and robust.
And there's about, you know,when they say there's a couple
ways, there's a few ways to skina cat.
In technical analysis, there'sprobably 200 ways to skin the
cat, and the bad thing, theterrible thing about technical
analysis is there's 200 ways toskin the cat.
I mean, so it's the great thing, is the same as the worst thing
(09:07):
about it.
I mean, you can kind of go downthe rabbit hole.
I'm sure you see these chartson Twitter, or X as they call it
now, where you know somebodyputs a chart up there.
Then they have, you know, threemoving averages.
Then they've got diagonal trendlines, then they've got
horizontal lines of support andresistance, then they've got a
cloud on top of it, they've gotvolume bars on the side, they've
got five indicators below itand it's like that's not going
(09:28):
to help you at all.
I mean, that's not going to doanything for you.
Yeah, Unless you understand the,the structure of what the chart
means, all that is just a bunchof distracting overlays it is,
it might look sexy, but to the,to the um amateur eye, but to
anybody who knows what they'redoing there is there is a such
thing as, um you know, a lotbeing too much.
Speaker 1 (09:49):
Anybody who knows what they're doing there is
there is a such thing as um, youknow a lot being too much so
for you um, especially doingthis 23 years and also being a
fiduciary.
What um are some of thestrategies like?
Especially with the last fewmonths with the election fears,
how do you choose to get in andout, especially with this
uncertainty in the market rightnow?
Speaker 2 (10:09):
Yeah, I think that that's a great question.
I think it's important that,before I answer it, to define
well, to make the point thateverybody needs to have their
own timeframe.
So you know, what I'm going toshare is my timeframe, and but
to define all of them.
Not all of them, but most ofthem, the main ones anyway,
first.
The first is you know ultrashort-term, like day trading.
(10:29):
You know these are where peopleliterally go to cash every day
at the close.
That would be one time frame.
Another time frame is calledswing trading.
You know swing trading.
You're owning positions formaybe a few days, up to three
weeks.
You know, one of the best swingtraders in the country, in my
opinion, has been my friend,brian Shannon over alpha
trendsnet.
He's amazing.
So if you're looking for helpwith with swing trading, go
(10:52):
check him out.
Um, subscribe to his service,but, um, I don't get anything
for it, by the way.
I'm just.
This is just selfless acts ofkindness here.
Um, the next timeframe would beshort term, which is, um, you
know, I'd say a month.
You know, month to two months,call it month to three months.
The next would be intermediateterm, which is like six to 12
months, and the last islong-term, which is, you know,
(11:13):
one to three years.
I'm in that intermediatetimeframe, so I'm I'm kind of
trading over a six to 12 month,uh, horizon, if you will.
And so, when the election wascoming up, you know my trends
that I'm following are a littlebit slower, say some, than a
swing trader might use, or evena short term trader.
(11:34):
So, and the reason I sit whereI sit is because I've tested
several strategies.
The great news is they all workif you follow your rules, I
mean.
So it's again, this goes back tothe whole 200 ways to skin a
cat, but, but the bad news is isthat when you're in the
business of managing money forother people, I think there are
optics you have to worry about,and what I mean by that is the
(11:56):
number one reason why clients orindividuals, couples, whatever
investors financial plans failis because they abandoned their
plan.
And the number one reason whypeople abandon their plans is
because the portfolio wasn'tallocated correctly, it was too
risky, the volatility was toohigh, and so, right along those
lines, if you have a timeframethat is too short, you can get a
(12:19):
lot of trading, and then, whenyou get a lot of trading and
you're making money, nobodycares.
But inevitably the market's notalways going to go up and
you're not always going to makemoney, and that seems obvious to
you and I not always going togo up and you're not always
going to make money and thatseems obvious to you and I.
but but I mean the second.
You start losing money andyou're placing a lot of trades.
You get that brain trash wherethe human beings are just
(12:39):
terrible investors and theystart going what are you doing?
You're placing all these trades.
It doesn't even cost themanything we pay for the trading
costs but they're going.
What are you doing?
What's going on?
I'm losing money.
You're placing all these trades.
You're just losing money.
And it's like well, nobody goesinto a trade and goes God, I
hope this goes down so I cansell it and make a loss.
Nobody does that.
But there is a such thing as agood loss and that is having
risk management in place,knowing what your exit strategy
(13:01):
is and, when you hit that exitstrategy, hitting the button and
walking away.
So my timeframe as the electionwas coming up, we didn't change
a whole lot.
I mean, oftentimes the markettells you or or or.
Well, yeah, the market tellsyou what to do, not the other
way around.
So I think that what, what wewere going to see with the
election is, we were going tosee um, in my opinion, the
(13:24):
market was still going to go up.
It didn't matter who gotelected.
Who got elected.
I just think the question wasreally where was that relative
strength?
Who are the playoff teams goingto be, you know, depending on
the president who won?
So I think we're alreadystarting to see.
You know, small caps arestarting to gain traction.
That makes a lot of sense, forinstance.
That's just one example.
Speaker 1 (13:40):
Right yeah, for me.
I was thinking the same thing.
It doesn't matter who gets in.
The only one I was thinkinglike with Kamala Harris was
really going to tax theunrealized capital gains.
I'm like that's going to betricky.
How do you plan for?
Speaker 2 (13:55):
that kind of thing.
That wasn't going to happen.
I mean, that was one of thereasons she lost the election.
But any advisor to her that hashalf a brain once she won would
be like look, you can't do that.
That was great, that was agreat talking point.
You know to get people uh, youknow thinking let's go after the
(14:16):
rich and take their money andpay off some of this debt.
But if you, if you taxedunrealized cap gains, um,
investment in this country wouldjust absolutely sink like a
rock.
That would.
That would be a terrible idea.
Speaker 1 (14:24):
No, and that's kind of what I was thinking too.
I'm like I think it was just abunch of lip service to get
everyone else really all excited, like oh yeah, robin Hood cake
from the rich.
I'm like it's not going tohappen.
The powers that be would belike yeah, no, you're not doing
that Exactly.
Or it's like are you going togive us a really nice loophole
if you are?
Speaker 2 (14:41):
Yeah Well, yeah, that's even worse.
Just more complication for theCPAs Right.
Right, and you do that toocorrect powers of attorney,
charitable planning, taxes, taxplanning.
But we're not.
We don't write wills, you know.
(15:17):
We don't write trusts, we don'tdo anybody's taxes.
We have a client, like onceevery few years, that'll say,
hey, can't you, could you hire aCPA and I'd love to have
everything done at your office.
And you know, twice in the last23 years I've surveyed our
clients to say you know, wouldyou be interested in that?
And the glaring kind of overallmessage is no, stay in your
lane, so we just stay in ourlane.
At least they're honest withyou.
True story yeah, no, it's good.
Best way to get better is toask the people who hire you,
(15:39):
right.
Speaker 1 (15:40):
Exactly.
So what are some of yourstrategies?
When there's a lot of fear?
Let me wait.
Let me rephrase that when whatis your, your stop point?
Where it's like at 2% loss orwhatever indicator I'm pulling
out Cause it's like I can'tafford to take more than this.
Speaker 2 (16:00):
Sure, yeah, and our trend following models.
So we have 18 portfolio modelswe manage and eight of them are
trend following models.
The others don't have stoplosses.
I would say that they haveranking stops.
So it's all relative strengthbased.
So what that means is goingback to that playoff team
analogy.
If a team has a few losses andthey have a losing streak going
(16:22):
on so they're not performingwell, a couple losses, even
three losses, that's not a trendyet.
But if the win-loss recordstarts to get to a point where
it doesn't make sense, wherethat team's not going to make
the playoffs this year, we wantto eject it and buy whatever's
at the top of the ranking system.
So the strategic models are notmeant to go to cash.
The tactical models are.
(16:43):
So they use that same relativestrength, stay invested with the
playoff teams but avoid therest strategy.
But there's also a trendfollowing filter for every
position in the portfolio foreach of those eight models, and
the one that I use is the 40week moving average.
So whenever there's a closebelow the 40 week moving average
on Friday, I'll typically giveit to the European close on
(17:05):
Monday, so 11 o'clock on Mondaymorning Eastern, and if it can't
reclaim that line in the sand,then we're out, 11 o'clock on
Monday morning Eastern.
And if it can't reclaim thatline in the sand, then we're out
and again.
So what you got there is, and astrategic portfolio would hold
on to that position, but you ownessentially the cleanest dirty
laundry.
Right, it might beoutperforming the market, but on
an absolute basis it's stilldropping in value, which the
(17:25):
whole purpose of tacticaltechnical analysis driven
portfolios is to.
You know, look at risk not asvolatility or just standard
deviation, but to look at riskmore along the lines as loss of
principle drawdowns, right.
So for in all those models,it's very simple 40 week moving
average close on Friday.
Again, we give it some time thenext week to see if it can
reclaim that line in the sand.
(17:46):
If it can't, it's out.
If it reclaims that line in thesand a few days later and it
closes above it on Friday andit's still in the ranking system
at the top, then we trade up,we buy it again.
That's where you have to benimble, follow your rules.
You can't be mad because, oh,it went up.
If I just would have held it, Iwouldn't have made more money
if I held it, but I've got thiscrystal ball in my conference
(18:07):
room that somebody bought me.
A client bought it for us as ajoke gift.
It doesn't work and anybodythat can tell you they're a
trend predictor is lying right.
I always say we're trendfollowers, not trend predictors,
so anyway, so yeah, that'sessentially our most common line
in the sand, which, again,every stock, every commodity,
every crypto, digital asset,bonds they all have their own
(18:30):
metaphorical line in the sand.
It's not like there's a switchthat goes off in the market and
then you sell everything in yourportfolio.
You treat every individualinvestment as its own.
Speaker 1 (18:40):
Speaking on crypto.
Is it a more aggressivestrategy or a similar one
modified, for crypto?
Speaker 2 (18:47):
No, Well, no, actually it's funny.
You asked that question becauseI'm in the process of
potentially building a couplemodel portfolios aimed at only
crypto, because, in my opinion,I think that the crypto asset
class is just that it's going tobe a new asset class.
To this point in the industry,there have only been six asset
classes there's US stocks,international stocks, currencies
(19:09):
, commodities, fixed income andcash, but now I think there's
the seventh asset class.
I think people are starting torealize that crypto is probably
here to stay.
So, as that happens, I thinkthat the way to do it, in my
opinion, is to, first andforemost, do a relative strength
calculation that ensures thatyou're buying the right I'll
call it the top ranked or thedigital asset with the most
(19:31):
momentum.
So if, first of all, you haveto look at the relationship
between them let's just sayBitcoin and Ethereum, so you
want to own the highest relativestrength position between the
two, let's just say, and thenthrow a trend following filter
on it, like the 40 week movingaverage.
Now, some people might want togo faster than that and,
honestly, I don't think there'sany problem with that.
Like, for instance, if you wantto use the 10-week moving
(19:52):
average instead and, by the way,the 40-week moving average is
very similar to the 200-daymathematically, and so the
10-week is the same as the 50,like the 50-day, so you could
use a faster moving average,which, and what's going to
happen is two things.
One, you're going to get insooner and out sooner.
(20:13):
However, and this is the mostimportant lesson here, there are
going to be way more whipsawswhere you get out soon, so to
speak, but as it comes back,you're going to have to pay a
trade up at higher prices,because it was just a whipsaw,
it wasn't an actual trend change, it was just call it a severe
pullback or mild correction.
Speaker 1 (20:34):
Yeah, I want to say, especially with all the gas fees
, if you're trading trading thestraight currency, not the
futures contracts that's goingto be you could be losing more
on the gas than the actual uhcurrency itself.
Yeah, sure, so that that wasgoing to be the next thing I was
going to ask are you going todo the actual like because they
have a couple bitcoin uh etfsfutures contracts?
Are you going to or wouldactual like because they have a
couple bitcoin uh etfs futurescontracts?
Are you going to or would youconsider trading the actual coin
(20:54):
itself?
Speaker 2 (20:56):
um, because of the the fact that I live and work in
the most highly regulatedindustry in the entire world, um
, and because I can't evenimagine how I would go about
setting up an institutionalinvesting company that had a
custodian, that was a digitalwallet, that I somehow
discretionarily managed digitalassets for clients.
(21:17):
I don't even know how you woulddo that.
I don't even know if it exists,to be honest, but I'll tell you
right now, I don't think thereis something for that?
I don't think so, and if therewas, I would want to do it
anyway.
So there's, as you mentioned,there's ETFs.
You know, gbtc GrayscaleBitcoin ETF was the first big
one that kind of came out.
It's got the most history, butit doesn't track really well
with the actual underlying, youknow, digital asset.
(21:39):
And then BITO came out, b-i-t-ocame out.
I'm trying to think when did itstart?
Let's see here I'll just pullit up.
So yeah, it launched on inOctober of 2021.
So it's been around for, youknow, three years at this point.
But there's another one thatjust launched earlier this year,
(21:59):
actually on the I think it wasthe second week of the year.
It's called the ARK 21 sharesBitcoin ETF.
It's, the symbol is ARKB, andwhat's really cool about it is A
it tracks the underlyingBitcoin asset pretty well better
than the others, I think.
And then B it's superinexpensive.
(22:20):
So, like GBTC, bido, they'repretty expensive ETFs.
This is 21 basis points.
Speaker 1 (22:26):
Okay, so then the other one is BITO, BITO, GBTC
and ARKB.
Speaker 2 (22:32):
Okay so then the other one is BITO, bito, gbtc
and ARKB Okay, but yeah, I thinkthat our strategies are
completely, you know, exchangetraded.
We're using ETFs, we're on thebroad market.
You know, we're not gonna we'renot gonna buy a digital asset
for a client.
That's.
That's a mess that I'd evenhave a hard time explaining.
Speaker 1 (22:50):
I was going to say just the regulations for your
industry to explain to thepowers of the government, like
why are you doing this?
It's like they asked me to andYep exactly.
So is there any particularsector other than like Bitcoin
and stuff like that you'relooking into?
Right now for investing, yeah.
Speaker 2 (23:11):
I mean at the moment we're.
I like small caps a lot.
Small caps have beenunderperforming for a long time.
I mean they showed kind of aglimmer of hope in, you know,
early 24.
And but when you look at achart, if you pull up a chart
like of IWM, for instance, andbut when you look at a chart, if
(23:31):
you pull up a chart like of IWM, for instance, you know the
iShares Russell 2000 ETF, it wasunderwater.
I mean.
I mean you could say, I meanyou could say it peaked out in
like November of 2021, but itwas.
I mean we're talking it waslike a one or two week breakout
and then it failed.
So I mean you can go all theway back to say I don't know
early 2021.
So I mean that's we're talkingthree and a half years ago.
(23:53):
It's been underwater untilliterally just a couple of weeks
ago.
So you, literally, if youinvested in in in small caps
back in early 2021, you were,you were a loser still just a
few weeks ago.
And that's as compared to, likethe NASDAQ or the S&P.
You know where.
(24:13):
You know S&P broke out a longtime ago.
I mean S&P broke out almost ayear ago at this point.
So you were profitable a wholeyear ahead of time and I think a
lot of that's had every well,not everything, but a lot of
it's had to do with interestrates being high.
When interest rates are high,small businesses struggle.
I think the election helped outa lot and is going to help out
(24:34):
a lot.
I think I think that thecurrent administration is going
to be very small businessfriendly.
I think rates are going tocontinue going down at the Fed,
so I think that's all going tohelp small caps and we might see
some outperformance there.
So, in other words, there mightbe an opportunity to outperform
if you have, you know, anallocation to, if not an
overweight, in the small capspace.
So I'd say that's a big place.
(24:56):
We've been Some others.
I mean we've been invested forquite a while now in you know,
industrials, technology, ai,things like that.
Some individual stocks we'veowned for a really long time
would be like NVIDIA I don'teven know how long ago I bought
that thing, it's been a whilebut NVIDIA, meta, broadcom,
(25:18):
netflix, intuitive, surgical,costco.
So those are some of the stockswe own right now and I guess I
already disclosed it, so Iwanted to make sure I disclose
hey, if I'm talking about this,we own it.
So yes, we own it.
Speaker 1 (25:29):
And this is not financial advice.
Speaker 2 (25:31):
That's right.
It's not financial advice.
Talk to you, talk to aqualified financial advisor,
ideally fiduciary, before makingany decisions about your
portfolio.
Speaker 1 (25:39):
Anyway, yeah, throw that in there, that's right.
Yeah, that's interesting.
Yeah, I actually bought anExxon and Costco.
I knew they were making money,so I just bought a couple shares
for the fun of it, and that'swhere I watched it go 100% and
I'm like, oh dang.
Speaker 2 (26:00):
Yeah, Costco was definitely a winner there.
But you know, with energy,energy is really struggling.
It's been struggling.
Speaker 1 (26:07):
Yeah, that's kind of where I bought in Gosh.
I think I bought in rightaround the same time with
Buffett and I didn't even knowit, okay.
So I rode Exx, even know it,okay.
So I I wrote x on with him but,um, I got out because it was
showing a lot of weakness.
It was like 90 and it'sdropping to 80 profits and I'm
like, yeah, it's probably gonnago down, so I'll just cut it,
take the money I'm looking at itright now, trading at 111.95
(26:30):
overnight, and it is literallytrading at the exact same spot.
Speaker 2 (26:34):
it was in October of 2022.
So two years ago nobody's madeany money, yeah.
Speaker 1 (26:40):
Yeah, and that's where I I like I said I got in
at that point I wrote it up like90% cut it and cause I'm like,
yeah, it's just showing a lot ofweakness now.
Yeah, but are there any othersectors like real estate you're
looking into or stuff like that?
Speaker 2 (27:00):
No, I'm not really looking at real estate a whole
lot.
I mean, real estate kind oflooks like small caps did to me
maybe a year ago where, again,if you look at real estate on a
chart, the peak in real estatewas literally the last week of
the year in 2021.
And, as of right, and that was,by the way, that was at $115,
(27:22):
$116 a share on the IYR, so onthe iShares real estate ETF and
it's traded at 97 right now.
So I mean it's down, you know,somewhere in the ballpark of you
know we'll call it 20%, maybe15, 20% off.
It's still off its highs andyou know, I think real estate's
also in my book, a relativelydefensive sector.
(27:45):
So I think it depends on whathappens with the market.
Interest rates, again, are goingto be a part of that discussion
.
But I think when you're in thiskind of environment where rates
are falling and could help realestate, I think that you also
have to look at all the otheroptions that are out there.
It's actually it's why Ibelieve so strongly in relative
strength and so strongly inconcentration to a certain
(28:06):
extent, as opposed todiversification, because if you
just buy some, you know somereal estate and food and
beverage, and some cyclicals andsome industrials and utilities,
and you just buy a little bitof everything.
So maybe some commodities,maybe large caps, maybe small
caps.
Eventually you've just builtyourself an index.
You just own the S&P 500 at acertain point, I mean.
So I think that it's importantto concentrate your holdings in
(28:30):
the best asset classes.
Or, if I were to say it anotherway, you want to concentrate
your holdings in the best stocks.
If you own stocks within thebest sectors and industry groups
, within the best asset classes,and stay invested in that way,
and then just stick with themomentum, stay with strength and
then, when things just thingsdon't you know start to fail and
roll over, understand that ifyou sell the top, you got lucky,
(28:52):
that's it.
That's all it was was luck.
Nobody sells the top, nobodybuys the bottom.
Speaker 1 (29:04):
So just when it starts to fail on you.
Stick to your rules.
Whatever your rules are forexit strategies, walk away.
And you know's relevantstrength and the trend of it.
Okay, are there other than the40-day moving average?
What are the indicators for you?
Is it like the 14-day moving 20to confirm or give signal to
(29:29):
the trend going up or down?
Speaker 2 (29:31):
Sure, I mean for, like you know, having a just
looking at a moving averagealone, it's important to
understand what direction it'sgoing.
Like, what direction is itsloping?
You know there is such a thing,by the way, as trendless.
You know it doesn't always haveto be an uptrend or a downtrend
, it can be trendless.
You know it can be choppy.
So that would be one.
I look at RSI, you know so,primarily like everybody who
(29:53):
looks at RSI usually looks atRSI 14.
So 14 period RSI, I look atthat quite a bit for look for
divergences.
You know I'm looking for, forinstance, when the market's
going up well in any all thetime with investments we own,
with the market as a whole.
When it's doing well, I'mlooking for reasons it's going
to turn over.
I'm looking for problemsconstantly, and when the
(30:15):
market's going down, I'mconstantly looking for positive
evidence.
So I think one of the biggestmistakes that investors make if
they're managing their ownportfolios is when things are
going well they get so euphoricthey don't spend as much time
Like they're enjoying it toomuch when, if you're going to
manage money, you can't enjoy it.
It can't be something that'sfun.
(30:36):
Fun is like going to managemoney you can't enjoy it.
It can't be something that'sfun.
Fun is like going to Vegas.
Managing your money has to be avery, very serious undertaking.
So, like I said, when themarket's going up, like the
stock market's been going up nowfor two years, I am always
trying to find reasons thatthere would be positive evidence
or, I'm sorry, negativeevidence on the horizon.
Positive evidence or, I'm sorry, negative evidence on the
(31:00):
horizon.
So like a negative divergencein RSI would look like higher
highs in the S&P but then lowerhighs in RSI.
Another example might be if I'mlooking at something really,
really short term so I'm lookingfor a short term entry or exit
I would look at RSI 5.
You know it's much faster, itgives you, you know, quicker
information.
But you got to understandyou're looking at a much, much
shorter time frame.
Then I look at it's similar toRSI, but MACD.
(31:24):
You know whether you're lookingat the highs and lows for a
divergence there, or if you'relooking at the histogram, that's
another.
You know the histogram isobviously the difference between
the signal line and the movingaverage, and so you can use that
for divergences as well, whichwill give you a hint of either
good things to come if themarket's going down or the
stock's going down, or badthings to come if it's going up
(31:44):
and you see a negativedivergence there.
When I look at the marketoverall, I like looking at
breadth indicators.
So, percentage of stocks abovethe 200-day, percentage of
stocks above the 50-day, newsix-month lows, new six week six
month highs, new 12 month highs, new 12 month lows, and I'm
(32:05):
looking for, um, you know, signsof weakness, or strength for
that matter, when the market'sgoing down, weakness when it's
going up.
So, because most people don'tknow this and I'm a person who
taught me, unfortunately passedaway I'm looking at a picture of
him on the wall over here.
Uh, um, um, oh, my god, I'mgonna stroke out here.
Come on, adam, I am strokingout, hold on okay, I call it
like the runway train.
We're gonna have to, we're gonnahave to cut this and go back.
(32:26):
Um, okay, it's been a long day.
I started at seven with the 730, with an interview with a
potential employee and then hereit is.
It's almost 730 right now.
Former president of LowryResearch, paul Desmond.
I didn't have to wait for it tofind it to pop up, I just knew
it was Paul.
Anyway, paul Desmond.
(32:47):
So if I start over and we cut inhere, one of my mentors over
the years was Paul Desmond, whowas the former president of
Lowry Research.
He's since passed and Paul wasthe person who taught me early
on that the way markets crash islike this small caps crash
first.
So what you have is the bigsmart money selling the small
(33:08):
caps and trading up into mid andlarge caps and mega caps.
So then they sell their midcaps and they'll start to head
downward and you do sellingpressure.
Then they they sell their midcaps and they'll start to head
downward and do selling pressure.
Then they start selling theirlarge caps.
And the reason markets crashthis way and the reason it's
it's such a on or such a call asecret in the business is
(33:29):
because most people don't knowthat all the major market
indices that people watch everyday, that see on TV, on the
radio, are cap weighted.
So the Dow is 30 large capstocks.
There's no small caps in it.
So if small caps and mid capsstart to go down, you won't see
it, because there's no smallcaps in the index.
If you're looking at the S&P,which is what probably most
people look at the S&P 500, it's502, 503 stocks and it's cap
(33:59):
weighted, which means whenMicrosoft has a big day or when
Apple has a big day, the S&P hasa big day.
So when you start to see smallcaps failing, they have such a
low representation on the S&P500, it won't even put a dent in
the index.
Same thing with mid caps.
Then when the smart money saysall right, that's it, I'm done,
and they start selling theirlarge caps, or stop buying large
caps, for that matter.
Now you see the market start toroll over and that's exactly
(34:21):
what happened between 2021 and2022 is small caps started to
fail in February, then mid capsand then you had, you know, kind
of like the hairpin on the topof the pile that caused the
avalanche you know which startedin November, december.
Speaker 1 (34:35):
Would the VIX and the value line gauge geometric also
be able to help gauge that too,or I think the value line is
interesting.
Speaker 2 (34:42):
I look at it um at least once, a quarter Um.
I don't use it as a main toolof my in my trading decisions,
but the value line is good forknowing kind of what the average
stock is doing.
Um and the VIX I think it'sgood to know if the VIX is
trending down.
That's obviously a good thing Ido.
(35:04):
There's a good friend of mine,andrew Thrasher, has won a
couple awards at the CharteredMarket Technicians the Dow Award
for Technical Analysis on VIXstudies specifically.
And I think when you start toget long periods of weakness
which is good, right in the VIX,you're that much closer to a
VIX spike which obviously wouldcause a pullback or a correction
.
So I think that I probably usethe VIX a whole lot more when
(35:25):
the market's in chaos ratherthan when the market's doing
well.
And I use Andrew's volatilityrisk trigger, the VRT, as just
kind of like to see when that'sgoing to happen, because I think
it gives a sign that you mightsee a volatility spike, say in
the next one to three weeks orso.
But yeah, I definitely look atthe VIX.
Speaker 1 (35:45):
Okay, yeah, for me, kind of like you, it is not the
heaviest weight in my analysisof everything, but it's kind of
like more of a pulse.
It's like, ah, everyone'sreally greedy right now, so
better wait on buying stuff,kind of thing.
Yeah, that makes sense, yeah,cool.
So you keep mentioning thesmall caps.
(36:07):
Is there a specific index thatyou look at, like the Russell
2000 or something?
Speaker 2 (36:12):
Yep, it'd be the Russell 2000.
I mean, I'd be looking at forsomebody who wants to get a pure
play on the small caps.
It would be, you know, iwm.
If you're looking for somethinga little bit more diversified
that gives you exposure butkeeps you in some large caps,
then I would look at like RSP,which is the equal weighted S&P
500.
Piece of cap weighted index andthat you know there's, the
(36:34):
small caps get no representation.
The RSP is the equal weightedindex.
So instead of, um, you know,having all the large caps get
the weight, every stock in theindex then gets an equal weight.
So it's equal representation.
Speaker 1 (36:47):
Okay, that's a good one.
I didn't know that, so I'lldefinitely look that one up,
yeah.
Speaker 2 (36:50):
The good analogy is uh, we're talking about politics
, right?
When you look at Congressacross the country, every state
has a different number ofcongressmen or congresswomen
depending on the size of thestate, right?
That's like the S&Pcap-weighted index or the NASDAQ
.
The equal weight is like theSenate Every state gets two.
(37:12):
That's it.
Speaker 1 (37:14):
Okay.
So yeah, like if you're I don'tknow some microchip company has
like eight or ten percent ofthe weight, it would just make
it like everyone gets like a onepercent representation kind of
thing, correct, yep, perfect, no, that would make more sense.
Yeah, if you have winners thatcan move the whole index, they
can also drop the whole index,kind of thing.
(37:36):
Yep, you got that right.
Nice, yeah, I'll definitelylook that up.
Is there anything in particularI might have glanced over or
missed that you want to talkabout?
Speaker 2 (37:48):
Maybe it's just a final note.
I'll just say it's and it's notgoing to be all that.
I'm going to warn you it's notgonna be a lot exciting.
But I think that one of thebiggest mistakes people can make
is that if they're investingand it's really exciting they're
probably doing it wrong.
But with that being said, allthis stuff's great, it's fun,
it's interesting, right,technical analysis I love it.
I mean, I live and breathecharts all the time, but at the
(38:11):
end of the day, none of itmatters if you don't have a plan
.
So I think it's above all, thisinvesting stuff that we talk
about, and how much fun it mightbe, how interesting it might be
, if you don't have a full blown, comprehensive financial plan
in place that tells you how muchyou need to be saving and what
types of accounts to get you toretirement on time so that you
(38:32):
can make work optional someday,then you're essentially driving,
you know, through a cornfieldin reverse at night, looking at
the rear view mirror, trying tofigure out what your path is,
and that's probably not exactlythe best, best plan in the world
.
So so my, my best advice isobviously, honestly, not all
that technical.
I mean, I could talk abouttechnical analysis and charts
and trend following and relativestrength all day long.
(38:54):
I love this stuff, but itdoesn't mean anything without a
path there.
It's like an engine withoutwheels.
You got an engine going, butyou need wheels to get you to
where you're going.
And, of course, if somebody sayshey, josh, I want to go on the
best vacation of my life, it'smy 40th birthday and I want it
to be huge and I want you tohelp me get there.
(39:15):
What's the best way to getthere?
Where should I stay?
You know how should I fly there?
You know what's the?
What are the best places to eat, things to do?
And you're like all right, well, cool, you know I'm down.
Where do you want to go?
And you're like well, I'm notgonna tell you that.
So how in the world am Isupposed to help me find my
favorite best vacation in theworld if I'm not going to tell
(39:35):
you where I even want to go?
It's maybe like going to thedoctor's office and saying I'm,
I need, I'm, I am in the worstpain of my life and I'm, I'm
fearing for my life right now.
And he's like well, where's ithurt?
And you're like I'm not goingto tell you.
They'll be like um well you camehere to tell us Right, I want
you to diagnose me blind, so yougot to have a plan.
Bottom line, you got to have aroadmap.
Speaker 1 (39:59):
Yeah, 100%.
No, it's true, Like the biggestone when I was studying my
analysis of the market and stuff.
They all just get there likeit's a cliche, but got to have a
plan or a goal.
And I like every single bookand I'm like but actually doing
it, like yeah, it makes sense,like I want to make a thousand
this week off the market.
When am I gonna have to wake up?
When am I gonna go in and outwhat?
(40:20):
What stops I'm gonna have toput in, kind of thing.
So it's like, yeah, it's notthe easy money.
The reason I laughed earlierwhen you said, uh, if you're
having fun like investing anddoing, uh, trading, it's
exciting, it's exciting andstuff like that, you're doing it
wrong.
My father is like he just keepshitting buttons and he's like
this is so great.
I'm like you have no clue whatyou're doing, do you?
Speaker 2 (40:42):
it's great today.
Speaker 1 (40:43):
It might be great today yeah, and then usually
like three weeks to a monthlater he's like why is it going
down?
The guy on reddit says it'sonly gonna go up.
Speaker 2 (40:52):
There's this uh, one of the people I really respect
in the business.
His name's Walter Deamer.
He's a legendary trader in thebusiness, and the I mean all
this is his quotes, and the bookis titled when the time comes
to buy, you won't want to it'sit's.
That's just one of the manyquotes in this book.
So, um, here's another one,peter Brandt, who is a wonderful
(41:15):
person.
I have the pleasure of knowinghim, but he said, when a trader
starts to feel real smart, he orshe is headed for a huge
drawdown.
And isn't that the truth?
Speaker 1 (41:26):
It really is.
Is there any place anyone likeyou want people to contact you
or check out your stuff?
Speaker 2 (41:32):
Yeah, sure, if you're interested in getting a hold of
me, linkedin is the first andbest place to go to get a hold
of me personally.
Yeah, sure, if you'reinterested in getting a hold of
me, linkedin is the first andbest place to go to get a hold
of me personally.
Connect with me there.
The second would belibertaswealthcom.
That's our financial advisoryfirm's website.
So Libertas sounds exactly likeit's spelled L-I-B-E-R-T-A-S,
like liberty, but it's Latin.
It stands for or it meansliberty, freedom and
independence in Latin.
(41:53):
So, libertaswealthcom, you canfind me there if you want to
shoot us a message or you knowanything.
I always say you don't have tobe a client to ask a question.
Speaker 1 (42:02):
That's awesome, though, yeah, just the fact that
people can reach out and belike hey, I saw you on the show.
Yeah for sure, man.
Thank you again for your time.
No, you're so welcome.
Have a wonderful day.
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