Investor's Edge with Gary Kaltbaum - Cross Currents On Wall Street

Episode Date: June 22, 2023

Follow Gary on GaryK.com or http://garykaltbaum.com

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Investor's Edge with Gary Cultbaum. Straight talk about you and your money. Now from the BizTalk Studios, here is Gary CultBomb. And welcome once again to Investors Edge. I'm Adam Sarhan in for Gary Kaye, who's out today. Today is Thursday, June 22nd, 2023. We've got a great show for you tonight. And I want to thank you very much for being here.

But before we dive into everything, as you know, this is a show about you and your money and all of the fun points in between. Just as a quick reminder, if you don't get the show in your city, you can go to garyk.com, listen live for archive. We are live Monday through Friday, 6 to 7 p.m. Eastern. The archives are available 24-7 on garyk.com. So you can pause it, rewind it, fast forward, listen on any device from anywhere in the world. Also on garyk.com, you can follow gary on Twitter by just pressing the button. You can subscribe to it. Gary's morning notes sent directly in your inbox for free, no charge.

You may email Gary, read the rest of his commentary. Or if you'd like, you can go to Convictionleaders.com and subscribe to his premium service, which he does a phenomenal job of. I read just every single post he publishes. And he does nightly, just about daily, nightly in-depth market webinars or webcasts, where he talks about the major indices, he talks about groups, stocks, leaders, laggards, you know, what to look out for, what to look for. they're really, really fantastic and shows you charts and a lot of just in-depth education.

Plus, you get a lot more of his thoughts in real time because he updates members several times throughout the day. So all of that is available on convictionleaders.com. So we have a few things to discuss today. Well, there's a lot, but Gary's done a phenomenal job of just really keeping everybody stepping back like 30,000 view kind of foot out of the way early 2020, got back in, got more bullish in early 2023. Excellent job sidestepping, the big bear market, especially in a lot of the tech areas that got, you know, you saw stocks go down 50, 60, 70, 80 percent or more. And being able to get out of the way, had Tip to Gary is just really, really, really a,

it's a superpower because a lot of people work really hard to make a lot of money and to make progress. and the progress can get erased very, very quickly. So one of the best things that, you know, in general, it's risk management. One of the best things any trader or investor or anyone at all can do is really master the art, and I use the word art on purpose, opposed to a science of risk management. Because it's one, I interview some smart folks on my show. It's called Smart Money Circle. And there's a podcast to it and some CEOs of publicly traded company, big money managers.

And somebody told me, Adam, we're not buying and selling stocks. We're buying and selling risk. And the best money managers in the world are the ones that can manage risk the most effective and in the best fashion. Because just about everything, before we dive into the markets, I always like just taking time to put the proper framework around things has an element of risk and an element of reward. by definition the future is unknown whether you're you want to know where the market's going to be in a year or what we're going to eat for dinner tonight or maybe in a year right or what's going to happen global pandemic you would have asked me before COVID is that going to happen no there's no way modern science yada yada yada yada and look what happened so anything can happen at any time

especially in the market so when you're able to properly assess the risk and then ask yourself you know before you enter my three favorite questions are Where am I going to enter? Where am I going to exit? And how much am I going to risk if I'm wrong? Because anybody can, you know, be a cowboy and load up the truck and go all in on something. Well, sure, what happens if that's something, whatever that is? It could be a great company, but a lousy stock.

Gets in trouble and has something unexpected happen and it gaps down and you get crushed. So understanding just basic risk management and understanding basic math is so important to getting ahead on Wall Street because if you can keep your losses small and that's where the math component comes in, you're way ahead of the pack. Just to give you some simple numbers to illustrate the point, someone's down 10 percent. You need an 11 percent gain to get back to even. Well, if you're down 25 percent, you need a 33 percent gain to get back to even. You buy something at 10, it goes to five, or you buy something at 100, it goes to 50. You just lost 50 percent. Well, okay, you would think. You just need a 50 percent gain to get back to even. I lost 50. You need to go up 50.

Something's at 100. It goes to $50. You're now at 50. In order for it to go back to 100, it has to go up 100%. Right? Because 50 plus 50 would be 100. If it goes from 10 to 5, same thing. It's at 5 now. It went down 50%. It's the same thing. It has to go up 100% to get back to even. And if you think that's wacky or cuckoo, just do the math and look at what happens when you go down 70% or 80%, 90%. I have a table in my book. The book's called Psychological Analysis, if you're not familiar, that illustrates that. And it's really profound.

My first saw it 20 years ago, it just blew my mind. I was like, what? Drawdowns in Wall Street parlance are just when you have your account declines. And it's normal. It happens everybody. The best traders, best investors, it doesn't matter who you are on Wall Street, to my knowledge, everybody has drawdowns. Drawdowns come in different size and scope. size, the percent change, and scope is the length of the drawdown.

But mentally being prepared for it and expecting it is really, really important. Why? Because if you don't, when it happens, you're going to panic and or experience other negative emotions or feelings. But if you're expecting it and you're prepared for it and you plan for it, you can do your best to keep those drawdown small in both size and scope. And it's one of Gary's many superpowers, but it's one of the things that he does phenomenally well. with just getting out of the way and having very little to no tolerance with losses.

So I do want to share that with you because it's important to where we are today with the market. So the market, it's extended. It just had a big run. Really, all year it's been rallying. It had a nice run from January to February. Then it had a nice pullback. And it's important, folks, as you go through and look at markets and look at stocks and ask yourself, how does this stock behave? How does the market behaves?

And you can just go back and look at the market and look at, you know, just the percent change or look at the moves. You can use daily charts. You can use weekly charts or monthly. And when you look at your stocks and you can look at how far extended they are above the 50-day moving average or above the 200-day before they pull back. But it's normal to see markets go up and then down and then up and then down and so on and so forth. So you had a nice rally coming into this year. from the beginning of the December low of 259 in the NASDAQ100, the QQQ, up to 313-ish, which was about a 20% rally in a few weeks.

And that was good start to the year. And then you pulled back from 313 in the NASDAQ-100, the QQ, down to 285 from February all the way up until the middle of March with the Silicon Bank value failure, so on and so forth. And that was a pullback or a drawdown of about 9%. And it lasted for about five weeks, maybe six, depending on how you want to count. Seven weeks if you want to give it, you know, it depends on where the low is or the high is,

but it's about six to seven weeks somewhere in that range, five to seven weeks. Okay. So you jumped 20% and you gave back 9%. And then you went on a really strong run from 285 all the way up to where we just were a few days ago, which was the high on about 372 on the 16th. So 372, that high is about a 30% percent. rally. So that's a huge move. Now you did have a little pullback in between beginning of April. You hit a high of 321 and then you pulled back to 309. So you had a little pullback.

Let me go here. One second. And then 309. So you had a little pullback of I would say, there we go, about three and a half, almost four percent. Let me do the math. Yeah, right around 4 percent, 3.75 percent. Sure, for about three or four weeks. That was a pullback into the 50-day moving average and it really touched the 50 and then just shot up from 309 to the recent high of 372. That's a big move. So you get a 20% rally, just to recap from late December, early January to February. And then the QQQ pulls back about 9%. And then it takes off jumps from 325 to 321.

So you get a nice little rally from about 12.5%. And then you get a pullback of a. about 4%. And then it starts going from 309 all the way up to the recent high from the 16th, which was 372. And that was a jump of right around 20%. Now we're in pullback time. So we pull back for three days. The NASDAQ 100 rally today. The big picture is that what's been working, the semiconductors, largely, the big cap tech stocks are bouncing. Now, what's, What's not working are the financials. You have a chance to take a look at XLF, which is an ETF that tracks the financials.

It's pulling back. But you can look at individual financials. Look at JPMorgan, down about 2%. You can look at Wells Fargo, down about a percent and a half today. You can look at a ticker symbol for J.P. Morgan's JPM. Wells Fargo's WFC. Bank of America, BAC is rolling over down 2% today. And I can go on and on and on with a lot more financials.

The regional banks, KRE, slicing below its 21-day moving average yesterday and then the 50-day moving average today, down about 3% just today alone. And then you can go look at some of the regional banks. They were hit pretty hard. So we're just – the big message from Gary is the financials are acting miserable, miserably. They're rolling over and just watch it on notice. So up next, we've got a lot more to discuss.

Time flies. I'm Adam Sarhan. This is the one and only investment. Thank you. Hi, I'm Gary Kalbaum, hosted a nationally syndicated radio show Investors Edge. We're not just handsome radio people. We manage investors' money for a living, specializing in fee-based discretionary money management.

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With Gary Coltbaum. It doesn't get better than this. And welcome once again to Investors Edge. If you're just joining us, we missed any part of the show, you can go to GaryK.com, listen live or archive, and we're available 24-7 on any device on GaryK.com. So if you're just to pick up what we were talking about, just going through the importance of risk management,

understanding that markets rally and then they pull back. And it's normal and healthy for markets to pull back. Those pullbacks or drawdowns, whatever word you want to use, come in different sizes, the percent change, and the scope. So the length of the pullback. You have two components to every pullback. There's a size component, how deep is the pullback on a percent basis, and then how long does it last?

So size and scope or size and duration, any way you want to describe it. All right. The cues today had a nice day. the NASDAQ 100. You can look at a stock like Amazon, AMZN, breaking out above resistance of a nice, you know, multi-week base here. Nice digestion. Great. Volume dries up on the most part, breaks out today, above average volume today. They announced spending huge money, I think $100 million on generative AI. And AI is all the rage. Okay, great. You can look at other semiconductor stocks. The SMH bounces off of its not even 20-day moving average, 21-day, somewhere in that area,

a little bit less, maybe 19 or 18-day moving average, but it didn't even touch a 21-day. Okay, great. Volume wasn't the heaviest, but okay, we'll take it. Navidia, very tight action, continues to act extremely well. And SMCI, super microcomputer, tried to bounce off the 21-day but got sold into some distribution, close and lower half of the range. Marvel, MRVL, or Marvel, right on its 21-day moving average. And again, just to give you some color and what that means,

the 21-day moving average tends to be a short-term area of support. Really short-term would be a 10-day, then the 21-day. A lot of stocks pull back into 21-day, and they bounce. The 50-day moving average is the guardrail. It's the line in the sand that you don't want to see a leading stock break down below. And then the 200-day moving average is a longer-term thing where it's like, okay, if it breaks that, then pretty much Goodnight Irene type of a thing, right? You just don't want to be in that situation.

So, again, the message from Gary, the financials, acting miserably. They're rolling over. Okay. We'll see what that means for the rest of the market, but beyond notice. We're seeing the very strong areas of the market that have been working, continue to work, big cap tech, semiconductors. You can even look at other areas like housing stocks, XHB, who's down half of a percent today, barely budged. Pulte Holmes, P. There's a ticker there.

another new high. You can look at DHA, another new high today. Beezer homes, a lower price. Home builder was down marginally today. Let's see, HOV got hit today. So it's a lower price home builder. It was down right to the 21 day, but that's a bad break. If you want to take a look at HOV on a daily chart, you can see what a bad break looks like. But it did that before and then recovered. So again, look at the behavior of each individual stock that you're trading. Toll Brothers, high-end home builder, continues to act extremely well, just strong action. So the homebuilder is acting well. You've got the building-related stocks. BLDR is builders first source. They manufacture structure-on-related building products, right, for residential and new construction. Okay,

stocks been extremely strong. It's extended up here, but it's just an example of what strong action looks like. Elf, ELF is a ticker symbol there. They make beauty supplies or cosmetics, low, lower priced or mid to lower priced cosmetic brand company. Stock is one of the strong stocks in the market. Last year in May, it bottomed your $20. The NASDAQ and the S&P and the Dow bottomed in October. So this stock bottomed about five, almost six months before the major indices bottomed. That is really, really strong action. And then Elf just started the rally. And when you have a chance, take a look at Elf on a daily chart, ELF,

and you'll see really just borderline picture perfect action. You broke the 50-day moving average one time in January, and you got right back above it. Stock went from 20 to 112th. I mean, that is explosive, explosive action. Hugging in the 50-day, just about the whole way up. You broke it for, I think, three or four days, and it got right back above it.

Outside of that, pulled back into the 21 day, a few pullbacks into the 50 day and just bam. You broke it a little bit in May for a day, maybe, and then right back above it. So if you want an example of leading stocks and how they perform and just good action, you could see. There's an old adage on Wall Street where it says that the market or stocks take the stairs up and then the elevator down, meaning you have a nice advance, then it goes sideways for a few weeks or a few months, another nice advance, sideways, advance, sideways, and so on and so forth. on the way up. So you take the stairs up. You go up and then sideways up and sideways

elf did that. You can look on a weekly chart. You can look on a monthly chart to see it better. However you want to see it a daily chart, it is just extremely strong. Short term extended, but okay, what's been working continues to work. And what hasn't been working, what's been under pressure, it's just sitting there. So I'm watching the transportation. We'll talk about other sectors now too. transportation stocks. You have a big cup forming since maybe February this year. They broke out the IYT, if you want to follow along, broke out above 229 back in early June, and you had a nice rally over the last few weeks. All right, it's now digesting. It's building a little handle. It's been about four days, five days. I want to see a handle go for a few weeks. If it can sit tight

and go sideways near 240 for a few weeks and then break out above the high of the handle, which is 24, 455, that'd be very bullish for these transportation stocks. So again, keep that in mind where if you start seeing this go top side, like they say, if it goes up and breaks out and goes up, that's going to be, that's going to have bullish ramifications for the broader market and also the economy. Ask yourself why, because the more things that move, the more money the transportation stocks make. Well, all right. Traditionally, the more things that move in the economy is better for the economy. When you have more economic activity, it tends to be better

than having less, right? FedEx, excuse me, a big transportation stock, fell recently after they reported earnings, but bounced right off the moving averages and basically recovered just about all that it lost for its, after reporting earnings. So you're in a situation now where you've got a nice base here in FedEx. If I can break above 235, that'd be bullish. But you've got cross currents, is where I'm going here. Some areas of the market are acting very strong, tech mainly, and many other areas are not acting strong or acting weak.

The Russell 2000, IWM, has a big cup forming. It really hasn't participated in this rally in a meaningful fashion. it's now starting to form a handle. Okay, we'll see what happens with these financials. It's a low handle. It's not a good cup and handle pattern. However, it did break out above 179 a few weeks ago, which was somewhat of an important level of resistance

or a mid-level area of support, back on, let's see, what day was that gaped up, was the second of June. And then had a nice run from 179 to right around 180, or 189. And now it's just pulling back into the second. 21 day. Okay, we'll see what happens. So again, just putting everything together, it's really important to step back and just look at the weight of the evidence and look at what, I always like to say,

the market is speaking and then ask, are you listening? Up next, we've got a lot more to talk about. I'm Adam Saran. This is the one and only investor's edge. Hello, hello, I'm Malcolm Gladwell, host of the podcast Smart Talks with IBM. I recently sat down with IBM's chairman and CEO, Arvin Krishna. And I asked him, how can companies use AI to its fullest potential to create smarter business? My one advice to them. Pick areas you can scale. Don't pick the shiny little toys on the side. For example. If anybody has more than 10% of what they had for customer service 10 years ago, they're already five years behind it. If anybody is not using AI to make their developers who write software 30% more productive today,

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And here's why. These aren't your average eggs. The hens live on open pastures with fresh air and sunshine all year long. They forage on local grasses and stretch their wings. They're living their best lives. life. That care really shows in the taste. I love mine scrambled with a little butter or whipped up into a fancy frittata. And here's something most people don't know. You can trace your eggs back to the farm they came from. Seriously, side of the carton, you'll find the farm name. Type it in at vitalfarms.com

slash farm, and you'll get a 360-degree peak at the pasture. Plus, Vital Farms is a certified B Corporation, which means they're committed to improving the lives of people, animals, and the planet through food. Eggs you could feel good about. So next time you're in the store, look for the carton in the egg aisle and visit vital farms.com to learn more. Vital Farms. Good eggs. No shortcuts. We're listening to America is talking. Investors Edge. He's got to be pleased with that. The crowd is just on his feet here. He's a Cinderella boy. With Gary Colbomb. It comes highly recommended. You're going to feel better if you talk to him. And welcome once again to Investors Edge. I'm Adam Sarhan. In case you're just joining us, we want to thank you very

much for being here. If you missed any part of the show, you can go to GaryK.com and rewind it, fast forward, listen anytime you want 24-7 on any device for free. So a few thoughts here. Again, we spoke just to recap the show so far. We spoke about the importance of risk management, spoke the importance of pullbacks, expecting them, or anticipating them, or, you know, looking how a stock and how the market behaves, and then extrapolating that going forward, say, oh, okay, well, if this thing gets, I don't know, 5, 10%, maybe 12, 13% above it's 50% the moving average, it tends to pull back. It's now 11, 12% above it.

Okay, well, odds are you're probably going to pull back is really, really important because this way you can stay in sync with the market. Then under the surface, you can take a look at what's actually happening. The financials are acting miserably, which is not a good sign for the market or for Main Street in the economy. Then you've got, we'll see what that happens. if you see continued weakness there, that could be a weight that drags the market lower, especially because you're way overdue for a pullback.

So, okay, outside of that, to just be on watch, notice, like pay attention to the financials. Outside of that, the queues, the NASDAQ 100 continue to lead, the cues were up today, the semiconductors up today, for the most part, and they continue to act strong. Spoke about housing stocks. We spoke about transportation stocks. spoke about some builders. Let's jump over and look at what I want to show you next here, biotech.

So if you look at XBI or IBB or any other biotech, well, let's look at the XBI. It's liquid and it's, I believe it's more liquid than IBB. Yeah, XBI. IBB has one and a half million average shares and the XBI is 7.8. let's go with the XBI. So it's an index that tracks biotech stocks. For the most part, it hasn't broken out and hadn't had a huge run yet.

$90 has been resistance for this thing, 92. We got as high as 95 last August and it's been basing since then. You had a high back in February near 92, and then you had an high recently just above 90. It's just a one long base. If this thing can break out above 90 and then above 92 and then above 95, that's going to be very, very bullish for the market. Because what's going to happen, folks, is you're going to see a broadening out of healthy action.

And the more areas that are rallying and participating in the market by design, the way the market's designed, by definition, how the market is structured, is created, you're going to have more areas that go up. The market's going to go up. And vice versa, the more areas that go down, the market goes down. So keep that in mind as you do your heart,

homework and you do your analysis and you put the pieces together, ask yourself, well, if these areas are not participating, what does that mean? If these areas are participating, what does that mean? And what are the ramifications going forward? It's all about playing the odds, but not playing the odds like a gambler plays the odds. No, playing the odds of probability. what has the highest probability to happen, the highest probability outcomes? Because the market by definition, it's full of uncertainty. Nobody knows with 100% certainty what's going to happen tomorrow, next week, next month, next year, so on and so forth. So how do you navigate an environment that's by definition unknown?

Probability. Odds. Studying history. Study market history. Not studying about Napoleon and history that go back to the ancient Greeks or Romans or whatever. No, it's studying market history. Study the stocks that lead the market higher. Study the market itself. How do the major indices behave? How long do these bare markets last? How long do bull markets last?

You know, Warren Buffett's got a great line in his annual letters or notes that he sends out. He calls it the American tailwind. And he attributes humbly all of his success. not most of it, to the American Tailwind, which is phenomenal. And it's brilliant, by the way. And he's spot on. And what does that mean? It means that there's a tendency for the market to go up and go up big time because of the great American, or I call it the Great American Tailwind.

And I cite my source, which is Buffett. So ask yourself, how are you aligned with the Great American Tailwind? and realize that over time, there's other areas that work and some areas that lag. There's a great rotation that occurs beneath the surface. Sometimes semiconductors are in favor. Sometimes financials are in favor. Sometimes the railroads are doing well. Sometimes the banks are, you know, the biotech are doing well.

Sometimes it's this. Sometimes it's that. Your job is to be aligned and in harmony with the market and not fight the market. When I was younger, you tried to fight the tape. tried to outsmart the market. I used to lean just by not knowing any better through sheer and utter inexperience and ignorance, whatever word you want to use. Try to short every time the market would rally.

Like, oh, I know better. There's no way the market's going up and then go find 10 negative headlines that would justify my quote-unquote preconceived notion or my bias. So after years and years and years of realizing it's foolish to fight the tape or fight the market, I realize there's got to be a better way to do this because I saw so many people get knocked out of the business and yada yada, yada. So I'm like, all right, there's a better way to do this. And it's aligning yourself with that great American tailwind. And then looking at the areas of the market that are leading and ask yourself, if the market just had a big huge run or the stock had a huge run, is this a good time to buy it? Probably not. Because most of the

likely, again, playing the odds, the probability, it's going to pull back. If I buy it here, and it has, it just had, let's just say, hypothetically, it goes up 30%, where am I going to exit if I'm wrong? If it pulls back 9 or 10%, that'd be perfectly normal. But I don't want to have a 10% loss. We just talked about the negative math, right? The, the, you're down 50%, you need 100% gain to get back to even. You're down 10, you need 11% gain to get back to even. As those losses grow, The subsequent gains required to get back to even, not make money, just get back to even, grow considerably. It's not linear. It's exponential.

I call it negative math. So we spoke about that earlier. So when you armed with that knowledge, getting in after a big run up, probability-wise, most likely, it's not going to keep going, it's going to pull back. So being patient and waiting for the inevitable pullbacks because just about everything under the side, pulls back, gives you a higher risk reward ratio for that trade. And I think in trades, it's funny, there's a lot of different ways to look at it, but it's okay, everything, so to speak, is a trade. I want to cross the street. If I look both ways, I don't see a bus coming. It's safe. There's no cars. I'm going to cross the street. Now, could I trip and fall? Could a car come speeding

around the corner that I don't see? Could some other random event occur? Absolutely. Absolutely. But I can't live life and fear. I'm going to take that trade and cross the street. As long as I've done my due diligence and I've looked both ways before I cross. I'm going to cross that street. Airplane. Could an airplane fall out of the sky? Of course. But what are the probabilities of that happening? Extremely low. I'll take that trade and jump on a plane if I need to go somewhere. So on and so forth. So think in trades. What does that mean? There's an element of risk and there's an element of reward. with just about every decision we make. What should I do with my time today? Watch Netflix and chill, like they say, or go read a book. God forbid, right? So, joking. So understand there's an opportunity cost there.

Risk, reward. You might not see it, but it's there. So part of making better decisions is understanding that dynamic and understanding it very well. Why? Because that allows us to level up and make smarter decisions. As you make smarter decisions, what happens? Invariably, your outcomes improve all throughout life, not just in the market. What does that mean? What does it lead to? Leads to a happier, better, more fulfilled, more successful life. Why? Because take two random people. One makes lousy decisions, doesn't think about in depth. The other one makes

intelligent decisions based on probabilities and so on and so forth. Who's going to have a better outcome? Over 100 decisions, a thousand decisions. The one who takes a time and makes a smarter decision. That's the point of all of this. It's to take your time. Be patient. Understand those probabilities.

Stack the odds of success in your favor. Learn from history so we don't repeat it. All right. Up next, where does this time go? This is the one only investors' edge. We've got a lot more to discuss. Thank you very much for being here. I'm Adam Sarnan, and this is the one-n-law investment. Hello, hello. I'm Malcolm Gladwell, host of Smart Talks with IBM. I recently spoke with IBM's new director of research, Jake Embatta. We discussed his vision for the future of quantum computing. At IBM research, what we always do is answer what is the future of

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One, two, ready, go. Action! And welcome once again to Investor's Edge. I'm Adam Sarhan, as always. I want to thank you very much for being here. So if you just joined us or missed any part of the show, you can go to GaryK.com, listen live or archive, and rewind, fast forward.

I know I cover a lot of ground, but I've got a very short amount of time, and I try my best to give you as much value as possible. Pack it with as much valuable information as possible. That said, next, what I wanted to share with you, or more just timeless lessons. I'm all about just learning, right? You know, Tony Robbins is a great line. He goes, success leaves clues. He also has a good knowledge.

He says, get out of your head or you're dead. So for me, it's all about, okay, success leaves clues. How can we learn from some of the greatest traders in history? What do they do differently? How do they think? Really, there's two components. How do you think? And then what's the execution?

What do you actually do? Anyone can have a great idea, but if you don't take action, nothing's going to happen. An idea by itself doesn't really do much. It's good to have an idea. Don't get me wrong. But having the action there behind it, the willingness, the tenacity, the drive, that's really, really, really critical. So in addition to thinking in risk and thinking in trades, because everything boils down to risk

and reward. in my mind's eye at least, or just about everything. The next question becomes, is how do you make smarter decisions? When you're in a situation where the market is unknown, you have to be okay with understanding the way that the decisions are made, meaning there's something called outcome bias. If you make a decision, the right decision, but the outcome is not favorable, but the input, the decision with the information you had at the time was right.

And if you do it 100 times, overwhelming majority of times it's going to give you the right outcome, that was the right decision to make. Even though that one-off or the two-off or the few isolated examples didn't give you the outcome you wanted, that's quote-unquote okay. Why? Because over enough times, 100 trades, 200 trades, 1,000 trades, 10 years of trades, if you have a good process and you follow your process, risk, reward, entries, exits, buying at the right time, so on and so forth, it'll, the winners will be larger than the losers. Net, net, after everything, you'll walk out ahead, assuming that you've done, you know, played your card right, so to speak.

And you have the ability to follow that rule or those rules that you've created for yourself with that structure, those guidelines. So part of thinking smarter is understanding how the mind works. There's something called cognitive biases. We all have them. If you have a mind, you have biases. Okay, there's lots of biases that impact our decisions. There's a recency bias. People tend to look at information that happened more recent and put more weight on it. We think we remember a lot, but people, humans, tend to forget most things, most information.

The brain just can't process all of the data that it's out there, just can't. So we just get rid of the information that we deem to be not important or not critical. If you want to, don't ask my wife because I ask her a lot of times, same question over and over again, and that's my reptile brain not working properly because the information coming out of her mouth should be extremely important, but for some reason, it's just I need to ask that question multiple times. What are we doing this weekend or, you know, kids or whatever the plans are. It's like, I told you before, okay, I'll get off that tangent.

So go back to the cognitive biases. It's really important to master thyself because ultimately the competition isn't against some unknown big institution. You get lost in the sauce like my friend, Moshe, talks about. It's against your former self. Yes, you're competing against the other ones as well. I get that. But we can't control what they're doing. We can control our own actions. We can't control our own temperament, our own behavior, our own thoughts, our planning. Do we trade impulsively? Do we have a plan and then trade the plan? Are we able to get out of our own ways? Do we do post-analysis?

Post-analysis is extremely powerful. Take the time to look at your trades, separate them from two columns, winners and losers and say, okay, these, what can I learn from here? What patterns? Remember, people are creatures of habit and patterns, pattern recognition. What habits serve me? What habits don't serve me? Maybe I look at the market too much during the day. Maybe I don't look at it enough, so on and so forth.

But really master thyself because you're the character that you can control. Think it was like a movie or a video game or whatever you want to process it to an analogize it and just help conceptualize the concepts that I'm sharing with you. And by the way, all this is available in my book. You can go on Amazon. It was ranked number one for two straight months. Thank you all for the kind reviews and the positive feedback. The book is called psychological analysis.

The whole idea of the book is that fundamental technical analysis are not enough to beat the market. If they were, everybody would own a few islands in the Caribbean. So I come up with this concept called psychological analysis, really mastering thyself. I'm sharing some of these principles with you, some of the things that I've learned along the way. When you can really master yourself and know, hey, here are my strengths, here are my weaknesses. Do more of what's working. And then find other people that have complementary skills. Their weaknesses are your strength and vice versa.

I'm very good at big picture stuff. I'm very bad at minute details. So, okay, thankfully for me, my wife is very good at details. She's also good a big picture, but it's another story. I'm not good at details. So I'm not going to sit there and look at a minute chart or try to do detail-oriented work. It's not going to serve me. So I'll find my lane, weekly charts work best for me.

Monthly's too far out and the drawdowns are too big. Dailys are good. I use them too, but I really try to stay in that weekly time frame as much as humanly possible. That's what works for me. I know other people that use other timeframes. Again, in the book,

there's an infinite number of ways to make money in the market. Your job is to find one that works for you and likewise for me and everybody else. Because when you find one that works for you, you can stick with it and it works. Otherwise, you do what's called, well, there's lots of names

for it, but basically, you jump from one shiny object to another shiny object to another shiny object. Style drift is what they call it on Wall Street, where it's like, oh, I'm a fundamental analysis today. Tomorrow will be a technical guide, next day, I'll be a quantitative guide, the next day, you know, so on and so forth. And you get lost in the sauce. Thanks again, Moshe for that word. We want to stay focused. Being focused is a superpower. So step back, put your trades in context, objectively analyze yourself, and find your weaknesses, find your strengths, and see what you can do to mitigate those weaknesses, you know, do your best to create guardrails. So you don't keep repeating them.

Because if not, you'll repeat them again tomorrow, again the next day, so on and so forth. So in closing, thank you very much for being here. This has been absolutely a pleasure. And thank you, everybody, for the love and feedback to Gary and his back getting better. And Gary, wish you a speedy, speedy recovery. And we're praying for you. And as far as the market, it's just pullback watch. Watch the pullbacks.

Let the market digest. Give it some time. And if it just shoots higher, it shoots higher. That's okay. That's what bull markets do. They kind of surprise you a little bit. And surprises in bull markets happen in the upside. Keep that in mind as well.

But overall, watch the financials. See what happens there. We've talked about the other areas of the market. And we've got the tech stocks that continue to lead with this AI engine driving the ship. If you missed any part of the show or you want to get in touch with Gary, you can go to GaryK.com or if you want his premium service, you go to Convictionleaders.com.

Thank you all for being here. Hug the children like Gary says. I'll speak to you again soon. This has been Investors' Edge with Gary Cult Bomb on BizTalk. To listen to past episodes or to get in contact with Gary, go to GaryK.com.

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