Those futures are already looking mighty mighty red. I hear that Putin may have bought some Triple Q puts before the start of the weekend. Let's just say that perhaps what Russia is going to be losing in Western sanctions, they're going to be making up for in profits on those puts. But in this video, we have three things to talk about.

Number One: my take on the escalation of this Ukraine, Putin, Russia situation. Number two: we have to talk about the sentiment heading into this week and some of the logical flips that we're seeing from retail traders and the overall market. What the data suggests are the best opportunities right now on both a short-term and long-term time horizon. But before we get into all of this, a quick word from our sponsor, Public.com Ziptrader Public.com is an investing app where you can buy stocks, Etfs, and crypto.

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It's very, very easy Again, Public.com Ziptrader. Thank you Public for sponsoring this video. Now back to the content. Okay, first, Putin.

So the Ukraine situation has dramatically escalated. Putin has ordered his forces into rebel Eastern Ukrainian regions after recognizing their independence from Ukraine, which obviously is not something that the Us and the rest of the West agree with. But of course, recognizing them as independent territories different from Ukraine paves the way for Russia to invade them in sort of a peacekeeping mission Because it's no longer them invading Ukraine, it's them invading independent territories which they helped back for years and helped arm the separatists who fought against Ukraine. And hey, look, I'm a pedestrian in terms of geopolitical analysis, but it is fascinating and in terms of a market reaction, it's very, very relevant.

I mean, it's pretty clear that markets are preparing for some sort of bloodbath. I mean, Putin himself warned in a speech of a quote, possible continuation of a bloodbath should Ukraine contest Putin's recognition of these independent territories. Putin went as far as questioning Ukraine's entire right to exist in a speech claiming that Ukraine never had a tradition of genuine statehood and bemoaning the breakup of the Soviet Union as a whole. Obviously that paves the way for substantially more aggression in Ukraine, but maybe throughout the entire region.

Perhaps there's even a broader agenda here, which is going to freak the market out trying to anticipate what's going to happen and excuse the fear-mongering But quite frankly, this is going to accelerate a lot of the problems that we're already having. If you're worried about energy prices that are skyrocketing, this is going to make them skyrocket even more. If you're worried about global economic uncertainty and global supply chains, this is going to make those even worse. If you're worried about the Fed having to raise rates rapidly during a period of time where the economy is slowing down rapidly and economic uncertainty is abounding, well, this makes that even more likely of a scenario.

We've gone through the data though, and it does show that over time fear does not stay in the market. In fact, fear tends to be the best opportunity to buy dips. But again, if you're going to be looking at these conditions, you have to recognize that fear does not always go away quickly, and there's a lot of different issues that are all coming and meeting in the middle. Right now, you now have sanctions rolling in from the U.s the Uk, and the Eu.

More are likely to come. So far, the American ones have been fairly constrained to the rebel region in Ukraine, but U.s investors are going to have to face the potential for broader, actually devastating sanctions on this massive producer which is Russia. And of course, not a zero percent chance that the escalation doesn't lead to what none of us want to happen, which is Boots on the ground. There are certainly levels of escalation and how far the consequences from the West are, but the more things escalate, the more that spiral continues and the more the market is spooked.

But in terms of the market reaction, I'm watching and you should watch too the commodity futures Energy Oil specifically. Look at that to see what markets are factoring in and you could tell what stocks are going to get hammered over the upcoming weeks. That said, the legitimate fear-mongering part of this video is now over. I want to talk to you about the actual data that suggests what you should be doing, or at least what history suggests you should be doing during these very rocky conditions.

So as inflation and rate hikes have rocked tech stocks and increasingly the overall market, there are some very fascinating comparisons that can be made. Take, for example, Netflix. If you invested in Netflix in June of 2018, your returns have been an astounding zero percent. Three and a half years, Zero percent returns.

It's worth mentioning that Netflix's business and business model has changed dramatically during this time period and has provided a lot more value. They've completely transformed their content outreach and international outreach as a whole, and they've also brought in quite a bit their subscriber base. But of course, new competition has been very, very harsh over the last couple of years in terms of scaling up, but still, three years zero percent returns. Meanwhile, if you bought a Nissan Leaf the vehicle in November 2020 and sold it today, you'd have somewhere around a 64 return.

If somebody told you back in November of 2020 that it's a better idea to buy Nissan's Leaf vehicle, which is really ugly in my opinion versus buying Netflix stocks, you probably would have laughed in their face. But Nissan Leaf has been one of the best growth opportunities of the last year, and a lot of people think this is a trend that's going to continue over the next decade. After all, leafs don't grow on trees. Facebook slash Meta you bought that in mid 2018.

You're now flat in returns as well. If you had bought a Toyota Corolla and held just one year, you'd have gotten a 39.5 return. Now I know that Facebook's making a huge bet into a very speculative world, but really, Toyota Corolla great vehicles. They lost hundreds of thousands of miles.

Fantastic, right? But still 39.5 return. If you invested in Paypal in July of 2019, you now be down about 10 to 15 and roughly two and a half years as an investor. Obviously, the company has had huge growth since July of 2019. They're still doing fantastic in terms of growth rates.

They're not as fast as they were in 2020, but still. the overall picture of value add that they're providing for customers is substantially better than what it was in July of 2019.. Go down the list: Salesforce ticker symbol: Crm Dramatic, dramatic winner of the last couple years huge winner probably in the future as well Now erased almost all of its gains from pre-coveted highs Chegg flat returns from early 2018. Zoom.

I'm less sympathetic about this one because I don't really get what makes them competitive, but they do have a nice reputation and a lot of people do use them and still beat down massively erased so much of its gains despite being one of the biggest winners of the pandemic and being one of the fastest accelerated, adopted platforms over the last two years. Roku another one that I'm not super sympathetic about because I don't really get what makes them competitive, but still. I mean flat returns If you bought and held it from a couple of years ago and you look at the numbers that these companies did over the last two years, and you look at the numbers that they're still doing not just stay at home stocks, but still pulled into pretty decent customer base. and it's like, really, the stock market doesn't see any value add, it's fantastic.

And there's this big picture of growth companies, a huge ticker list of stocks that have been beat down massively from all-time highs as a result of this inflation trade. If you look through the list, some of them are pump and dump style of spec stocks. Don't get me wrong, but a lot of them are very, very good companies that are still seeing accelerating growth and have the capital on their balance sheet to survive many a storm. Yet look how massively they're down and people still think they should go down a lot more.

And hey, they maybe will. But it's fascinating. And the reason it's fascinating is because logic has flipped in this market and it's a really good opportunity for people that see that. And it's a really bad opportunity for people that don't.

Logic for long-term conviction, capital is to buy stocks at good deals that have the highest chance of providing the biggest economic growth or the biggest revenue growth over the upcoming years, because that's the biggest driver of stock market returns. But yet most people are focused on rotating their capital into Nissan Leaf style opportunities, not the literal car. I mean that in more of a metaphorical sense, companies that are on a fluke uptrend because of the current market condition that are able to pass on prices to consumers because consumers either have no choice or they're still willing to pay for it. But also, we're going to be bludgeoned massively after that fluke.

Market condition ends, while at the same time selling and selling. selling stocks that actually have the highest potential for growth. over the upcoming years, and that rotation has gotten increasingly concentrated. At first, you had a massive rotation out of small cap stocks into big tech stocks.

We talked about that last year being very, very bubblish. At that same time, you had a massive massive rotation into overall value stocks and categories like utilities, consumer staples, financials so on, and so forth stocks that make sense over a short-term time horizon for an inflationary problem. Obviously, those have started panicking a bit this year as well, but now you're just seeing concentration in one sector, which is really energy and some broader commodity place. You look at the one month, six months and now one year performance of the S P energy segment.

It's up 18 on the month, all the way up to 75 on the year. Meanwhile, literally everything else is underperformed in that time period. It gets really atrocious when you're looking at the last month returns. Everything is red except financial, which is basically flat.

Meanwhile, energy is up 18.77 percent. Month over month, you're seeing S P energy outpace literally everything from information tech to consumer discretionary to S P Healthcare, to obviously the overall benchmark and many other categories. And these are all categories of mixed value stocks, tech stocks, and some medium cap growth stocks that have made it into the S P. Now, don't get me wrong, this is all interconnected.

The selloffs are accelerated by massive booming energy prices which are helping boost the energy segment while killing everything else. And it's very difficult to see when this is going to end, especially with the latest Putin aggression. And I'm certainly not against short-term to medium-term trades on macro conditions as a part of your trading. but I'd be very, very careful here about missing other opportunities.

A lot of people right now are rotating their entire portfolios into chasing this new inflation trade that has been concentrated just in energy. and again, I totally support that on a term time. Horizon energy is going parabolic right now, and if you can take a concentrated bed in it as a trade fine, but you want to be very, very careful about bandwagon hopping. People like to bandwagon, hop on things that have done well over the last 6 to 12 months, and hop off of bandwagons that actually are going to do very, very well over the long term.

Ironically, I made a video back on April 21st, 2020 when oil futures contracts dipped negative and so did of course my access to a barber if you could tell by the thumbnail and I explained how oil supply and oil production tend to be fairly slow at reacting to demand shifts and a massive demand shift like the pandemic, shutting down most economic activity around the world created the situation where a ton of excess supply was dumped on the market and futures contracts went negative as the cost of operations and the cost of storing oil was more than the actual oil was worth at that time. Analysts at that time were saying oil is going to be cheap for the next five to ten years and they place bets accordingly. Now it's been like a year and a half and they're already saying that they're accelerating to new highs forever, and you need to take your bets based on that Again, Like I said back then, momentum trading on that type of thing is fine, but you have to acknowledge how extremes work. You're always on a push from one extreme to the other.

This extreme rotated a lot faster than I thought it would, but still, it's the same thing when you see something going into a new extreme, just know that eventually you're due for a reversion now, backing up a second. Obviously, there's a lot of reasons why stocks are selling off right now. the Fed is really working against the market. The economy has a lot of uncertainty in the future.

There's a lot of problems outside of this whole Putin-russia Ukraine situation. and let's be frank, even if there is nothing, it makes sense that there's going to be a cyclical downturn because there always has been. And it's not something to be sad about. It's an opportunity to say hey, look, there's lots of fear.

There's lots of cycles that we've seen play out over the last 50 years. This is an opportunity not to panic by, but an opportunity to look for opportunities that make the most sense. So let me pick your brain about something really quickly. so we know that over the long run.

it's revenue growth and future profitability that drive long run returns, right? I've shown this a million times. I've noticed that a lot of other Youtubers and folks all over social media have been sharing it as well year over year. Performance is based mostly on the multiple. The market is willing to pay for your stock based on current favorite sentiment, but over the long run it's based on actually what's driving the growth companies that actually have growth.

So you go back to this data set. Think about this. Over the last three, five, and ten years, the S P Information Technology sector has been the top performer. The three year annualized returns are 36.22 28.08 and 21.47 percent Now, information tech or companies like for example Apple, Microsoft, Nvidia, your Visa, your Adobe, Salesforce, Cisco, and so forth, and then Consumer Discretionary which is a mix between value discretionary like Home Depot and Lowe's and Nike and some big tech stocks Tesla and Amazon combined to actually make up 40 of consumer discretionary by the way.

But you also have healthcare which has performed above the index benchmark as well, and these are some of the biggest drivers of growth in terms of stock market returns over the last three, five, and 10 years, right? But there are also some of the most beat down over the last month and last three and six months Go down the list. Negative Six Point Eight, Four percent in a month Negative Nine Point Five, Three percent in a month Negative Six Point Eight Six percent in a month. And then you look at S. P Energy.

It did terrible in the last three years. five years, and ten years. Compared to the previously mentioned categories, it barely kept pace with long-term inflation. We were talking seven Point Two, eight percent, Two Point Eight, three percent, and Two Point Eight six percent.

respectfully. And that seemingly high Seven Point Two Eight. Don't get it flipped. The reason that this was so high is because the last year's return was 75, which averaged out the massive massive bludgeon that oil returns had had prior to that.

So it's done terrible over a long term time Horizon, But it's doing fantastic right now. In other words, what did best over a long term time? Horizon is doing the worst right now. And what did worst over a long term time? Horizon is doing the best right now. If you look at this in context, this table is literally completely flipped in terms of performance.

and with it, investors are oftentimes getting their priorities flipped jumping to a new bandwagon after barely even doing anything with the previous bandwagon, they're giving up the opportunity for long-term gains in one of the biggest drivers of the stock market, which are of course, revenue growth and actually providing value and future profitability from customers. And again, I'm not against macro trades as a portion of your portfolio. I'm just saying that when you're ignoring a lot of the best opportunities, you want to make sure that you're double checking that. One of the things that I've noticed is that a lot of people who have bought dips in stocks that they really really believed in are now rotating out of those dips because they dipped a little bit more and they're going and rotating into a very, very, very small concentration of stocks.

Which is fine if you're trading them on a momentum basis. But if you're rotating all of your high conviction capital into a few gas station stocks or oil producing stocks that's going to eventually end very, very badly Because those aren't going to be the long-run drivers of performance, those are going to be the short-term drivers of this current market condition. The truth is, we can talk about tech stocks all we want, and increasingly some of the big value companies that are starting to come down. But if we are in a cycle where investors aren't willing to buy those companies, hey, they're going to keep going down.

So my take is sure play the energy trade if you want, but make sure that you keep your eye on the long run which are buying companies at good prices that are going to drive the biggest stock market growth over the upcoming three, five and ten years. And if you need to, don't, just look at the historical returns and then say the Fed pumped these tech stocks, The Fed pumped the entire market to these highs. There's nothing that happened that qualified them to go up this much well. Look at what companies drove the most economic growth in the Us over the last 10 years, Look at what companies provided the biggest gains in the stock market over the last 10 years, and ask yourself why? Because if you look at the Y, you'll be able to determine which ones are going to make the most sense for investing in over the next five to ten years and which ones are going to be the best dip buys if this rise in fear could did use.

Anyways, folks that caps off this video. I do want to thank Public.com Ziptrader for sponsoring us today. If you have any questions or comments on this market condition or you want to share what you're doing, make sure to comment below and let us know. I love hearing from you folks and I do read a lot of the comments Anyways, have a good one and I'll see you in tomorrow's video.