The Calm Before the Drizzle

[00:00:00] Speaker A: Foreign. [00:00:05] Speaker B: Welcome back to Intelligent Investment Live. I am Garrett Leo here with Matt Dahl of ARPG in Las Vegas. Matt, pleasure to see you as always, my friend. Welcome back to. To another round of this. I think we're about 40, 45 shows in by now, so I don't know exactly what the number is, but welcome back to round. Whatever we're at now. Good to see you. [00:00:26] Speaker C: Ah, favorite part of the week. Friday. [00:00:28] Speaker A: Friday. [00:00:30] Speaker B: So tell me the truth. Is it looking Forward to the 30 minutes of me every week, or is it just strictly that this is one of your last obligations of the week? Tell the truth. It's okay. [00:00:39] Speaker C: Oh, it's 100% as my last obligation for the week. It's like, I'm out. I'm out the door. I'm gonna go have a nice lunch with my brother. We talk race cars, but I don't know, you know, sometimes when we miss a week or so, I do get separation anxiety. And then I have a little picture of you on my dresser at home that's surrounded by candles and a rosary. You know, I only cry for about 20 minutes a day at it. [00:01:00] Speaker B: That's totally understandable. As long as you're not more than a half an hour. I think that's a healthy. [00:01:04] Speaker C: Yeah, that would be weird. [00:01:05] Speaker B: Yeah, that would be. 20 minutes is a good, healthy processing of your grief. That's. That's totally. [00:01:10] Speaker C: But it is. It is a loud, guttural sob. [00:01:14] Speaker B: Yeah. Yeah. Well, you got to get it out. I mean, don't. You don't need to hold it back when you're doing it, so. [00:01:18] Speaker C: Actually, you would have enjoyed howling. It's a mess, but worth it. [00:01:22] Speaker B: I was thinking about you a little bit yesterday. Well, not really, but now that I'm talking to you, it reminds me that I should have been thinking about you. I did a. I started another. We've not released it yet, but I've started a. It's a hobby. It's not anything we're making any money off of by any means, but started recording a golf podcast with a couple of guys. And for whatever reason, yesterday, the analogy of the day seemed to be race cars and golf and how. How much you can learn from the golf swing or how many, I guess, how many analogies there are between driving a race car and, you know, making a good golf swing. So all that race car talk, I mean, we went for like an hour straight, and I bet we brought up, like, 10 different racing analogies. And looking back at it, you would have been, even though you don't Play golf. I don't believe you would have been able to contribute greatly to that conversation with your racing background. [00:02:08] Speaker C: You know what's funny is I was talking to one of my advisors and he golf slot, he's really, really good. And my future new son in law, he's a golfer and I was watching something on tv, it might have been CNBC or something which is on or whatever and they were doing an interview, they were interviewing somebody at the golf course, like, man, it's so green and pretty there. So I walked over to my advisor, said, I think you need to take me golfing. It just seems like nice, like it's great because Las Vegas is, is, you know, it's, it's desert, it's hot, it's brown. So going on a golf course rather than sitting in the office all day seems kind of nice. There's water, there's trees. It was absolutely, it's great. You know, you go out, you have just have a couple beers and whether you, you don't have to be any good, I go, well, good, because I will be absolutely terrible at it. So let's go golfing. So he's going to take me golfing. [00:02:55] Speaker B: There are few things in the world anymore that I truly get romantic about, but golf is one of them. I think it's one of the greatest. I think it's the greatest sport in the world and it's so much like life, you know, I mean, I think there are. So maybe more than any other sport, it's one of these things that, you know, sometimes you do your best and it just variables out of your control will cause you to have a bad day. Sometimes you just are in the zone. Nothing can stop you. But one way or the other, it's, it's very peaceful. Well, it can be peaceful if you don'. If you let yourself get overly competitive, the peacefulness goes away really quick. But if you just get out and have kind of the mindset like you just said of going out and just enjoying the out, you know, being outside and it's a great sport and it's, I don't think I can. One of my favorite quotes I'll have to tell you sometime off, off the show. I don't think we can say it in the show and continue to keep our clean rating, but there's, there's some great one liners from golf also. So yeah, I encourage it. You, you definitely should, should give it a crack sometimes. So what's going on in the market? We, we talked about a show a few Months ago where we, we referenced it as the storm before the calm and you said now we're, we're kind of in the opposite. Things are very quiet right now. VIX is, let's see, where are we at on the VIX right now? Maybe you've got that handy. I don't have it actually. Close, close by 15. [00:04:14] Speaker C: Yeah, yeah, about 15. [00:04:16] Speaker B: Yeah. [00:04:17] Speaker C: We have a 30 day, we have a 30 day moving average at 16 and a half. It's really low. [00:04:22] Speaker B: Okay. And we're up there pretty high. I mean, I don't know, we're not quite at the all time highs on the market or are we intraday, we're right on it. Whether we're higher or you know, 10 basis points below. We're basically sitting right at the high right now in the market. Valuations are stretched quite a bit right now as we talked about in the last several shows. So you said before we got going here that the, this is more like the calm before the storm. So what is the, what do you see the state of things and where do you see things heading in the next little bit? [00:04:57] Speaker C: So back in March we call it the storm before the calm. We had to wait a couple of weeks before, you know, the final capitulatory move and then the recovery began. But it was one, heck, it was an incredible rally, right. One that, you know, again I think we're proud of here for sort of calling it right. But this, we're kind of on the other end of that now. But let me be clear. This is not the calm before the storm. This is the calm before a light, warm, summery shower. [00:05:32] Speaker A: Okay. [00:05:32] Speaker C: With maybe a nice breeze that you could sit on your porch, sip lemonade with maybe a cocktail in it. [00:05:37] Speaker B: Yeah, just a little sprinkle, just a nice summer shower, cooling off shower. [00:05:41] Speaker C: Everyone is waiting for a pullback right now, including me. Everyone's waiting to grab a nice little 10 pullback. We get a couple 10 pullbacks every year. Everyone's waiting for it. So we're not gonna get it, okay. Because people are going to come in and they're gonna, they're gonna buy it. [00:05:56] Speaker A: Right. [00:05:56] Speaker C: So my, you know, if it pulls back, will it pull back 10? I don't think so. I think we'll get, if we get 7%, we're lucky. I would say we're probably going to get more of a 5ish, 6% pullback somewhere in that range. And it will probably, it will probably be about a four week, four to five week total time frame from when it begins. And I expect it to begin sometime in the next couple week to two. [00:06:21] Speaker A: Okay. [00:06:21] Speaker C: We keep kind of what we said first, second week of August. My guess is we'll start to see it roll over, which be the second week of August next week. The full, the next full week of August will be next week. We'll start to see a pullback and that will probably last four to five weeks. The reason I think it will last four to five weeks is on June 27, the market broke out above its February high. And if you remember, back in February, we hit that 6,144, February 19th. From there, the market just did a dive bomb right into April 8th. [00:06:56] Speaker A: Okay. [00:06:57] Speaker C: Because of tariffs. [00:06:58] Speaker A: Okay. [00:06:58] Speaker C: And we have, if we had about a six to seven week pullback right through there. And as it recovered and it got into June, it started to, it started to bump up against those old highs. It had a hard time getting through 6,000. [00:07:13] Speaker A: Okay. [00:07:14] Speaker C: Then it had an even tougher time getting through that, that sort of, that 6140 range. [00:07:18] Speaker A: Okay. [00:07:19] Speaker C: But it finally broke through that range and took off. You know, it went like a, like a whirlwind after that. [00:07:26] Speaker A: Okay. [00:07:26] Speaker B: Yeah. [00:07:27] Speaker C: So that time frame from top, from where it broke out to where it peaked out on July 28 is four weeks. But it looks like it's going to peak out again today. [00:07:38] Speaker A: Okay. [00:07:38] Speaker C: And if we call this another peak that now we got about six weeks. So call it a. So what I think could take place is a pullback in magnitude and time that equals that move from June. Not that I'm a, I'm not a certified market technician like, like Mark Newton or one of those guys. Those guys are, you know, above and beyond anything that I am as far as technical analysis is concerned. But I think because of these solid sound fundamentals that we have in the market and the market being as forward looking as it is right now, what's coming next year with a dovish bedroom like that, there could be a pullback, but I think it will be very, I think it will be very short lived and very narrow in magnitude. So you know, there's always the, the conversation what's going to cause it to pull back and what's going to cause it to pull back? It could be anything. God only knows. [00:08:34] Speaker A: Okay. [00:08:34] Speaker C: But sometimes markets can simply just coil up like a spring like they're doing now. And it's the stretch valuations and poor seasonality in and of itself that can cause people to. Just for the market to pull back. And the reason that happens is everyone's waiting for a pullback. So if everyone's waiting for a pullback so they can buy it, what are they also not doing? [00:09:00] Speaker B: Selling. [00:09:00] Speaker C: They're not buying. [00:09:02] Speaker B: They're not buying. [00:09:02] Speaker C: Yeah, they're not buying. So we, we don't have a lot of buyers. And if I look today in the AAII sentiment reading, we're only at 34% buy bulls, we're 40% bears. [00:09:13] Speaker A: Okay. [00:09:14] Speaker C: So this, this whole market has a bit of a bearish lean to it. So it's, it's, it's wanting to see some sort of a pullback. Which is, which is why, which is why we know. Which is what, what's telling, what, what that's telling us is that pullback, if and if and when we get it at current sentiment readings will be very shallow. We're not looking at, we're not looking at, you know, 60% bulls and 20% bears right now. [00:09:39] Speaker A: Okay. [00:09:40] Speaker C: We're looking at 34 bulls and 40% bears. So we don't have, we don't have, we don't have a lot of off sites taking place on the bearer side these days. [00:09:50] Speaker A: Okay. [00:09:52] Speaker B: Wise right now it's, it's pretty, it pretty, it's leaning, it's pretty balanced, but maybe leaning slightly bare, yet we're going higher, which is here, it's, you know that, that's pretty uncommon. One of the, There are very few times, and I don't even know if this is one of them, but there are very few times when you can definitively say this is an absolute truth in the market. And anytime this happens, you can bank on it, But I think this might be one of those things. Anytime everybody thinks a particular thing is going to happen, that one thing is pretty much the one thing you know is not going to happen if there is consensus. The best example of this I can think of like a big time frame, but is I got into the industry in 2010. I remember 2011, 12, 13, 14, 15. Every single year, every single advisor, every single wholesaler, every single commentator knew interest rates were going to go up. And they knew you should not bet on bonds. There was no way they could go any lower. There was no way. They couldn't have. We couldn't have rapid inflation and people were betting on gold like crazy. Everybody knew we had to have imminent inflation and an imminent bond market crash. The bond bubble was going to crash. [00:11:06] Speaker C: Guess what? [00:11:06] Speaker B: The one thing that never happened It finally, in 2022, we finally saw the bond market. We finally saw yields rise a little bit. But I Mean, it was literally 10 years after everybody knew it was going to happen. So a lot of times when you, when everybody agrees on one thing, that's the one thing you can pretty much bank on not happening. [00:11:30] Speaker C: Yeah, you know, I mean, here's the other thing is, you know, the S and p drops around 3% about every six to eight weeks. That's about the number. You know, we, we typically see a bit of a larger pullback of about 5% about every three to four months. [00:11:48] Speaker A: Right. [00:11:48] Speaker C: That's about it. [00:11:49] Speaker B: Pretty run of the mill. [00:11:50] Speaker C: Well, granted we got, you know, seven buffets full of that in, in April, so we've had our share, but we have not seen anything close to a 3% pullback since April. [00:12:03] Speaker B: So wait, since April we've not even been close to a 3%. I mean, because a 3, that's only a dip. That's in market terms. You think of, you know, a 10% is a correction, 25% is a bear market. 3% is just considered. Okay, 20. Yeah, 20 or 20. I've heard 20 and 25. [00:12:23] Speaker C: I typically use closing highs. I don't, I don't, I don't look at intradays at all in today's. I mean that's just, that's just day traders, you know. [00:12:31] Speaker B: Yeah. [00:12:31] Speaker C: And you know, dorks living in their basement having nachos for breakfast. [00:12:36] Speaker B: That's the Robin Hood. That's the Robin Hood volume. [00:12:40] Speaker A: Right. [00:12:40] Speaker C: So I don't, I don't, there's, I don't. Because we haven't had really any motion to speak of. And the VIX is so deflated right now. We're sitting again the 13th. The, the 30 day moving average is down to 16 and a half. And it's, and it's, and it's directionally lower. The trend is lower. And we're on. And it's August 8th and we've seen now hard data. Hard data finally came out last week. We talked about a little bit. [00:13:13] Speaker A: Okay. [00:13:13] Speaker C: We've had sentiment data and there's hard data. [00:13:15] Speaker A: Okay. [00:13:16] Speaker C: Sentiment data is what we think is going to happen. Hard data is what actually took place. Okay, so what actually took place? We finally had some hard data. That was labor. That was jobs. We went from 150,000 jobs a month on average for a three month average down to 37,000 in one fell swoop of the labor department and statistics getting it that wrong for May and June, which is why she got fired and she deserved to be fired. Because if you can't get it any closer than that you probably need to go do something else. Okay, But July only posted, July only posted 74,000 jobs. And I fully, fully, fully expect July to be revised down in August. Okay, so now we actually have hard data. And is that hard? Was that hard data inflationary? No, it was not. It was the other side. It was, it was a significant cooling of the labor markets. [00:14:12] Speaker A: Okay. [00:14:13] Speaker C: So that narrative now, and that caused a pretty, that caused about almost 100 point day on the S P. That it was always 118 point day on the S P. The day that was last Friday, it was a bad day in the S P. So it was a bad day for all, all indices. But specifically using the S P as a benchmark, okay, so the market is now, it's like the eye of Mordor. It's turned in that direction. Now it's looking at the labor market going, okay, now what are you going to do? You know, so anything that comes out that supports the narrative of cooling, shrinking labor forces is going to be very impactful to the market. So it remains to be seen what takes place. And the pullback could really begin in September when we get August employment numbers. [00:15:07] Speaker A: Okay. [00:15:08] Speaker C: When we get those jolts or we get starts getting the jolts numbers come out the end of this month. [00:15:12] Speaker A: Right? [00:15:13] Speaker C: That could be the catalyst that really brings it out. So the fact that we, the fact that we have a cooling labor market and we have stretch valuations, we're sitting at 22.2 times earnings right now. Next 12 months, we're at 21 and a quarter times 2026 earnings. [00:15:32] Speaker A: Okay? [00:15:33] Speaker C: We are at almost 19 times 2027 earnings. [00:15:38] Speaker A: Okay. [00:15:39] Speaker C: However, the reason the market's going up and I was discussing this this morning with the team, if you look at earnings, I think a little bit is attributable to earnings probably the retail side is 83% of companies. So we have 90% of the S&P is reported for Q2. 90% of the 90%, 83% are beating their expectations. 83. That number is normally around 72. So the, there was a surprise on the surprise, right? The surprise percentage is 7.1%. They're beating by an average of 7.1%. [00:16:22] Speaker A: Okay? [00:16:23] Speaker C: That number is normally 6.2, 6.3. So we have more companies beating their expectation than normally do and beating it by a wider margin than they normally do. And I think to some extent that was priced in because we had so many revisions down in April. [00:16:40] Speaker A: Okay. [00:16:41] Speaker C: So they really lowered that bar. They made it kind of easier to jump over. And I Think the market knew that. But what did we start to get in June and July? Specifically in July and in August. Okay, revisions up. This is an interesting little metric I like to look at. We now have 61 of companies. Look at all of the companies in the S P and all of the analysts that analyze all these companies, they aggregate each company and all the analysts. And was it net revised up? Was it net revised down? [00:17:12] Speaker A: Okay? [00:17:13] Speaker C: And if you're looking. And as we look at it, we've had. So this month we have 65% of the S and P companies have been revised up, okay? In June, that number was 34% for. This is for 20. This is for 2025, by the way. Okay, for 2025 we have 65% of companies have revised up. June, that number was 34%. In April that number was 27%. [00:17:42] Speaker A: Okay? [00:17:42] Speaker C: So we've had significant revisions up. And you and I discussed this in the beginning of middle of May that we're just now seeing revisions tick up. Well, now those revisions are ticking up. [00:17:54] Speaker A: And up and up, okay? [00:17:55] Speaker C: And the market's seeing that, okay? If you look at 2026 earnings, we have 61. 61 revisions up for this month, okay. Versus 39 in June. So significant move 2027, 55, 55 revisions up versus 35 in June. So this is what I care about is, is the reason I got into the earnings of Q2. Those are, those look backwards and it's nice to know. It's nice to know, guess what? The world didn't come apart. These companies are still making money. They still know how to make money. The tariffs weren't the end of the world. You know, we're going to get through this, okay? But it's the revisions up that I really look at, okay? Because if we, if you continue to see those deteriorations in earnings for 20 for the out the out years, that then you have to start asking yourself why now if you, if you blend a lower discount rate, okay. Into next year, things start to look pretty darn good. And that's, I think it's the combination of the. Of higher earnings revisions, a lower discount rate, I. E. Lower interest rates because of maybe a dovish Fed coming in. And again, I think, I think what we're going to hear toward the end of this year, we're gonna start seeing very beginnings of it is the old phrase, don't fight the Fed. There's gonna be a lot of people fighting this Fed going, no, no, no, inflation, inflation, inflation, inflation. And I'm here to tell you, they're gonna, they're, they're going to be stuck chasing this rally come November. [00:19:29] Speaker A: Okay. [00:19:30] Speaker C: And that's, that's sort of our playbook. [00:19:33] Speaker B: So you're seeing sort of a, the, the little drizzle, you know, 3, 4, 5, 6% somewhere in there. You know, the CNBC and the, well, I don't mean to call out individual outlets, but the, the talking media heads will, will make a big deal of it because we need bad news to sell, you know, to get people watching TV. And we'll be proclaiming at 6% down that the market's fallen. You know, going to be down 25 by the end of the year. But then somewhere in there, all these people who want to be bullish, but they're waiting for that 10% pullback will start to buy, to try to get ahead of the 10%. They don't want to miss the buying opportunities. They start buying at 6, 7% down. And then that puts a floor in it so we don't get the big, the big drop. And then you're seeing that as kind of the final washout before a big rally heading into the end of the year. Is that kind of the timeline that I'm hearing or did I miss? [00:20:25] Speaker C: Yes, that's kind of, that lines up kind of what we thought at the beginning of the year where we discussed the fun Strat where they thought the market would get a 65, 6600 sort of in the first half of the year and then pull back and then finish the year about, you know, 6600. Where I thought, well, you know, we thought that the market would probably pull back sometime in the, in the, late, in the, into the late winter, early spring. [00:20:51] Speaker A: Right. [00:20:52] Speaker C: And I think we said 54, 5500. Of course it went to 4, 900 because of the tear up situation, but the time frame was fairly close. [00:20:59] Speaker A: Okay. [00:21:00] Speaker C: The magnitude was greater than we all thought, I think. Than we all thought. But then a rally from there up to sort of that 62,6300 range. Now we're actually higher than that. [00:21:10] Speaker A: Okay. [00:21:11] Speaker C: Right now. And then probably just a seasonal pullback for, caused by whatever set of circumstances and then a run into the end of the year. And I think this particular run is going to be supercharged in the last four to six weeks because of, because there's gonna be a lot of people that are behind and they're gonna have to chase this thing, especially with the narrative into 20, 26 of a dovish of a new. They're supposed to announce today. They have not announced it yet, but it's supposed to be announced today, the nomination for the new Federal Reserve chairman who will be replacing Powell in May. [00:21:42] Speaker A: Okay. [00:21:43] Speaker C: And of course, I think top of the list is Kevin Hassett. And number two is Kevin. [00:21:48] Speaker A: Kevin. [00:21:49] Speaker C: The other Kevin. [00:21:50] Speaker A: Okay. [00:21:51] Speaker C: Scott Bessant took his name sort of out of the running, which I'm a big fan of. Scott Besant, I mean, I think he's as articulate and as bright as it gets. And I think he knows, I think he knows policy and I think he knows economics and how that, how that can, how policy impacts and implicates those economics on a much more granular level than any other secretary of the treasury we've ever seen. So I'm actually excited for him to stay in that role. And I think if we have a Federal Reserve chairman on the other side who, you know, who understands you want to skate to where the puck is going to not to where it is and not to be too late, I think that'll be another. That will be the leg that takes you at the end of the year. And my. And if you really want me to polish the old crystal ball, I think next year is going to be relative. I think it'll be up, but I think it'll be a really light year. I think it's gonna be a light year. [00:22:51] Speaker A: I don't. [00:22:51] Speaker C: If we have one of these years where the market just gets chased into the end, where we get to, you know, some number like 7,000 or 7,100, I don't know that we'll have more than a 5% year next year because we will pull all of those returns forward. And we're still sitting at stretch valuation. A lot of that is now priced in. So we might need a year. We might need a year of digestion, which will cause some indigestion. So maybe we'll need a year of indigestion. [00:23:20] Speaker A: I don't know. [00:23:21] Speaker B: Yeah, it's funny, too, when you talk about the. If everybody's looking for a 10% pullback and they are lagging a bit. [00:23:26] Speaker A: Little. [00:23:27] Speaker B: Little. If you've been, if you've been in the bullish camp to this point and you're calling for that 10% pullback to get yourself back in the game. [00:23:36] Speaker A: Right. [00:23:36] Speaker B: Maybe you're sitting, you know, maybe you're, you're managing a portfolio that's usually 80, 20, 90, 10 stocks, and maybe you're sitting a little light right now at 60, 40 because you're a little bit on the bullish or the bearish side, when the market pulls back that 6%, you start to think, all right, I'm right. I knew I was right all along. And once it gets down 10%, I'll be validated and I'll buy and then I'll be, you know, everything will be good and we'll be right back where we wanted to be. But then when it starts to rally off of, say, 6% and it gets up 4 and it gets up 3, and it gets up to. Now all of a sudden you're freaking out because you want to at least get back in at some discount because it does feel a little bit better to be able to buy at a 2% pullbacks instead of a 6, even if you don't get the full 10. So then those bull, those, those bears start to kind of desperately get in while they can because they think they might miss the opportunity if they don't. And guess what? That does. It takes us back up to where we started and kind of gives you the, the seed that you need for the next rally. And it's funny, I was just sitting here thinking at one point when you were, you were giving your target for the year at 61, 6200 with a stretch target of 69. And I'm looking at it now. We're only like 6, 7% away from that 69 target. We're getting closer and closer to it. It doesn't take a huge rally from this point to get to your, your stretch target by the end of the year. [00:24:53] Speaker C: No, it doesn't. It really, really doesn't. You know, I mean, I would say when you're trying to find that, that perfect spot, then you're timing the market right. Timing the market will never work. No one can do it. No one will ever be able to do it. No AI will ever be able to do it. It simply won't work. It never has. It never will. There are certain tools out there that let you. That will kind of let you know how the cycle might look and where to look for and what general areas it can get into. But what you have to do is price the market, not time the market. You price the market, you say, okay, so this market pulls back 5%, and that gets me to a, you know, a 20 times ratings. Okay, that's fine. We have the market growing at, you know, 13%. I like that ratio. Now, if it, if you buy it with a 5% pullback and it goes down 10, who cares? It doesn't matter. Okay, you bought it at a Bet you bought it at a better price and valuation than you would have done otherwise had you not done your job as a manager. Because what we do, we manage money. We are money managers. [00:26:11] Speaker A: Right? [00:26:11] Speaker C: So our job, very simply put, is to buy low and sell high. That's our job. [00:26:16] Speaker A: Okay? [00:26:17] Speaker C: So we want. [00:26:18] Speaker A: We. [00:26:19] Speaker C: Although, you know, some. It's easy to say. Well, you're. You're saying you're timing the market. No, we're pricing the market. [00:26:25] Speaker A: Okay. [00:26:26] Speaker C: We're looking at a fair price and a fair value against this growth rate. And right now it's not. It's. It's just. It's too expensive right now. I mean, you're. I'm walking in and looking at a pair of jeans in the Crystal shops in the aria. And there's 700 when I can go, you know, wait three weeks and I'll buy them at Ross dress for less for $45. [00:26:45] Speaker A: Not. [00:26:45] Speaker C: Not that it would be that much of a pullback, okay. But, you know, it's those people that wait for a 10% pull by. They say, okay, so the market's a 6400. So I'll wait for the market to pull back 640 points. So when it gets down to 5760, I'll buy there. [00:27:07] Speaker A: Okay? [00:27:08] Speaker C: That's what that means. And they look for that perfect little. That little. That buy at the bottom of the V. The point at the bottom of the V. Right. Well, then, you know, back to your earlier point. That ain't gonna happen, okay. Because it'll never get there. [00:27:21] Speaker A: Okay. [00:27:23] Speaker C: It's a very high. Probably. It will only get there when no one's expecting it. [00:27:26] Speaker A: Okay. [00:27:27] Speaker C: Which means there's a high problem. There's. It's almost a certainty at some point and probably before the end of this year that the market has a five, that the S&P 500 has a five handle on it again, 5,000 something. [00:27:38] Speaker A: Okay. [00:27:39] Speaker C: What will get it there? I have no idea what will happen. I have no idea. But statistically it could. It is likely to take place because that's only, you know, 390 points from here. [00:27:49] Speaker A: Okay. [00:27:50] Speaker B: Yeah. [00:27:51] Speaker C: So we're talking about what about 5. About a 5% pullback from here. So it's pretty likely that that will take place now from that point on. Do we. Do you buy? Well, sure did. What are earnings look like? Was there revisions down? What does the data look like from there was a data good or bad? Inflationary labor, what have you? Okay, well, normally the hard data, and that's not as volatile Right. So now all of a sudden you're looking at the same economics, the same core earnings correlations you know you're going to get, but you're just buying at a better price. So if it goes down from wherever you buy it from, it doesn't matter. You still, you still did your job for your clients. [00:28:43] Speaker A: Right. [00:28:44] Speaker C: And that's when you look at what my definition of bullish, bearish and neutral means. Okay, so right now I'm neutral. I am bullish, but I'm neutral tactically. I'm, I'm, I'm strategically long term bullish. Very bullish. This economy is doing great. People hated this rally that we took. They hated, they hated every second of it. I loved it. But I am tactically neutral, not tactically bearish. Here's why bulls buy, neutrals hold or don't allocate new funds. Bears sell. I ain't selling this. There's no, there's not enough rice in China to get me to sell this. [00:29:22] Speaker B: Yeah. [00:29:24] Speaker C: But I'm not deploying new capital at these levels. I'm neutral at these levels. And I will turn, I will turn bullish at some level lower than this, whatever that might be. And it's just, it's a game of, it's a game of, you know, statistics. [00:29:39] Speaker A: Right. [00:29:39] Speaker C: It's highly probable from an all time high going to the worst months of the year at the 99% decile evaluations where we just saw some pretty gnarly hard data that the market may pull back. It's likely that that will take place. Where it will go and how long it will go for, I have no idea. [00:29:58] Speaker A: Okay. [00:29:59] Speaker C: But you have to look at what cake is being baked right now. The cake that's being baked is an asymmetrical move to the downside. Is there upside move? Yeah, there might be 2%. The market could get to 6,500 from here before it goes back down, but it could very easily go down to 6,000. So 6,400 to 6,500 sounds like 100 point move. 6,400 to 6,000 sounds like a 400 point move. That sounds like a 4x asymmetrical risk. That's not the kind of risk I'm willing to take for the. [00:30:31] Speaker A: Yeah. [00:30:31] Speaker B: And the analogy I used to share a lot of times with it between. When you talk about market timing versus market pricing or pricing the market versus timing the market, it can be really difficult sometimes to distinguish between the two because they kind of sound similar. But the way that I've described it before is if you live in anywhere from Texas, Oklahoma, Kansas to Mississippi, Alabama, Georgia, you understand that springtime from March to June, you've got a much higher threat of tornadoes than you do in other times of the year. It doesn't mean that you can't have one in August. It doesn't mean you can't have one in January. And it doesn't mean that every single April, May and June you're going to get 38 tornadoes in your county. It just means that statistically it's, it's a higher probability at that point. And you, you know, when you, I look at the weather here in North Carolina all the time, I'm going to try to go out and play golf. I'm going to check the weather and see, you know, what the chances are of it raining. It doesn't mean that, you know that the weather is always going to be correct. But they're using probability models to basically say, okay, right now this is a higher, the other day I had a chance I could have played golf, but there was like a 87% chance of thunderstorms in two hours. It didn't really make sense to go out there. It ended up not storming. I could have been out there, but it wasn't worth the risk of getting out there and playing two holes and then you know, you've dumped 40 bucks and you don't get a refund and you're dodging lightning bolts for the rest of the afternoon. [00:31:57] Speaker A: Right. [00:31:57] Speaker B: It wasn't worth it. So it's, it's making well calculated decisions. It doesn't mean you're always going to be right either. Sometimes it's not going to be, it's not going to play out the exact way you think it is. But you still want to put yourself in the best, the scenario with the highest probability of success. How's that? And it's, it's not. You don't have to be right all the time. But again, if you can be 60, 40, you're doing better than you know, almost anybody in this game. So you're just playing the, playing the odds there as always, just here for entertainment and education purposes. I'll let the long disclosure at the end go into more detail on that. But if you would like to chat with with Matt and his team at ARPG, you can give them a call at 702-655-8300 or head over to intelligent investment.com if you are checking us out on YouTube, please like the video. Subscribe to the channel so you can catch all of our future episodes and any of the other shows that are coming out on the network. If you're listening on any of the like two dozen podcast platforms we're on, please follow us, subscribe, whatever it's called there and so you can continue to enjoy Matt's brilliant commentary and thoughts on the market. And we appreciate it. As always, Matt, always a pleasure. You enjoy your weekend, buddy. [00:33:14] Speaker C: You too. Nice weekend. [00:33:16] Speaker B: Take it easy. See ya. [00:33:17] Speaker D: Discussions in the Intelligent Investment show are for educational purposes only. The information presented should not be considered specific investment advice or a recommendation to take any particular course of action. Always consult with a financial professional regarding your personal situation before making investment or financial performance decisions. The views and opinions expressed are based on current economic and market conditions and are subject to change. There is no guarantee that any statements of future expectations will come to fruition. All investing involves risk, including the potential for loss of principal. Securities offered through United Planners Financial Services Member finra, SIPC Advisory services offered through American Retirement Planning Group. ARPG and United Planners are independent companies. Garrett, Lill and Wealth Partners are not affiliated with ARPG or United Planners. 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