Investor's Edge with Gary Kaltbaum - Earnings Season & Some Timeless Lessons [10.18.2024]

Episode Date: October 18, 2024

https://garykaltbaum.com/

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Today is Friday, October 18, 2024. We've got a great show for you tonight. I want to thank you very much for being here. Before we dive into the show, as you know, this is a show, about you and your money. All of the fun points in between. Just a quick reminder if you don't get the show in your city, you can go to GaryK.com. You can listen live, archive. You can rewind it, fast forward it, listen to it on any device you want as many times as you want over and over again, all for free on GaryK.com. We are live Monday through Friday, 6 to 7 p.m. Eastern. Also at GaryK.com, you can follow Gary on X, formerly known as Twitter, by just pressing the button. You can subscribe to Gary's morning notes sent directly to your inbox for free.

You can email Gary, ask about his money management services. Or if you want more, you want to join his Conviction Leaders Premium Service. That's Conviction Leaders.com. And that's where he shares thoughts about the market intraday. Several updates throughout the day. It gives nightly and weekend, actually, every single day and over the weekend, in-depth market webcasts, where he shows charts, shows you what he's seeing, stocks, sectors, and the whole nine yards. So that's all available at Conviction.

leaders.com. So a few thoughts. I'm going to share notes from Gary to make sure I get that right at the top of the show covered. And then we'll dive into a lot more. So let's see here. Gary says he wouldn't be surprised to see if Bitcoin breaks out of a seven-month range pretty soon. Why? Because Microstrategies is doing really well and it's a high octane.

It's a proxy for Bitcoin. If you look at micro strategies, She's the CEO over there. Ticker symbol is MSTR. He's a big fan of Bitcoin. He leveraged the balance sheet, borrowed a lot of money, bought a lot of Bitcoin. And to his credit, he's doing very, very well. Stock went from 43 back in January to over 200 now.

And it's at a new all-time high. If you look on a monthly chart, you can see a nice long base and it's breaking out of that base now. So that's his thoughts on Gary's thoughts on Bitcoin and micro strategy specifically. but be very clear it's not for the meek and mild. It's a high octane, even Bitcoin. It's a lot of volatility, but that being said, probably more upside in crypto or specifically in Bitcoin or other Bitcoin related names, depending on how things unfold.

The big names like Apple, Navidia, are near big breakout points, near pivot points. Tease a little bit, but they haven't broken out just yet. You have a situation here where Navidia is very, very close. very, very close. Even if they break out the edge above resistance, I mean, you're right there, more or less. So that's another thing to keep in mind. Gold, another high, GLD. If you look at GLD, another high. Silver, SLVs trying to catch up here. Had a nice breakout today on volume. That's SLV. Silver breaking out of a long base. So gold and silver, areas of strength, which is Gary, Gary's been on like White on Rice. Stocks, Netflix, explosive gap.

I mean, it's a big breakaway gap today, up over 10% on Monster Volume throughout the day. I mean, it was up more depending on where, you know, to close, all that fun stuff. But a big, big gap up today in Netflix to an all-time high. And ISRG, same situation. Big gap up to, I believe, an all-time high as well. Let me double check. Yeah, to an all-time high. Sorry, Netflix is not an all-time high just yet, to clarify.

Netflix's all-time high was in 2021 at 690. Well, hold on a second here. 791. What's wrong with this thing? Something is wrong. No, you know what? It is an all-time high. I am correct.

So, yeah, Netflix, 799 was the old high in 21. You're at 761. So Netflix, all-time high breakout. I like all-time high breakouts. I like 52-week-high breakouts. They're very good. Volume shows up behind it, which is what Netflix is doing today, even better. Okay.

On the other side, worst areas pretty much is oil. Oil prices are coming down, which is actually good news for the consumer. Why? Because think of energy prices. They serve as an indirect tax on both consumers and businesses. The next three weeks, we have a lot of earnings coming out a lot. But so far, the reactions have been pretty good. J.P. Morgan was up 4% on earnings.

And that was a drop on $10 number on that. So you had J.P. Morgan came out. earnings were down year over year, down 4%. But J.P. Morgan's rallied. Wells Fargo. Look at that one when you have a chance. WFC was up nicely on earnings. Earnings were up 2% year over year and a big base breakout this week in WFC. So the reaction to the earnings, folks, is very, very important. In fact, I would argue that the reaction is more important than the numbers themselves because the numbers by definition, and I cover this in my book and psychological analysis, It's a rear view mirror phenomenon. The numbers tell you what happened in the past. The market, by definition, is a forward-looking mechanism. It looks to the right of the chart where the numbers, economic numbers, earnings numbers, whatever the case is, tells you what happened in the past. So sometimes people get confused, like I did for many, many years, not understanding that.

So when you understand, hey, the market is looking forward, oh, okay, things make sense. So trying to, let's see, final note from Gary, trying to finally bounce, but very unsure from here. though we know the government's going to continue pounding away to help things out. All right. So those are Gary's thoughts. I want to make sure I covered everything. We spoke about NFs, Netflix and ISRG. Good.

All right. Now, on to the market. So we're midway through October, end of the week, today's Friday. I always like doing a week in review and just do a pulse at the end of the week and look at weekly charts and say, hey, what's going on? You know, what happened this week, what happened in the last few weeks. And what we can see, it's pretty strong action. For the S&P 500, you look at the SPY, you've had one down week since August 9th, the beginning of August.

Literally every single other week has been up. That folks is very, very impressive. Why? Because it tells you what the big money is doing. They're accumulating. They're buying stocks. So when you're in a situation where you've got every chance in the world to fall, but instead stocks rally, that's a bullish event. and all-time highs, right, for most of the indices, not all of them, but most of them.

So when you pause and you put things in perspective, you ask yourself, oh, okay, hold on a second. We've had a big run. You know, we had a little pullback in August. Immediately market rebounds and goes right to new highs if you look at the S&P 500. Short term, in the near term now, we're a little extended. I'm not going to tell you any other way about it. My job is just to show you, you know, tell you what I see. And we're in that extended phase.

So I wouldn't be surprised at all to see the market pull back a little bit. But it doesn't have to. So the jobs report's now behind us. Inflation for this month is now behind us. I had a reporter from Reuters called me up this morning. He said, Adam, what are you looking at next week? Earnings. Earnings, earnings, earnings.

Not just earnings, but the reaction to the new. So there's three things I look for during earning season. Number one, the numbers. Number two, the numbers compared to the same period last year. I want to look at Q1 versus Q1, not Q4 versus Q1, Q3 versus Q3, Q2 versus Q2, so on and so forth. Because when the quarter just ended, you know, the third quarter just ended, so now we're getting the numbers, we're in the fourth quarter now, I don't want to compare Compare the fourth quarter to the third quarter, second quarter to third quarter. It's not, it's not apples to apples. You know, retail stocks do very well at the end of the year. Okay. So I'm not going to compare that to Q1. But year over year. So Q324 compared to Q323. What were the numbers? And then did we have growth? All things being equal, growth is good. I'm a growth investor. I like growth stocks. Very simple. company that doesn't grow their earnings, but has a good reaction to earnings, which is another

thing I look for, the reaction, all right, that's another thing. So you put the pieces together of a puzzle. And there's nothing 100% perfect 100% of the time, at least I don't know of any. If there are, please let me know. But it's the preponderance of evidence, the weight of the evidence. It's stacking Ws like my friend Moshe says. You want to stack Ws. It's a, it's a, all this is about probabilities.

If you see a company that can sequentially grow earnings by double digits, revenues up double digits, quarter after quarter, year after year, and then it sets up nicely and it breaks out on volume, it's probably going higher to an all-time high like Netflix, for example. Netflix doesn't have the big double-dibbid growth anymore like it had before, but for years, what was Netflix doing? Reporting very strong earnings. they would beat estimates.

They would at times hit new highs just right now, gaping up to a new high. And like Gary says, it's not Aunt Mary and Uncle Bob doing the buying. That's the big institutions. So, all right, if they're in there buying and aggressively buying, I want to buy two.

It's that simple. I mean, sometimes it's just, you don't have to go too deep or overthink this. In fact, keeping it simple is a superpower. It's really, really powerful when you keep things simple. So that's where I look for for earning season. And the other thing I look for for earning season is what the actual numbers are compared to estimates.

You know, if the analysts are expecting a dollar, company reports $2, great. There's a company beaten raise, which is also excellent. I like to see that. Several beaten raised quarters in a row. They don't have to. You know, for a long time, Apple would report. report earnings and lower guidance, and then smash your estimates and then do the same thing. Report strong numbers, lower guidance, because they wanted the curb expectations.

They wanted to lower the streets estimate so they could beat estimates again. So keep that in mind as well, the expectation game. Up next, we've got a lot more to cover. I'm Adam Sarhan. This is the one and only Investor's Edge. Hi, I'm Gary Kalpom, 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 discretion

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Hey, this promise you. is to be fun. Investors Edge. The last bastion of quality programming. With Gary Coltbaum. It doesn't get better than this. And welcome once again to Investors Edge. In case you're just joining us or missed any part of the show, you can go to GaryK.com.

Rewind, fast forward. Listen, on demand, 24-7, all for free on any device you want. So we spoke about earnings. We spoke about some stocks gaping up on earnings. He spoke about Gary's thoughts about the market. few other things I want to cover. Earnings that are, well, let me back up even more. Let's separate.

What helped me out of the lot was when I learned that you can have a good company and a lousy stock, a lousy stock and a good company, meaning the company, one thing that's completely separate, a complete different animal than the actual stock. Could there be a chance, you know, times where companies lose money, but the stock goes up? Yeah. could you see a stock where a company makes a lot of money but the stock or sorry the company makes a lot of money but the stock goes down yes two total different separate animals they're related very closely but not always with a hundred percent correlation so when you as we make our way through earnings season folks in the next several weeks we're going to have tons and tons and tons of earnings there's a few things to keep in mind number one it's the reaction like we discussed, but how are the numbers received?

Somebody might say something. So look, I learned this my wife. I might say A. She doesn't hear B, C, D, E, Elementop, or QRX or TUV. She hears the number seven or 10, not even a letter. So the way something is said, so company reports earnings. The CEO goes on or the team management and they have a conference call, they do this, they do that, earnings call, but the stock gets slammed or the other way around.

Stock soars. It's the reaction. It's the way the market receives the action. Remember earlier I spoke about the whole idea of expectations. You know, Apple was notorious for this for many, many years. Reports strong earnings lowers guidance. What? Stock wouldn't even go down for a few days.

And then a week or two, month or two later, boom, new highs. So it's the reaction to the news that I put as the most important thing during earnings season. Because again, you can have a strong, like JP Morgan. Ernie's could be down year over year or any stock. I'll call it LMNOP. And then what happens? Stocks up. Now there's two other things that let's go a little deeper.

There's two other things I look at. The reaction to the news is great. But new highs. Are we at a 52 week high? or we had a new all-time high. Big difference. You can have a stock that made a high back in 2021 or made a high 10 years ago or whenever

and it goes sideways for a few years. Like Zoom, for example. Look at ZM. Zoom was one of those COVID stocks had a huge rally during COVID. You know, the world shut down. Everyone's going to go on Zoom meetings. Okay, great.

Stock had a huge move up. But then huge crash or huge collapse. all the way back down. Okay. Now it's been years. The stock's basing, setting up here, hitting 52 week highs. So 52 weeks is just one year, the last year. But it's nowhere near it's all-time high. Big difference there. So if you want, take a look at Zoom, ZM, you can go on a weekly chart, you can look at a monthly chart, and you can see it. And what's the idea there? Is that it's a Okay, there's all those people that own it at higher prices.

That's called overhead resistance or overhead supply. The idea that when you have an all-time high is that nobody owns it at higher prices. So basically, you're wide open for the stock to go as high as it wants because there's nobody out there selling it. There's no selling pressure above the market. Johnson's all-time high territory goes straight up and work and they don't roll over and fail. You know, lots of breakouts fail. It happens. And that's why risk management becomes.

important. I mean, so important. Let me underline that again. Extremely, movie, moly, importante, however you say it in Spanish or in any other language. Right? It's risk management, defense first. I told the story before, but I'll tell it again. I was interviewing a big money manager one time on my Smart Money Circle show. And the guy said, Adam, we're not buying and selling stocks. He goes, Adam, you're not buying something. I said, what am I doing? He goes, you're buying and selling risk. I thought that was brilliant. I think this guy managed like three or four billion. I can't remember.

And I was like, wow, that is so smart. Because we're all trading, we're risking our money. We buy something stock with the potential for a reward that hopefully is greater than the risk. So when you become really focused on risk management, and this is a great trait Gary has, it's really, really, really excellent at it, excellent. is keep those losses small. I don't think I've seen Gary have a, you know, participating in a bear mark. I've watched him, known him since the 90s, dot com crash, 08 crash, every other bare market sense or pullback since, whether it's 2021 or it's 2022 or it's 2018, whatever it is.

Corrections, pull mark, all the market madness we've seen over the last 30, 25, 30 years. I don't think one time he's just been in a bare market. market, but oops, it doesn't happen. So that's a superpower. The ability to manage risk and keep those losses small. Look, you have a stock and this is a common question. Hey, Adam, what do I do if I own a stock and it's going to report earnings soon? Well, ideally, you have a cushion, meaning let's say you bought it at 100. It's now at 120 or 130. So you have a cushion or 150 or 200. And if you have a big enough cushion over 10% or so,

I would hold it. If I have a 2% cushion or I'm flat or I'm down a little bit, I don't really take the risk of holding it. I'd rather pay up and buy it if it reacts well to earnings. Why? Because what if it gaps down on me? Like stocks do. They gap up on earnings and they gap down on earnings.

Sometimes they do nothing. But I don't want to be caught with the big loss. I think one of the most important lessons that I've learned for myself that I want to share, whoever wants to listen by all means, it just keeps those losses as small as possible. And by the way, it's not just in the market. It's in life. I'll tell you a story. A friend of mine.

I've known him since my daughter was in first grade. So my daughter and his daughter are friends. He's a doctor, smart guy. And he went to a different school. And we've been friends for years. he put his daughter in a school and she's just really miserable. It's just not a good environment for that girl.

So I saw him last week and actually two weeks ago and anyway we were talking blah blah blah and he's like yeah we're thinking of pulling out, Edith, the girl at the end of the year. End of the year, I asked him, I said, why? He's like, well in the school year. I said if you're not happy, pull her out now.

Why are you going to wait another four, five, six, seven months or, you know, another half of the year plus some, three quarters of the year. Why do that? Keep those losses small. I said, look at it like a trade. Trade's not working. Why stay in it for another year? What's going to change? If the girl's miserable, just move her to a different school, to a better one. Hopefully the new environments be better and let her enjoy the rest of the school year. So hope that makes sense. Up next, we've got a lot more to cover. I'm Adam Sarhan. This is the one and only investors' age. Ever feel like your bedroom's running out of space?

Here's the good news. You don't have to sell your favorite things to make space. With IKEA bedroom storage solutions, dressers, wardrobes, full closet systems, even storage boxes, you can hold onto it all. Your vintage banties? Keep them. Those limited edition sneakers? They stay. And yes, there's room for your childhood teddy bear too. Need to organize a walking closet? The Pax wardrobe lets you custom. my shelves, rails, and compartments, so every item has a home. Too many clothes and not enough drawers. The Stork Lintas six-door dresser is perfect for denim, sweaters, and everyday essentials. And if the kids are taking over your space, TroFest storage boxes make sorting toys and

art supplies easy and clean up fun. From primary suites to playrooms, IKEA has storage options that adapt to your life and help you keep what matters most. Don't sell anything you love. Store it instead. Shop IKEA bedroom storage today. at IKEA.us slash bedroom storage. Success starts with your drive, and American Public University is here to fuel it. With affordable tuition and over 200 flexible online programs,

APU helps you gain the skills and confidence to move forward. Whether you're changing careers, starting fresh, or pursuing a lifelong passion, our programs are designed for people who never stop. You bring the fire, APU will fuel the journey. Learn more at appu. One sweet, melty bite of a Hershey's bar, and suddenly I'm right back sitting on the front porch with my grandmother on a slow summer afternoon. She doesn't say much, just breaks the bar in half and hands me a piece.

I open my mouth to say whatever a nine-year-old wants to say. And she replies with a low, listen. So we sat there, listening. That was the first time I learned that quiet can feel full. Hershey's. It's your happy place. You'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. And for Gary Kay, who's out today. In case you're just joining us, or missed any part of the show, you can go to GaryK. or wine, fast forward, listen at your convenience, anytime you want, all for free on garyk.com on any device you want. All right. So we spoke about risk.

We spoke about earnings. Spoke about what happened today in the market, some breakaway gaps, what to do if you own a stock as we go into the thick of earning season over the next few weeks. If you have a cushion, if you don't have a cushion, of course, do whatever works for you. There's no investment advice being given. This is all general information, educational purposes only, et cetera, et cetera, et cetera. But just really simple. for me it's all about risk just like my friend's daughter with school why keep her in the school year

so let's take it a step further trades are like decisions decisions are like trades there's an element of risk element of reward should I cross the street if I look both ways and there's no cars sure cross the street if you want to there's the rewards getting the ball from the other side of the street or going to your friend's house on the other side of the street great if it's a busy street with lots of cars flying up and down across the highway, yeah, no thanks. The risk is too great. So that helps me a lot

with my intuition. It helps me a lot with my decision-making process. And it helps me a lot to simplify complicated things in life, not just buying and selling stocks. By the way, it helps me do that also. When you take away everything, I mean, in high,

school. They teach you, teach our kids what? Simplify the fractions. When you take away everything, like, for example, what's easier to know? Half, like one over two as a fraction? Or, I don't know. You know, let's go 17 over 34. Whatever it is, right? 40 over 80. You know, one half is easier than any other. I can go one-third and 33, you know, you can complicate things eight ways of Sunday. But when you keep it simple, everybody knows half. Everybody knows 50%. That's simple, right? Here, 1-504, 50-04 over 752, or 1 over 2. They equal the same exact thing. They're both half. 752 times 2 is 1504. Or one-half. When I speak, what do you want me to say?

752 over 1540, blah, blah, blah, blah, blah, blah, or half? You want half. Everybody wants simple. I've studied the most successful people in the world. It's one of my passions. I love to learn. I know I don't know, so I want to learn. Great.

You know, Aristotle taught us way back when I stumbled across it. I said, okay, I don't know how to do this. Let me learn. and genius and simplicity are the same sides of the coin. I mean, there's a very thin line. Look at anyone who's a genius. They have an unbelievable ability to simplify things. Steve Jobs, an iPhone, iPad.

A baby, walk around the mall, you see kids in strollers on the iPad, can use an iPad. Literally, that simple. You push a button. Elon Musk with Tesla. He took out the ignition on the car. What's the point of an ignition? He said. You get in the car, you're going to drive it.

So take it out. What? It's unbelievable. You get a Tesla. Your phone is the key. There's no point of a key anymore. But let's just say you have an older one with the key. Great.

You get in. The car's on. Unbelievably brilliant. Brilliant. Simple. So whenever I'm faced with any kind of a decision, here, I got another story for you. Tonight I got invited to go see the Orlando Magic Game. A friend of mine's got box a box and he's like, hey, come, bring your kids, blah, blah, have a big thing.

Great. So what time? He goes five o'clock. I'll pick you up. I said, great. This was yesterday. He said, great. Tomorrow morning, I happen to be speaking at the Money Show in Orlando.

Okay, great. 8 a.m. So I think of myself, I'm okay, game starts at five, maybe he'll pick me up five, starts at six, be done at eight, be home at nine, ten, something like that, something reasonable. Turns out with the box, you get dinner, you get the whole, you know, the schmooze and the blah, blah, blah, and this, that and the other thing. The game doesn't start until seven. That means it's not going to be over for two, three hours of what, nine, ten, ten o'clock.

I won't be back until 11. I've got to be speaking to a group of people tomorrow morning. It's got to be there at 8 a.m. that means I'm out the door at seven I'm up at six or five 30 I don't want to come home at 11 o'clock at night 12 o'clock at night and this guy's got box it we can go anytime so I initially said yes to him because I thought the game was starting earlier then this morning it dawned I mean thankfully it did hey what time's the game start I checked it out in Google and seven o'clock I said no thanks texted the guy said thank you very much he was on a flight and he called me when he landed

and I said, I said, I got to speak tomorrow, blah, blah, blah, blah. Okay, great, no problem. We'll do it again next weekend or the weekend after. I said, great, thanks very much and appreciate it. And that was that. Simple. When the facts change, I'm going to change. I buy a stock, it goes up, great.

It stops going up. Get out of the way. It's risk or reward. If I simplify everything as possible, there's an entry price for the stock. It doesn't matter the company, doesn't matter the, any what shows up on the statement the price and I'm just looking at not saying the company doesn't matter not saying earnings don't matter I'm not saying any of that stuff I'm just saying if I were to

simplify this business of investing to the simplest possible thing what is the one thing that really matters it's your price that determines everything your entry price your exit price everything else is noise so your entry price versus the market determines whether or not you're up or down. You bought it 100, it's now at 120. Okay, you're up 20%. Simple. Literally, the name of the stock doesn't matter in that scenario. All the other data points that we look at, we analyze and we do this from crunch the numbers, all that. Super important stuff. But the most important is price. So from a risk standpoint, that when you understand risk and you understand reward and you really look at it in that lens, and you filter out all the noise.

All of a sudden you get this simplicity, you get this level of clarity. I'm not saying you just click and become a genius. I'm not saying to go look at the price and nothing else. No. All I'm just saying is that what's a single variable that determines your results in the market? It's a price.

If you focus on risk management, which is something that most people don't really like to do. Most people go to the market, they pull out a calculator, they look at the price of stock. If I buy a thousand shares at $1,000 and it goes to $2, I just made a thousand dollars or a million dollars into the stock and it goes up this much. I made, you know, enough to buy a house.

Whatever it is. They look at the reward side of it. They grab the calculator and they just start punching away. Very rarely do I meet somebody, especially newbies, and say, hey, here's the wrist side of it. Let me just focus like a hawk on the wrist side. Because the reward side of kind of take care of itself over time. But these professionals, the ones that do this and succeed. at this and are very, very good, not one week or one month or one year that have multi-decade

track records. They're excellent, excellent risk managers. And I want you to be one as well. Because once I understood that risk is so important and to look at it and to really be friends with it and love it and really, you know, make it my friend, my world changed. because then I got clarity. And that simplicity of like, oh, get in the car, it's going to go. So you don't have to push a button to turn the key.

Oh, okay, I get that. Okay. Take out the ignition button. That's genius. When you're done, you put the car in park and it just turns off when the key is no longer near the car. Great. Risk management. And again, I've studied the successful people.

I've also studied the big failures. The one thing all the big failures have in common, the ones that get not, down to the business that the accounts that blow up. I've blown up accounts early on in my day. 2008, the investment banking model got destroyed. Lehman brothers, you know, Morgan Stanley, Goldman Sacks, Merrill Lynch, and Bear Stearns were the five biggest investment banks. Lehman, Bear, and Merrill all gobbled up or failed and, you know, was sold off or bought. And Goldman and Morgan were left standing, but they had to change the commercial banks because of one reason. they didn't respect risk.

You can go back and look at the 2000s. You can go back 100 years ago in the roaring 20s and the big depression in the crash of 1929 into the 30s. It's risk. So, hope this helps. And again, you can apply it any way you want to any decision in life, anywhere you want to go.

It's risk versus reward. Real simple. Up next, we've got a lot more to cover. I'm Adam Sarhan. This is the one and only investor's edge. Ever feel like your bedroom's running out of space? Here's the good news. You don't have to sell your favorite things to make space. With IKEA bedroom storage solutions, dressers, wardrobes, full closet systems, even storage boxes.

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grandmother on a slow summer afternoon. She doesn't say much, just breaks the bar in half and hands me a piece. I open my mouth to say whatever a nine-year-old wants to say. And she replies with a low listen. So we sat there.

Listening. That was the first time I learned that quiet can feel full. Hershey's. It's your happy place. You're listening to What are we waiting for? Well, what are you waiting for? One, two, ready, go. Inversters Edge with Gary Culpa.

And welcome once again to Investors Edge. I'm Adam Sarhan, in for Gary Kay, who's out today. So we spend a lot of time covering lots of really important things in the market. A few other things I want to cover in the last few minutes while we have left together today are different types of stocks. There's two kinds. There's leading stocks. Stocks that by definition are leading the market. They exhibit strong relative strength.

And then there's everything else. So the lagging stocks. So there's a few things I look at. Number one, what's the goal of the stock? How do you win? You make money when the stock goes up. Great. What happens when the stock goes down?

If you're long, you lose money. So all right. And Newton taught us an object in motion does what? stays in motion. So ideally, we want to buy stocks that not just limp around and go up 1% a year and that's it. We want to buy the strongest of the strong, the cream de la creme. We want the fastest horses on the track. We want the stocks that are going to go up the most. Why not? Right? Speaking with a lady yesterday and she goes, everybody's happy when they win, Adam, and everyone's unhappy when they lose. They go, yeah, you're right. It's human nature. Same thing with

investing. You want to buy the strongest of the strong. So I'm looking for the leading stocks. That's the strongest stocks in the market. And I want to rank them every single week. What's the strongest stock in the market right now, year to date, in 2024? And I don't mean the Vida or Apple, which, by the way, both those stocks are acting very, very strong and they're great. And they are leading stocks. They are some of the strongest stocks in the market.

They're big. They're liquid. They have great earnings, great revenue growth. you know, great products, they're expected to grow their earnings going forward, you know, so on and so forth. Just the strongest stocks in the market. And as you go through, and you can use filters if it's over $5 or under, you know, over $50 and does it have volume, does it not have volume?

There's lots of different ways to go through and sort out to see which stocks are the highest. But interestingly, and I don't know more. much about this, but ticker symbol, W-G-S. That's W is in water, G as and Gary, S-S-S-N-D-X Holdings, Gen G-E-N-E-D-X.com is the website. I don't own the stock. I have no position. I'm not affiliated with the company. They do lose money.

It's a biotech company. But the stock is up, I think it's like 2,000% this year. I'm not going to go buy it just because it's up. But what I want to do is I want to know the strongest stocks in the market. And I'm going to go through most of them. And I do that every week on Find Leadingstocks.com. And I share my thoughts. Why?

Because it's my own internal process. I go through and I scan the leaders. And I learned from Warren Buffett and Charlie Munger the art and the power of saying no. They have something. called the Circle of Competence. Meaning, Warren Buffett knows he's not a tech investor. He doesn't understand it.

He knows insurance companies very well. He understands that. He knows railroads very well. He understands that. He knows banks very well, understands and owns that. Coke, American Express, no problem. Back in the late 90s with dot-com boom, he didn't participate for the most part. And guess what?

He didn't get burned on the way down with the bust. He said, tech stocks, it's not my circle of competence. So no. There's thousands of stocks out there and ETS and currencies and crypto and futures and commodity. There's so many opportunities every single day. And the market's open. Tick, tick, tick, tick, tick, tick, down, tick, tick, up down, up down. You can go bonkers.

But really being able to filter out all the learning, mastering the art of saying no, folks, that's a superpower. That is so incredibly powerful, I can't even begin to tell you. The fact is in life, most things fail. Most things don't work. It's not a match. And that's okay. That's the beauty of life. Look at an apple tree. You have thousands of seeds. One seed becomes a new tree, maybe two seeds. And the rest of the seeds are dead. Bye-bye. And you have beautiful nature, beautiful forest, beautiful trees, and vegetation in life. goes on and on and on. Perfect. Why? Because asymmetric risk to reward. When the seed is wrong, nature's wrong, you lose one seed. No problem. Minus one. Could be 999 out of 1, that's okay. You're down 999. The one seed that works, you have a new tree that literally will make infinite number of new

seeds or thousands and thousands and thousands of new seeds. And then the same thing happens again. Most of those seeds fail, die, no problem. Another seed comes and bam. And so on and so forth. So if I can structure, if I can, you know, my investing in my trading where I can limit the losses, but let the winners run, it mirrors that phenomenon. And if I can focus on leading stocks and say no to the lagging ones, then all of a sudden I can increase the probability of being right because I'm looking at stocks that are already going up. not just blindly buying them because, oh, LMNOP is the strongest stock in the market this year. I got to own it.

No. It's a biotech that loses money. I have no interest in owning something like that right now. And it's also extended. It had a big move. But I want to know it. So I speak to investors all over, right? So I always ask the question, what's the strongest stock in the market?

And professionals, individuals, everybody has an idea. They always say, oh, Apple, Navidia, you know, whatever the stock de jure is. No. How do you plan to beat the business? market if you don't know the strong stocks in the market. So that's a simple question. But again, everything I do is intended by design to be super simple. So I can focus on things that really move the needle. And in this case, what moves the needle is leading stocks, setting up, following them, being patient, another superpower in this business. Being patient,

saying no is a superpower and being patient as a superpower and keeping your loss. so small. You know, respecting risk, superpower. Why? Because guess what? If you wait, you can be in a great stock, buy it at the wrong time after a big move up and then you buy it and has a normal pullback, you get stopped out and then an insult injury goes off without you. Happened to me so many times. No, thank you. Be patient. I want to watch those leaders and then look for breakouts and look for setups. It's all I do. Literally that's all I do, all day, every day. here's stocks breaking out right after the open here's stock setting up the breakout weekend report comes up here you go and that's it and then say no to everything else eliminate the distractions

folks if you can learn to eliminate your distractions it becomes a superpower yes I'll miss stocks that don't fit my criteria that's okay so I believe that's all the time we have for today I don't know where the time goes want to thank everybody for being here have a great weekend everybody. They believe Gary will be back on Monday. Hug your children. Say hi to your spouse. Enjoy your weekend. 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.

That's GaryK.com. Success starts with your drive. An American Public University is here to fuel it. With affordable tuition and over 200 flexible online programs, APU helps you gain the skills and confidence to move forward. Whether you're changing careers, starting fresh, or pursuing a lifelong passion, our programs are designed for people who never stop. You bring the fire, APU will fuel the journey.

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