December 11, 2024 • 15 mins
S&P 6,000. Nasdaq 20,000. Dow 45,000. And of course, Bitcoin $100,000. We’ve seen a lot of big, round numbers fall in 2024 – and not just in the stock market. But what’s happening BEHIND the curtain? Why should traders embrace “mindful investing” here – and focus on avoiding four “deadly sins?” I spoke with David Keller, President and Chief Strategist at Sierra Alpha Research, to get the answers in this MoneyShow MoneyMasters Podcast segment.
We begin by discussing Dave’s new venture, Sierra Alpha, and how he’s looking to help both institutional and individual clients succeed more consistently. The conversation then pivots to market conditions in December 2024 – including the recent resurgence in “Big Tech,” the differences between the pre-election and post-election market environments, and the one key sector whose strength bodes well for the future. At the same time, Dave sees signs of waning breadth and reduced participation late in Q4...and explains what would concern him even more if he sees it happen in Q1 2025. As for whether we can notch a THIRD straight year of 20%-plus gains for the S&P? Dave has thoughts as well – and he shares them next, along with his take on what happens next with Bitcoin and gold.
Later, we cover the concept of mindful investing and how it can help center traders in a volatile market filled with potential distractions. He also sheds light on the four deadly sins you should avoid if you want to become a more successful investor, a concept he plans to go deeper into at the 2025 MoneyShow/TradersEXPO Las Vegas, scheduled for Feb. 17-19 at the Paris Las Vegas. Click here to register: https://www.lasvegasmoneyshow.com/?scode=061246
We begin by discussing Dave’s new venture, Sierra Alpha, and how he’s looking to help both institutional and individual clients succeed more consistently. The conversation then pivots to market conditions in December 2024 – including the recent resurgence in “Big Tech,” the differences between the pre-election and post-election market environments, and the one key sector whose strength bodes well for the future. At the same time, Dave sees signs of waning breadth and reduced participation late in Q4...and explains what would concern him even more if he sees it happen in Q1 2025. As for whether we can notch a THIRD straight year of 20%-plus gains for the S&P? Dave has thoughts as well – and he shares them next, along with his take on what happens next with Bitcoin and gold.
Later, we cover the concept of mindful investing and how it can help center traders in a volatile market filled with potential distractions. He also sheds light on the four deadly sins you should avoid if you want to become a more successful investor, a concept he plans to go deeper into at the 2025 MoneyShow/TradersEXPO Las Vegas, scheduled for Feb. 17-19 at the Paris Las Vegas. Click here to register: https://www.lasvegasmoneyshow.com/?scode=061246
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:05):
SMP six thousand, NASDAK twenty thousand, DOW forty five thousand,
and of course bitcoined one hundred thousand. We've seen a
lot of big round numbers fall in twenty twenty four
Paterstan stocks, but other assets too.
Speaker 2 (00:18):
What's happening behind the current? Is this advanced? Healthy or frothy?
Speaker 1 (00:22):
After two years of twenty percent plus games in the SMP,
we do it again in twenty five. Is the time
to batten down the hatches? Today you're gonna get answers
to questions like those from a guest. I'm pleased to
welcome back to The Money Show, money Master's podcast. He's
David Keller, President and chief strategist at Sierra Alpha Research. Dave,
thanks for hopping on the show.
Speaker 3 (00:41):
Yeah, it's good to see you. Good. Mike, thanks for
having me on.
Speaker 2 (00:44):
Yeah, you know, it's funny. I was looking back.
Speaker 1 (00:45):
I haven't had you on since March, which has definitely
been too long. Some things have changed and some things happened,
But I want to start with Sierra Alpha Research.
Speaker 2 (00:52):
You're a new venture here. What is it and what
is it you're doing?
Speaker 3 (00:56):
Yeah, So my career has taken me to a number
of different places, from Bloomberg in New York, from Fidelity
up in Boston, stock Charts in the Seattle area, and
I'm really excited to draw on those experiences and really
just try to help individual investors and financial advisors improve
their decision making. And having worked with money managers, you know,
(01:17):
running one hundred plus billion dollar funds, and working with
individual investors running a couple thousand dollars in their portfolio,
they make the same behavioral mistakes. And I found the
technical analysis provides a really good structured approach, if done correctly,
to help you minimize those behavioral bumps and focus more
on opportunities and using discipline in your decision making process.
(01:42):
So yes, here ALFA Research is really to help people
learn about the markets, improve their market awareness, improve their
understanding of what's going on using technical analysis.
Speaker 2 (01:52):
Right, great, glad to hear it. Best of luck to
you with the new adventure. Thank you.
Speaker 1 (01:56):
You know, obviously, as we're talking here, you know market,
like I mention, we're hitting all these milestones. We've seen
it in multiple asset classes. So what are your thoughts
on this market? Where do you think we stand here?
In mid December twenty twenty four.
Speaker 3 (02:08):
Yeah, So I mean Q four of twenty twenty four
is following you know, really almost I mean, at least
at the end of the year, is really following the
seasonal playbook really well, you don't have to look that
far back look to twenty twenty which is the last
election year. Now we are coming out of the you know,
sort of COVID experience there, but you still had that
nice rally in November and December after the election day,
(02:29):
and in an election year, between election day and your end,
you almost always have a period of strength, and so
I'm not surprised that we're seeing the resilient strength that
we are here in Q four. I think the real
challenge is what happens in Q one of next year,
which is once the euphoria of that post election rally
is worn off, sort of what's next, And that's where
(02:52):
I think investors will have to focus a lot on,
you know, a new administration. You know, obviously it could
be a lot of policy changes, different tailwinds and headwinds
than what we've been what we've been experiencing. So you know,
at this point the market is going up and that
it on its own is very very bullish for me
when the market's in an up trend. I think of
things as innocent until proven guilty. So I'm always looking
(03:14):
for signs that, you know, the market is taking on
a guilty vibe and that those sort of opportunities, those
those sort of signs of deterioration or what I'd be
looking for here.
Speaker 1 (03:24):
Okay, if I roll back the clock to midyear and
maybe eve a little bit before, we started to see
some of that rotation. You know that the big tech
thing that was dominating everything mag seven. We all know
about that, that was starting to give way to small
caps and some other sectors, and then kind of, I
know recently on X you mentioned.
Speaker 2 (03:38):
Here we are back to big, big tech world. So
how do you think that's going to play out.
Speaker 3 (03:43):
We've come full circle back to like the beginning of
the year, right when it was sort of the Magnificent
seven and then everything else, right, and you're finding that
particularly now where stocks like Alphabet, you know, breaking out
gapping higher, Meta breaking above six hundred dollars, Apple others
all having these you know, Tesla for sure having nice runs.
The reality is that breadth and indicators are actually going
(04:05):
a lot weaker here, right, So you know, end of September,
I think it was ninety percent of the S and
P members above their fifty day moving average. Now it's
down almost to fifty percent, so you know, more and
more stocks are breaking down below their fifty day moving average,
but the biggest names are strong enough that it's allowing
the benchmarks to look arguably a lot stronger than I
(04:26):
guess they really are. And you saw the same thing
like in January February of twenty twenty four, the market rallied.
A lot of stocks were actually not particularly strong, but
the biggest names, the megacap growth names, were so strong
it's sort of compensated for that. The danger sign is
where you start to see profit taking in those big
megacap names, which is why, as always I think they're
(04:46):
the most important charts to follow strength and Apple strength,
and Meta strengthen and VIDIA strength and Tesla goes a
long way to making the S and P and the
NASDAK looking remarkably strong. Weakness in those charts in video
breaking down below support which is a possibility. Those would
be warning signs I would be looking for, but for
now it's sort of offense over defense. Conditions are still
(05:06):
pretty good.
Speaker 1 (05:07):
And I noticed you mentioned too the bullish percent index
on the SMP. I think it just dropped back below
seventy percent, right, what's the significance of that, potentially.
Speaker 3 (05:15):
Yeah, So in a healthy bullmarket phase, you you know,
obviously or I guess intuitively, would think you have a
lot of stocks going higher. And so the bullish percent
index is a market breadth indicator based on point and
figure charts, which is a classic sort of charting methodology.
And so we have indicators called the bullish percent indexes
that literally quantify what percent of a certain universe are
(05:36):
in a bullish phase. And what I found is when
an indicator gets above seventy percent, that sort of signifies
that things are working. Most stocks are going up. There
are a lot of positive trends out there, and so
as a result, conditions are probably pretty constructive. What you
look for in an extended bullmarket like we're experiencing now,
you look for signs that that's changing, or what I
(05:57):
call it change of characters. So the bullish percent index
coming back to low seventy percent has often happened at
major tops because all of those stocks are going higher.
All of a sudden, you have some initial profit taking
on some of the names that have been going up,
they start to break down. Eventually that distribution really starts
to weigh on the market as a whole. So it's
not one hundred percent effective. I wish things were more
(06:20):
more than they are sometimes, but really, if you look
at major tops, it's had this sort of configuration. So
I think between now and going into January, those would
be the danger signs. I would be looking for signs
that confirm the market has been overextended here in December
starting to change going into January. That could set us
up for a maybe rockier Q one than I think
a lot of people would want to think.
Speaker 2 (06:41):
Got it.
Speaker 1 (06:41):
Let me ask you about another key sector of the financials.
I mean, I've always kind of followed them in what's
going on in the credit markets for sort of an
early warnings and the fact we've had participation there is
that buys What are your thoughts on that?
Speaker 3 (06:53):
Yeah, So the financial sector earlier in the year, boy,
talk about a place you didn't want to be. But
in the last six months, I mean the second half
of the year really started to emerge. I think that's
really sort of a forward looking sort of move anticipating
for the rate cuts. We have one more December FED
meeting now coming up in twenty twenty four, and then
it'll be all about looking forward to the pace of
(07:15):
rate cuts into the beginning of next year. A steeper
yield curve, which would mean the short end of the
curve comes down the long end remains around current levels.
That steeper yield curve is usually a really good environment
for financials because that's essentially how a regional bank makes
money based on the steepness of the yield curve. So
it's not been a great environment for you know, financial
(07:36):
companies generally speaking, because the yel curve has been inverted
for so long. It's now starting to normalize, and I
would say going into twenty twenty five, that's one of
the key emerging themes. If financials do better. By the way,
small caps probably a really good place to be. They're
a much bigger weight than in the large cap indexes
like the S and PR of the NASTAC, So I
would not be surprised if financials sort of re emerge
(07:59):
in a position of strength small caps, which are doing
better on an absolute basis, I wouldn't be surprised if
they start to improve on a relative basis as well.
Speaker 1 (08:08):
I got to ask about the technicals and some of
these alternative assets, bitcoin, gold and so on. I mean,
what are your thoughts there. Obviously we kind of the
blowoff moving gold a big correction after the election. Bitcoin
has just kind of kept running after the election. I'm
curious about your thoughts. As we had into twenty five.
Speaker 3 (08:22):
I feel like when people write books about twenty twenty four,
there will be the period before the election and then
period after. I mean talk about a pivotal moment when
and so many things had a certain look and feel
up until early November and then have dramatically changed. And
things that come to mind Gold, I mean for much
of the year, and I remember at money shows earlier
in the year we talked about the strength and gold
(08:44):
and how it was outperforming the S and P and
the NASSAC for most of twenty twenty four. That's only
changed in the last month or two, right when you've
seen gold come back a bit while the major indexes
have gone higher, but gold has been a remarkably strong trait.
It's retraced quite a bit now. I would say if
you look at the GLD for example, it's kind of
range bound and very close to actually breaking out to
a new swing high. So I would say with something
(09:06):
like that, re exerting an upward phase by breaking out
on stronger momentum would be an interesting, you know, sign
that there could be further upside to be had there.
Speaker 2 (09:16):
I would say, with.
Speaker 3 (09:16):
Cryptocurrencies, you have Bitcoin, you have ethereum trading up against major,
big round number resistance.
Speaker 2 (09:23):
Right.
Speaker 3 (09:23):
So Bitcoin it's one hundred thousand, which is a you know,
obviously a key psychological level. With ethereum it's four thousand,
and so when these things hit these big numbers, I'm
not surprised, recognizing the pullbacks that we've experienced in both
of those, the long term trends that were still quite strong,
and so I would say with Bitcoin breaking above one
hundred thousand and holding that breakout would be a very
bullish development. The same with ether prices. They've chopped around
(09:46):
as they've tested the previous resistance, but both of those
are actually setting up quite well going into the beginning
of next year. A lot of that is sort of
a tailwind I think implied by the Trump administration, by
Elon Musk being more involved et cetera, et cetera. But
for me, it's all about the charts, and as long
as the chart is going up, I'm gonna want to
own things like that. And so Bitcoin, ethereum and some
of the other top coins I think pretty attractive here.
Speaker 1 (10:10):
Okay, any other stock sectors that I haven't mentioned that
either look particularly bullish to you here or particularly bearish
as we had in the end of the month and
the end.
Speaker 2 (10:19):
Of the year.
Speaker 3 (10:20):
Yeah, no, thanks for asking, Mike. I think, to be
honest with you, the most important chart we haven't talked
about yet, I would say would be the performance of
the defensive sectors. There have been times here recently where
it's looked like things like utilities or consumer staples or
real estate have started to improve and it's not really materialized.
And just more recently you're seeing technology go up and
(10:41):
those defensive sectors really starting to underperform just in the
last month or so. But I would say, going into
being in of next year, if you're concerned about the
sustainability of this uptrend, one of the great tells that
a major top is probably happening. Are those defensive sectors
start to improve, particularly on a relative basis. Meaning the
ratio of the excel you or the XLP versus the
(11:01):
S and P five hundred starts to improve. When a
market has had a sustained rally and then institutional investors
want to get a little more defensive, they'll often rotate
to those sectors like utilities real estate. So for now,
I'm not seeing a warning sign yet, but that's top
of my list of charts to watch for a potential
warning sign going into Q one.
Speaker 1 (11:22):
Okay, we'll pivot away from the market action, just talk
a little bit more of kind of your your education
philosophical approach to this market.
Speaker 2 (11:27):
I mean, you talk about a lot about what mindful
investors should do or shouldn't do.
Speaker 1 (11:31):
I was curious we can expand on that point at all.
Speaker 3 (11:34):
Yeah, for sure. I mean my own experience personally with
mindful meditation was transformative. It really helped me recenter and
focus on the present and what was happening around me
instead of getting just so caught up in the future
or caught up in the past. And I have found
that applying that sort of mental approach to investing has
(11:55):
been really rewarding for me and for a lot of
my premium members as well. So we talk about mindful investing,
it's having a good process for understanding what's happening around us,
what I call a good market awareness. So for me,
it's having a morning coffee routine. Every morning I bring
up the same set of charts. I go in a
consistent checklist that I review all of the key metrics.
(12:16):
It's doing a certain thing every week. It's doing a
certain thing every month as a way of just reinforcing
trends that I'm seeing, recognizing changes and all of that.
But it also has to do with learning from your
past mistakes. I think a lot of times a mindless
way of going about your process is to ignore mistakes
and kind of move on because it's too painful to
(12:36):
relive a bad trade. I would argue one of the
best things you could do at the end of the
year is look back at some of your unsuccessful trades
and think about what went wrong right, What did you
miss that you could have done, What did you not
read that you could have read, What signals might have
helped point you in the right direction. So for me,
mindful investing is just having a better healthy relationship between
the present the past, and that sets you up for success.
(12:59):
In the f So that's how mindful investing I think
is something I think most investors could probably improve on.
Speaker 2 (13:05):
Got it? And one I think I want to ask you, Bobby,
you're joining us.
Speaker 1 (13:07):
I'm fortunate enough to have you for the twenty five
Money Show Traders Expo in Las Vegas this February.
Speaker 2 (13:13):
Your topic is the four deadly sins of investors.
Speaker 1 (13:15):
So, without giving too much away, I mean, what are
people going to walk away from that presentation with?
Speaker 3 (13:20):
So I actually was coming up with an idea for
the presentation. I'm excited to join you guys in Las
Vegas in the new year. And I really drew this
from an exercise I used to do with money managers
I would work with at Fidelity and other large institutions.
I would basically draw an idealized chart and talk about
some of the mistakes that could be made and think
about how they made decisions around different phases when a
(13:43):
stock was going up, when a stock was going down.
And what we're going to do in this session together
is sort of identify those four areas, those four deadly
sins where investors tend to mess up. What sort of
evidence could help us avoid those things, and what tools,
what charts we should review to make sure we avoid
those in the future. And I would say, as a hint,
(14:03):
it's things like buying too late, selling too early, and
there's nothing worse than selling when a stock is up
twenty percent and then sitting on the sidelines as it
goes up another two hundred percent. So we're going to
look at some examples of where having a more consistent
process could have helped us stick with our winners and
unwind our losing positions, maybe more quickly, more effectively, more efficiently,
(14:24):
and it should be a lot of fun. I'm looking
forward to it.
Speaker 1 (14:26):
Well, great, David, I really appreciate thinking some time out
share and your insights here viewers. If you are watching
this and you want to learn more from David, he
is going to be speaking at that event. It's the
Money Show Traders Expo Las Vegas. It runs February seventeenth
to nineteenth at the Paris Las Vegas Resort. You can
go look at the description below to find out more
and click the link to get details and register for
that event. David, you know help you have a great
(14:47):
end of your year, and I look forward to seeing
you in the new year.
Speaker 3 (14:49):
As well, thanks Mike. Happy holidays. We'll see in Vegas.
Are right?
Speaker 2 (14:52):
Same? Do you to take care.
Speaker 1 (14:54):
We'll have more interviews for you every week, so I
encourage you to subscribe to The Money Master's podcast so
you can stay up to date with the insights from
top money experts. You can follow me on Twitter at
real Mike Larsen and follow Money Show for more investing
and trading content on Twitter, Instagram, and YouTube at Money Show.
Speaker 2 (15:11):
Thanks for listening, See you next time.
SMP six thousand, NASDAK twenty thousand, DOW forty five thousand,
and of course bitcoined one hundred thousand. We've seen a
lot of big round numbers fall in twenty twenty four
Paterstan stocks, but other assets too.
Speaker 2 (00:18):
What's happening behind the current? Is this advanced? Healthy or frothy?
Speaker 1 (00:22):
After two years of twenty percent plus games in the SMP,
we do it again in twenty five. Is the time
to batten down the hatches? Today you're gonna get answers
to questions like those from a guest. I'm pleased to
welcome back to The Money Show, money Master's podcast. He's
David Keller, President and chief strategist at Sierra Alpha Research. Dave,
thanks for hopping on the show.
Speaker 3 (00:41):
Yeah, it's good to see you. Good. Mike, thanks for
having me on.
Speaker 2 (00:44):
Yeah, you know, it's funny. I was looking back.
Speaker 1 (00:45):
I haven't had you on since March, which has definitely
been too long. Some things have changed and some things happened,
But I want to start with Sierra Alpha Research.
Speaker 2 (00:52):
You're a new venture here. What is it and what
is it you're doing?
Speaker 3 (00:56):
Yeah, So my career has taken me to a number
of different places, from Bloomberg in New York, from Fidelity
up in Boston, stock Charts in the Seattle area, and
I'm really excited to draw on those experiences and really
just try to help individual investors and financial advisors improve
their decision making. And having worked with money managers, you know,
(01:17):
running one hundred plus billion dollar funds, and working with
individual investors running a couple thousand dollars in their portfolio,
they make the same behavioral mistakes. And I found the
technical analysis provides a really good structured approach, if done correctly,
to help you minimize those behavioral bumps and focus more
on opportunities and using discipline in your decision making process.
(01:42):
So yes, here ALFA Research is really to help people
learn about the markets, improve their market awareness, improve their
understanding of what's going on using technical analysis.
Speaker 2 (01:52):
Right, great, glad to hear it. Best of luck to
you with the new adventure. Thank you.
Speaker 1 (01:56):
You know, obviously, as we're talking here, you know market,
like I mention, we're hitting all these milestones. We've seen
it in multiple asset classes. So what are your thoughts
on this market? Where do you think we stand here?
In mid December twenty twenty four.
Speaker 3 (02:08):
Yeah, So I mean Q four of twenty twenty four
is following you know, really almost I mean, at least
at the end of the year, is really following the
seasonal playbook really well, you don't have to look that
far back look to twenty twenty which is the last
election year. Now we are coming out of the you know,
sort of COVID experience there, but you still had that
nice rally in November and December after the election day,
(02:29):
and in an election year, between election day and your end,
you almost always have a period of strength, and so
I'm not surprised that we're seeing the resilient strength that
we are here in Q four. I think the real
challenge is what happens in Q one of next year,
which is once the euphoria of that post election rally
is worn off, sort of what's next, And that's where
(02:52):
I think investors will have to focus a lot on,
you know, a new administration. You know, obviously it could
be a lot of policy changes, different tailwinds and headwinds
than what we've been what we've been experiencing. So you know,
at this point the market is going up and that
it on its own is very very bullish for me
when the market's in an up trend. I think of
things as innocent until proven guilty. So I'm always looking
(03:14):
for signs that, you know, the market is taking on
a guilty vibe and that those sort of opportunities, those
those sort of signs of deterioration or what I'd be
looking for here.
Speaker 1 (03:24):
Okay, if I roll back the clock to midyear and
maybe eve a little bit before, we started to see
some of that rotation. You know that the big tech
thing that was dominating everything mag seven. We all know
about that, that was starting to give way to small
caps and some other sectors, and then kind of, I
know recently on X you mentioned.
Speaker 2 (03:38):
Here we are back to big, big tech world. So
how do you think that's going to play out.
Speaker 3 (03:43):
We've come full circle back to like the beginning of
the year, right when it was sort of the Magnificent
seven and then everything else, right, and you're finding that
particularly now where stocks like Alphabet, you know, breaking out
gapping higher, Meta breaking above six hundred dollars, Apple others
all having these you know, Tesla for sure having nice runs.
The reality is that breadth and indicators are actually going
(04:05):
a lot weaker here, right, So you know, end of September,
I think it was ninety percent of the S and
P members above their fifty day moving average. Now it's
down almost to fifty percent, so you know, more and
more stocks are breaking down below their fifty day moving average,
but the biggest names are strong enough that it's allowing
the benchmarks to look arguably a lot stronger than I
(04:26):
guess they really are. And you saw the same thing
like in January February of twenty twenty four, the market rallied.
A lot of stocks were actually not particularly strong, but
the biggest names, the megacap growth names, were so strong
it's sort of compensated for that. The danger sign is
where you start to see profit taking in those big
megacap names, which is why, as always I think they're
(04:46):
the most important charts to follow strength and Apple strength,
and Meta strengthen and VIDIA strength and Tesla goes a
long way to making the S and P and the
NASDAK looking remarkably strong. Weakness in those charts in video
breaking down below support which is a possibility. Those would
be warning signs I would be looking for, but for
now it's sort of offense over defense. Conditions are still
(05:06):
pretty good.
Speaker 1 (05:07):
And I noticed you mentioned too the bullish percent index
on the SMP. I think it just dropped back below
seventy percent, right, what's the significance of that, potentially.
Speaker 3 (05:15):
Yeah, So in a healthy bullmarket phase, you you know,
obviously or I guess intuitively, would think you have a
lot of stocks going higher. And so the bullish percent
index is a market breadth indicator based on point and
figure charts, which is a classic sort of charting methodology.
And so we have indicators called the bullish percent indexes
that literally quantify what percent of a certain universe are
(05:36):
in a bullish phase. And what I found is when
an indicator gets above seventy percent, that sort of signifies
that things are working. Most stocks are going up. There
are a lot of positive trends out there, and so
as a result, conditions are probably pretty constructive. What you
look for in an extended bullmarket like we're experiencing now,
you look for signs that that's changing, or what I
(05:57):
call it change of characters. So the bullish percent index
coming back to low seventy percent has often happened at
major tops because all of those stocks are going higher.
All of a sudden, you have some initial profit taking
on some of the names that have been going up,
they start to break down. Eventually that distribution really starts
to weigh on the market as a whole. So it's
not one hundred percent effective. I wish things were more
(06:20):
more than they are sometimes, but really, if you look
at major tops, it's had this sort of configuration. So
I think between now and going into January, those would
be the danger signs. I would be looking for signs
that confirm the market has been overextended here in December
starting to change going into January. That could set us
up for a maybe rockier Q one than I think
a lot of people would want to think.
Speaker 2 (06:41):
Got it.
Speaker 1 (06:41):
Let me ask you about another key sector of the financials.
I mean, I've always kind of followed them in what's
going on in the credit markets for sort of an
early warnings and the fact we've had participation there is
that buys What are your thoughts on that?
Speaker 3 (06:53):
Yeah, So the financial sector earlier in the year, boy,
talk about a place you didn't want to be. But
in the last six months, I mean the second half
of the year really started to emerge. I think that's
really sort of a forward looking sort of move anticipating
for the rate cuts. We have one more December FED
meeting now coming up in twenty twenty four, and then
it'll be all about looking forward to the pace of
(07:15):
rate cuts into the beginning of next year. A steeper
yield curve, which would mean the short end of the
curve comes down the long end remains around current levels.
That steeper yield curve is usually a really good environment
for financials because that's essentially how a regional bank makes
money based on the steepness of the yield curve. So
it's not been a great environment for you know, financial
(07:36):
companies generally speaking, because the yel curve has been inverted
for so long. It's now starting to normalize, and I
would say going into twenty twenty five, that's one of
the key emerging themes. If financials do better. By the way,
small caps probably a really good place to be. They're
a much bigger weight than in the large cap indexes
like the S and PR of the NASTAC, So I
would not be surprised if financials sort of re emerge
(07:59):
in a position of strength small caps, which are doing
better on an absolute basis, I wouldn't be surprised if
they start to improve on a relative basis as well.
Speaker 1 (08:08):
I got to ask about the technicals and some of
these alternative assets, bitcoin, gold and so on. I mean,
what are your thoughts there. Obviously we kind of the
blowoff moving gold a big correction after the election. Bitcoin
has just kind of kept running after the election. I'm
curious about your thoughts. As we had into twenty five.
Speaker 3 (08:22):
I feel like when people write books about twenty twenty four,
there will be the period before the election and then
period after. I mean talk about a pivotal moment when
and so many things had a certain look and feel
up until early November and then have dramatically changed. And
things that come to mind Gold, I mean for much
of the year, and I remember at money shows earlier
in the year we talked about the strength and gold
(08:44):
and how it was outperforming the S and P and
the NASSAC for most of twenty twenty four. That's only
changed in the last month or two, right when you've
seen gold come back a bit while the major indexes
have gone higher, but gold has been a remarkably strong trait.
It's retraced quite a bit now. I would say if
you look at the GLD for example, it's kind of
range bound and very close to actually breaking out to
a new swing high. So I would say with something
(09:06):
like that, re exerting an upward phase by breaking out
on stronger momentum would be an interesting, you know, sign
that there could be further upside to be had there.
Speaker 2 (09:16):
I would say, with.
Speaker 3 (09:16):
Cryptocurrencies, you have Bitcoin, you have ethereum trading up against major,
big round number resistance.
Speaker 2 (09:23):
Right.
Speaker 3 (09:23):
So Bitcoin it's one hundred thousand, which is a you know,
obviously a key psychological level. With ethereum it's four thousand,
and so when these things hit these big numbers, I'm
not surprised, recognizing the pullbacks that we've experienced in both
of those, the long term trends that were still quite strong,
and so I would say with Bitcoin breaking above one
hundred thousand and holding that breakout would be a very
bullish development. The same with ether prices. They've chopped around
(09:46):
as they've tested the previous resistance, but both of those
are actually setting up quite well going into the beginning
of next year. A lot of that is sort of
a tailwind I think implied by the Trump administration, by
Elon Musk being more involved et cetera, et cetera. But
for me, it's all about the charts, and as long
as the chart is going up, I'm gonna want to
own things like that. And so Bitcoin, ethereum and some
of the other top coins I think pretty attractive here.
Speaker 1 (10:10):
Okay, any other stock sectors that I haven't mentioned that
either look particularly bullish to you here or particularly bearish
as we had in the end of the month and
the end.
Speaker 2 (10:19):
Of the year.
Speaker 3 (10:20):
Yeah, no, thanks for asking, Mike. I think, to be
honest with you, the most important chart we haven't talked
about yet, I would say would be the performance of
the defensive sectors. There have been times here recently where
it's looked like things like utilities or consumer staples or
real estate have started to improve and it's not really materialized.
And just more recently you're seeing technology go up and
(10:41):
those defensive sectors really starting to underperform just in the
last month or so. But I would say, going into
being in of next year, if you're concerned about the
sustainability of this uptrend, one of the great tells that
a major top is probably happening. Are those defensive sectors
start to improve, particularly on a relative basis. Meaning the
ratio of the excel you or the XLP versus the
(11:01):
S and P five hundred starts to improve. When a
market has had a sustained rally and then institutional investors
want to get a little more defensive, they'll often rotate
to those sectors like utilities real estate. So for now,
I'm not seeing a warning sign yet, but that's top
of my list of charts to watch for a potential
warning sign going into Q one.
Speaker 1 (11:22):
Okay, we'll pivot away from the market action, just talk
a little bit more of kind of your your education
philosophical approach to this market.
Speaker 2 (11:27):
I mean, you talk about a lot about what mindful
investors should do or shouldn't do.
Speaker 1 (11:31):
I was curious we can expand on that point at all.
Speaker 3 (11:34):
Yeah, for sure. I mean my own experience personally with
mindful meditation was transformative. It really helped me recenter and
focus on the present and what was happening around me
instead of getting just so caught up in the future
or caught up in the past. And I have found
that applying that sort of mental approach to investing has
(11:55):
been really rewarding for me and for a lot of
my premium members as well. So we talk about mindful investing,
it's having a good process for understanding what's happening around us,
what I call a good market awareness. So for me,
it's having a morning coffee routine. Every morning I bring
up the same set of charts. I go in a
consistent checklist that I review all of the key metrics.
(12:16):
It's doing a certain thing every week. It's doing a
certain thing every month as a way of just reinforcing
trends that I'm seeing, recognizing changes and all of that.
But it also has to do with learning from your
past mistakes. I think a lot of times a mindless
way of going about your process is to ignore mistakes
and kind of move on because it's too painful to
(12:36):
relive a bad trade. I would argue one of the
best things you could do at the end of the
year is look back at some of your unsuccessful trades
and think about what went wrong right, What did you
miss that you could have done, What did you not
read that you could have read, What signals might have
helped point you in the right direction. So for me,
mindful investing is just having a better healthy relationship between
the present the past, and that sets you up for success.
(12:59):
In the f So that's how mindful investing I think
is something I think most investors could probably improve on.
Speaker 2 (13:05):
Got it? And one I think I want to ask you, Bobby,
you're joining us.
Speaker 1 (13:07):
I'm fortunate enough to have you for the twenty five
Money Show Traders Expo in Las Vegas this February.
Speaker 2 (13:13):
Your topic is the four deadly sins of investors.
Speaker 1 (13:15):
So, without giving too much away, I mean, what are
people going to walk away from that presentation with?
Speaker 3 (13:20):
So I actually was coming up with an idea for
the presentation. I'm excited to join you guys in Las
Vegas in the new year. And I really drew this
from an exercise I used to do with money managers
I would work with at Fidelity and other large institutions.
I would basically draw an idealized chart and talk about
some of the mistakes that could be made and think
about how they made decisions around different phases when a
(13:43):
stock was going up, when a stock was going down.
And what we're going to do in this session together
is sort of identify those four areas, those four deadly
sins where investors tend to mess up. What sort of
evidence could help us avoid those things, and what tools,
what charts we should review to make sure we avoid
those in the future. And I would say, as a hint,
(14:03):
it's things like buying too late, selling too early, and
there's nothing worse than selling when a stock is up
twenty percent and then sitting on the sidelines as it
goes up another two hundred percent. So we're going to
look at some examples of where having a more consistent
process could have helped us stick with our winners and
unwind our losing positions, maybe more quickly, more effectively, more efficiently,
(14:24):
and it should be a lot of fun. I'm looking
forward to it.
Speaker 1 (14:26):
Well, great, David, I really appreciate thinking some time out
share and your insights here viewers. If you are watching
this and you want to learn more from David, he
is going to be speaking at that event. It's the
Money Show Traders Expo Las Vegas. It runs February seventeenth
to nineteenth at the Paris Las Vegas Resort. You can
go look at the description below to find out more
and click the link to get details and register for
that event. David, you know help you have a great
(14:47):
end of your year, and I look forward to seeing
you in the new year.
Speaker 3 (14:49):
As well, thanks Mike. Happy holidays. We'll see in Vegas.
Are right?
Speaker 2 (14:52):
Same? Do you to take care.
Speaker 1 (14:54):
We'll have more interviews for you every week, so I
encourage you to subscribe to The Money Master's podcast so
you can stay up to date with the insights from
top money experts. You can follow me on Twitter at
real Mike Larsen and follow Money Show for more investing
and trading content on Twitter, Instagram, and YouTube at Money Show.
Speaker 2 (15:11):
Thanks for listening, See you next time.
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