Money Rehab with Nicole Lapin - How To Ride the Historic Stock Market High Like a Pro

Episode Date: February 16, 2024

This has been one crazy week for the stock market! To unpack everything that’s been going on in the market this week, and what we can expect to see in the coming weeks, Nicole speaks with Peter Tuchman — also known as the Einstein of Wall Street, and host of the MNN podcast Trade Like Einstein. $ Investors: Robinhood has the only IRA that gives you a 3% boost on every dollar you contribute when you subscribe to Robinhood Gold. Learn more at Robinhood.com/boost  $ Want the kiddos in your life to become money masters? Check out Greenlight, the best money app and debit card for families (and get one month free!): http://greenlight.com/moneyrehab $ Is mental health a resolution for 2024? Get 10% off your first month of therapy with BetterHelp at: http://betterhelp.com/moneyrehab  $ The secret to health and wealth is in your gut. Literally. Get 20% off a 90 day bottle of Just Thrive Probiotic and Just Calm. Try it at: justthrivehealth.com and use promo code: MONEYREHAB. $ Want one-on-one money coaching from Nicole? Book a meeting with her here: intro.co/moneynewsnetwork 

I love hosting on Airbnb. It's a great way to bring in some extra cash. But I totally get it that it might sound overwhelming to start, or even too complicated, if, say, you want to put your summer home in Maine on Airbnb, but you live full-time in San Francisco and you can't go to Maine every time you need to change sheets for your guests or something like that. If thoughts like these have been holding you back, I have great news for you. Airbnb has launched a co-host network, which is a network of high quality local co-hosts with Airbnb experience that can take care of your home and your guests. Co-hosts can do what you don't have time for, like managing your reservations, messaging your guests, giving support at the property, or even create your listing for you.

I always want to line up a reservation for my house when I'm traveling for work, but sometimes I just don't get around to it because getting ready to travel always feels like a scramble, so I don't end up making time to make my house look guest-friendly. I guess that's the best way to put it. But I'm matching with a co-host so I can still make that extra cash while also making it easy on myself. Find a co-host at airbnb.com slash host. One of the most stressful periods of my life was when I was in credit card debt. I got to a point where I just knew that I had to get it under control for my financial future and also for my mental health. We've all hit a point where we've realized it was time to make some serious money moves. So take control of your finances by using a Chime checking account with features like no

maintenance fees, fee-free overdraft up to $200, or getting paid up to two days early with direct deposit. Learn more at Chime.com slash MNN. When you check out Chime, you'll see that you can overdraft up to $200 with no fees. If you're an OG listener, you know about my infamous $35 overdraft fee that I got from buying a $7 latte and how I am still very fired up about it. If I had Chime back then, that wouldn't even be a story. Make your fall finances a little greener by working toward your financial goals with Chime. Open your account in just two minutes at Chime.com slash MNN. That's Chime.com slash MNN. Chime feels like progress. Banking services and debit card provided by the Bancorp Bank N.A. or Stride Bank N.A. Members FDIC. SpotMe eligibility requirements and overdraft limits

apply. Boosts are available to eligible Chime members enrolled in SpotMe and are subject to monthly limits. Terms and conditions apply. Go to Chime.com slash disclosures for details. I'm Nicole Lappin, the only financial expert you don't need a dictionary to understand. It's time for some money rehab. What a crazy week for the stock market. We ended last week with the S&P 500 hitting an all-time record high. It was an upward tick that was fueled mostly by tech, particularly NVIDIA and Alphabet, two of the companies that are in the S&P 500. Now, you'd think breaking a record would be the biggest story in market news for a while, but nope, there is more. To unpack everything that's been going on in the market this week

and what we can expect in the upcoming weeks, I'm talking to Peter Tuchman, also known as the Einstein of Wall Street and the host of the MNN podcast, Trade Like Einstein. When Peter and I spoke yesterday, he was calling me from the balcony of the New York Stock Exchange. So you'll definitely hear some of the hustle and bustle around him. He is literally in the action, which makes him one of my favorite people to talk to when the market goes wild. And it often does. Here's our conversation. Peter freaking Tuckman, welcome to Money Rehab. Yeah, baby, I'm here. It's good to be here. Yeah, baby, you're like the godfather of M&N. Or like the mascot.

I can't decide. One of the two. One of each. That's right. So big news a week ago, February 9th, the S&P 500 reached a new historic high. What was this historic high? Why did it happen? What was going on over there

on the floor that day? Yeah. So even though we had sort of teased and flirted with 5,000, we had not closed above it until the day you said. So easy come, easy go, right? We had this big day for the S&P. It was just this Tuesday that the Dow fell 500 points. It made it the worst day in about a year, right? So why did that happen? Why did we have the S&P reaching historic highs and then the Dow going in the pooper? Okay. So look, the market has rallied. We are six weeks into the year. We've had only one bad week so far in 2024. The market has forged on after a really great 2023. Okay. And the tech stocks have been leading participants in this major rally. Look, there's a lot of enthusiasm, rational enthusiasm. It turns out that I sort of did a little analysis. The last time that the interest rates were as high

as they are now, and we were in a bull market was before the bubble of 2000. In the late 90s, apparently, we were in around 5% or 6% interest rates, and the market rallied quite significantly up until we ended up having the tech bubble and the internet bubble, and we sort of blew up. So look, markets tend to reach towards milestones and landmarks, and then sometimes sometimes if it happens fast and furiously, they can often be overextended on the upside or the downside, whichever side we're going towards. And sometimes those milestones become resistance. I don't think that's what happened here. It was clear that there was a lot of expectations around the CPI number, right? That's the number we get every month around how hot is inflation. And I saw one of the great headlines was after we hit 5,000, the next day, the CPI number came out and it said hot CPI number pours

cold water on the market, which is clearly what happened. There were such expectations, especially by the media, that we were going to get a number below 3%, right? It's important for us to know we're coming down from 8% and change, right? Which was a crazy inflation number. And we've gotten down to 3.1%. But the markets run on expectations and the delivery by whether it's guidance and earnings or whether it's economic data. So they were pushing us to have all eyes on the CPI number that we were going to, for the first time, break 3%. It's a tenth of a percent. We just didn't break it. And so those expectations, everyone bought into that by the rumor, sell the news. They bought into that hope that we were finally going to break 3%

for the first time. And that meant that the Fed was going to be able to cut rates in Q2 or whatever. And they came in shy by two tenths of a percent. And so this market is basically the movements, the trade. There's such a huge tranche of traders in the market that when they love something, they will buy it with abandon. We're seeing stocks like Arm, you know, and NVIDIA going up 50, 100 points in a day. So when they love something, they buy it with a rational enthusiasm. When they sell it, they sell it with abandon. And it is not a very forgiving market. So that happened to be the day before that we hit the record high. We had closed there. And then the CPI number came in and they just said, you know what? I want out

of this right now. And a lot of traders started to dump. I would imagine a lot of people who bought the rumor decided to sell the news. And that's why it happened. What's important to note is the follow through, right? The day we sold off 800 points on the Dow and almost 90 handles on the S&P, we did not close on the lows of the day, right? So I trade the S&P. That's my specialty. And we were down 98 handles, I think almost almost 100 handles around 350 in the afternoon and right into the close. Handles are points. Handles are points. Handles are points. That's just it's a term we use here on the floor. You're so fancy. So I don't know where the handle term came from, but that's what they're called down here.

Anyway, they rallied 30 points, 30 handles, and closed right into the last 10 minutes of trading, which really meant often when you'll see a down day and the market closes on the lows of the day, more times than not, the next day is a gap down day, which can be a bit of capitulation. That day, we did not close on the low of the day. We had a huge rally in the last five minutes of training.

And I think that set us up, set the runway up for the rally we've seen now two days in a row. Today, we were up. Yesterday, we were up. And it seems like that was just a one-day affair. It was an over-emotional reaction to a CPI number that wasn't that bad, right? And I think we're still, we're off to the races again. And so let's give listeners a little refresher. When you say CPI, it's showing where inflation

is going. So when inflation goes up, which industries tend to feel the most pain? Well, look, consumer staples, for one, right now, all eyes are on the state of the consumer. Look, we have to realize that there's sometimes the economy and the markets don't trade in concert, right? We'll see an economy that's a bit sluggish. We're looking at a consumer base that has the highest credit card debt that I think we've seen in decades, right? But I think it's important to note that where we came from, we were at 8% and change.

We were almost $5 on gasoline, right? And I don't blame anybody for it, which clearly was a function of the pandemic. I'm a firm believer. We did not throw $3 trillion into the economy when we did around the pandemic. We got back to even. The pandemic was in March, April, May was the beginning of it, 2020. We were back to even by August 19th because we threw $3 trillion into the market over three months. In the crash of 2007, and I will call it a crash, it was very significant. They put $800 billion into the market as a stimulus, and it took nine years to get back to even. So I'm a firm believer if we didn't do what we did,

and a lot of people don't like Jay Powell and they felt he's just printing money. I think if we didn't do what we did, we'd all be on bread lines right now. I think we really did the right thing. We've gone from 8% change inflation, right? And I think we were there, we were at real highs to 3%. So I think we're doing a lot of that. That's a huge move down, especially when our goal is 2%. So I don't know what everybody's complaining. who, especially when our goal is 2%. So I don't know what everybody's complaining. Yeah, I think it's really smart to remind folks also that the economy is not Wall Street. They can be two different beasts and do two different things. What are people though saying on the street about what the Fed's going to do with interest rates when they meet in March?

Okay. So for some strange reason, and it's not what I heard, everybody hears different things when they listen to the Fed, right? Obviously we have one meeting where we talk, whether what we change the number or we keep the number flat. And then we have a news conference, which is where the nuance of Jay Powell's language is so important, whether it's hawkish or dovish. Recently in the last meeting, obviously we stayed pat on the number. We didn't raise it or lower it. However, he did say, and I don't know, it caught everybody by surprise. I did not get the sense that we were looking at an interest rate cut in March. I thought we were looking at probably the later part of Q2. But obviously, I guess expectations were around it. And he made it

very clear. He tossed that out onto the table that there's nothing's going to happen in March. Right. You know, it's a data driven decision making. But he said, I don't think no matter what happens, are we going to change it up in March? And we're probably I think there's a 44 percent chance that we'll have one in May, an 11 percent further chance there'll be another one, I think, in July. So, I mean, I think that's where we're at. I think each month we're going to see there's still a lot of information that we're going to see. Earnings season was quite reasonable.

The market is clearly responding quite well to everything. No matter, look, we just saw a down day of 800 points, right? And there was no follow through on it. That means, like I've always said about crashes and pullbacks, is that all of these things are nothing more than buying opportunities. Right. Use the word crash and start singing the praises of doomsday like we did suddenly two days ago. You know, the overreaction, the catastrophism of an up day of a thousand and a down day. This is the norm. It's not the exception to the norm. Down 800 day is not actually a big

deal in the world we've been living in for the last couple of years. Literally, for the last four years, we've barely ever seen a less than a 1% move in the market. So I think the media tends to love to catastrophize everything. So yeah, basically, it's like two steps forward, one step back. This is how the market works. But ultimately, we're trending forward. Correct. And that's a healthy market. That's a healthy way to trade when we're day trading stocks, right? We want stocks to be going up and we want them to pull back.

That's how you build a foundation in markets, in economies and in everything, right? I mean, that's the way it is. And so it's two steps forward and one step back. I don't like to predict what's going to happen. Look, if I have learned anything over the last number of years, anything can happen. Anything can happen in the market. Anything can happen in the world and anything can happen in the stock. Right. We are seeing stocks go from ARM, for instance. OK, went public in September at 50 bucks. Everybody didn't like it. It pulled back to 35. It's now trading at 170. Just now,

NVIDIA announced that they took a stake in the company, right? The AI revolution is off to the races, right? The amount of money that is being put into AI is in the trillions. And it's really a revolution. And that the things that we thought of, the world of the Jetsons, let's say, right? Robots and all that kind of stuff. It's not 2050. We're talking 2025. We're going to start seeing flying cars and all this wild stuff. So I think it's important. That's one of the things that's fueling the market in a big way. Right now, the market is telling me it feels like it's going higher, but, you know, it can be dislocated as we just saw. One CPI number, you know, one bad thing that can happen globally, you know, any number of things, a big hack can completely dislocate it. But net net, I kind of think that those things that we've seen when that happens are pullbacks and they're not the norm.

They're the exception. Yeah. Market is such a sensitive flower. Hold on to your wallets. Money Rehab will be right back. I love hosting on Airbnb. It's a great way to bring in some extra cash, but I totally get it that it might sound overwhelming to start or even too complicated if, say, you want to put your summer home in Maine on Airbnb, but you live full time in San Francisco and you can't go to Maine every time you need to change sheets for your guests or something like that. If thoughts like these have been holding you back, I have great news for you. Airbnb has launched a co-host network, which is a network of high quality local co-hosts with Airbnb experience that can take care of your home and your guests. Co-hosts can do what you don't have time for, like managing your reservations,

messaging your guests, giving support at the property, or even create your listing for you. I always want to line up a reservation for my house when I'm traveling for work, but sometimes I just don't get around to it because getting ready to travel always feels like a scramble, so I don't end up making time to make my house look guest-friendly. I guess that's the best way to put it. But I'm matching with a co-host so I can still make that extra cash while also making it easy on myself. Find a co-host at Airbnb.com slash host. One of the most stressful periods of my life was when I was in credit card debt. I got to a point where I just knew that I had to get it under control for my financial future and also for

my mental health. We've all hit a point where we've realized it was time to make some serious money moves. So take control of your finances by using a Chime checking account with features like no maintenance fees, fee-free overdraft up to $200, or getting paid up to two days early with direct deposit. Learn more at Chime.com slash MNN. When you check out Chime, you'll see that you can overdraft up to $200 with no fees. If you're an OG listener, you know about my infamous $35 overdraft fee that I got from buying a $7 latte and how I am still very fired up about it. If I had Chime back then, that wouldn't even be a story.

Make your fall finances a little greener by working toward your financial goals with Chime. Open your account in just two minutes at Chime.com slash MNN. That's Chime.com slash MNN. Chime. Feels like progress. Banking services and debit card provided by the Bank Corp Bank N.A. or Stride Bank N.A. Members FDIC. SpotMe eligibility requirements and overdraft limits apply. Boosts are available to eligible Chime members enrolled in SpotMe

and are subject to monthly limits. Terms and conditions apply. Boosts are available to eligible Chime members enrolled in Spot Me and are subject to monthly limits. Terms and conditions apply. Go to Chime.com slash disclosures for details. And now for some more money rehab. Okay, so fine, we won't predict the future, but we can do a vibe check. And that's really what the VIX tells us. So for our listeners who don't know, can you explain what the VIX is? The VIX jumped. Why do you think that is? What are the factors responsible for that?

And what will that tell us about where the market's going? Okay. So the VIX is a fear index. It's supposed to basically trend to zero. So when it goes up like that, that it goes there for a number of different reasons. It is basically can be used as a hedge. You don't trade the VIX as an entity itself. You use the VIX as a way to protect yourself

against possible disasters. When you've got a portfolio that is long the market, right? And you really want to hedge yourself against a potential of, because as I said, if I've learned anything, any in the last number of years, anything can happen. Right. We just came through 2023. That was a year we had a major bank crisis.

Do we even remember that? No. We are in two massive global wars. Do we remember that? Well, we're kind of living it on a daily basis. But, you know, we tend to get jaded by what's going on around the world. So when you see the VIX spike, that's basically people hedging themselves in a long position against a disaster happening. There are so many moving parts to what's going on globally, economically and whatnot, that anything can happen. And that's why we're seeing the VIX spike like that. Now, historically, though, markets, the VIX tend to be an inverse reaction to the market. When the market goes down significantly, you see the VIX spike up, right? That's once again, fear that it's going down. It does happen, though, that the market, that the VIX can be up and the market can be up at the same time. And when that happens to me,

that's more of a hedge than a fear that the market's going to crash. But let's be clear again, there are a number of big Wall Street pundits who are saying that we're looking at one of the biggest crashes ever in March, right? Some guy from Morgan Stanley, there's a number of people out on the street who are touting the crash. And there always are people like that. You know, we always see that when markets are trading at record highs. And I always wonder, is that sour grapes? Is that people who never hopped on board and they watch the market? Is that Bitcoins at 52,000, the markets at 5,000, they never hopped on board, so they're going to start talking about a crash? You never know what that's about. I don't know. I mean, sour grapes are people shorting the market, so talking their buck.

And there are. There are those inveterate bears who are always talking about doomsday and always who are short the market. And those people, at the end of the day, when is the pain enough for them to hop back in the market? The market can hang on way longer than most people's portfolios can. And always listen to those pundits with lots and lots of salt because they have some interest in it. Peter, we end our episodes, as you know, by asking all of our guests for a tip that listeners can take straight to the bank. You have so, so many. What's just one tip today that listeners, investors can do during times of uncertainty? I love to really talk to people like yourself who are way smarter than me.

And I think it's fascinating to watch. The Russell 2000 is a fascinating index. As the Dow is 30 stocks, the S&P is 500. The Russell is 2000 stocks. What gave it away? The breadth of that indices is quite huge. What we saw at the end of 2023 was the Russell 2000 go from a 52-week low to a 52-week high over the last 46 days of the year. Then the first of the year came along and the Russell felt really weak as the market continued to go on. I think there was a nice move in it. People were maybe taking profits or whatnot. But what I investigated, my investigation with Dan Ives, I asked him because a lot of these AI stocks, and I find it sort of fascinating, the whole sector and the fact that he's really clear that this is a revolution, that's his wheelhouse. And he said that that's going to change our lives in a big way and not in a bad

way. I was sort of skeptical that it's outsourcing humans and whatnot. And he said, that's really not going to happen. But what I asked him was a lot of these names like NVIDIA. February of last year, NVIDIA was trading at $108. It's trading at $726. So many of these names in the AI space are really way outpriced for a lot of people to trade the market. And so I asked him, a lot of people to trade the market. And so I asked him, are there any stocks in the sort of embedded in the Russell that are have exposure to AI that are more affordable? And he said, yes, there are plenty. And so I think maybe that's what say and I'm not an advisor to anybody, but it's clear to me from from the reconnaissance I've done that AI is here to stay. It is going to be a revolution. There are trillions of dollars being thrown in it. I read right before our interview that NVIDIA has put a lot of money in

ARM, which is the stock that just went from 50 to 150 over the last couple of weeks. And another stock called Sound, I think it is, and a couple of other biotech stocks that have exposure to the AI space. I think people need to do their own homework, but I think that they should check out some of these sort of tertiary names, mid-cap, small-cap, that are in that space, because from what I hear, that is going to be the future right now. And I think it's going to be a good future because it's going to help us in the medical space in a big way. But you know what? The last thing I'll say to you is that from a more humanist point of view, I think that everybody really needs to go out there and ask everybody in their world how they're doing. Okay. I think everybody is sort of a little bit freaked out at the moment,

just in general, all over the world and surely here in New York and in big cities. If the VIX, the VIX, the VIX should be the human index right now. I think that's maybe why it's spiking. There's so much fear and anxiety and discord going around amongst human beings that I think people need to sort of check that a little bit. So that's my that's my tip of the day. I love that. And with people who have money on the sidelines right now, because you're seeing and they listen to Money Rehab so they know don't buy high, buy low. They're keeping their money on the sidelines. Maybe they put money into an IRA before the deadline for last year, but they don't want to put that to work until there's a little bit of correction. How long do you think people should wait on the sidelines?

You know what? I don't know about a correction. The market tells us what's happening here. We just saw a very short-term correction. If there was going to be a correction this week, we just saw a very short-term little peek at it. There was no follow through. So I'm a firm believer waiting around for a crash or a correction or a pullback is just not a good thing to do. I think people need to really analyze the space. As I said, an alternative to buying high is to find spaces that are like AI and find tertiary or secondary stocks that are cheaper right now. I mean, one of the stocks I just mentioned, I think is a three or $7 stock, right? So there are stocks in that space that are more affordable for the general public. Look, at the end of the

day, waiting around for that to happen, it's not what I would advise people to do, and I'm not an advisor, but I think what you do is you start to buy small, right? Whatever you do, your first entry into the market in any equity or option should be the smallest inroad into the stock. Let's say you allotted to buy 500 shares or $500 of a stock, right? You just buy $50 first of it and then $100 first. Your first inroad into a stock, your purchase should be the smallest amount of all so that you're always chasing gain. If it continues to go up, right, then you can average up. But if it continues to fall, then you have some powder to play with on the downside. Never go all in on an equity, especially in a market that's,

it is long in the tooth. There's no question about it. We are trading at record highs. And so I think people are, but we've been doing that. We've been hitting milestones every month and every quarter for the last year and change, right? The last time we saw a correction that was anything significant was 2022, right? Maybe July of 2023, but they didn't last that long. We just had a one day, you know, one day pullback. And by the end of the day, people were done with it and said, you know what, I'm buying into this down 100 and they scooped it up 30 or 40 points.

So don't wait around. Money Rehab is a production of Money News Network. I'm your host, Nicole Lappin. Money Rehab's executive producer is Morgan Lavoie. Our researcher is Emily Holmes. Do you need some money rehab? And let's be honest, we all do. So email us your money questions, moneyrehab at moneynewsnetwork.com to potentially have your questions answered on the show or even have a one-on-one intervention with me. And follow us on Instagram at Money News and TikTok at Money News Network for exclusive video content. And lastly, thank you. No, seriously, thank you. Thank you for listening and for investing in yourself, which is the most important investment you can make.