Speaker 1: 0:00

Economic data is about to crater as Trump throws the kitchen sink out with the baby and the bath water, and the question, therefore, is what do you do in this moment with your portfolio? Do you just buy the dip in hope and pray, or is there a smarter strategy? I want to give you two pointers that have worked over the decades in my experience and walk you through the following. So let's get cracking. Trump is expected to blame the old BLS commissioner and reduce job numbers by up to 2 million. Yeah, 2 million, which would be the biggest adjustment ever. Now share my screen with you here. Goldman Sachs was expecting about 750,000, maybe even 950,000 jobs just vanished. These are paper tiger jobs. They never existed, they were just made up in a spreadsheet, and he's doing that because he's hoping. He's therefore going to get bigly 0.5 or even 1% rate cuts from the Fed, and that would therefore set him up to win the midterms coming up.

Speaker 1: 1:12

Now for those begging for rate cuts, you might want to look back at 2001, 2008. What happened in 2001 and 2008? Well, the Fed started cutting rates just before unemployment spiked, and the lower rate cuts were not a win for us. It was the signal that the real damage was about to hit. So if the economy was healthy and booming, there would be no need to cut rates. Right, that's the theory. You kind of want high rates if the economy is booming, but before this pivot happens and before rates become bad news, possibly there is still time for you to protect your portfolio, literally. Just don't give up all your gains like you did at the beginning of the year right, most people did, and I'm going to do something for you to help you build a more sustainable portfolio, one that actually gets you retired earlier. I will spend two hours with you live this Saturday, training you and sharing with you how Wall Street deals with these things in a lot more depth than we're doing right here, and you can grab yourself a free seat for that live training at felixfriendsorg slash training. It's on the screen. It's also down below in the description before they go. I'd expect about a thousand of you there, or maybe a little bit more.

Speaker 1: 2:30

So back to the story. Us bankruptcies are surging past the 2020 levels. A little proof of the pudding here for you. Here we go. S&p Global data US bankruptcy spiked this summer to their highest level since 2020, right, 71 public and private companies filed for bankruptcy. One of the big ones you might recognize is where are you going to get your sliced pineapple in a can from, or even those delicious peach halves? Well, del Monte is bust with debt between $1 and $10 billion. Well, it's $9 billion between friends. So there is something going on in the real economy which isn't brilliant Now kittens are stepping on my keyboard, as you can probably tell which is never useful.

Speaker 1: 3:21

So what's Wall Street doing? Wall Street's doing one very, very simple thing Wall Street is buying quality. Now, what the heck is quality? Well, have a look at what they bought last quarter. These are the nine I believe it is top stocks that hedge funds and the big funds bought last quarter and I've literally got three kittens staring at this. That's how interesting that thing is and these are pretty much actually yeah, pretty much all stocks with actually very, very solid numbers. So how do you define quality like that? How do you check your own portfolio whether it's quality? Well, look to me, it's two things, and I want you to write this down, because otherwise you walk away and you'll be like what was the second thing? Again. This down, because otherwise you walk away and you'll be like what was the second thing again. Okay.

Speaker 1: 4:11

So the first thing is you want a big, bigly even moat. What's a moat? Big water thing around your company, lots of alligators in it and nobody can cross the pond, the moat, to compete. So it makes it difficult for other companies to compete. There is one very one, he says Germanicness, coming through. There is one very big, very one, he says Germanicness, coming through. There is one very big indicator for that, which is gross margin. You want your gross margin to be greater than 60%. Generally speaking, that's a pretty good number. Higher the better. Your visa and master cards achieve almost 100%. Your car manufacturers are typically at 10%, which is why they're crummy businesses.

Speaker 1: 4:45

Now, what's the second one? Well, there is one other indicator which is equally as important, or perhaps even more important, that almost nobody really understands and nobody really looks at. So let me tell you what that is. If I can still see the screen with these three little rugrats here, can you see them? You can only see one. There are two more snuggling up to the screen.

Speaker 1: 5:07

The second one is ROIC. What does that stand for? Return on invested capital? It means if we're going to have to reduce the kitten density around here a little bit. It means that if the company invests $100, what is the return they're getting in year one? So in year one, one year later, how much money are they making?

Speaker 1: 5:34

Generally speaking, you want that to be at least as big as your target return. So, fighting off kittens right, left and center, especially hue. So what does it mean? Say you want a 12 return on your portfolio. Well, it's probably pretty good idea if you're roic of all your stocks is at least 12 or higher. If you want to aim for a little bit more, look for 20 plus, be a bit more, um, selective, you know, but like me with all these cats, so those are literally the two numbers I would look out. Forget everything else, pretty. So those are literally the two numbers I would look at. Forget everything else pretty much, just look at those two numbers. I mean, obviously that's stuff to look at.

Speaker 1: 6:12

And actually there's a warning as well, because on this list we have quite a few magnificent seven stocks. Did you notice one thing? Yesterday, all of the magnificent seven stocks were actually down. So if we go into trade vision here, click on home, click on the heat map up there and you see the live heat map for the day for any of your watch lists or also simply for the index, like the S&P, and you can change it by market cap or make every sector the same size. And you can see here Nvidia, microsoft, google, amazon they're all down, so they're not immune to this right. And that has me a little concerned with the mag sevens. So I'll be a little careful with the mag seven, because the mag seven have outperformed the market so incredibly well. There is an ETF called MAGS M-A-G-S which you can follow and it's had a pretty nice run up. So a little bit of a pullback would not surprise me at this particular moment. So a little bit of a warning there for you MAGS 7 gobblers.

Speaker 1: 7:22

Now you can also just see where is the money flowing, and I did a podcast yesterday on MarketBeat, which is another great channel. Check it out. I'll repost it as well later today. And we're talking about where does the money flow. What do institutions do? Well, they look at where the money flows. There is little charts like this which tell you each sector, or each industry, rather, and where the money is going, and you can look at well, where's the money actually going? Well, look home. Improvements. Well, what we're talking about. Last week. I was talking about home builders and related stocks, right, so those are going up nicely.

Speaker 1: 8:01

We were looking at yesterday, or actually on Sunday, casinos Well, wynn is one of the big winners of yesterday. And looking at a day like yesterday and looking at, well, which stocks didn't falter, who's got strength on the tough days, that's a good thing to do as well, and you can go on a lot of the banks we've been bullish on. Yeah, there's a lot of stuff on here that we actually been looking at, a lot of the REITs and so on. You might be thinking, oh, I don't believe you, felix. Well, if you look up my list from Sunday, which I share with my mentees, for example, auto parts, right, doesn't sound very sexy, but yesterday, can we search this Auto? Maybe they call it car, try to please the foreigners. Okay, I can't bloody find it, but it was on here somewhere as a sector. Industrials, okay, well, you can tell how well I plan these videos, trying to impress you. But, yeah, no, you know, we're looking at all those sectors that are actually doing quite nicely, but that's auto parts.

Speaker 1: 9:14

Biotech stocks actually surprised me yesterday. So there was one stock from on my list from last week which is abbv and again it's here on my list from last week. Where is it here, abbv? And look at that. Yesterday Didn't do a lot, it only went down 0.1% and that is strength in the face of adversity. So look for the strength builders in your portfolio and on your watch list, right. And if you understand the sector rotation and it isn't based on rules, it's based on money flows If you understand where the money is flowing before the money flows there, well, guess what?

Speaker 1: 9:53

You're probably better set up and you also stop holding on to the things that top out Stocks. Top out Stocks do not go up in a straight line. And once you understand that well, you just make better decisions. So you know what to do. There's a link up there FelixFranalogcom training. Come and learn with me, right, felixfrontalogcom training, at Saturday, 10 am, new York time, and I will shake you up, I'll stir you around and I'll make sure you leave better informed and more inspired than ever. And then there is a little warning for you, which is the CTAs, the algo funds. So algo funds are computer-driven funds.

Speaker 1: 10:34

If we go down this month, in the next month they would sell $67 billion of US stocks, $183 billion of global stocks. That's pretty big. So the downside risk is significant. I'm not trying to scare you or freak you out. I'm obviously saying risk management keeping our money, not having big losses. That's where we make money. So if everything goes wonderful, everything is good. If we go down a little bit, not so good. If we go down a lot, uh-oh right, they're going to sell bigly.

Speaker 1: 11:05

It's not hard to learn how the market moves. Honestly, it just isn't. It is just a same thing again and again and again. And I was saying I was talking about on Sunday and last week, things like auto parts, home builders, talking about casinos, utilities been in that for a while and those are sectors that we see as having sweet setups before the setup actually happens. And if you're always late, setup actually happens. And if you're always late to the party, if you're always chasing the latest thing whatever went up a lot yesterday then it becomes challenging. You know it becomes challenging to actually make money out of this, whereas if you are better informed and you have better rules from the outset, then you can actually do quite nicely with it.

Speaker 1: 11:48

There was another another one of those, for example, I saw yesterday KDP. Where is the basic materials? Consumer here we go Consumer here KDP, for example. Beverages non-alcoholic KDP. Coca-cola, pepsi did well yesterday, right. What do we have on our list? Kdp? Oh, here we go. The one beverage stock on our list Keurig, dr Pepper from Sunday KDP right.

Speaker 1: 12:17

So it's not like these things are not predictable. It is just a question of understanding what those rules look like. And what do we get? We get a great, big, beautiful green candle. Looks like we're going to get a breakout on on today as well, another gap up, and that then takes us above or very close to the april highs, which means this lovely textbook heartbeat pattern here is finally paying off, right. So we're going out above that. That's what pays off, and likelihood is it does very, very well. What are we missing? This thing, volume. The volume doesn't go up. It won't do it, but if it does, tremendous things will happen. So we position ourselves for these. Is it too late? No, no, it's not.

Speaker 1: 13:02

But don't just buy something because I'm mentioning it. Buy it because it matches your rules. Buy it because some of your stops got triggered yesterday and they took profits, right. That's what it's all about locking in the gains. You know, people made a lot of money on Palantir this year. A lot of money. Well, it's a pullback. At this point it isn't catastrophic. But what if this thing goes down another $50? I'm not saying it will, but it's possible.

Speaker 1: 13:27

Do you know where to sell? Have you got that set up? Have you got that set up? Because why do you do this? Not because you're in love with Palantir or Alex Carp's hair. You do this because you want to get to financial freedom earlier retirement, better retirement, pay for your kid's college or whatever it is that you want to do. Buy a Lamborghini, sit on the beach, get more cats. Cats are free, actually, which is good, um, and they have to work, obviously, for their keep, sleep on the desk, keep it warm. But yeah, that's what I'm saying to you. And if you are frustrated and a lot of people look at my comments yesterday on the video I put out on on this mini crash before it mini crashed, look at all the anger in those comments and everybody is leaving this angry comments.

Speaker 1: 14:07

I know exactly what's going on in their portfolio. I know that they're invested on hope. I know they're invested on that things will just keep going up and they've just been buying the dip and they're hoping that it's going to continue to work. Maybe it will, maybe it won't, and they have zero plan for what happens when we go down. Now, the market moves in cycles. It goes up and it goes down. You know why you make the real money when it goes down. Why, well? A, because you lock in your gains. B because that's where the opportunities are. And just because the market goes down doesn't mean you can't make money. There are always, always, always, sectors that make money every single week. And if you look at let me show you once more Look at yesterday's sector.

Speaker 1: 14:50

This actually wasn't that bad of a day, was it? Look at all the green. Look at all the green. Well, does your portfolio have all that green? Probably not, because you're all in software, you're all in tech, right. You're in Netflix, you're in Palantir, you're in technology, which had a terrible day.

Speaker 1: 15:03

But healthcare did well, wholesale did well. Wholesale did well. A lot of the finance stocks did well, a lot of the mortgage stuff, a lot of some of the smaller banks. Construction materials did well. We were talking about that, right? So it is just about am I in the right place? And utilities doing very well?

Speaker 1: 15:18

And if you're not, well, you're going to hit the concrete pretty hard again and you've done it before. Are you going to do it again Now? Only you can do something about that. I can offer to teach you and motivate you, and I'll do that for you on Saturday, because I love doing it and I love the impact we get and I love the changes. I love the testimonials I see.

Speaker 1: 15:41

But don't just walk away from your portfolio because it turns red. That's the moment where you need to take action. So join me Saturday, felixrensselaercom training and, of course, you'll be joined by all of these great experts here. Here are two of those and I thank you for watching. I thank you for tuning in and I hope to see you on the next one. Take care, felix and Winston here. And imagine a stock so good. The best investor in the world famously bought it. I'm not talking about Warren Buffett or any of the hedge fund lot, nancy Pelosi, of course. We're talking Tempus AI, ticker symbol TEM. It is a precision medicine company. They use AI to analyze vast amounts of clinical, molecular, multimodal whatever that is data to support better healthcare decisions.