Investor's Edge with Gary Kaltbaum - What To Do When The Market Pullsback

Episode Date: August 30, 2023

garyK.com or https://garykaltbaum.com/Considered one of the finest radio shows on the markets, the business world and everything that affects them, Investor’s Edge with Gary Kaltbaum, a Fox News Channel Business Contributor, brings his in-depth take every day. If you want fluff, this is not the place. Gary is a hard hitting and pull-no-punches host especially when it comes to people in power affecting you and your money. His daily in-depth analysis on the markets is second to none.

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Terms apply. Lounge access is subject to change. See Capital One.com for detail. Investors Edge with Gary Cultbaum. 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.

Thank you very much for being here. As you know, this is a show about you and your money, all the fun points in between. In case you're just joining, you can go to GaryK.com. You can listen to the show, or archive on any device, just about any time you want 24-7. Well, not just about any time you want 24-7 on any device. It's always available.

You can email Gary. You can join him on his Twitter by following him at at Gary Kalpom. Or you can read some of his post that he puts up anytime throughout the day. He also has a premium service at Convictionleaders.com, which is fantastic. You get his thoughts about the market just about several times, all day, every day, several times throughout the day. and you get nightly webcasts where he breaks down the action on Wall Street for you and really does a great job of keeping, you know, members in front of important news and important events as they happen in real time. So that being said, that's the overview.

Now let's dive in. We've got a lot to discuss. So today is a, was a relatively quiet day on Wall Street. You had what's called a follow-through day on Tuesday, which was yesterday, a big update. What does a follow-through day do just as a quick? quick recap, it confirms a new rally attempt. On the 18th of August, the market tried the rally. Some of the indices closed higher, some closed the upper half of the range, but really you were falling for the first half of August. And then that was day one. And then you start counting the

days. As long as that low on the 18th has not taken out, you continue counting the days. And then a big follow-through day, or it's just a big up day of at least, you know, one and a half percent or more on heavy volume or heavier volume than the prior session. And then that confronts, confirms a new rally attempt is unfolding. Now, not all follow-through days lead to new bull markets or new huge uptrends, but just about all, or all that I've studied, bull markets and big uptrends begin with a follow-through day. So that's why it's important to pay attention to them. Now, we had one yesterday, which was on Tuesday, and the market responded relatively well. It was a broad-based rally. Gary spoke about it over the radio for you last night.

which if you didn't, if you miss it or you didn't get a chance to listen to it, you want to go back and re-listen to it, you can get that on garyk.com for free. And then what happens today was, today was the market followed through, meaning it went a little bit higher. I don't want to keep saying the word followed through to confuse you, but the market went a little bit higher today, which is a, you know, a healthy sign. There's three things the market can do on any given day. It can go up, it can go down or it can go sideways. Paying attention to what happens where the market opens versus where it closes, it's a, subtle but important sign to show you if there's underlying, you know, underneath the surface, if there's accumulation, which is big institutions buying stocks, or if it's distribution, big

institutions selling. So if you see a hot open, like a really strong open, then a weak close where it closes down, that's not a good sign, all things being equal. If you see the opposite where the market opens a little bit lower, or opens down big and then closes up or closes in the upper half of the range, that's subtle but an important sign that the bulls of, you know, the day, so to speak. Think of it as a game of tug of war between the bulls and the bears. And the bull, it's almost like it just never ends. Unlike a real game of tug of war where you have a winner and a loser, this thing just goes on and on the market's always open, right? It's an infinite game. So, which I'll talk to you about later in the show, the difference between a finite game

and an infinite game. So when you have a game of tug of war, it's like, okay, sometimes the bulls are winning, sometimes the bears are winning, sometimes one side just gets tired, fatigued. sits in and the other side you know takes advantage of that and pulls back a little bit and then it goes back and forth back and forth ultimately one side you know prevails meaning you have a nice uptrend for several weeks or several months then you get a downtrend and then that lasts for a few days or a few weeks a few months and then bam the uptrend resumes until eventually the uptrend is over and the new bear market begins so what's happened this year just a step back as those of you that know, I like to put things in context. I'm a big picture thinker. So a lot of what I talk about

is just putting things in perspective, right? It's the end of August, pretty much, you know, tomorrow is the last day of the month. And if you look on a monthly chart of the NASDAQ 100, the QQQ, or the S&P 500, the SPY, you can see a pretty strong year. The NASDAQ 100 is in first place because most of the gains have come from the big cap tech stocks or just tech stocks in general, AI was really introduced as a major driver this year, a major catalyst, and tech in general, it's just been a leading group. Well, all right. Other areas have led as well, like housing stocks have been strong this year, even though

mortgage rates have gone up and the yield in the 10 years gone up substantially, but housing stocks have been strong because inventories low. And some other areas have been leading. But for the most part, the vast majority of the move this year has been big cap tech and other semiconductor-type stocks because the AI craze. Well, all right, when you step back and look on a monthly chart, you can see a big bullish cup forming in the QQQ. And now we're starting to form a handle. That's somewhat bullish, because typically you see cup and handle patterns occur on a daily chart or even a weekly chart.

Rarely do you see them occurring on a monthly chart. So if we go sideways for another few weeks or a few months, even September, October, tend to be bumpy periods in the market historically. It doesn't mean it has to be going forward. But if we go sideways for a few more weeks here, we're going to have a small handle form. And the longer we go sideways, a longer that handle of form. But it's really giving the market a chance to digest the big run we had all year, really from the October low of last year.

Because the market bought in October of 22. And we've pretty much been going up since. We've had some pullbacks along the way, which is normal. But when you step back and look at the big picture, we've had a big run this year. And the market's pausing to digest that move. Well, all right. Let's see how that pause, that digestion unfolds. If it's a quiet pullback, you know, the NASDAQ 100 think it's down about 8.5% from the high up until the August low just a few weeks ago.

That's normal. It's run of the mill. Several times a year you'll see the NASDAQ, you'll see the NASDAQ, or the S&P pullback 4, 5, 6%, 8, 9%. Sometimes it even pulls back double digits, 11, 12, 13, 14%, or 15, 16% in some, you know, worse cases. So pullbacks happen. But pullbacks I've learned are healthy. I used to fear them when I first got started trading and investing because my, oh my God, I'm losing money.

Or oh my God, I got stopped out or oh my God. Enter any other type of, oh my God, you can think of with any other language you want to use. It doesn't serve you. So I've learned, after doing this for so many, I mean, decades now I've been doing this since the 90s, that pullbacks are inevitable. They happen in every single environment you possibly can think of. In a bullish environment, they happen. And even in downtrends, you get pulled, you know, they go the other way. They get relief rallies and then the downtrend resumes.

But pullbacks are part of this business. It's inevitable. Stocks pullback, leading stocks pullback. The market pulls back, ETFs pullback, sectors pullback, and so on and so forth. So it's really important as you trade and invest and, you know, think of your time frame. Step back and understand, ask yourself, is this a normal healthy pullback, meaning is it shallow in both size and scope? What does that mean? Size is a small percent decline.

Eight, nine percent's fine. If it's down 80 percent, that's not a pullback, right? So typically the way Wall Street defines pullbacks is anything under 10 percent. A correction would be anything. between 10 and 19.9%. And then a bare market would be anything over 20. I don't use those parameters because sometimes you see stocks pull back 25, 30%, and then take off and go again.

So I go a little bit wider, but still, it doesn't matter. You know, semantics aside, it's the spirit of the law, not the letter of the law that matters, right? Are you pulling back in an uptrend and then the uptrend resumes? Or is that done, that move over? And it's going to have a big move down and that's it. party's over. So that's ultimately what matters. At this stage, right here, right now, it appears to be a pullback, an ugly pullback because some leading stocks or growth stocks, which Gary's done a phenomenal job mentioning for you, have really gotten hit and hit hard. And that's not normal in pullbacks.

Normally pullbacks, you see, you know, stocks go down 5, 10%, 15, 20%, even 25% sometimes in some severest cases. And then they go back. up again. But you don't typically see stocks get walloped the way we've seen it in this past earning season over the last several weeks, especially leading stocks. So it's not just a normal pullback. It's a pretty ugly pullback. But if the Bulls can think of that game of tug-of-war, can regain control and send the market higher, then we're in a situation where we can easily, in a very short amount of time, break out and hit new highs again, in my humble opinion. But of course, need action to support that view. So on a monthly chart, we're tracing out of bullish cup. It's now

beginning to form a small handle. If that handle develops, and then we bust out of here and go higher, great. The big news that happened yesterday, we closed above the 50-day moving average. Today was a quiet day, which is normal. Remember, there's three things the market can do, up down or sideways. After a big move up like yesterday, the market just paused to digest the big move it had, which is normal and healthy. So, take your time, look for leaders. I'll talk about what else I do with pullbacks and a whole lot more, as we keep going forward here, but just take your time with the market and let the market prove itself.

We have the jobs report on Friday, right? And more data's coming out. Up next, we've got a whole lot more to cover. I'm Adam Sarhan. This is the one and only investor's 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

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They bring you home. Realtors are members of the National Association. of Realtors, right by you. It's time to switch on the integrator units and get the brain cells working. You're listening to. Hey, this promises 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, pause, fast forward, listen at your convenience. 24-7 from any device. So we spoke about the beginning of the, during the show, the beginning of the show, we spoke about pullbacks and the importance of understanding that pullbacks are normal

and part of the business and not to be scared of them and instead to embrace them. We spoke about the fact that NASDAQ long term could be, on a monthly chart, could be forming a big cup with handle pattern, which is very bullish, rare on a monthly chart. The other market that's doing something similar is gold, you can look at GLD on a monthly, and that's got a much longer handle. It's about two and a half, three years now the handle there, and it's also a lot choppier. The NASDAQ, if you go to QQQQ, the NASDAQ has a one month handle, so it's just beginning to form that handle. Whether we go sideways for a few weeks, for a few months, or we break out with no handle, who knows, you know, let the market decide, but I just want

to throw that out there. Because big picture, it's normal and healthy to see the market pull back and digest after a big run. So the market had a big run off. the low. We're up about 45, 50% in the QQQ from the October low. It's earned the right to pullback and digest. And again, the key is to analyze the health of this pullback to see if it's a short-term healthy pullback or something more severe. Now, if we take out August's low, look at August 18 on any of the indices or August on a monthly chart and we break below that, no, boy, no, that's going to be a bearish sign. That game of tug-of-war, the bear is going to have regain control or the upper hand. In the short term, if we break below the 50-day moving average,

which we just got above it yesterday, it's not going to be a good sign. It would be more of a bearish sign. Think of the 50-day moving average as a binary kind of line in the sand. Above it is bullish, below it is bearish. Above it is good, below it is bad, type of a thing. Doesn't mean you can't go higher. You can definitely can go higher. You can look back at 2017, you can look at 2013, you can look at 20. I mean, a lot of these years where you get these really strong rallies on Wall Street. The market, and by the market, I mean any of the indices, the Dow, the S&P, the NASDAQ, the Russell, whatever index you want to look at breaks the 50 several times. And you still can have a really, really robust year. Look at 2017. Look at 2013. You can see

it break the 50 several times. But all things being equal, you know, there's a great saying out there. Nothing good happens below the 50. And that's why we use it as a line in the sand. And it's not just me or it's not just Gary. It's all over the place, right? Why? Because it works. So it's important to look for clues like a detective, right? There's nothing in the market that's 100% accurate 100% of the time that I know of. Maybe it exists. I just don't know of it. And if it does, please let me know.

I'd love to know. So when you're dealing with an environment that's uncertain, by definition the future is uncertain. No one knows what's going to happen in a year from now, in tomorrow where the market closes tomorrow. And if they do, they're telling you, you know, they don't know what they're talking about. Let's put it that way. But what we can do is navigate and make intelligent decisions based on probabilities with the information we have in front of us. And then when the facts change, we stay flexible and we change as well. Just that simple.

Now, simple, not easy, but simple. So what does that mean? If you look at losing weight, it's a simple formula. Calories in versus calories out. Look at getting rich. It's a simple formula. Cash flow in versus cash flow out. Well, Adam, I need to make more money.

No, you don't. What do you speak? $10 million? You spend $11 million. You're still negative one. Maybe in some cases you want to make more money. You need to make more money. Sure.

But really understand that relationship between cash flow in versus cash flow at. Not how much you make, it's how much you keep. Right? You've heard that before. Losing weight. It's calories in versus calories out. Yet most people are overweight. Money.

It's cash flow. flow in versus cash flow out. Most people aren't to where they want to be financially. But it's simple, Adam. It's not easy. That's what I mean by simple, not easy. Right. So when you look at the market and you step back and you understand these pullbacks are part of the business. It's part of the game. It's part of the industry. It's just part of the way the market works. What do we do when the market pulls back? Adam, what do we do? What do we do? Here we go. Here's a few things. Number one, isolate strength, folks. It's really important. to look at the stocks that aren't pulling back as much as the rest of the market.

They're exhibiting what we call it strong relative strength. They're outperforming the market. They're outperforming their peers. And by definition, they're getting institutional support. Meaning, the market's down. The queues are down about 8.5, 9% from the high until the August low. Not anymore, but where they were just a few weeks ago. Okay.

what stocks weren't going down, in fact, what stocks were going up? That's a great way of isolating strength. Yesterday, fallout today, what stocks were breaking out and working? Today, another day after the fall of the day, what stocks broke out and worked? Well, let's go through some of them for you. HOV, Hovannian, reported earnings, I believe, this morning, monster rally, 15.4% breaks out above a interesting, a good looking pattern here. 11-ish was a pivot point.

Okay, exploded out of here on massive volume. This is a low-price homemaker. But Adam, the mortgage rates are going up, interest rates are going up? How are these home builders doing so well? Biggest supply inventory remains very, very low. And by the way, the economy remains very strong. People are employed. We'll see what happens on Friday with the jobs report.

But one of the biggest things that has happened is baffled the market, baffled the Fed. Everyone was talking about, you know, the market fell last year because people were pricing in a hard landing or a soft landing. And guess what? We didn't get a landing, any kind of landing. What does that mean? The economy didn't have a recession, but the market fell as if we were going to get one. So that's a good way of isolating strength. You find a stock like that that rallies really sharply on earnings, closes in the upper half of the range. Now, another example of one that's not as good because it closed in the lower half of the range

would be Vera Bradley, V-R-A, Victor Roger Adam, is a ticker. And Vera Bradley, it's a clothing of fashion company. They gapped up, well, they rallied strong. The stock hit a high of 73 today closes at 705 in the lower half of the range. Did it on heavy volume, but that's a subtle sign of distribution. Remember we spoke about the institutions that are either buying. accumulation or their selling distribution and that game of tug of war earlier in the show and think about where the market opens versus where it closes, that's a subtle sign of weakness.

Doesn't mean the stock can't go up, but just a subtle sign of weakness in the short term. So that's what I do all day every day. I want to find these stocks that are blasting off and going higher when the market is still in pullback mode or just limping out of here. All that happened yesterday was the market got back up by the it's 50-day moving average. Today, the major indices closed slightly higher. The Dow was up 37 points, more or less to close at 34,0890. The S&P closed at 45-14, up 17 points. And the NASDAQ composite closed at 14,019, up 75 points. Half a percent, 0.38%, and then 0.11%, or 0.11%. It barely moved

today. It was a quiet day. Well, all right, we've got the jobs report on Friday and some more data coming out. So that's what we do for pullbacks, is just find strength. I always like to say the market is speaking and ask, are you listening? So up next, we'll talk about the infinite game versus the finite game. We'll talk about some more stocks and a whole lot more. I'm Adam Sarhan. This is the one and only investor's edge. 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. 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. That's the sound of McDonald's extra value meal. Sausage McMuffin with Egg, Hash Brown, Small Hot Coffee, and Sweet Golden Silence, all for only $5. Price and participation may vary. Promotion pricing may be lower than meal pricing. This message is brought to you by the Capital One VentureX card. VentureX 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 Fes, Next card. What's in your wallet? Terms apply. Lounge access is subject to change. See Capital One.com for details. 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 for Gary Kay, who's out today. In case you just joining us or missed any part of the show, you can go to GaryK.com and listen live or rewind,

fast forward or on any device you want from anywhere you want 24-7, all for free to the radio show. So if you want Gary's premium thoughts, by all means, take a free trial. Go to Convictionleaders.com, and sign up for free and see if you like it. It's well worth it to dive in deeper and get Gary's every night he gives you webcasts. breaks down the market for you, lets you know what he sees. In real time, gives you multiple updates every day. It's a great service and a lot of fun. Now, a few thoughts.

We spoke about the pullbacks. What do we do when the market pulls back? Embrace them instead of fear of them. Okay, great. Spoke about the fact we've looked for leadership. Look for stocks that are up and up big and up on volume. Why? Because that shows you what the institutional investors are doing.

It's not what the individual investor is doing, right? When you get a stock that trades, let's say, 5 million shares on average every day, and then all of a sudden one day it comes in at 15 million shares, that shows you there's tremendous appetite from the big institutional investors for that stock. And it breaks out above resistance and so on and so forth. And just as a quick refresher, think of resistance and support, two common terms, as a floor and ceiling. So support is a floor, resistance is a ceiling.

If a stock's trading between, I don't know, let's just say 30 and 35 for six months, 35 would be resistance, 30 would be support. And then all of a sudden one day it breaks out above 35 on monstrous volume. That's a game changer. Paradigmame shift. Something has happened differently. Okay. That game of the tug of war between bulls and bears.

The bulls outpowered the bears. Now, a lot of breakouts fail. That's okay. But the ones that work, more than make up for the few that fail or the ones that fail and then some. So one of the great lines is just be patient with your winners and impatient with your losers. right? Taking small losses is part of the business. Testing. No one knows what's going to happen with 100% certainty tomorrow. You don't have to as long as you manage risk really, really well. Also, as a refresher, we spoke about the fact that NASDA could be tracing out a big cup and handle

pattern on a monthly chart. That could be very, very bullish, especially if AI kicks in and lives up to its promises. We'll see. But for now, we'll just take it day by day. It's all you can do in the market. Week by week, month by once, take your time. And when things work out or things are moving in your favor, you're getting clues that the bulls are winning that tug of war and the market's getting stronger, you can slowly increase your exposure if you want. And if you don't want to, that's fine too. It's 100% up to you. And then when the thing, you know, market kind rolls over a little bit and get that pull back or that correction, you can reduce your exposure again, up to you. So what else do I do when the market pulls back? Isolate strength.

Find the stocks that are breaking out. And then give them, I'd be patience. The third thing. Give the market time to digest the big gains it had. The market's up big this year for the NASDAQ 100, that is, double digits, right? And the S&P's up double digits. Okay, great. It's earned the right to pause and digest.

After a big run or a long day, what do people do? They go to sleep to pause, regenerate, rejuvenate, whatever word you want to use. Pause, digest. Just take your time. And then you wake up. up the next day, you're full of energy. When you get that pullback, the pullback's over. Bam, you lean into it and then the market just takes off and goes. Because the pullbacks give the market, and we said size and scope.

Size is a percent decline. How deep is the pullback off the high? So far the NASDAQ 100 was about eight and a half percent or just under nine percent from a 52-week high to the August low. Okay. And then scope is how long does it last? Does a pullback last a few days, a few weeks, a few hours, a few years, a few years, a few years, a few. months, you know, that's what I mean by scope. So small and size and scope is typically down single digits or down to about 13, 15%, somewhere in that range from the major indices. And it lasts a few weeks to a few months, but doesn't drag out for years and years and years and years. So next, pullbacks. What else do I do when the market pulls back? It's I lean into it. I stay

vigilant. People, humans, you know, my book, psychological analysis, was number one on Amazon on for two straight months, every single day for two months. And in it, I talk about cognitive biases and some mental walls. You ever do something and hit a wall? We all have. Well, what do successful people do? They break down that wall. Unsuccessful people look away. So how do they do that? Well, they realize that pretty much whatever they want on the other side of that wall, right? After you go through a little bit of pain, you get the pleasure. All right. People are programmed to do what? Seek pleasure and avoid pain. It's just the way people are programmed. And when you understand that and you understand successful people typically do the opposite of what most people do, all right, then you can adjust accordingly.

So in a pullback, the people get pain or pleasure. Well, if you're long, you get pain because the market's going down, things aren't working, so on and so forth. What do people do? They avoid pain. So they look away to another shiny object. And then what happens? They're out. The market turns.

Eventually that pullback's over. and then it takes off and goes without them. And then it breaks out and hits new highs. And then they get back in because now there's pleasure or there's FOMO, fear of missing out. Oh my God, if the market keeps going up, it keeps going up, it keeps going up, and I'm not in. So I get in.

Well, after what? I'm at the right time because I was looking away at the right time when the market turned. And then after a big move up, what happens after a green light? You get a red light. And then after a red light, you get a green light. So after a big move up, you get a pullback. They get in, they miss the big rally up, most people. And then what happens?

The market pulls back. They get stopped out and they lose money again. And then all of a sudden, they compounded their mistake. And then the market takes off again without. They look away. The market takes off without them and so on. And they just rinse, watch, repeat, rinse, watch, repeat. Then they tell themselves a fabricated story that's not, it's a, you know, not an empowering story, a disempowering story, negative story that hurts them.

I'm a victim. The market's against me. This, then, you know, whatever. Uh-uh. We're not here to play that game. Successful people do the exact opposite. They're there to win. They're there to level up.

They're there to challenge themselves intellectually. Do the heavy lifting. Do those mental sit-ups. And hopefully physical sit-ups. Get active, move, right? All right. So lean into the pullback. What does that mean?

Stay on top of these watch lists. Every single day, I'm looking at the stocks. I'm scanning. I want to find the leaders. Find these stocks that aren't going down. Why? Because when the market turns, it's going to happen very quickly. And those stocks that are leading during that pullback are going to blast off and go.

Bam, they just go. bam and you've seen this happen before and if you haven't then just look at history you'll see countless examples of this over and over and over again why because that's just how markets work it's human nature right walk into a crowded theater yell fire you're gonna get the same reaction anywhere in the world irrespective of your language religion your background your how much money you have in the bank how much you don't have in the bank what year it was 500 years ago 500 years in the future people are people are people so when you understand the way market works and how things function, then all of a sudden you can plan to make sure you're

making intelligent decisions and you're doing the things that can hopefully give you the results you want. That's really big. And that's what I'm about because if you can get your mind right, the results and you have a much higher probability of getting the results you want with the right mental outlook in any endeavor and the market being one of them, right? that's my two and a half sentence about pullbacks. I used to fear him. I used to run from them. I used to hide.

I used to look away. Look at, miss the rally. I mean, I'm giving you 20 plus years of experience here and may end mistakes. A wise man learns some of his mistakes. A wiser man learns some other people's mistakes. I hope,

hopefully you were the wiser person here. And that's why I share all this because it's, you know, I want people to learn and benefit. So they don't have to repeat the same costly mistakes that I, I've made. And by the way, continue to make I'm humans. So humans are fallible. Then we make mistakes, right? And it's okay. So that's, that's everything with pullbacks. And lean into it. Be there. Show up. Do the work. Why? Because when it turns, you'll be there to catch it instead of missing it.

And that's one of the, another one of the things I love about Gary's. He's there. He's doing the work every single day. Even when he doesn't feel like doing the work, he still shows up and does the work. what does will you i don't say where there's that famous saying that showing up is is i'm going to i don't know the quote but so basically showing up is just about the key ingredient for being successful just show up that's not the exact quote i definitely did not do a good job quoting it but you get the gist of it right and my brain's a very spirit of the law not the letter of the law big picture kind guy what's the gist of what's being said well all right show up and you're going win. Show up, you'll be successful. Okay, great, I'll show up. That simple. The exact detail of the

quote, not my expertise. So, what else? Under the hood, when the market rallies, you get quiet days like today, it's important to look at the sectors and see what sectors are working and see what's not working so you can adjust and lean into the areas that are leading, that are working, and stay away from the ones that aren't. So up next, we'll talk about the infinite game versus the finite game and a few more stocks and some sectors and a whole lot more. I'm Adam Sarhan, and this is the one and only Investors' Edge. 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 Capital1.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 confused 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.

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What are we waiting for? Well, what are you waiting for? One, two, ready, go. Action! Investors Edge With Gary Culpa. And welcome once again to Investor's Edge. In case you missed any part of the show

where you're just joining us, you can go to GaryK.com, rewind, fast forward, listen to all of Gary's shows. You can listen live or to the archives for free on GaryK.com. you want 24-7 from any device. I'm Adam Sarhan filling in for Gary Kaye, who's out today. I spoke about, covered a lot of ground today. We'll leave a few minutes left, so I'm going to speak about something really important with markets. It's a mindset, subtle but important shift and mindset. Most people are used to, well, first off, markets tend to be counterintuitive in nature.

The way that we're programmed in real life, meaning outside the market, for the most part, one plus one equals two, right? You go to the dry cleaner. You go to the dry cleaner. you put clothes in the laundry, it comes out, it's clean. You crack an egg, you cook it, food comes out, you eat, you don't die. You know, the accountant does the taxes. There are some businesses, for the most part, one plus one equals two. On Wall Street, it just, that's not the case. There are some businesses where the performance-based businesses,

where you literally can't teach someone or show someone exactly what to do with a hundred percent certainty that they're going to get their desired outcome. The markets is one of them. I give you a million dollars and say, okay, you have 10 trades, make sure every single trade is a winning trade or is a losing trade. It's virtually impossible to do or take a thousand trades, a bigger data set, right? A basketball player, Michael Jordan, shoots a free throw. He can show me what he does, but there's a certain feel, a quality to it that he just knows and he's developed by shooting millions or thousands of tens of thousands of free throws over the life, maybe hundreds of thousands. who knows how many times that guy shot the ball.

But I can't exactly replicate what he's doing with 100% accuracy. I can come close. Maybe if I try. Actually, basketball, I have no skill whatsoever. So maybe something else I can come close to it, but not, you know, think of George Clooney an actor. There's certain businesses that are performance-based businesses. A lawyer can't guarantee she can win in court.

Do her best, but she can't guarantee it with 100% certainty every single time. Maybe if it's a layup, it's one case or, you know, with two cases. may be sure, but every single time, a thousand percent certainty, guaranteed they're going to win, can't do it. But over time, you know, you get skill, you get certain kind of experience. Life's a great teacher. Then you start developing a skill. And you can use that skill to get really, really excellent, I mean, superb results. But it comes through many, many losses. It comes through many, many mistakes. It comes through having the tenacity and the, the, discipline to keep pushing and keep learning and changing your mindset from when lose to when

learn in other words you win or you learn win learn and understanding losing is part of being successful and so on and so forth and embracing losses and basing the brain and getting past the pain and then getting the other side why because that's what successful people do it's just how michael jordan because michael jordan right tiger woods i think was at a game of time and where he was hitting the ball and somebody in the crowd's like i wish i could be you tiger he walks over him he gets in his face he goes no you don't show me your hands and his hands are soft he works the computer whatever it is he's look at my hands they're all full of blisters and calluses and so on and so forth he's like I wake up every single day at 4 a.m. hit that golf club until my hands bleed

what do you do there that's it right so yeah sure Tiger's got skill no question but he harnesses and develops that skill that gets you to the next level so again Michael Jordan we sit there for the first guy of practice if you go listen to his stories or his coach was is a great now authors slash business leaders slash whatever we want to call him and it's got two books one's called relentless his coach and he coach co-beating coach dway and a few other people as well and the other book is called win w then the number one and then n right and he said michael was the first guy on the court and everybody else would go out and party and you know drink and do drugs whatever they were doing michael first thing in the morning sitting there shooting

free throws, shooting free throws, developing that skill. Laser focus. So that's about performing, some businesses are performance businesses and some are with a predictable outcome. This is a performance-based business. So it requires each of us individually to step up and bring out our superhero inside of us. I have that in the book where I've got two characters and one's a superhero. The other one's what I call the dumb money beast. Think of like a Tasmanian devil runs around the side, makes emotional decisions and so on and so forth. And the superhero, Heroes, Calm, Cool, Collected, makes rational decisions. So, finite versus infinite game.

Most games we play in life are finite games. You play basketball, baseball, tennis, soccer, golf, whatever you want. There's a fixed number of players, a certain time. Here are the rules. Start, finish, next number of points. And the bell rings at the end. Okay, who's got the most points wins? More or less, that's the way finite games work.

But there are some things in life where it's an infinite game. politics, business. Think of Apple, Microsoft, GM, Tesla. Tesla's not, you know, what Elon Musk is trying to do with Tesla, it's an infinite game. People are going to drive EV electric cars, electric vehicles, EVs, in his mind's eye, hopefully forever. That's what he wants to have happened. He's not looking to go in for one quarter, blow away estimates, and then shut the company down. It's more of a longer term. Warren Buffett, turn 93, 3,000. three today, happy birthday Warren. And he's still on top of his game. Long-term, infinite type of mindset, right? Okay, great. The market, stock market's not going anywhere. You don't wake up one day, play for a day, and then you're done, and that's it, it's over.

You've got to wake up the next day, and the next day, and the next day, and the next day. So having the ability to understand, you can't just buy it and hold it for everyone. Look, you can do whatever you want. but buying and holding it forever, buying and hoping that it works, it's not a prudent strategy. If it was, everybody would do it and be done. There's a lot of other elements, right? Risk management. What do you do when stocks go down 80, 90 percent, never recover, and so on and so forth,

which the market's countless stocks have done that. They were the poster child of the day, and now they're just toast. It could be totally gone. Like literally, don't even trade anymore. Or they just got crushed and they never came back. So understanding you as the user error, you know, when in the old days we used to, even today, I guess, you buy a printer and you call customer service. First question they ask, hey, is it plugged in? Oh, no, it's not plugged in.

Well, you plug in and then it works. That's user error. There's nothing wrong with the printer. It's user error. That's a story in my life. User error, right? Okay, thanks. I'll plug it in.

Nothing wrong with the market. It's the user error. So how do I upgrade the user? That's my obsession, my focus, my passion, my love, I want to learn how to improve. light edge, just get better every day, every week, every month, a little bit better. And then over time, it adds up, the compounding returns. So understand that the market's never going, it's not going anywhere. So ask yourself, how do I play this game? So I'm around next week, next year, next month, so on and so forth. Five years from now, 10 years from now. That's really, really important.

Then all of a sudden, you can elevate yourself and get away from the mistakes that most people make. And you can learn how to respect risk because you're playing an infinite game. and then all of a sudden that light bulb goes off over time. That's all the time we have for today. Everybody, thank you so much for listening as always. This has been an absolute pleasure. I'm Adam Sarhan. This is the one and only Investor's Edge.

This has been Investors Edge with Gary Coltbaum on BizTalk. To listen to past episodes or to get in contact with Gary, go to GaryK.com. That's GaryK.com. This message is brought to you by the Capital One VentureX, 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.