Investor's Edge with Gary Kaltbaum - Week In Review [08.09.2024 w Adam Sarhan]

Episode Date: August 9, 2024

https://garykaltbaum.com/

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while supplies last, loyalty programs subject to terms and conditions. Visit the prodesk or Lose.com slash terms for more details. Subject to change. Investor's Edge with Gary Coltbaum. Straight talk about you and your money. Now from the BizTalk Studios, here is Gary Cultbaum. And welcome once again to Investors Edge. I'm Adam Sarhan, in for Gary Kay, who's out today.

Today is Friday, August 9th, 2024. We've got a great show for you tonight. As always, I want to thank you very much for being here. Before we dive into the show, just some headlines, some notes, if you will. As you know, this is a show about you and your money. the fun points in between. Just as a quick reminder, if you don't get this show in your city, you can go to GaryK.com, listen live or archive. 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 also email Gary, ask about his money management services, or if you want his premium service, his member-only website, you can click on Convictionleaders.com. There's a big banner, GaryK.com. you just click on it or go to convictionleaders.com, and you could take a free trial to get Gary's premium service. In it, he does daily webcasts, breaks down the market for you in real time, lets you know what he's seeing, what's on his radar, and a whole lot more leading stocks. Things are breaking down, get defensive.

He did a phenomenal job, which you know, listening to the show back in July, and really mid-July, just getting out of the way. And the second half of July and so far at the beginning of August, getting out of tech. I mean, absolutely fantastic job. On it, like, white on rice. That's the best thing I could say as a person who reads

everything that he puts out. And I've been listening to this show. Somebody asked me one time, how long have you listen to Gary? Since 1999. I wanted to learn about the market, and this was back when AM radio was what we had. There was no internet. Well, the internet was just starting.

There was no Google. The IPO for Google was 2004. Google had started, but there was no Facebook at the time. There was no X or Twitter. There was no Instagram. There was none of this stuff. So it was good old-fashioned radio and Gary was on and I've been plugged in, tuned in every since. And it just hats off. I mean, phenomenal, phenomenal job. As you all know since you listen. All right. Let's few things. Few notes from Gary that I want to share with you because that is my job. And then after that, we'll dive in and go into a lot of a lot of fun things with the market. So first off, the main. The main.

theme, the huge spike in the VIX we saw combined with defensive day in the NASDAQ off the 200-day moving average on Monday in the NASDAQ 100. We think, this is Gary saying, we think there's a near-term low. We have yet to see oomph. No, that's not a technical term. That's his word saying that you want to see a lot more power behind the rally. You've been rallying nicely. Thursday was a big update, but volume was light. And oomph is just big, heavy up days on just monstrous. volume. If we take out the lows of this week, which is Monday, there's a very good chance we're heading into a full-blown bare market. Straight from Gary, I'm reading verbatim. But we're not there yet. The semis are in a bare market because they're below 20% from an all-time high. And the NASDAQ had a

decent day. It's just a continuation of the bounce we saw from Monday and let's hope it continues. those are the big headlines. I like to get any messages that Gary wants to share with you out right at the top of the show so we can have some fun and make sure I do my job and relay the message. So a few thoughts for you. If you look on a weekly chart, it tells a different story than a daily chart. And I'm a big fan of using multiple timeframes when I make investment decisions. Why?

because the more time frames that align, the better. I don't know the magic behind it, but I can tell you from a practical standpoint of trading since the 90s. I started trading in the mid-90s, by the way, but I came across Gary in 99. There's an extremely powerful just alignment for lack of a better word.

when you have trades that look good on multiple timeframes, daily, weeklies, monthlies, yearly, so on and so forth. So the more timeframes that align, the better. It's also part of trend following, right? The idea is to follow trends. And trends come in all different shapes and sizes, just like patterns and all, you know, pretty much most things in life. But what you really want to do is you want to go out there and you want to ask yourself,

where are the big trends? Am I aligned with the big trends? trends. As you guys know, or gals know that listen to me is I'm a very big fan, especially for the limited time I come on the show, of sharing timeless advice with you. Things that I've learned over the decades that I'd like to share with you that I wish I would have known when I got started. And that's where I take most of the show because I don't, I'm not on here every day like Gary is in this brief amount of time I am on here. I like to share things actionable ideas, nuggets of wisdom that you can use, excuse me, to read.

really get ahead. And the show's called Investor's Edge. I want to help you get an edge, build an edge. So part of the business of investing, it's understanding time, right? Think of it just if you're explaining this to a five-year-old. How do you make money in the market? Well, you buy something, you want it to go up. Real simple. If you short it, you want it to go down. That's how you make money in those two scenarios. I mean, that's really all that you can do is you go long, you buy something, long as Wall Street parlance for buying, or you go short, you sell it, and then you buy it back later, lower price. I mean, those are the two ways for you to really make money in just a basic stock. There's other, there's options, strategies, and

strangles and straddles, I'm not going to go into any of that. Just buying and selling stocks. Real simple. Okay, great. So when you buy something, there's an expression in Wall Street, an old adage that says the trend is your friend, right? You want to make the trend your friend. when you buy something, you want it to go up. I'm going to be speaking about buying, since that's what most people are doing, and I want to share that with you. So there's only three things that can happen after you buy something.

It goes up, down, or sideways. I'll say it again, slower. Up, down, or sideways. And now I'm sharing this with you, and I simplify things because it's really important to keep things simple in life, in my opinion. because there's an elegance, there's a power to simplicity. They say if you can explain something,

if you can, you know, to a five-year-old or a 10-year-old, if you can simplify things, you really understand it. If you can't explain it in simple terms, you don't really have a good grasp of it, or it's hard for you yourself to understand it. So that's why I always like to keep, you know, things as simple as possible. In school, they teach our kids to simplify what?

They're fractions, right? Always simplify it to the least common denominator. So when I'm sharing what I've learned, I was going to keep it real simple. So you buy something, you want to go up. If it goes sideways, it's okay, but there's an opportunity cost because if the market's going up and your stock's not going up, guess what? There's a problem. There's an opportunity cost there because you could be buying something else that is going up. And nobody really wants to buy something and watch it just go sideways. They want to buy things and they want those things to go up. That's the whole idea

of investing. And then compounding your returns, which is what I believe to be one of the eighth wonders of the world, if not the eighth wonder of the world. I was going to say one of the wonders of the world. Compounding is extremely powerful. But the more aligned you are with that longer-term trend, you can look at a yearly chart, a quarterly chart, a monthly chart, the better. The higher the probability, again, there's no luck. There is nothing that's 100% guaranteed to work every single time. Rinse washer. B, if there is, please let me know. I have yet to find one. But it's about probabilities. And if you understand the probabilities

and you make high probability trades in life, by the way, and the markets, I believe it's a mirror. It's the same thing that happens here, happens there. You have a situation where you can do very well over the long term. And at the same time, you eliminate low probability trades.

Why? Because any one trade doesn't really matter. if you have a system that keeps your risk small when you're wrong and lets your winners run when you're right. That's really what it comes down to. Most successful people, and I know because I study successful people, in the market, boil it down. They do different things.

Some are fundamental investors, value investors, growth investors, technical investors, quantitative investors, systematic trade, so on and so forth. It boils down to risk versus reward. Really that simple. Every trade, I like to think of it, as I'm buying and selling risk. Someone told me that. It's not my line, but it's a great line.

I was interviewing a big money manager one time. He goes, Adam, you're not buying and selling stocks. You're buying and selling risk. And I was like, wow, that's brilliant. So when you think about it, you want to ask yourself, How do I increase the probability of being right? How do I sink my teeth into the trades where there's a prior uptrend or as early as possible in an uptrend as possible where things are changing? Where there's a tailwind and not a headwind where the wind is at my back and pushing me forward.

Okay, great. If you can do that over time, you'll be very, very successful. Over time. And capture what Buffett, this is Warren Buffett, not my line. He calls it the American Tailwind. In one of his annual letters, he attributes in a very humble fashion his success to being alive for the last 50, 60 years. Sorry, not being alive, I think he's older than 80-ish, 90-ish, but he's alive for the last several decades, and he's been able to capture that American tailwind.

So I want to help you capture it as well. Up next, but you've got to respect risk. Up next, we've got a lot more to talk. I'm Adam Sarhan. This is the one and only Investors Edge. 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. No big commissions, just a fee on the assets that's managed. We also provide a full range of personalized services, including retirement planning, fixed income, and educational needs,

all to assist you in achieving your financial goals. understanding not all individuals have the same needs, we'll carefully evaluate your personal goals to determine a proper investment strategy. If your current approach to investing is not getting you to where you would like to be, call us to make an appointment for a complementary portfolio review. The number to call is 888-4-2-5-59. That's 888-5-5-9. That's 888-4-2-5-9. services offered through Colbaum Capital Management. Guys, it's no use putting it off. The best time for an underwear refresh is now.

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on the show that you want to watch. So we spoke about the market. We are so far for now, that 200-day moving average that was tested earlier in the week and the NASDAQ has been defended. We closed in the upper half of the range, depending at the index you looked at or you look at now, it's either up on the week or it's down on the week, but in the upper half of the range. So the NASDAQ is down slightly. The S&P is down slightly, but it's really small losses. If you look at the weekly bar, upper half of the week. The upper half of the bar for the week. And that subtle but important sign of strength. Oh, okay. That means you sold off. All the sellers were exhausted. Buyers showed up and you closed in the upper half of the range. After a big move down. I think you're down, what, four weeks in a row now

for the S&P 500. And I believe you're down more or less around the same thing for the NASDAQ. So the NASDAQ 100, if you look at the QQQ, that closed up for the week just barely by a point change or somewhere in that area. So, but again, a big defensive week off the 200-day moving average. For now, in your term, that's a line in the sand that I'll be watching, which is Monday's low. That's it. If Monday's low is taken out, big chance we're going much lower. If it's not, then we'll either go sideways for a little bit or we'll bounce back and eventually at some point in time hit new highs. Really keep it that simple, folks. And if you position yourself accordingly, you can do what Gary does, you can get out of the way on the way down. And then you can be around when

things turn around. Why? Because that's what it means by staying in harmony with the money, with the market. You know, or I like to say in harm money with your money or with the market instead of harm money, M-O-N-E-1. It's a plan on the word. But that's what, it's a way of just staying, not fighting the market. In the old days, I used to do that. I want to, I want to, to be right, my ego, Adam, me, me, me, me, me, me, me. And it cost me dearly. I would not participate in the big moves. And I would not participate in the American Tailwind, like Buffett talks about. And I missed out, frankly, on a lot. So I learned from it. You know, for me once, it's on you, fool me twice, it's on me. So the first time I missed it, no problem. Second time,

it took me years to get that concept. But again, part of what I'm doing here is I want to share with you what I've learned. They say a wise person learns from their mistakes, a wiser person learn some other people's mistakes. I want you to be the wiser person. It's karma. Just give, you know, give good vibes kind of a thing. I don't benefit. It's just, I'm helping. I want to help that simple. One good story, bam. That's what drives me. I love it. So I love getting, hearing great stories or great testimonials. One nugget of wisdom can really be a massive game changer. And I love to learn. And I know how powerful it is and how it's changed my mind.

So now I'm in a position to help others. I want to do that. So going back to the market, when you think in terms of risk and reward and you think in terms of simplicity, ask yourself, what's your edge with your investment process? What is it that's going to help you control your emotions? If you're humans, if you're a human or all humans, have emotions. People buy based on emotions and then they justify it with what I call emotional logic. Excuse me. Emotional logic. See, I'm human. I cough, right? Something in my throat. Emotional logic. What is that? I really like this house. There's a few flaws in it, but I love the house.

I'm going to buy it because of all the great things that that house has and then kind of dismiss or downplay the negative things that the house enter stock, enter shirt, enter a piece of gum, enter meal, restaurant, whatever it is that you're buying. It doesn't matter. It's all the same. It goes to your brain. It's all the same underlying dynamics of risk of reward, emotions, logic, so on and so forth. Emotions, trump logic just about every single time. I have yet to see anybody that really buy the, a stock that they quote-unquote hate. But I've seen at the same time countless stories of people buying stocks that they love and they justify it with whatever nugget of emotional logic, which is somewhat flawed logic, works for them. I've done that a gazillion times. And I know countless other people to have as well.

It's human nature. You buy what you like. So when you understand there's a layer of emotions, under the decision-making process, you get clarity. And you understand you're buying and selling risk, you get clarity. When you, I struggled with this a lot when I scaled. When I started to make more money and invest more money, I was still operating as if I was in a scarcity mindset.

And it took me years to develop an abundant mindset. It really did. And then finally, when you get there, it's like, oh, okay, I've got to remind myself, There's an abundance and abundant mindset and so on and so forth. But I'm emotionally attached and so are humans to money. Okay, some more than others, but there's an emotional attachment. I've yet to be anybody that gets really angry if they make a million dollars in anything. People are happy.

They're elated. They're experienced joy. Their endorphins are running. The dopamine is every other good chemical in the brain goes massive hit. Okay. And people are upset when they lose, more or less. Okay. So if you understand these dynamics when you're going to buy and sell stocks, you can ask yourself,

oh, okay, am I doing this to quote unquote be right, support my ego? Am I doing this because I like the stock? And what am I ignoring? And if you're human, you have blind spots. Another thing I talk about, I have a book. It's called psychological analysis. So there's fundamental and there's technical analysis that I believe, which is the two big schools of thought, it's not enough to beat the market.

My humble opinion is a third school of thought, which I'm introducing, or I introduced a few years ago. The book was number one on Amazon every day for three months, which was very happy and proud about, which is psychological analysis, which is all this stuff I'm talking about, and then some. I'm just barely skimming the surface here. And don't worry, there's cartoons in the book. I keep the book extremely simple. I think it's the only investment book that I know of with cartoons in it. And in it, there's characters.

There's a smart money superhero, which is a good side of you. and then there's the dumb money beast which goes out there and makes emotional decisions. And really being aware of that, change my world. Not just investing in trading and, you know, the market. It's my entire life. Because every decision in my mind is a trade. There's some element of risk and some element of reward. Literally every single decision.

That's how I look at it. Should I cross the street? What's the probability of getting hit by a bus? look both ways before the cross the street. There's no cars coming. I'm healthy. I can cross the street. Great. I'll do it. And come, and that's it. Now, could I trip and fall? Could a car come turning out and no?

Yeah, absolutely. But you've got to live your life based on some kind of semblance of normalcy, right? Go on an airplane. What are the probability? Higher likelihood you get hit by, you know, a car accident than a plane crash. Okay, great. I'll take that trade. So on and so forth. But understanding the dynamics, folks, under the surface,

when you make decisions gives you clarity. Up next, we've got a lot more to talk about. We'll talk about some sectors, some stocks, and then take all this and apply to the market. I'm Adam Sarhan. This is the one and only Investors' Edge. Guys, it's no use putting it off. The best time for an underwear refresh is now.

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This message is brought to you by the Capital One Venture X card. Venture X offers the premium benefits you expect, like a $300 annual Capital One travel credit for less than you expect. Elevate your earn with unlimited double miles on every purchase, bringing you one step closer to your next dream destination. Plus, enjoy access to over 1,000 airport lounges worldwide. The Capital One Venture X card. What's in your wallet? Terms apply, lounge access is subject to change. See Capital One.com for details.

This episode is brought to you by Spreaker. The platform responsible for a rapidly spreading condition known as podcast brain. Symptoms include buying microphones you don't need, explaining RSS feeds to confuse. used relatives, and saying things like, sorry, I can't talk right now, I'm editing audio. If this sounds familiar, you're probably already a podcaster. The good news is Spreaker makes the whole process simple. You record your show, upload it once, and Spreaker distributes it everywhere people listen, Apple Podcasts, Spotify, and about a dozen apps your cousin's swears are the next big thing. Even better, Spreaker helps you monetize your show with ads,

meaning your podcast might someday pay for, well, more microphones. Start your show. show today at spreeker.com. Spreaker, because if you're going to talk to yourself for an hour, you might as well publish it. 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. In case you're just joining us and missed any part of the show. you can go to GaryK.com. Rewind fast forward. Listen to it as many times as you want.

I know people take notes. By all means, all for free, by the way, on GaryK.com. So, by all means, do whatever you want with it. I mean, Gary's show is just phenomenal. So that being said, let's keep moving forward because we have a lot to cover. So we spoke about the psychology, spoke about risk reward. The market ended higher today. Spoke about multiple time frames.

Not by much, by the way. half a percentage point for the NASDAQ thereabouts and half a percentage point for the S&P 500. The other thing, so when I started, I was getting to the story here is when I started growing my portfolio and my wealth, I had a hard time mentally dealing with that. Why? Because I was emotionally attached to my money. So I said, okay, great. How do I figure this out? How do I solve for X? Again, keep it real simple. And I'm not the only person who has this problem. I'm sure other people had the problem as well. All right. What are we emotionally, if we're emotionally attached to money. What are we not, and my decisions are, my emotions, excuse me, are based on my decisions and

or my decisions are based on my emotions, excuse me, and then my emotions are clouding my decisions. It's a loop kind of a thing. Okay. What is something that I'm not emotionally attached to? If I'm emotionally attached to money, what am I not emotionally attached to? And then after years, going back and forth, up and down, finally I figured out it's percentages. nobody that I know is in love with minus 7% or plus 8%. I just don't know anybody who loves passages the same way they love money. I know countless people that love money. Hey, 7% on a billion gazillion dollars is 70 million dollars.

Oh my goodness. Wow, great. I love 70 million dollars or $7,000, whatever it is. beautiful thing about money, scales. Percentages, people aren't emotionally attached to them. At least I'm not. That helped me a lot. Oh my God, it's a big down day in the market.

I'm down 2%. Okay, no big deal. Opposed to, hey, I'm down X amount of dollars. That's a big deal. Notice the difference there? It's subtle, but it's very powerful. So to help stay calm, especially with weeks like, this where the market's going down, it's oversold, Gary's been on this since the middle of July,

it's four weeks now the market's been getting hit. And breaking down, by the way, it's really important to ask yourself, before the market starts falling, when the market's extended like it was in late June and early July, where am I going to exit? Remember, the three most important questions. All this is in my book. First, before I buy a stock, where am I going to enter? second, we're making it exit if I'm wrong, and third, how much do I risk if I'm wrong? That's it. And then once you have an open position, same question. If the markets all just gets clobbered, enter this week, the carry trade, the yen, the this,

it doesn't matter the reason. The what is what matters. What is actually happening is what matters, but everyone's looking for the why. What shows up in your statement? The price. Nothing else does. The news doesn't show up in your statement. The Bank of Japan raising rates, the Fed cutting rates, this, that, you don't think.

It's all noise. Price is what matters, folks. So once I understood that and really just drill down into it and then start looking at the percent, and then thinking in advance, you know how the Fed stress tests banks for worst case scenarios? Same thing here. Stress test my portfolio.

What happens if all my stops are hitting? What happens if we get a big decline out of nowhere? So one and so forth. Then I would, you know, you could, think in advance. You're not in a reactive state of fear, panic, enter any other negative emotion there is. You're not happy, but you're prepared. And there's a huge difference there. Being prepared when things go against you and not being prepared. I'll say that again and again and again. Ben Franklin taught us this hundreds of years ago. Failing to prepare is preparing

to fail. I tell my kids this all the time and they're young when they go to school. I just say it's even simpler terms. You either prepare to win or you don't. You prepare to win or you're preparing the fail. If you don't prepare for win, then you're preparing, you know, you're preparing to fail. On their tests or the exams, they don't study my daughter's in seventh grade now. She crams last minute. Those kind of typical things that 12, 13 year old kids are going to do.

All right. Procrastination, so on and so forth. Well, I want to prepare to win. In the market, it's the same situation. Think about that. It's the same situation. So June, July, the first half of July, the markets are extended. We're up pretty much all year. We had a little pullback in March to early April, but that was 3% or 4%.

That was it. The average pullback is 14% in the S&P 500. And it's June, July. Gary's telling you the market's extended. I'm telling folks in my membership site on Find Leading Stockcom. Hey, folks, the market's extended, extended, extended, extended, and then lo and behold, bam, you get this correction the last three or four weeks. Now, how do you know in real time that the market's correcting?

Well, there's guardrails. Ray Dalio talks about this too. In a great book, I'm not affiliated with him in any way, shape, performance called principles. I suggest people read it that are interested in getting ahead and leveling up. He's one of the wealthiest guys in the world and one of the most successful people in finance. And he shared a book called Principles, which outlines his principles from making decisions. And in it, he talks about having guard rails. We all have blind spots.

Get to know your blind spots. Protect yourselves. Create guardrails for those blind spots. So look at the 50-day moving average. All things being equal in an upward trending market, stocks above the 50, great. Stocks below the 50, not so much. We talked about probabilities earlier, remember? Higher probability events are when the market's above the 50.

Lower probability events of the market going up is when it's below the 50. the 50. That's it. So the market breaks below the 50 and does it on volume. What do you think's going to happen? Something's changed. It hasn't been below the 50 in months. All of a sudden it breaks a 50 late July, early August and breaks down, breaks down, breaks down. Okay. Then we touched a 200-day moving average this week. Again, folks, success leaves clues. Jim Rohn talks about that. Tony Robbins talks about that. Look at any really successful investor. They market history. And if you study those clues, you see patterns. Gary talks about familiar faces in a photo album. Similar situation. So I hope some of this helps. So as the market's going down,

you can use the 21-day moving average, 50-day moving average, even the 200-day important areas to watch. If we break both in 200-day on a closing basis, odds are we're going lower. Look, let's just back up. The bare market ended in October of 2020. Then you rallied January for February and then you pulled back and you touched the 200-day moving average in March of 23 with Silicon Valley Bank failing and so on and so forth. Okay, great. That was the first touch of the 200 days since the bare market ended. Then you rallied, rallied, rallied.

And then October of 23, so it was March of 23 the first touch. October of 23 was the second time the market touch of 200-day moving average. And then in November came of last year, the Fed said they're going to stop raising rates, and then they said they're going to start cutting rates, and the market just took off. Basically, from November, all the way up until March, had a little pullback in April, and then shot up until July. Then you have this pullback now into the 200-day moving average. It's the third time, again, zooming out.

Remember, I'm putting all this together now. Earlier in the show, I spoke about the weekly charts and monthly charts, like zooming out. Third time, the market starts a 200-day moving average since the big. market ended in October of 2022. Well, okay. This is really, there's one of three scenarios. Either go sideways, which is very possible for a while, can digest the recent run, reshuffle the cards and the deck, some new leadership can show up, the stocks can build new bases. That's a big probability. The second scenario, market rallies, it goes straight back up, the bottom. It's rare, but it happens. The third scenario, it rolls over and it goes straight down.

and we have a deeper correction or we take out the 200 day moving average and we fall into potentially a bear market or just a really steep correction into this bull market. Those are the three scenarios. So when you can zoom out and ask yourself, okay, the week's over. What happened this week? Well, so far, the 200 day was defended. Good sign. Third touch of the 200 since the rally, you know, the bear market ended in October of 2022.

Check that box. We closed the upper half of the range. Check that box. The market rally because we were oversold. But more importantly, Bulls showed up and they defended the 200-day moving average. Like Gary talks about. It wasn't Aunt Mary and Uncle Bob doing the defending

of the 200-day moving average. It was the big institutions. So that's how we can go make high probability events or make sense of the market by looking at precedent and asking ourselves just binary, what happens? Up next, we've got a lot more to cover. I'm Adam Sarhan. This is the one and only

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Sprinker, because if you're going to talk to yourself for an hour, you might as well publish it. You're listening to What are we waiting for? Well, what are you waiting for? One, two, ready, go. Action! Investors Edge with Gary Culper.

And welcome once again to Investors Edge. I'm Adam Sarhan, in for Gary Kay. In case you missed any part of the show, want to relisten to anything that I said. I know that I have a tendency, folks, to speak fast. I have so much I want to cover, and so little time to cover it. I try to get it in there.

You can go to GaryK.com. Pause, rewind, fast forward, listen at your convenience. Anytime you want for free on GaryK.com. Rewind, fast forward, so on and so forth. All right. So we spoke about a lot. We spoke about the market. Big defensive week this week, putting things in perspective.

We spoke about the importance of aligning ourselves with the intermediate and longer-term trends. We spoke about the importance of understanding risk versus reward. we spoke about the importance of understanding the forces, i.e. your emotions, and my emotions, behind the decisions we make in every area of our life or just about every area of our life. Sometimes it's just straight logic, but most of the time it's emotional decisions with some kind of logic sprinkled in. Then we spoke about understanding the importance of probability and high probability events and eliminating low probability events from your decision-making process,

or as much as possible. It's not 100% perfect, but as close as possible. And then we spoke about market history and market precedent, and understanding the power of moving averages. There's a 50-day moving average, the 21, all these different moving averages, and understanding where you are in cycles. short term, are you extended to the upside or you extended to the downside? Late June, really mid-June, late June, for a few weeks before the top in the middle of June,

I think it was June 10th, June 11th, somewhere in that time frame. But for the few weeks before it, markets extended folks, markets extended folks, markets extended. it doesn't take some kind of high level quantitative algorithm you know next level

market science genius to just understand when you look at certain things you see patterns once you can understand those patterns you kind of get a feel and you understand

how markets work the last few times the NASDAQ was 8, 9, 10, 11% above its 50-day moving average it pulled back into the 50. That's literally happened a bunch of time since that October 2020 low.

Okay. In the middle of July, before the correction, you were eight, almost nine percent above the 50-day moving average. So the last few times that's happened, you get to pull back into the 50, if not lower. So late June, early July, hey folks, just so you know, we're extended. We're extended.

And then adjust your stops. Pay attention, stress test your portfolio. ask yourself, where am I going to exit if we end up pulling back? By the time, sentiment was very bullish, right? Everyone thinks that there's no way the market's going to pull back. That's the exact time, by the way, when it usually does pull back. And people that listen, we're protected. And then all of a sudden you get the pullback.

And then on one side, you're extended above the 50. Now you're extended below the 50. You're also touching, this week you touched, undercut a little bit, depending on the index you look at. But just look at the NASDAQ or the NASDAQ 100. You can go to the QQQQ to follow along since that was a leading index on the way up and it led on the way down. Let's look at the Q's. Okay.

The NASDAQ 100. Hit the 200 day moving average week, reversed off of it, closed the upper half of the range, and closed barely up on the week. Okay. That's the big institutions buying. And that give, you know, that's a clue. Okay. Something's happening here. That's different.

Now, probability-wise, you're down for four weeks in a row. You had a big pullback, double-digit pullback off the high. You're way below the 50, and you had that big sell-off on Monday, then somewhat of a reversal. Took a few days. It doesn't have umph. Thursday was a big update, but volume was below the prior day. Okay, the windows open for what they call a follow-through day, a big update on volume. Great.

but odds are we can see what's happening. We have a line in the sand, which is this week's low. Probability is if that's taken out, you're going lower. If not, you're going sideways or if we get above the 50, get above a downward trend line, get that fall through day, get some more leadership showing up, get some more stocks, breaking out, so on and so forth. Odds are it can go higher.

But we need to give the market time. Remember, I was saying earlier to explain things to a five-year-old kind of and keep things simple. You make money in the market. You buy a stock. Okay, you want to go up. There's two things you need to happen. It doesn't matter what your strategy is. You need time and price. That's it. Profits are a function of time and price. Even if you're a high-frequency trader in-out, in-out, you still need an element of time. And the price has to move in your favor. That's what I was saying earlier in the show, but I wanted to bring it up here towards the end. Because it's important to understand that. And Buffett talked about the, I love it,

the American Tailwind. I call it the great American tailwind in my book because it really is so powerful to be aligned with longer term trends. It doesn't mean you buy and hold forever. I'm not a believer of that. The risk is super is number one in my world.

I have what I call an amped investment strategy, AMPD. D is defense first. A is advanced entry points. M is market conditions. P is psychological analysis. Know yourself. Know the psychology of the market. But D is defense for always, always, always respect risk.

The players, the people that blow up in this business, and I've seen many of them. Countless individuals, I've seen institutions fall. In 2008, I remember the entire investment banking model was basically destroyed. There were five big investment banks back then, Goldman, Morgan, Merrill, Lehman, and Bear. Bears gobbled up by JP Morgan. Lehman failed. Merrill got bought by Bank of America, leaving Goldman and Morgan standing. Both of them had to switch their charters to become commercial banks, take the Tart money,

and stay alive or bailout money from Buffet from whoever it was, and bam. Investment banking model gone just like that. In a few months. But it wasn't live for 100 years in that model or whatever it was, right? So things change quickly. But the idea is why they blow up. Anybody in this business that loses money that gets knocked out of the game gets knocked out for one reason, one reason only.

They don't respect risk. And the ones that thrive do. And I want everybody to thrive. So we'll see what happens going forward. Take your time. There's no rush. That's also a very, very important thing. Take your time.

Because if you rush things, you get into that frazzled state and you end up making a lot of just careless errors. So I hope you enjoyed the show for today. That's all the time that I have. Gary will be back next week. As Gary says, hug the children. Enjoy it. and always respect risk, don't fight the tape, don't fight the market.

Have a great weekend, everybody. I'll speak to you soon. This has been Investor's 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. Guys, it's no use putting it off. The best time for an underwear refresh is now. Tommy John underwear is designed for a perfect fit that stays put all day.

Their zero-chafe thanks to four times more stretch than competing brands, and their innovative horizontal quick-draw fly is a game-changer. With over 30 million pairs sold, there are thousands of men out there more comfortable than you. Don't settle for less. Go to Tommyjohn.com today for 25% off your first order with Code Comfort. That's Tommyjohn.com code comfort. Tommy John. Comfort perfected.

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