The webinar was recorded January 20, 2022.
You can find the slides here.
What to Expect from the Market in 2022 - and 3 Stocks that Could Lead the Next Bull Run.mp4
Chris [00:00:05] Hello and welcome to today’s Cabot Wealth webinar, “What to expect from the market in 2020, two and three stocks that could lead the next bull run”. I’m your host, Chris Preston, Vice President of content here at Cabot Wealth Network, and with me today is Mike Santoli, Chief Analyst of our flagship Cabot Growth Investor and Cabot Top 10 trader Advisories today. Mike’s here to talk about what he’s seeing from the market in its current topsy turvy state, what to expect in the coming months and which stocks look poised for growth despite the recent headwinds. This is an interactive webinar, which means we’ll be fielding your questions after Mike’s presentation concludes, so if you have a question, feel free to ask it at any time in the question box on your control panel and we’ll try to get to as many of them as time allows once Mike wraps things up. Just keep in mind, we cannot offer advice in regards to on personal investing situation or portfolio. First of all, let me introduce Mike. Mike’s a growth stock and market timing expert and has been Chief Analyst of Cabot Growth Investor and Cabot Top 10 Trader since joining Cabot in 1999. Mike has uncovered exceptional growth stocks and helped to create new tools and rules for buying and selling stocks. Perhaps most notable, was his development of the proprietary trend following market timing system Cabot Tides, which has helped Cabot place among the top handful of market timing newsletter newsletters numerous times and Mike himself is honored as one of the 10 best market timers, according to Market Timers Digest, on an almost annual basis. Bottom line Mike knows a thing or two about growth investing and market timing, so I’ll let him take it from here. Mike? Floor is yours.
Mike [00:01:46] All right. Thank you very much, Chris, and thanks everyone for being here, whether you’re listening live or going to watch this here in a couple of days when we shoot out the link. Yeah, interesting times, obviously to start the year, but I always like doing this in January. It’s nice to get away from the the day to day, week to week stuff and kind of take a look at some of the big picture things. So let’s just hop right into it. So, if you’ve attended any of these, it’s kind of a similar structure as when I talk at the The Wealth Summit. I like to start with sort of the secular multidecade supercycle trend, whatever you want to call it. And I think it’s still a secular bull market. You know, you don’t trade on that on a day to day basis. Obviously, we’re talking about, you know, many years of patterns here, but at the same time, it’s very important to keep in mind secular bears are tend to be when you get the, you know, the 50 percent whopper declines in the major indexes, things like that. Whereas in the secular bulls, you do get bear markets, but they tend to be the three to six month variety right now. Anyway, I think it’s it’s a secular bull market. I would say we’re probably in the seventh inning. We’re almost nine years into it. You never know for sure. I don’t think the ninth inning, but I don’t think it’s a fourth inning either sort of thing throwing sort of down in sort of the regular long term, you know, is it the cyclical trend, whatever you want to call it? To me, it’s still a bull market, but there’s clearly a lot of yellow flags out there. I don’t need to tell you that if you’ve been watching things the last few weeks, I when I did the slide, I said there’s plenty of good and plenty of bad, but I kind of said there’s plenty of decent out there. If you look at the broad market, you know, like when I’m doing Cabot growth investor right now, it’s like chewing rusty nails. It’s terrible. But when I do talk 10 every week, it’s not great, but there’s a lot of stuff that looks pretty good. It’s in cyclical ville. It’s in commodities, financials, stuff like that. But it’s not that hard to find some stocks that are resisting the decline that are tightened up for many, many months shown some big volume buying. So I think there’s slightly more positive than negative, but clearly it’s it’s a mixed bag and there’s we’ll get into some of the yellow flags here. As for the here now, which is your most important, I think have to just believe what you see growth is basically bearish. I mean, you can I don’t want to say bear market because people have a connotation. You know, what does that mean? But you know, a lot of these growth stocks, the big winners since the pandemic, in my opinion, have topped out doesn’t mean they can’t rally 40 percent or something like that or gap up on earnings. But in terms of their point of peak perception on sort of the bigger time frame, I would guess their point of peak perceptions of the past. So I think there’ll be some new leadership down the road. That said, a lot of these cyclicals are still solid and they really just got going from multiyear nothing periods in November 2020 and have been consolidating for six to 10 months. So it’s again, it’s a mixed bag. I think right now you have to believe what you see. But overall, I’d say risk is elevated just because there’s such a dichotomy and there could be rotation, there could be the selling could spread like we’ve seen the last couple of days before today. So we’ll see how it goes. All right. Starting with the megatrend, and we won’t spend too much time on the secular stuff because it’s so 10000 feet. But this is just a chart going back a million years, you know, of the S&P and these cycles there. It’s not voodoo, it’s just investor perception and valuations go up and then they go down, OK, that sort of thing. But the market has this pattern of doing this sort of 10 to 20 year cycle. I did get an email maybe two weeks ago and someone saying, well, the Fed’s raising rates and quantitative tightening and so on, so forth. And, you know, could the secular bull be over? And I said, no, I guess you could kind of argue, I’ll show you a couple of slides later on that say, well, if you want to entertain that possibility. But all I’d say is nine years to me. Maybe we’re at the beginning of the end phase, but the end phase in a secular trend can be like many years. So, you know, we’re finally getting the public involved, the Robin Hood stuff, you know, things like that. But usually when you get that, that’s not the very, very end. That’s. Just sort of past the middle stages, but still before the end, OK, so we’re about nine years and when you when we get to March, April, that was when the breakout was in 2013. Another thing that I like to look at and this again, I use this chart in most of the presentations looking at the secular trend. This is just the 15 year annualized real return. And I take a look at this now three times a year sort of thing just to keep an eye on it. And if you go, I’m not going to go into the minutia, but basically 13 to 15 percent on this, you get the peaks in 1929, 1937, nineteen sixty six two thousand. You know, it’s not an exact indicator, but it just tells you, you know, you made 15 percent a year after inflation for 15 years in a row. I mean, it’s a lot, you know? And by that point, everybody’s telling you what stocks to buy. Your neighbors are making a ton of money in the market, all that sort of thing. And right now, we’re at eight percent or nine percent or whatever, we’re in the middle. And I think that we’re warming up, but not now. If you do look at kind of the 10 year rate of return, it is a little bit more stretched, but it’s also less reliable as sort of an indicator. The 15 year lines up much better. So again, I think we’re heating up. We’re clearly not in the first or second inning of this whole thing. But I don’t think it’s it’s the ninth inning, either. This non dynamic chart this is from Gallup just pulled away from their website, and this is just how many people they poll people once a year, twice a year, how to pay, how many people own stocks for one K directly mutual funds, whatever. And you can see back in the late 90s, mid 2000s, it was low 60s after the financial crisis, it kind of bottomed out low 50s. And then this was from August of 2021. So maybe it’s a little higher now, but you’re at mid to kind of climbing into the upper 50s again, warming up, but not, you know, super hot. I know some people talk about demographics with this, but I don’t know. I mean, I know a lot of people listening here are probably retired and they still own mutual funds and stocks. So I don’t think that that’s really a factor. I think it’s just more, you know, how the economy is doing people’s perception of the future. And like I said, it’s been warming up here, but not crazy. So I still think this, you know, the long story short, I think the market’s going to be higher few years from now for one case. All that, I still think we have a long time to run before, you know, the proverbial taxi cab driver, maybe Uber drivers giving you stock tips on the way to the airport sort of thing. OK. Now, I always like to challenge myself because I can be wrong, you know, believe it or not, but I can be wrong as much as anyone should be wrong. Small speculation did take a huge move here, and maybe I should put this in the next section, but speculation take a huge leap in the last couple of years. This is just a chart of the total volume traded on the Nasdaq by week, and the Red Line is the 52 week moving average. So one year moving average and you can see for it actually did rise. It’s not a log chart, but it went up from 7500 to 2500 or whatever over a few years. But then we had the moonshot after the pandemic, when Robinhood and all that stuff. And it’s still very elevated. The blue line is the 10 week. I wouldn’t go too far in the details, but the blue line is the 10 month, excuse me, the 10 week moving average, that huge spike there in early 2021. That was the meme. You know, GameStop and whatever. AMC, all that stuff. Remember, all that stuff was going nuts. I think hurts, like went up a lot, even though it was going bankrupt. One of those companies, you know, so that was just there was a lot of speculation and it has come down in the last, you know, since that February peak. I’ll be talking about that February peak a little bit later when it comes to growth stocks. But there could still be some air to be let out of the balloon. OK, so on a longer term basis, so that is something that, you know, kind of is in my mind, just a kind of present the opposing case. All right. And then last on the secular thing, I still think I’m not an interest rate guy, so I probably should just shut up about this, but I think long term rates are still a driver. OK, now there’s two points here. Number one, the chart on the left is just a yearly chart of the 10 year note in the 40s, 50s and early 60s. And my point here is, say, in 1950, if you look, the 10 year note was something like two and a quarter, whatever. And by 1960, it was high three or four percent. The 1950s were amazing for stocks. So I’m not trying to say interest rates don’t matter. They can go up, but no higher interest rates are generally not as good as lower interest rates for stocks. But it doesn’t mean if rates go up over time, you know, if they went up three percent in a year, that would be an issue. But if you know rates going up over many years, it’s not something that necessarily or historically has really crushed stocks, especially when they’re coming off a low level and that low level isn’t poor in the chart to your right. This is a few days old, but it’s just the current yield of the 10 year note. I think it’s up to one point nine or one point eighty five. And the point here is that, you know, if rates have come up a lot, no one from the depths of the pandemic and stuff number one, number two, people think they’re going to continue to rise, obviously with the Fed and inflation and stuff like that. But then it’s kind of like what rates are really going to rise or where they’re going to go to? Oh, they’re going to they’re going to skyrocket to 2.6 percent on the 10 year note. It’s kind of like, well, you know, is that you know that when I started in 1999, six percent was low. Of course, you know, people in the 80s, you know, 10 percent was low or something like that. Right now, I just ran the screen. I did it last summer for the conference. When you’re looking at the top 20 percent of market cap stocks, which make up about 60 percent of the market’s market cap, so they’re like 60 percent of the market. I believe it’s about nine percent or 10 percent yield more than four percent and something like almost 30 percent yield more than two percent. OK, now I’m not a dividend guy, but I just mean as a brought and by the way, and that says nothing about sort of the the small, you know, the midcaps, not small caps, but the mid-cap or the small large cap, you know, rates and utilities. Now you have energy companies paying and business development companies and all this stuff. You just have a lot of the market that benefits from this sort of sustained lower rates. Not to mention that all these companies are borrowing the money for basically free and have long term debt now for years and don’t have to pay much interest. OK? Long story short is I still think even if rates come up. So I still think this sort of very low level of long term rates could be one of the main secular drivers here that could drive this secular bull market higher. So overall, I think we’re still in a secular bull market, which is obviously good news. Now getting into the kind of the current market this these charts were just for I just updated these today. So the Cabot trend lines are the most reliable indicator. They’re not fancy. They’re not sexy. It’s hard to come up with something to say about them because they don’t change much. The last signal was a buy signal in June 2020. OK, it’s a long time ago, and they’re still bullish. Last year I did a study, went back whatever 30 or 40 years and just overlaid. The Cabot trend line signals on sort of when bull market started and stopped and bear market started and so on, so forth. And the Cabot trend lines were bullish. Eighty four percent during the bull markets. So right now, they’re still bullish. Pick your percentage, but there’s an 80 percent chance we’re still in a bull market. OK. They were a little bit less reliable on the bear markets because they tend to be quicker. You know, sometimes you get these three month dives, obviously March 2020, and this is sort of a more of a lagging trend following indicator. But the bottom line is they’re still positive to get a sell signal. We need to see two straight weeks of both indexes closed below their 35 week lines. Maybe if we fall apart later today and tomorrow, maybe this would be week one. We’ll see, but we don’t really anticipate signals. We just go with what we see. And right now, the major trend is still bullish, and I think that’s not something to be taken lightly. All right. This is also this is something I’ve written about the last couple issue. So I don’t want to. I put it all kind of on the slide and you guys can dove into it later if you want to. But there’s been a lot of these. There’s not the blast off indicators, the great ones that 90 percent, the two to one, the three day thrust, those are those are gold. I mean, those are really stood the test of time for 50 60 years. Maybe at some point they’ll stop working, but they work just as well in the 60s as they did in 2009. OK. Recently, though, there’s been a lot of these mini thrusts or secondary studies. I don’t really know what to call them here, but they’re kind of like not something that I would really take action on. But when you see one after another, after another. I’m just making a mental note. We had three out of four eighty percent up volume days on the NYSE NYSE in early December. And by the way, the NYSE and the S&P are still above the early December levels. So just to let you know, unlike growth stocks. So there was it’s kind of a bit underneath the market. Then you had this sort of mid-December four days in a row of decent gains, which I have to admit when I sort. I studied it, I was like, this probably is going to be nothing. It actually only happens like once a year on average, going back 45 years or so. I think my study went back to 1978. That’s the data I had. And you can just see the six and 12 month average max return average minimum return of the S&P was pretty healthy. Now there were some stinkers in there. I think one of the times you had four straight good days, it was like June of 2011 or something like that. And then in July, the market fell apart 15 percent or something like that. So it’s not like I said, they’re not these super reliable. Take it to the bank core blast off indicators, but on average, I still think it’s a feather in the bulls cap. OK? The most recent one I wrote about in the last issue, I think was the last issue was this sort of as many, many breath thrusts on the advance decline line for the New York Stock Exchange. And you basically go from oversold to overbought within a relatively short period of time. The best the best ones happened within like two weeks. This is kind of more within one month. And there’s been a limited history. I didn’t go back and study it forever, but it’s been generally a good thing the last 10 or 15 years, OK? So again, I view this as I can’t say, it’s like confirmation we’re definitely in a bull market. But you know, you probably wouldn’t be having a lot of these things happen. If the market’s going to fall apart, it could happen. But I would just say playing the odds outside the odds are better. You know that the overall bull market is intact. Moreover, a lot of a lot of sectors out there, I think, are near. You know, I said longer term breakouts here. Maybe I should say follow on breakouts, the financials, the transports, the industrials, you know, pickier sort of cyclical sector at best. They did nothing for like two and a half three years from the beginning of 2018 through most of 2020. Some of them go back further at the in October 2020 before the vaccine announcements after the election and all that the economy, which is materials and mining, was unchanged from sometime in 2008. I mean, so there was just nothing going on there. And of course, you know, oil stocks with a dog’s dinner and all this stuff. Then we get these long term breakouts after the vaccine, and they did have these runs for, you know, eight months depends on the sector. But six, eight months, OK? And then generally speaking, the financials have been a little bit better. But generally speaking, a lot of these sectors have just been dead for five, six, seven, eight months, and they’re trying to break out here and now. These breakouts have been rejected the last few days, so maybe this is the wrong slide and they all fail and everything goes to hell. But my point is that there’s a lot of things, a lot of areas of the market there are in position to break out from what I think is, I’ll say, middle stage early to mid-stage patterns, meaning like it’s not like they’ve been running for two years. They had one advance after years of doing nothing, then consolidated for five or six months. And now if they get going, say, on earnings or something like that, they could be in pretty good position. We’ll see how it plays out, but I won’t say usually because sometimes the cyclicals obviously are the last to top out in a in a market move. But it’s not. It’s not common to see this many areas of the market look pretty good. And if you look at these charts, these are monthly charts, by the way. You wouldn’t be like, Oh my God, we’re in this mini crash for growth stocks. You know, you’re like, Oh, this looks like a normal consolidation. All right. And just kind of playing along with that, this is just very broad. I would I’m not recommending any of these, but I’m just saying this is the average stock. So the chart on the top left is the S&P unweighted. You everyone talks about Apple and Microsoft. Well, this is every day. Every stock in the S&P is only worth whatever 0.2 percent, I guess. So Apple is just as big as any other stock in the S&P 500. And you can see it’s not setting the world on fire. It doesn’t look great. It’s at the 10 week line, but it certainly isn’t a disaster. OK, the chart on the top right is the midcaps equal weight and the bottom is equal weight small caps. Again, they don’t look amazing. They’re hanging around the 200 day line of the 40 week moving average. But my point is that they’re not strong. This is why I said there’s plenty of decent out there. There’s not plenty of amazing action at all, but there’s a lot of stocks that are still hanging in there and look like normal consolidations to this point. And that might that could change tomorrow or next week. But the longer it goes on, you know, the more I think you have to respect it. So that’s kind of on the positive end of the defense when looking at sort of the regular long term vision. On the flip side, I think it’s fair to say the current bull move from a cyclical perspective, it’s not early now. I don’t put timeframes on this, like the secular is a little bit more clear. You know, nine nine years, could things top out? Sure, there’s no surety in the market, but it hasn’t happened before. You know, it usually goes on longer. OK, these bull markets, sometimes I remember in the 90s, we went three years without a 10 percent whatever it was. So there’s no timeframe. But you can just see the last few years you’ve had two year runs, one year run two year, and now we’re 21 months into this thing. Since the crash in 2020 doesn’t mean it can’t go another year. But you know, the longer you go, the more you know, weekends are in there, the more the higher expectations are, the more downside surprise potential there is. OK, if this was a year and a half ago, it’s like, sure, you could fall apart, but we just kicked off a new bull move. You know, so usually the market doesn’t up and die from there. And of course we did. We’ve had a great move since then. So it’s just something to keep in mind that the last real correction, I mean, we’re seeing now and growth stocks, but the last real correction in the S&P was March 2020, you know, almost two years ago at this point. Key divergences, this is kind of a, you know, yes, I know Mike sort of slide, but you know, obviously we have growth stocks doing crappy and we have the rest of the market hanging in there, although it depends on the day and this these charts are from this weekend, so there are a couple of days all the way out of date. But you know, the New York composite hit a new high recently, and the chart on the right is the advance decline line on the NYSE. We did have that little mini thrust there. You can see that big three us kind of coming into the beginning of the year, which that was one of those sort of secondary studies, but overall, well short of its high. And this is kind of like the granddaddy of divergences when people talk about it, usually New York Stock Exchange advanced decline line divergences can go on for a year or two without causing major problems. But the longer they go on, the way I think about it is, you know, it’s just another hurdle or the higher the hurdle for the bulls to kind of leap over to prove that they’re back in control. OK, now we’ll see how it goes. The breath is kind of come down here this week, obviously with the selling, but it’s just another thing that’s kind of, you know, like I said, a lot of yellow flags. And then longer term sentiment now sentiment, a secondary number one, number two, this is one survey, so you know, it’s not the be all end all of analysis, but I have to say the air survey American Association of Individual Investors Survey Air does a pretty good job and it moves pretty quickly. But if you smooth things out either on an intermediate term basis or this is a longer term basis, this red line again, it’s a 52 week moving average. So, you know, one year long and this chart goes back 10 years and just the first two arrows were you kind of got up into this range and then came down. I mean, it’s not just if sentiment is still going up, it can be elevated, but stay elevated for a while. But when it starts to really tail off those two periods of time, just two examples here. Mid-2000, what 15? And then or early 2015 and mid-2018? Those were kind of the last two, not including March 2020. Those were two kind of cyclical bear markets where we had the 2015 2016 correction and then of the late 2018 kind of fourth quarter retreat. And we’re kind of back up there now. You know, an equal and up to, you know, two examples doesn’t prove anything, but it’s just that we have had a good run. A lot of good news, especially the first three quarters of last year, the vaccines, the economy was coming back, earnings were good. You know, a lot of the big cap averages did well S&P 500 Dow. So a lot of people got excited, put a lot of money back in the market. All right. So just well, let me go back, so overall, I still think, you know, if you had to balance it out, I’d say, you know, the odds still favor the market will be higher in three or six months. You know, the studies and the Cabot trend lines and a lot of stocks still look decent and are setting up. But it’s it’s definitely, I would say risk is elevated just because things are so divergent, could get rotation, could have the selling spread. We’ll see how it goes. You know, even if we bounce here, the question is what bounces? Is it just the stuff that fell 50 percent and the stuff that’s holding up maybe sells? I mean, you know, we have to see how things play out. So, you know, we’re cautious. We’re 50, whatever, 60 percent cash, I think almost so it’s pretty. It’s pretty defensive. But we’ll see how it goes overall for the bull market. I’m not willing to throw in the towel and a lot of people are talking bearish lately, but we’ll just see how it goes. All right? So as for the here and now, there’s really not much to say. Growth again, I try not to use the bull market bear. Sometimes I say bear phase because people have connotations. But all I can say is there’s a lot of this is Square and Shopify and all this. It’s hard to find. There’s maybe three stocks that I like, you know, big liquid growth stocks that are not below their 200 day lines at this point. And there a lot of them are way below the 200 day lines. And I just think that and I don’t even think it’s that controversial to say that we’ve just hit longer term tops in these things. It doesn’t mean they’re going to zero or some of them can’t bottom out and participate in the next sustained uptrend and do OK. And some of them may come back and be leaders, you know, usually maybe two out of 10 will do that. But when these things break out in April of 2020 at 35 bucks. And I think Net Cloudflare broke out at 40 or something and then go to 250 or 280 or whatever 220 and then fall 50 percent in two months. That is a abnormal sign. So from a longer term perspective, you know, this is going to be requiring, at the very least, it’s going to require a lot of repair work. OK, now the flip side, like I’ve been saying, cyclicals look solid. I think solid is the right word. I wouldn’t say bullish. Some things look bullish, but I would say solid. OK, so they’re not exciting. I’m not a bank expert. I don’t look at a bank statement. I mean, it’s just makes my head spin. But you got a lot of financials that look pretty good. You know, dear, just like you seen a lot of this, like this deer chart and I don’t know what deer this was of this weekend. So don’t quote me on deer itself, but you just see a lot of this where again, you had this huge, persistent uptrend and now the stock has spent it needed a consolidation, had such a big move, and now it’s spent nine months or whatever doing nothing. It’s showing some volume clues. It showed a lot of tightness last year into the end of the year. And who knows, maybe it fails and gaps down on earnings, but you’re just seeing a lot of set ups like that, even things like Expedia or Hyatt. They had been hanging in there, took on a little bit of water recently. OK. Forward, obviously oil stocks. So there’s still a lot of stuff in cyclical bill that looks pretty solid. How that plays out, we’ll see. But until proven otherwise, just kind of kind of go with it. Near-term sentiment winking, weakening, but mixed, so this is just kind of what we looked at before, but just more intermediate term. So the chart on the top left is again, it’s the Abels less bears. But now we’re looking at the eight week moving average. Now I will say today’s reading I didn’t put it in here was very bearish, which is good from that perspective. So we’re kind of creeping into like the lower reaches of the last four or five years of sentiment on that indicator. The chart on the bottom left is the 15 day equity put call ratio. I mean, there’s a million ways to look at sentiment that’s near the highest level since the pandemic. It’s nowhere close to the pandemic levels, so there’s room to run. So, you know, what I’m saying is it’s weakening, but it’s it’s not extreme and it’s also mixed. Our own real money index is just the sum of the money flows into equity funds, and ETFs end of the year can be weird, either big outflows or big inflows. And we saw big inflows, this Christmastime sort of thing. So we’ll see where we are in a week or two. But at this point, just going with what we see, it’s near its highs of the past year. OK, so it certainly doesn’t seem to be a lot of fear built up in there, like people were anticipating a big decline. So the bottom line is, I definitely think sentiment has come in. There’s no doubt about that, but it’s not extreme to me, which is which is a little bit of a character change in the past couple of years. Every time we saw a three or four percent decline in the indexes, it was like people are freaking out, everyone selling stuff and, you know, predicting the end of the world. Now we’re kind of more on that buy the debt mode. So there’s probably going to have to be some more. I don’t know. Worry built in, I guess, is the way I would put it in the near term. Now I will say, because I don’t want to be all negative. I don’t think I am all negative, but I will say that on the growth side of things, it’s been a horror show. It’s been I’ve been writing, it’s a mini crash. Maybe it’s a crash crash, maybe it’s just a regular crash. There’s just been these stocks that really since mid-November, I could list 10 of them right now that are down 50 percent, at least 40 percent. And I’m talking big liquid names or at least glamor names that were big winners in the prior few months. I do have to say, though, I just wonder if it’s so bad it could be good here soon, and maybe we could start what I’m calling the repair phase. Like, I highly doubt we’re going to bottom right now and just go up and down. That’s I’m all for it. But that’s usually not how the market works. But we may bottom rally and then some of the best stocks rally really well. And then maybe we retest or build a bot, you know, something like that and begin to repair the damage. It’s basically like all these stocks fell off motor. You know, we’re going motorcycles down the highway and they all fell off. They’ve got to be in the hospital for a while, and some of them might go to a glue factory, so to speak. OK, but so on. The chart on the left is kind of interesting. It’s a 20 year chart and I want to say this correctly, so it’s not too confusing. What it shows you The percent of stocks in the S&P 500 above their 200 day line. Minus the percent of stocks above the entire Nasdaq that are above their 200 day line. So kind of like height, not, you know, high quality blue chip sort of stuff versus the vast Nasdaq Market now. The Nasdaq has a lot of junk. So long term the average here is not zero, it’s probably five to 10 percent positive. There’s more quality in the S&P, but right now it’s at a 20. At least a 20 year high coming this year in this chart was a few days ago, so it was 42 percent. So 42 percent more stocks in the S&P were above their 200 day line than the broad Nasdaq. OK, so that’s I mean, I’m sorry. That’s a extreme. It can get more extreme. It could stay up here. I’m not predicting anything, but we’re not. It’s my point here is it’s not like this trend of growth underperforming just started three weeks ago, you know, four weeks ago, really, it started in February 2021. Remember, I showed you that chart of the Nasdaq volume and there was that meme peak with GameStop and all that stuff in February. That was really the primary quote unquote growth stock talk or what I’d say the glamor stock talk. Some things topped out there, some things topped out and kind of May, June, July, DocuSign, stuff like that. Some things didn’t top out to Movember. You know, the real the strongest of the strong like Cloudflare kept going, OK. But a lot of the other stuff topped out at February or even before the chart on the right here is the ARK versus the S&P 500, just an hour on a relative performance line. And you know, you can see for years 2018 2019, it didn’t outperform or underperform the S&P 500, but then it had this huge post-pandemic or post-pandemic crash run and relative to the S&P 500, not absolute price. It’s given all of it back. Basically, again, it could just keep going through the floor. I’m not saying it can’t, but my point is that we’re kind of a year into the period of underperformance for growth doesn’t mean it can’t go on. Another year doesn’t mean you can’t go on three, I don’t know. But it’s just sort of one of these things where it is the rubber band on the accelerate, the relative performance decline, the percent of stocks. You can look at it various different ways. The rubber band is pretty stretched here in terms of growth, stinking and, you know, value or cyclicals being OK. How that how that plays out, I don’t know, but that’s why I just I would just urge you not to put your head in the sand, be super negative about growth stocks, put all your money into, you know, defensive stock stuff like that. All right. So I just thought that was kind of interesting and I wanted to bring it up because it’s not like this decline just started at the start of 2022. It’s been going on, especially the underperformance for months and months and months. Now, last part of this sort of presentation before we get to the stocks, what to watch. This is really kind of the key. I think I’m not right about this next week. So we’re going to preview I. As Chris said, I was worked with Carlton Lutz, founder of Cabot, and we came up with Cabot tides in, oh, two or three, that sort of time or one or two, I think it was. And as far as long as I’m here, Cabot Times is going to be here. I believe in it and all that. But you also have to be flexible and realize that at times, like now, the market’s all over the place. You know, the New York composite looks, OK? The small caps are kind of know where the Nasdaq is death, you know, so you kind of have to you have to know what you’re owning. And obviously what I focus on as growth stocks and what I’m going to be focusing on and watching closely is what I’m kind of calling the growth tides. And I’ve been sort of slowly but surely looking at some of these ETFs. This is QQQ J, which is the next gen Nasdaq 100 50. Why is the IBD 50 fund the I always the Russell 2000 growth portion, so to speak? And then the IPO fund from Renaissance, which actually owns a lot of these, you know, snowflake and stuff like that we’ll be talking about, you know, the tides rules. I don’t get into it and bore you. But you know, basically we want to see these indexes hit a five week high to turn the intermediate term trend up. I’m going to be putting a little bit more emphasis on these things in their charts and be focusing on them to kind of tell me when growth stocks are pulling out of at least the intermediate term decline. Maybe it’s not, you know, the next one year advance, but I think these are going to be more telling, necessarily in the near term than the general Cabot tides, because you know what small caps do or what the S&P 500 does, as we’ve seen, might not necessarily correlate with growth stocks. OK, so that’s number one. Number two, you know, I’m going to have a slide on this. It’s the new lows. Speaking of Carlton. You know? I kind of put this in there, and I was like, should I talk about this again? But it works. This this shows up all the time in March 2020. The combined number of new lows peaked about a week and a half. I think we can have the two weeks before the bottom. Now we weren’t buying, you know, when the market’s fallen three percent a day, but it just gave you a hint that more and more stocks were starting to resist the decline. OK, now we haven’t really seen that yet. The chart on the left as the New York Stock Exchange number new lows chart on the right is sort of the net new lows on the Nasdaq, new highs minus new lows. You can look at it a few different ways, but what you like to see is a bounce, obviously in the market number one. And then if we retest or kind of come back down, you’d like to see a positive divergence that just shows that maybe the big cap stocks are getting hit, but the broad market is starting to resist the decline. They’ve already priced in all the worries and they’re looking ahead. Better times can’t say we’ve started to see that yet. The Nasdaq, like maybe a little bit, but I can’t. I can’t quite go there yet, but I will be watching that. OK, and then I’m looking for things that these are kind of funds or areas that I like kind of are on the margin that I think will be tells, OK, the top left is the semiconductors. They’ve been one of the few growth areas that’s held up now. Maybe they fall apart, I don’t know. But if they fall apart, you’re looking for hotels of like character change, if they fall apart. Maybe we get another leg down the Nasdaq, or if the Nasdaq bounces and the chip stocks break out, maybe it could be a sign like, Hey, this is future leadership, OK? The chart on the bottom left and top right one is oils. That’s really been one of the only sectors advancing in the top right is the XL piece the defensive stuff? You know, again, maybe we see a reversal, especially in the defensive stuff. Nasdaq bounces, XRP gets hit and you see that for a few days. That could be the first sign that there’s a little bit of a character change, even like on a day like today, I didn’t check, but I think this was at 11 or 12 this morning, a in the morning. You know, the Nasdaq was up 100 points, but the XRP was also up about the equivalent of that the same percentage. So you’d almost like to see some of these days where the Nasdaq and growth stocks do bounce, which is normal. But you see some reversal here and the defensive stuff, or maybe some of the cyclical stuff, too. We’ll see how it plays out. OK, the bottom right chart is actually just our aggression index, which is the Nasdaq versus the Zlp, and that’s really what I’m talking about. Can that bounce back above say? It’s 40 week moving average, the red line, which is kind of the demarcation line the last few years. If it does, that could be a sign that, you know, spring is coming. But right now, you know, obviously defenses in favor overgrowth, OK? So all in all, I’m going to get into stocks in a second. But all in all, we’re I mean, listen, I’m defensive. OK, I’m not going to predict anything, but just going with the evidence number one big picture. I think it’s still a secular bull market. I think when we look back at 2020 four or five or whatever, you know, we’ll be higher. I don’t think it’s going be a straight line higher, but I think will be higher. Things are going to be better stuff like that. That said, the current market, we are long in the tooth. There’s still plenty of decent stuff out there, but there’s no question we’re seeing abnormal action and growth stocks. So I do think risk is elevated. I think right now, I mean, just what I’ve been advising, if you want to nibble on this, nibble on that oil stocks on pullbacks, stuff like that, I’m not opposed to that, but I’d be holding a good chunk of cash. And I just think the biggest thing here and kind of going into the slide, the big money’s going to be made in the next sustained uptrend, you know, not even right now. If you buy the best stock out there, you might get a pop for a few days, but you’re not making a ton of money. On the upside, there’s not a lot of money being made, even if you’re in the stuff that looks decent. The big money is going to be made when we get that sustained uptrend and there’s new leaders and fresh stuff, and that’s really the time you want to get to. So you want to get there with your capital and confidence intact. OK, now like I said earlier, the next growth rally, I really think it’s going to be important to focus on newer names. It doesn’t mean brand new, but something that didn’t go up a billion percent in the last two years. Maybe one or two of those could be OK. I mean, it’s possible, but I think the biggest thing is going to be a lot of those old leaders, I think have really talked they could bounce. If you want to play that, that’s fine. But I highly doubt these things are going to fall 60 percent and then lead the next uptrend and go on to hit new highs. And they’re all going to it’s all going to be software and, you know, cybersecurity stocks. Again, I hope it. I hope I’m wrong, trust me. But that’s not usually how the market works. The good news is that there’s a lot of IPOs the last two years that have great numbers, great stories, and then I think either could get going pretty soon when the market does or, you know, they might need some more seasoning to go forward. So I got two of those and then one cyclical name to keep an eye on. And I would just say, I’m kind of focusing on stuff that, you know, I want to just focus on stuff that’s like the model portfolio or whatever. I mean, you guys know that. So these are some names that I think can do well sometime during 2022, especially when the market clears up, OK? And you’ve note you’ve known some of these snowflake is one that I’m very high on. I just think my biggest thought was snowflake actually on my notes here because I thought it was snowflake. Is that at some point it’s gonna be a liquid leader? I don’t know if it’s in a month. In a year, you know, nine. I don’t know, but it’s got just all the metrics except for earnings, that’s the one thing it’s missing, but it’s got triple digit sales growth, liquidity, big market cap. A ton of people already own it. And just a really unique story. I mean, I’m not a I’m kind of a dude when it comes to the technology aspects, but it’s like the next big thing in data storage and sharing. There’s always this evolution going like networking. You know, they always have the better mousetrap. But this is kind of the data cloud. It’s not really a soft it’s not a subscription service, but it’s basically a powerful network effects and a consumption model. So people pay for the storage they use. And the big thing here is like, you’re just putting all your data in this thing. The people who want to get at it can get at. It can query it sort can do all this stuff. You can share it across departments and companies and supply chains, and you don’t have to worry about, you know, Hey, well, we got to share this with this company. Download it, scrub it, put the security on it. It’s all kind of embedded in the platform. I mean, I’m sure it takes a little bit of work, but it’s a big, big improvement. And the more companies that use it, the bigger the value of the platform. It’s like it’s almost like I make it like eBay back in the day, but it’s like the more you know, more companies are on it, the more attractive the platform, the more sharing, the more companies that want to be on it. OK? I think it smells like a big stock, and I have to say it’s 26 percent or whatever at the time. Is it ready to go right here? I don’t think so, but it’s hanging around its 40 week line and this sort of big, long IPO base and call a cup with handle or whatever. But this big, long IPO base has been seen in so many leaders. I mean, LinkedIn and Baidu and Facebook. I mean, just these. I mean, time after time, after time, they come out of these things, and when they come out of them, they can have really good run. So snowflake is definitely high on my watch list. It has work to do, but at some point I would really bet that it’s going to be a leader and have a good run. Like I said, oh, the other thing too was consumption model, remaining performance obligations for them. All the money that’s been signed under contract that’s coming to them is 1.8 billion. It’s 80 percent more than the last 12 months of their revenue, and it’s up 90 percent from a year ago. So it’s just this this sort of pipeline, it just seems like a company. It’s going to get manyfold bigger. The valuation is big, but the fact that the stock hasn’t completely keeled over to 200 bucks, you’ve fallen in half at this point, I think is a pretty good sign that there’s some institutions defending it. The next stock here might surprise you a little bit is Dutch brothers over here. I wrote about this last week. I have a buddy who used to run a real small hedge fund sort of thing. He’s retired, but he still obviously an investor and he’s kind of the IPO whisperer and he’ll send me this IPO here and there. And it’s usually it’s like, Oh yeah, I’ll take a look, but OK. But I looked at this. I was amazed at how much I like. I think it can be a future leader and I think it will have a run this year. I do think it needs seasoning. It’s in the middle of its Post IPO group right here, just how it got hit yesterday. But it’s kind of like snowflake. They’re in early 2021, so it could easily get hit. Depends what the market’s going on, but it’s a very simple story. Just beverages. Cold beverages 80 percent of their business is beverages, energy drinks, espresso drinks, things like that. Great customer service. They’ve been around since, I don’t know, a long time, and they’ve, you know, they’re big on culture. They’re opening all the company owned stores. At this point, they have some franchise stores, and it’s not something that someone’s going to come out and be like, Oh, I have a better semiconductor than you. You know, it’s just drinks and it’s a cookie cutter model. The most important thing? Well, one of the most important things for a cookie cutter story is the store economics Shake Shack, which I’ve always I’ve sort of toyed with because it has a great store opening plan, but I don’t think their store economics model is great. That’s why they can’t really make all this money and their costs are too variable not to dump on Shake Shack. But, you know, Dutch brothers here 80 percent first year payback. So if it’s cost 100 bucks to open a store, they get 80 of that back after the first year. OK? And when you’re making that much money back, that’s the second best I’ve ever heard of that. I remember anyway. Next to five below, which I think actually pays back a little bit less than a year. But when you’re making that money back so quick, you can expand the store, count a lot and still remain profitable. You know, you can invest but remain profitable, not borrow a ton of money to take a chance of opening a couple of hundred stores. That’s why they were able to grow their store count north of 20 percent last year. And again, this year, you’re looking at probably mid-single digit same store sales growth over time, that sort of thing. Nothing amazing, but, you know, three percent, six percent, something like that. And they have five hundred and thirty eight stores. They can grow that about eight fold going forward. To me, it’s a back burner watch list. OK, maybe I’m here in January 2023. Like, what’s your stock of the year, Dutch brothers? Because it’s finally set up? I don’t know, but I really, really, really like the story. Maybe they get past their IPO lockup period, that sort of thing, and they’re ready to go, but it needs seasoning. But it’s definitely something I’m keeping on my list of sort of 40 names that flash all day long just to just to be there if it gets up on earnings or if there’s a character change is definitely. Something to look into, it sounds like a great, you know, it’s going to get a lot bigger over time. And last but not least again, I like Devon Energy. So don’t. This isn’t like sell Devon and buy Pioneer Natural, but I’m trying to find things that are outside of it. I’m bullish on oil stocks. You know, my thesis is that they’ve kind of almost become and I say cigarets, but you know, they become a mature industry. You know, everyone dumps on them, Oh, we’re just going to alternative energy. So why are they going to invest like hell and grow like they might as well just take all this cash flow and harvest it and pay it back and buy back stock? And that’s what these guys are doing, I think can be kind of a cyclical liquid leader. OK. Couple of big things recently, besides just oil prices are up, yada yada. Three real things. Number one, they sold their Delaware assets Delaware Basin in Texas to continental resources for three and a quarter billion. That was way above expectations that used that money to cut their net debt, which is now just a half times cash flow and going down quick. They’re going to be net debt free soon. And because of that, they’re able to pay out whether it’s dividends or dividends going be like 80 percent of the cash flow. And then above that, they might buy back stock. OK. So that’s number one. Number two, they liquidated all their oil hedges because they basically don’t have debt. I mean, it’s not like they need it to pay their dividends. They’re basically free. They’re bullish on oil. They think there’s been underinvestment. They don’t have much in the way of hedges. Could be a good or bad thing, of course. You know, we’ll see what happens. But obviously, the market likes that, OK? And plus there’s is just management has over the next five years. I mean, who the hell is going to knows what oil’s doing over the next five years? But even if prices come down, you know, 20, 30 percent stay there. You’re talking about a stock that’s probably paying a few percent in dividends, buying back some stock, not having any debt, that sort of thing. I will say this is a weekly chart. I will say if you look at the daily chart, it’s very impressive. The stock basically did nothing from whatever may through December last year. Net net sort of its highs kind of built this base on base formation and the stock went up, I think, the first 12 days of the year, I think every day through yesterday. I’m not sure. I think it was up yesterday and every one of those days, except for one, I think the first day of the year was on big above average volume. And that kind of correlated the early in the year, they said they dropped their hedges and all this sort of thing. So, you know, I’m not a dividend expert and all that. I just think perception wise, these things, I think short term can pullback. I think, you know, their oil stocks, they will pull back. They will test you. They’re not just going to run away on the upside, I don’t think. But my guess is that perception is really changing toward this group doesn’t hurt that oil’s in the mid 80s. But even if oil pulls in, these stocks will pull in. But there has been support, and we saw that late last year when oil pulled back, whatever 25 percent. And the stocks pulled back, but not, you know, they were down 10 to 15 percent. Some of them were flat, like Devon Energy. They didn’t even really pull back net net during the oil stock pullback. So is another kind of potential liquid leader group name in the group that I think can do well this year. That’s all I got for this. I am going to take a sip of water and hand it back to Chris, who will go on to the next slide here. Talk a little bit and then I’ll be. I’ll be here for questions. Thank you very much.
Chris [00:45:34] Yeah, thanks, Mike. And, yeah, like you said, I’ll give you a minute to catch your breath here. Well, I tell you, tell everyone how they can sign up for Cabot growth investor. Like we said, it’s our it’s our flagship advisory. It was founded in 1970, when it was the Cabot market letter and written by the aforementioned Carlton Lutz. For the last couple of decades, however, Mike has been running the show and helping his readers beat the market on an almost annual basis. And as a subscriber each week, you’ll receive clear and comprehensive updates on the stocks recommended in our legendary model portfolio. Plus, you’ll receive invaluable investing lessons that you won’t just become a more successful investor, you become a wiser investor. So if you want to subscribe to Cabot growth investor to hear more from Mike and get his market beating stock picks, please visit the website on your screen. Cabot Wealth dot com slash webinar special for a special offer It’s exclusively for listeners of today’s webinar and you also receive an email what they offer in your inbox shortly. OK, let’s get on to your questions. There’s been a bunch of rolled in during the course of the last half hour or so. I’ll start with just a quick follow up from David. What’s your time for? You kind of mentioned this a little bit. What’s your timeframe on Dutch brothers one to three years?
Mike [00:47:09] Yeah, it’s a fair question. I don’t I don’t play that game. If if it had just broken out and it had all the numbers in the sales and earnings, I would probably play that game more and say 12 to 18 months. But I don’t know, is it going to take a year to set up? I think it can be quicker than that given, you know, the market’s pressure now. So if the market can kind of come out of it, that’s going to help. I would just say it probably needs at least a few more weeks of seasoning and probably longer than that. The way I looked at this, given these three stocks, was given where the market’s at, especially with growth. What names do I think can have a sustained run sometime this year? Obviously, I’m thinking, I’m hoping sooner rather than later. But I would just say yes, I just I think the company is going to do great from everything I’ve read. We’ll see. But we just have to wait to see. See, when the stock sets up, breaks out, gets going and when the market turns healthy.
Mike [00:48:05] I will say, Chris, once it gets going, I’m sorry. I do think the cookie cutter stories can run for a while. They’re not as dynamic, but they tend to be longer lasting because they’re it’s rapid and reliable growth. So it’s just a matter of when it starts. But I don’t think it’s going to be a shooting star and die in six months once it gets going, I think, and go for a while. But when that is what to find out.
Chris [00:48:25] OK, another question- What do you think of Chinese stocks like NIO X, P&G and Baba?
Mike [00:48:38] Yeah. So from a this is sort of in the oil thing a couple of years ago, from a growth stock perspective, I think nothing of them because they don’t really have momentum and the numbers and the uncertainty, that’s my main thing. I mean, the rule, you have to have some baseline for rules. And if you’re worried that the rules are going to change negatively at any time, it’s hard to put a concentrated position on as a general statement for Chinese stocks. I would just say sentiment toward them is terrible and the action has been horrible. So I don’t think you’re like kind of like some of the stuff I was saying. I don’t think you’re in the second inning of the decline or anything. It’s it’s probably, you know, as a as a general group ETFs for whatever you want to go sector, it probably could be something that can stage a turnaround. But right now, I’m looking for things. Then there’s not much right now, but I’m looking for stuff that can hold up. And when we do bounce or earnings season comes can show some upside life that institutions are like, Hey, OK, I’m going to buy this. That $40 is too low for the stock. I’m buying it. You know, that’s what I’m looking for is just stuff like that. I really just haven’t seen much of that in the Chinese stocks.
Chris [00:49:51] OK. Question from Bob, and I think this one is we got a similar question during your webinar last January. What’s your opinion of the FANG stocks right now?
Mike [00:50:01] Same as anything, I don’t I. I’m not negative on them, but and they probably I honestly don’t even look at it much. I really don’t even know what Facebook looks like, to be honest with you. Stuff like that. They’ll probably do OK. They’ll probably do what the market does or what kind of big cap growth stocks are doing, I think they’re more market performers at this point. That’s not to say it’s bad or whatever, but I’m really more focused on newer, fresher things going forward. We’ll see what happens. I mean, who knows, maybe Facebook has some new growth wave next year or whatever and turns into a kind of a liquid leader again. But I would say the odds are against that. So I’m not I’m I’m just sort of neutral on them, to be honest.
Chris [00:50:46] OK. Question about what do you think of BDCs? Give examples. RCC and HD GC.
Mike [00:50:58] Fair question. But I’m a bear or maybe a bowl of little brain. I try to stay in my my lane because that’s what I put all my research and focus on. So Tom would probably have better things on it, on the dividend stocks and stuff like that. I had mentioned those earlier just because my point was for the overall market timing, you just have to recognize there’s a lot of there’s a large swath of the market that pays a lot of dividends or buyback stock or whatever rates and all that BDCs. And that can kind of cause some, maybe some underlying support of long term rates stay relatively low. But honestly, I don’t follow those. I’m sure there’s some of that. I know ARCC is a big one or one of the bigger ones, but I’m really not up on on their numbers or or their prospects.
Chris [00:51:43] And I actually wrote about BTC is in the last month or two on the Cabot Wealth dot com website. I can remember the title of it, but if you just search business business development companies, you would find that. But Mike’s right. Tom Hutchinson, who’s Chief Analyst our Cabot dividend investor and Cabot can come advisor newsletters. He knows all about them. All about all things dividends of your curious. I’d give him a read. OK, see. Question from Boris. What about gold related mining stocks? E.g., Barrick Kinross, et cetera. And gold prices overall?
Mike [00:52:22] Interesting that you say that. So, officially it’s the same thing. It’s not my expertize. Unofficially, I was running through charts this weekend and I will say the long term meaning. And even now, at this point, eight years or something, gold is set up pretty well. The prices and I have noticed that some of the miners have popped every couple of weeks. I like to just kind of broaden the view or just take a look at stuff that I don’t normally some stuff. So I would say again, also from kind of a student of the market perspective, contrary perspective, it’s been out of favor for a while. Gold stuff. And it wouldn’t surprise me, you know, especially with inflation and commodities doing well if they kick into gear. I think the total for that again will just be, you know, top 10. We screen for whatever is working. I mean, we take out the illiquid junk, but we not junk. I shouldn’t say that, but the illiquid stuff. You make a lot of money on that junk sometimes. But so if we start seeing some gold stocks pop up and top 10, I will feature them. I do think there’s a set up there, but now you kind of need to see it ignite. So that’s my general view in terms of individual companies. I’m not. I’m not up on them quite yet.
Chris [00:53:32] And we do have a recently launched gold and metals advisory, it’s not just gold, silver, it’s copper, platinum, tin, even zinc by our own cliff joke launched a few months ago. So that’s another one to check out. Question from Julio. What are your top three? Go to tech indicators and would it hold at least a year of being more of an investor than a trader?
Mike [00:54:02] I don’t understand the last part of that question.
Chris [00:54:04] I don’t quite, I guess basically what are your top three go to tech indicators?
Mike [00:54:08] Yeah, I wouldn’t say tech, but I think those I really do think those growth tides, if you look at what those things are and it’s it’s a lot of the software, cyber security, there’s some retail and stuff in there, some medical. But I think I mean, if you want to just find a tech ETF, you can. I would avoid the ones that are, you know, 40 percent in Apple because it’s not going to tell you that much. But I really do think that some of the QQQ JS and 50 wise and even the IPO fund Ark Ark is a little bit too extreme, but those are really what I’m killing off of for growth. And let’s face it, if growth is doing well, I mean, networking chips, software, Seabiscuit, I mean, you know, a lot of the tech is going to be accomplished in that. So yeah.
Chris [00:54:59] All right. We’ll do a couple more question from Deborah. What are your thoughts on the future of crypto?
Mike [00:55:06] Good question. Yeah, it’s a good question. I’m a big trend follower, so I’m not an expert on it at all. I really am not. I think it can do well because it seems to be just gaining in popularity. Honestly, what I look at it as is. Well, let me put it this way, I think there’ll be more money to be made in growth stocks during the next sustained uptrend, like the next real bull phase or whatever you want to call it. So that’s where my focus is. The longer term, I would just say, I think that there’s just a total opinion. So I’m not an expert on it, but I do think there’s growing acceptance of it. And if there’s growing acceptance of it and there’s somewhat limited supply, it could probably generally do well. But you know, my main thing with these is we run a concentrated portfolio and I mean, we’re not unaccustomed to volatility. But, you know, if I’m putting a 10 percent position of my portfolio into something that could go up or down 20 percent a day, it’s that’s too much, you know, so we need a little bit more structure. I do think the way to maybe play those in the future is if crypto becomes real in the crypto economy becomes real, so on, so forth. Whatever the buzzwords are, there will be companies. You know, Coinbase, obviously, is like the Charles Schwab of it or the NYSE of it. But there will be more and more companies that use it, provide services for it and all that. And then they might be the growth stocks that you could get into. That’s kind of what I’m looking at it going forward.
Chris [00:56:37] Another broad question from Tommy, who’s been waiting patiently, and I know you love this stuff. Do you have a target idea for a spy in 2022?
Mike [00:56:47] No, no, I don’t. I think the odds favor it’ll be higher, but I just don’t. I just don’t do targets. I just. If the world was that easy, we’d all be rich sort of thing. You know, I think that right now, the risk is elevated even in the best stuff. You know, all the stuff I said. But I do think, I mean, let me put this way if we do get a cyclical bear market, which I’m not predicting. But if the S&P falls 15 or 20 percent, I think once it bottoms out and gets going, you can have a good, you know, 20 plus percent run, but we’ll just have to see how it plays out. I’m not a big target guy.
Chris [00:57:22] All right, last question from Paul. Paul asked, what are your thoughts on the uptake of electric vehicles in the US?
Mike [00:57:30] But I mean, I think there’s going to be more and more coming. I think you’ve seen more and more ways to play it. I do think that was investment wise a little over, you know, overplayed, I think last year, not overplayed, but just that was part of the speculation, although stocks went bananas and have come down for the most part. But no, I think it’s for real. I don’t think it’s a fad. I think there will be more opportunities going forward. But as always, you get to see the right stocks with the right numbers and, you know, making a big enough difference to the company’s earnings. Right now, a lot of the stuff going on obviously is within a bigger company. So, you know, it’s going to be five percent of their business. Is that enough to move the earnings and move the stock? You know, sometimes yes. Sometimes no. So I’m bullish on it in general. But you know, like most things, you got to see the right stock in the right setup.
Chris [00:58:21] I guess we have time for one more question really quick from Jim. Jim just asked, do you see a chance of a bounce coming in any prior IBD leaderboard semiconductors that are down 20 percent like AMD and Nvidia?
Mike [00:58:37] Yeah, definitely. Yeah, I don’t. I don’t have a specific name. I mean, I would say those stocks have held up relatively well. I mean, they’re down there below below the 50 day line of stuff, but they haven’t peaked. Yeah, I do. I mean, I think things are near. I mean, I don’t know. Last Monday, we bounced and I was like, This could probably bounce for a couple of weeks and we bounce for two days and then ran into trouble. OK. I mean, I do think you’ve had day after day after day of hundreds of new lows. You’re seeing some of these like short term, like today’s AAA sentiment measures horrible in a good way. So, you know, I think, you know, yeah, I think we can bounce. I’m not a bounce guy, really. But if you want to play it, you know, go ahead and try. Just keep it small. Make sure you if you lose your lose small sort of thing. But yeah, I think there’s a chance some of these things can bounce back into resistance. I don’t think we’re just going to fall. Yeah. I don’t think these stocks are going to fall like 90 percent without bouncing, you know? So I think they can bounce here somewhat soon, but we’ll have to see how it plays out.
Chris [00:59:37] OK. Good questions. Thanks, Mike. Any last words for our sign off here?
Mike [00:59:43] Now just keep your heads up, especially if you’re a growth investor. I mean, there are some things out there like I said growth investor right now. And rusty nails top 10, though it’s not great, but it’s not a disaster. So there are some opportunities now, but I don’t want to try to. I’m not a trumpet sunshine guy. I think most people know that. But really, I do think that if we do get a reset here and I think it’s fair to say whether we get one in the S&P or not, we’re getting one in the growth Nasdaq complex and that might go on for a while. But now that we’re getting that reset when we really do bottom out, build some launching pads, fresh leaders and get going, that’s when you can really build. You know, forget a 10 percent position, hopefully bigger than that and ride some of these things, not for three or four weeks, but for months and months and months. And that’s really where the big money. So I’m not trying to say it’s going to happen tomorrow. I hope it does, but it probably going to take a little while. But just keep your head up and we’ll be on the leaders. We’ve seen this before. We’ll be there again, and I’m pretty confident we’ll see it sometime here in the weeks and months ahead.
Chris [01:00:41] Sounds good. Or thanks, and thanks to everyone for joining us today. We’ll be back next month with a webinar from Tim Lutz, our chief investment officer at Chief Analyst of our Cabot Marijuana Investor Advisory. Tim, we’ll be talking about his favorite cannabis stocks for the next uptrend. Speaking of beaten down sectors due for due for a big move that’ll be at 2:00 p.m. Eastern on Thursday, February 17th. So join us for that. That does it for us, for Mike and the entire Cabot Wealth Network team. I’m Chris Preston. And we’ll see you next time.