Stocks with Josh talks 2024 market moves (Part 2)

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Welcome back to our special two part episode featuring stocks with Josh. If you haven't listened to last week's episode, I suggest you go back and take a listen. In today's episode, you'll hear from Josh as he shares his 2024 predictions when it comes to volatility, technology stocks, earnings, seasons and seasonality around the presidential election.

You know, we talked about 2023. Let's talk a little bit more about next year and what might happen. But first, I really want to think about, you know, everyone, the biggest kind of index is the S&P 500. It accounts for most of the market cap in the US stocks, the 500 largest stocks and and kind of on a long term chart and I know you do a lot of technical analysis.

Where do you see the support and resistance right now for for the S&P 500 it's sort of 2024.

All right. So if we look at the S&P 500 as measured by the SPX we have an obvious area of resistance at the previous all time high of around 4783 to 40, we'll say 4800, but we're there now. So we've pushed up against this area of resistance. That's what's referred. That's the all time high. We are currently touching it.

And if we close above this area right now, I think that we could go as high as 4900. I think we can get we can get up to 4900. But after that, from a technical perspective, I think that we would, you know, we would hit a wall.

Very interesting. And so 2024 is also a presidential year, if you haven't heard yet. You know, the noise hasn't gotten deafening yet, but I'm sure very soon it will. We'll have primaries coming up and then the election in November. And, you know, people have been looking forward to this for a long time. And in the past it has meant certain things for stocks.

So, you know, kind of what's your thoughts on the presidential election? Does it mean anything for particular sectors of the market generally, any any type of calendar trends we should be watching?

Well, yeah, you know, I will just simply say this, that I have observed through my my couple of decades of trading, that sentiment does play a huge part in the economy and a positive feeling can absolutely sweep across the country based on presidential elections. And it doesn't matter. People will say, well, it's got to be this party or that party.

And from my personal observation, it hasn't mattered who which party has gotten in. It's simply, you know, sort of the positive hope for change. New leadership, fresh leadership, often times gives people this feeling of of optimism that something will get better. And that has from my past experience, caused the market to to move. Sometimes we've seen a president get elected and the market there's been an initial market reaction.

But I've often noticed and this is just what we call this is a non factual, just, you know, personal observation. Sometimes seeing someone get elected, the market didn't want there was a little mini drop down that recovered within, you know, you know, maybe a drop down one week and then everybody on CNBC was talking about, you know, it'd be in a certain way.

And then, you know, the following week it just recovered. And so at most, I would say that change, if it's you know, if it if there if we have a clear and decisive election, it would produce, you know, a positive move to the market. I've also observed in years gone by when the when there was an indecisive election and we've had a couple of those in the last decade, we've had a couple of moments where people are questioning the outcome that the market didn't like.

The market did not enjoy that lack of clarity and direction. So as long as we have a clear and concise and election, I actually believe that that an election year is positive for the stock market. I am personally you could say I'll go out on a limb and predict from my own personal opinion that we will have faced whatever drop we're going to face I think we'll have faced before the election.

And so the election could set up for giving us a positive rally off of some lows, but that's very speculative. Just my general observations from years gone by.

That's that's a very interesting thought. And my question would be, would something like that actually influence the election itself for the incumbent? So if we see a 50% drop in the market, you may feel some people may want to change their votes. Any thoughts on that? Or do you think people are or more aligned with other issues?

You know, I think, you know, I remember years ago when I was a kid, I'll talk about old elections rather than recent elections. Maybe they're less controversial. But I remember, you know, they used to say, I remember that Bush after Reagan, you know, I remember everyone said that he lost because he was out of touch. He was you know, they kind of accused him of being an old guy in Washington, out of touch with with people's money.

And and he was too caught up in global affairs and interactions around the world. And he wasn't acknowledging that the American economy was not doing that well. He kept pointing to the future know people were sitting there today dealing with today problems, not problems down the road. You know, and leadership sometimes can be looking so far out or so globally that they're not looking at exactly what people are going through this Christmas, you know, filling up this tank of gas.

And so I think that, you know, yeah, if things aren't going well, if prices on oil aren't coming down by the time it's election time, I think that would absolutely impact people. And I have also observed and I've seen it in the past. And Justin, I'd be curious if you've seen this too, that sometimes we've run really expensive gas off years and we get to an election year.

And it's amazing how the politicians find a way of bringing the price of gas down there, you know, months before the election. So people feel like, it's not that bad. So I think we're going to see a ton of manipulation this year. Yeah.

And obviously, you know, the gas season kind of peaks in the summer and then it comes down slowly from there. So there's that natural decline. But, you know, my real question is, you know, what what triggers are they going to pull? You know, we've already seen the Strategic Petroleum Reserve be depleted significantly. It's at its lowest levels in decades.

And so at some point the question becomes, you know, how do you you know, how do you fix that? And yeah, maybe maybe we can broker a truce in Ukraine and Russia, and that certainly would bring prices down or, you know, obviously there's a lot of tensions in the Middle East, but those are tall asks going into an election year for for for anything.

And I think what you've said earlier about the elections in that a lot of times it's not about the result, but it's about the certainty. It's about getting that resolved and it's about people accepting. They're just they have a fear of the unknown. And once it's known, even if it's not what they wanted, they become okay with it on a per se.

And I would have transitioned that maybe a little bit into earnings because I think sometimes there are situations around earnings where you're not really sure what a company is going to report, and then you see them report very average results and the stock goes up and you're like, Well, why is that? And at some point people were just like, well, the the worst didn't come true.

And and they actually had earnings and it was in line. And at that point they're ready to then put their money to work, but they don't want to do it until they see an actual result, just like an election result. And speaking of earnings, you know, stocks posted positive year on year earnings, gross growth in the third quarter of 2023 above analysts expectations.

So what's your outlook going forward for earnings in 2024?

You know, I think that based on some of the graphs that I've looked at and some of the other research that I've been reading into, there is the expectation of these are not going to be record breaking years. But I think that they're definitely what I've seen is that the low of earnings people have seen as being behind us and that's why big tech took off as much as it did is because we saw this big earnings drop.

Right. And then we've seen this steady recovery coming out of it. Now, could there be another big earnings drop? Yes. But the data that would be needed to be seen, you know, such as a slowing economy, you know, we're not seeing. And so until that data manifests, we simply cannot have an overly bearish view of earnings. We have to assume that we are going to continue to see earnings growth on par with what we've seen in 2023, because there is absolutely no data that suggests that we won't.

And so I'm I'm in that camp just and I have to be a little bit of a wait and see person. And I think that you make a bit people make a huge mistake trying to look too far down. I enjoy looking into 2024 because I think it's important to get a general idea of how things might swing.

But a lot of 2024 is going to be determined on data that we don't have, you know, and what we can't predict and we definitely have to be careful about making taking positions too early before the market reveals what it wants to do.

That's that's a very good point. And my question then becomes, you know, what are some of those great data points or particular sectors or companies you might be looking for as kind of a early warning signal of, you know, this is the time to watch out and we might see some of those earnings be derailed.

Well, I love that question because it's actually one I have a very strong opinion on on my page. I have referred.

To the Apple Indicator as a overall sentiment for the largest investment firms. If people are buying Apple and pushing the price of Apple higher, it largely tells me that they believe that the economy is stable and doing well. And, you know, and I did a video last in 2022 when Apple was down at 125. And at the time I said and predicted if we break and closed beneath 125, this market is going to be it's going to be way worse than anybody realizes because that was a profit point for a lot of investors in Apple.

Right. That was a big area of support. And I said if they're going to sell their apple, then they don't want to own anything. And this is just conjecture and personal opinion. So I like to refer to as the Apple indicator. And I've said before, if Apple's going back to all time highs and we saw it go back to all time highs, it tells us that any of big tech could potentially follow suit.

And we saw that with Microsoft. So I would say that I tend to be looking right now at really the two that I tend to be looking at the most is Apple. And then after that, it is currently been Microsoft. If Wall Street likes those companies and if those supports genuine, genuine, genuinely hold, then it means that they are not too scared of the market ahead of us.

When we see those break key levels of support. And I can tell you right now, 170 moving forward on Apple is a key area of support. If we get back later on into 2024 and Apple comes down to, you know, 170 and breaks through with volume, then it means that, you know, it's kind of like Apple's like the Groundhog Day for me, you know, if it pops its head up or, you know, that type of thing, you know, if we drop beneath 170, we lose that area of support.

You know, I think we could potentially go down to 155. It tells me the market's got three more months of of negative digestion. If we hold support and bounce in that general range in 2024, it tells me that, you know, that was it. That's all the market wanted to price in. So I famously on my page talk about Apple because I think it is a represents nation of quality.

If people are afraid to buy quality, then they're going to be a they're going to be much more afraid to buy anything else. Does that make sense?

Yeah. So so basically what you're telling me is Apple is even a better indicator than Punxsutawney Phil the groundhog. And speaking of big tech, I'm going to give you the top two performers this year in the S&P 500, both of them big tech Meta platforms, up almost 190% or, you know, almost at the end of the year, Nvidia up approximately 248%.

So my question to you is, you know, these are decent gains. I think most investors would be pretty happy with with it with gains like these. What's the strategy for trading stocks like these going into 2024?

Well, I'm going to I'm going to I'm going to go out on a limb and give some predictions on these bold predictions. I like Nvidia and Nvidia has already shown us that the market likes Nvidia, the big investment firms like Nvidia and if and without getting too off track, we have an issue with chips globally. There is conflict and potential of conflict around Taiwan.

There's things that could absolutely cause invidious stock to become way more valuable than it currently is. And those who think that way bought up when in video was at 408 in recent days that dipped beneath $400 and it did not go back to test previous areas of high. It found real strong support. It moved all the way back up to 500.

That was a testament to the fact that in video is going to continue to be a big market leader. I would not be shocked if in 2024 NVIDIA got above north of 600 and we even saw a stock split. That's possible. I'm not predicting it. I'm just simply telling you that it's possible. If it got between six and 650, we'd see a stock split.

And I think that because of all the tensions that exist and because of the importance of this product, I think that AMD and Nvidia are to companies that that have been doing really well. Meta is doing well more, in my opinion, because of the AI story and I think also because it had been just ridiculously beat down and the fear of Mark Zuckerberg going after the metaverse, which was a legitimate fear because he was spending billions of dollars and the market basically punished the stock until he showed them that he was coming back to focus on advertising and growth of the incredible community that is Meta.

And so when they saw that he was in his right mind, they began to rebuy his stock. And I think that that's an AI story. And I think if I had to pick between the two, I'm going to go with the chip makers as the ones being having the greatest potential in 2024. I'm not sure if I answered your question.

Those are just some initial thoughts on those two companies.

No, no, that's that's a very, very interesting and basically, I just want to shift a little bit towards volatility because, you know, a lot of people use volatility to think about what might happen to stocks in the stock market. And, you know, a lot of people use the VIX index, which is a 30 day look forward for, you know, the market volatility.

And it's it's really hit lows recently, not lows we haven't seen since the pandemic in much lower than than it's long term average. And so, you know, my question, so what does this mean going into 2024? We're seeing this low volatility. Could we expect higher volatility or about the same or lower or what's what's the expectation?

I appreciate that question, and I have an answer for it, one that at least is an answer for myself. What am I looking for in regards to volatility? And I think that what we didn't see that I thought that we should have seen when we recently tested the lows in end of August, September and October, we we we saw that volatility was largely around 13 on the VIX.

And what we what I would have liked to have seen is for volatility to have doubled. That's a basic general rule of thumb. So if we really got a flush out at that moment, then we should have seen volatility spike to 26. If you go back in history, that's a typical move. We didn't get it. So that actually was an early indicator that the market was still in the mode of pressing higher some.

At the time I was concerned when it was between 20 and 23 that we had to be cautious and wait for that bigger volatility move to get back into heavy investing. But it did not turn out to be the case. It it actually volatility flushed and the market took off again like a rocket. And here we are at the lows.

So we let's assume that this is the low right now it's around 12. The recent low is around 1230. We'll call it again. I'm going to be looking for if we get a vote, if we begin to get a sell off and everybody perceives that the top has been peaked, we hit let's say we hit that 4900 on the S&P 500 and we're down at 12 on the VIX.

I'm going to look for that to double as a general rule of thumb. So I'm going to be looking for it to hit $24 to feel like we've had a real proper flush out. So, yes, I absolutely think we're going to have more volatility, but I don't have a gauge as to when the closest I would see it would be around March on that, you know, by the rumor, sell the news on that actual rate cut coming.

Yeah, that's a really interesting point you make about the volatility in the most recent sell off in the third quarter, that September October timeframe. It did not go up very much given how much we went down, but it seems like there wasn't too much fear in the market. I felt like we were it was almost a very orderly sell off.

Right, you're 100% right on that.

Which is in contrast to the sell off that we saw in long term bonds. We saw people panicking in ten year rates, exploiting the 5%. And so, you know, kind of my thought here is, you know what? What's the difference there? What what causes that market of just people to just panic versus, you know, slowly selling off or, you know, obviously, I rather it looked like this was the sell off on the bond market going higher and not necessarily on earnings or economic outlook.

Yeah, well, I don't think so. Just in regards to that, you know, there's the phrase dumb money and that's been used by insiders on Wall Street to refer to the retail community and and basically the emotional nature of retail investors. You know, I think that the the Wall Street itself, they tend to not be emotional. They tend to have a big broad view, the much closer to the data than typical retail traders.

And and yes, it's a very unusual thing for them to get into a panic moment that typically can only be generated by data and news. And I don't think that we have had really any news for a long time. That was somewhat of an expected. That's my personal opinion. So I think the reason why the VIX has moved coolly as it has is because we haven't really had any unexpected data.

I mean, really for over a year now, the, you know, inflation has steadily been moving down. The Fed's maintained his rhetoric with minor, you know, minor indications of of an easing idea. And and so yeah, the data hasn't been there there's nothing that's shocked or surprised the market and and that's another reason why we still haven't had a reason to go down.

So yeah we haven't had any real bad data. Corporate earnings didn't shock us in any way. They were pleasantly they were all a pleasant surprise of, of better growth than expected.

Yeah. And so a lot of that sell off seem to be really about bond yields rising. And we saw an absolute reversal. And you know, in the fourth quarter where bond, you know, bonds rallied and yields came down and the stock market rallied. And so, you know, is that correlation being stretched? I mean, going into 2024, if bonds keep going, yields keep going lower, do you expect the stock market to keep rising?

Well, will that correlation continue or is it stretched?

That's a good question. You know, I would say that I can't I wouldn't have a strong prediction on that. I think that there are factors in my mind that come that come quickly to my mind that would that could eradicate the that simple view in general. I think we are still seeing that and should for should for a while more.

I think that we you know, we're seeing some treasuries go up nicely and we're definitely seeing some we're seeing those will continue to rise as the Fed cuts rates. Now, the question as to where that money will go specifically, I think, you know, that there could come that situation where risk is taken off table for a brief period of time.

And I guess if that were if I had to give a more concise answer, I would say that I don't believe that when we're taking risk off the table, that it will be off for for a long period of time. I think it's going to be a short period of time, a dip, and then you're going to see again, unless we get some data that would cause us to think otherwise.

You know, I go back to that Larry Fink interview. He wasn't scared because there's so much money being printed. There is nothing in the data that he saw that should keep him from being a confident investor. That was the attitude that he got. And so I would say the same thing largely, I think, as you were saying, we are going to see you know, I think we're going to see movement of money into stocks eventually.

So that's an interesting take. It's always interesting to see guys like Larry Fink and other people, you know, what they think about the market. And I mean, and this is the time of year, end of year, beginning of next year. People are are making they're doing their takes, making their prognostications about 2024. And it seems to me like, you know, there's kind of this herd mentality and they always kind of stick close to each other in their predictions.

And my question to you is, anything you think is consensus for a lot of a lot of these prognosticators that maybe you don't agree with?

That's a really good question. Well, I would just say this. What comes to mind that I would almost like a warning that I would like to give people is I would like them to understand what the four cycles of the market. You know, we have an accumulation phase. We have a mark up phase. We have a distribution phase, followed by a decline phase.

So in 2022, a lot of stocks had bottomed and they went into an accumulation phase. And then we saw quickly after that we've seen a markup phase really all of 2023 been an incredible year from the lows of 2020 to what follows a markup phase. Markup phase is followed by distribution. What are the characteristics of distribution? Characteristics of distribution is much higher price swings.

So instead of Apple going up a couple of dollars every day, you know, one one 183 184 186 187 with one and a half dollar pullbacks, you see it flush down, you know, five, $6 a day, two days in a row, dropping $10 after it spent a month climbing $10. And then you think, okay, well, goodness gracious, I better turn around and sell my apple right now.

And then you see it turn around and pump $10 in a single day. Back up to where it was. Those larger price movements are the characteristics of distribution. And if I were to say, you know, consensus right now is that the market's going higher and higher and that everything is going to continue to climb. Now, it's true that a lot of retail investors tend to let go of their winners too soon.

And so it does pay to hold on to your winners to see where they could go if you had been invested in Meta at $84 and it went up 100% and you sold, you would have made a fatal mistake because it was going to go up another 100%. Still the same with Nvidia. You know, I would say that at this point in time, I would say that all of these stocks are are elevated.

They're at the top of their range. And it's then it could be time to raise your stop loss so you can actually realize some of the gains that you had. And I guess it would be my I don't know what consensus is right now. Consensus. And, you know, people are largely still in a bullish mind frame. I've often noticed Justin that that when the market's bullish, everybody on CNBC is bullish.

You know, when the market's bearish, everybody comes out with bearish commentators. They just go from the bullish commentators to the bearish commentators. Depending on what the day did, they're not really forward looking. You know, they're just kind of letting you know, what just happened. I think that everybody should realize that we just went through a markup phase and that the next phase after that is typically distribution.

And unless you want to ride the wide waves of price action on the distribution phase, you may consider taking profits.

Well, it sounds like the distribution phase would be pretty good for volatility in the VIX. So we might, you know, jump off of some of these lows. And that's a question for you in in you know, in some ways, I think a lot of investors think, well, if you did it right, 20, 23 was pretty easy just bought and you hold Yeah.

And you made a lot of money no matter pretty much wherever you went, you could make money this year. Obviously it was narrow in the fact that if you're a big tech, you made more. But you know, wherever you are, if you bought and held. And so but with the volatility coming in, you know, how how how did the traders and investors need to change their game plan with that?

You know, I will say this in regards to the first part of your comment is in the beginning of 2023, somewhere in the month, I think it was March, I have to go back and look specifically. I did a video titled and it was hard for me to do this video and hard for me to title this video the way that I did.

The video was titled You Missed the Bottom. And the reason why I did that is because I knew that there were people that were still afraid to invest in 2023 because they had the belief based on that consensus you were talking about, that there was going to be a Armageddon recession. The mother of all recessions was coming in 2023, and I knew that people were sitting on cash and that they were afraid to invest because because I had been.

I had been. And so I thought, you know what? I thought I need to quickly pivot. This market's doing great. We have no clue that a recession will come in 2023. I need to pivot and I need to let people know that I'm pivoting. And that proved to be great. That proved to be good advice. And if people had gone all in from that moment forward, there was a ton of money to be left in big tech all the way up till today and now going in to, you know, now going into to 2024.

Justin, I think I should consider doing a video. Don't you know, don't miss taking profits at the top.

But that's that's a good one. So, you know, the other thing that we've seen in 2023 and honestly, 2022, it's it's really been about the Fed. What the Fed is not even what the Fed did. It's more about how the market interprets what the Fed has done or what they're going to do. And so what I love, you know, kind of every few months the Fed comes out with their own projections.

And so they just did so in December. And, you know, I want to run some of these economic numbers by you and kind of see what you think about where the Fed is. And so just so everyone's clear and understands how it works, the Fed, there's not a come up with the consensus number and say, this is our number.

They survey all of the all of the FOMC members. Everyone comes up with their own forecasts and then they combine them to have a median forecast. So obviously, certain Fed members may be lower or higher than these. These just just the average median numbers. And the first one that that I think a lot of people expect it to go up a lot in 2023, and that is unemployment.

Unemployment is still chugging. We're really kind of very close to all time lows. We did see some some of that slack in the labor market, the job opening. So there's not as many job openings now as there were, but the actual people employed, a lot of people are unemployed right now. And so from that aspect, that's pretty good.

And so the Fed sees their median unemployment rate at the end of next year, end of 2024 at 4.1%. What's your thoughts on unemployment?

Well, okay, I'd like to just take a broader view to explain this in a way that the retail market could understand, because I didn't understand what I'm about to say years ago. I didn't understand it. So what happens if we have the data points that convinces the market makers or Wall Street, we'll just refer to them that we are moving into a recession, then what?

They're going to begin to look for all of the analysts that cover big tech and all the large companies in in the US, they're going to begin to look for them to cut employees because they want them to be preemptive in protecting profit margin. I cannot say that the most sacred, you know, part of Wall Street is the profit margin.

And that's what those the analysts are wanting to see protected. And the only way to protect it is to cut people. And so the the companies that are the most aggressive in cutting employees are the ones whose price share price will be preserved by Wall Street. And and so it almost becomes a race to to make these cuts.

But it's very hard because companies take time to build up these valuable employees. And then all of a sudden somebody at the very top or the board of directors above the CEO says, yeah, we need to cut 10,000 people. And then the company, it takes them time to scramble and figure out what that's going to look like. You know, okay, which department could we afford to do that in?

Which one would we hurt our revenues the most? And so I just want to make make it clear that that's why I went back to the fact that we don't have the data that would indicate to us that would cause the market to react that way. We don't have it. Matter of fact, in many ways, analysts should be expecting these companies to add employees and in 2024 to capitalize on the AI growth and other factors that are going to impact them and into other global economies, they want to see employees added right now.

So I don't see I see I think the Fed there there can be there can the labor market can ease things, can cool off because it had been super hot, but I don't see it dropping exponentially. And that's another point that I guess I want to take a step back and make. There is in my mind a 5050 on inflation going back up and the labor market tightening again.

And best case scenario is that we would remain in this softening environment for a while and the markets don't get spooked. But I but if I could just as easily just in right now, make a case for you why the labor market would tighten and it and the Fed is wrong. I could just as easily do that the data the data does not support that capitulation tipping moment yet for labor.

Yeah, and that's brings up a real interesting point about the Fed's own inflation forecasts. So to me right now, I think inflation might be the hardest thing to predict. And I've seen people have so many different views on where they think we're going with inflation and so the Fed uses what's called core PCE inflation. That's their measure of inflation.

And most, you know, most of us retail people, we're looking at CPI, but eventually they show the same type of thing in a trend inflation. And they're looking at 2.4 a prediction for next year and on their way to the target of 2%. But obviously there are there's a lot of room to go both ways. I mean, a lot of people think, well, if if inflation if the economy slows and we have a recession or inflation will slow.

But there's other people, I think the opposite who say, well, if the economy slows, we could have stagflation and inflation could rise or the economy overheats and inflation rises. So so there's a lot of different situations with inflation. And you know, right now I think it's calmed went up a lot faster than anyone ever thought it would, you know, a year and a half ago.

And it's come down faster from its peak. You know, CPI peaked over 9%. It wasn't that long ago and here we are much, much lower and it hasn't proved to be sticky. And I think for me a lot of that has to do with the idea of what what people would call supply constrained inflation or basically, you know, for instance, we have, you know, a problem getting shipping through the Red Sea and that could cause prices to go up.

And obviously the pandemic and the war in Ukraine caused temporary supply problems. And the real question is it is are people willing to pay more for some of these goods? And I'm not sure a lot of people have have a real good feeling either way of which way we're going to go. And it seems to shift every month.

So what are your thoughts on on inflation for 2024? And how do you how do you use that to gauge your investing?

Well, first, I thought you did a great job just kind of giving an overview. I agreed with every single thing that you laid out there. So thank you for that. Well, I think the largest point that I would make is that first I agree with you. It's kind of surprising how it did. You know, you know, you could say maybe the Fed did a great job.

He they did an unprecedented rate hike. I mean, we were seeing 75 basis points coming one after the other, and maybe he got ahead of it. And that's what's caused this nice, beautiful slowdown. And it was sort of surprising to see him do that. It was nice to see the market respond and for inflation to come down. But I guess the the only point that I could really contribute on this, Justin, is that I don't think that that we have a clear path yet.

And I think the you know, I don't think anybody who says that we do should have any reason for saying that. I mean, at the moment we could we have a clear path that perhaps over the next 30 days we'll continue the trend. But all would take is for inflation to begin to go back up for this market to freak out because they might give the market a couple reads, you know, to see if one is an anomaly.

Perhaps it might drop a little bit digest. But the very second we see that that the Fed doesn't have inflation under control, everybody's going to be concerned about the back in the 1970s, you know, into the 1980s when there was hyperinflation, you know, the fear of hyperinflation and and it getting outside of his control, especially after his aggressive cuts.

So largely, I just don't think that we have we have that we know what's going to happen. And and that's another reason why you either want to be you know, you want to be in some cash at this point, taking some profits can potentially, you know, be in some short term bonds still seem sensible to me so that you could react you know, in the in the first quarter of 2024, see what happens with inflation.

Yeah that's that's a great point. And so, you know looking at all of these, you know, factors that the Fed and I'll give you one more data point changing to real GDP 1.4%. So they don't expect a recession, but but slow growth and they've taken all this together and try to figure out, well, how many cuts are they going to make?

And they expect the Fed funds rate to be at a median level of 4.6% at the end of 2024. That equates to about three cuts. The market, meanwhile, is expecting them to cut five or six times. But just to give you, you know, give our listeners a little bit broader context, the Fed raised 500 basis points. That's 20 hikes, 2025 basis point hikes.

So now we're talking about one cut or two cuts or three cuts. And it seems like everyone is so excited and literally we're only going back from 20 down to 17. If you're following the Fed, is that enough to move the needle for stocks higher? You know, is you know, are people overreacting when it seems like we're raising 75 point points at a time before and now when we cut 25 basis points, people think this is, you know, the greatest thing ever.

And so, you know, my question. So, you know, what what are some of your thoughts on that?

Well, I think the best response I could give to you is I think that the market has already priced in more cuts. 100% of me is convinced this current market has priced in more cuts than the Fed has said that or that the the the top analysts have suggested the Fed will do or he's given an indication they so they're pricing in more cuts.

And I think that's a little bit dangerous, of course, because if they have jumped the gun and if for some reason they're wrong and inflation remains sticky and he gives us a cut but doesn't give us as many cuts as they're expecting now, there is confusion and the market hates confusion. And typically we'll see impending volatility and, you know, in in the market.

So I think that the problem that we're at right now is that the market has priced in all these cuts and which is kind of weird, Justin, because the market's expecting all these cuts typically that's going to be based on some recessionary data and him having to respond to it. But simultaneously, they've projected high growth for the S&P 500 and the two don't go hand in hand.

And so I did another video about, you know, three months back saying someone's lying either, you know, they're I said the market is lying. And the implication of that is that you cannot simultaneously be pricing in all these cuts and expecting because the market, because the Fed is only going to cut because of of of the signs of a piece of the economy slowing too much and then simultaneously expecting Apple meta you know and you know all these other companies and video to you know to Tesla and all of them to be having great earnings the two don't go hand in hand and and that doesn't make sense and I don't think that's I don'tthink we I don't have an answer for you as to why that is. Why that's the way it is right now.

Well, it's going to be a fascinating topic. And that's probably the one that, you know, along with inflation, that I think a lot of people want some clarity on. And so hopefully going into 2024, we'll get a little bit more clarity once we see, you know, a kind of a steady bottom. But in inflation, where it goes from there and and ultimately, you know, we might be heading for that March meeting and that might be the real important meeting for the Fed to see what they do because if there is a expectation that they cut it, it will be about what they say of future cuts.

If they don't cut that, it will be a surprise for a lot of people and there's got to be a reason behind it. So I think you're spot on there with with March being that that meeting that everyone should be looking forward to with the Fed and with that I really want to thank you for being on the podcast today.

We have we've covered a range of topics and and it's so exciting to have you here and you're also active in our community. And I and I urge listeners to get into the human community, follow Josh And, you know, I just want to let you kind of have the last word. What your, you know, anything that we haven't talked about that that coming up for 2024 that you want to let our listeners know or investors know your thoughts about?

Yeah, well, you know, I want to just give some people encouragement. I gave a recent Jack Ma quote he's the founder of of Alibaba and he said, you know, things are going to be I'm going to I'm going to quote it incorrectly, but you'll get the gist of it. You know, things are going to be bad. They're going to be tough today and they're probably going to be tough tomorrow.

But then after that will come the sunshine. And, you know, I think that don't let the market scare you. Don't let it intimidate you if you don't understand every single thing that Justin and I were talking about today. You know, you can the Wall Street is for you. And it you know, it looks like you Wall Street become diverse.

It's a place where everybody is coming in and growing wealth. And so, you know, don't get too bearish, don't get too bullish. You know, think through your decisions, think through your risk, do your research, grow a little bit every day, and you'll find that people are making money on Wall Street. And that's why I'm on a one month vacation in Hawaii right now, because there's money to be made on Wall Street.

And I just want to encourage everybody to continue their journey. You know, podcasts like this can give you perspective. You know, there's that old analogy about sharpening the ax before cutting the wood, listening to these types of podcasts and just digesting people's thoughts on the market. It's just going to help you sharpen that ax so you can make better decisions for yourself.

Thanks for having me on, Justin. I really enjoyed the conversation.

Thank you, Josh And thanks to our listeners. And again, if you enjoyed this podcast, please make sure to follow Josh. Let him know you enjoyed it. Let us know in the comments how much you enjoyed us and we'll try to have him on again very soon to get his thoughts. Thank you very much.

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