Oh, so much pain in this market. Nearly every major indices down you have the Vix and Uvxy volatility index is picking up, semiconductor space is getting hammered. Big Dogs and Internet contented information like Alphabet, Meta and Twitter are getting killed. Your Microsoft, your Apple, your Adobe, your Oracle down banks and capital markets seeing selloffs now reversing their early year trend of positive trading, I do see these as a unique opportunity given rising interest rates later in the year, but you also have Rxe new 52 week lows.

I was looking very, very hard to find an actual picture of the Kathy Woods today, and you can see very clearly a sizable portion of the Kathy Woods have been cut down. Our on the ground Ziptrader research team actually managed to get an exclusive picture of the head lumberjack. I don't know if you recognize him, but he looks oddly familiar. but don't worry, he did mention that his decision to chuck Wood is only transitory in terms of uptrending areas of the market.

There's not much, but Bbig has continued to see some strengths. Today last week, just below the two dollar region, we noticed that it was seeing renewed retail interest as a short squeeze candidate unless we briefed on it a couple times last week and reiterated it in today's morning briefing and it climbed as high as 5 49. But it's been one of the only battlefields so far in 2022 that I can think of that has managed to retain a solid day after day uptrend. A solid retail induced short squeeze fighting day after day uptrend.

Nonetheless, the attention that it's getting right now is extremely high and trending in the right direction. and if you look at the squeeze setup as well as really the options chain set up, this is looking like an interesting setup for a squeeze on Mcqueezy. That said, context is key and we're in an environment where everything's getting beat down if there's any level of risk to it. And at the end of the day, these squeezers come and go.

And they're not long-term traits. They can be fun short-term plays if you manage your risk, but keep in mind in this kind of environment, the only thing that's really holding up Bbig is retail. Momentum doesn't mean you can't play it, but it does mean that there's not going to be much support once it finally does end the squeezy Mcsqueeze phase. Speaking of some short term fun though, you are also seeing those pushes with Trump Stocks, Joak and then Sympathy Runner Fun.

Dwack actually does have a big catalyst coming. Next month, the Truth Social app will finally be launched. At least that's according to their plans. Of course, Dwack is going to merge with the Trump Media and Technology Group, and the Trump Media and Technology Group is going to get a ton more attention.

Because of this Truth Social App launch, I would expect Dwac to see some positive inflows, at least on a short-term basis when you get closer to that catalyst. Outside of that, we did finally get a win with Selfie. They reported in the after hours today that they got regulatory approval to become a national bank. We've been waiting for this for a heck of a while, and this approval means that they'll be able to lend at much more competitive rates and provide members with substantially better financial products.

As a whole, there is no shortage of not so fly Sofi bears saying that this wasn't going to happen, so this is a big big win for the sofa believers. That said, of course it is a little bit bittersweet and that the multiple crunches hit so far so hard that even with this massive spike in the after hours, it's really only returned a few days of losses. But long-term company efforts to provide shareholders with more value will show up in the pricing. We got to get through these damn macro issues, But anyways, besides a few squeeze style or meme momentum runners, we didn't really see much green today, and we haven't seen much green this year.

It's another dirty, dirty, dirty day in the overall market, and I was reading the Wall Street Journal the other day and they had a piece displaying data on the monthly net purchases of U.s equities by individual investors over the last couple of years aka retail traders. And from 2018 to the first month of 2020, monthly net purchases hovered around one to seven billion dollars. Then all of a sudden 2020 came in. Retail investments went above 20 billion towards the end of the market drop, and then they continued buying with a vengeance through 2020, at rates many times higher than the past years.

Then what happens? 2021 comes around, and you have in some cases, even higher buying rates than in 2020, and definitely more consistent. And that held up despite most of the growth sector and small cap markets which are disproportionately retail based, getting totally destroyed from late February to October and then from basically November to now. Not only that, but you take out some of the big tech names and the Nasdaq and the Nasdaq is doing horrible. And some statistics show that retail traders may have accounted for one-third of all U.s stock market trading in 2021, which is insanely positive, and many brokers reported that just the first quarter of 2021 saw record numbers of new accounts created.

Schwab added more in Q1 of 2021 than they did in the entirety of 2020, which in and of itself was an insane year. But one of the situations that we need to talk about and we need to warn about, is the tendency of stock market participants to struggle with what I call random reinforcement. market cycle reinforcement, the market telling you how to think instead of you thinking for yourself. People who joined the market for the first time in say, March 2020 and throughout that year were reinforced constantly constantly that every single time something dipped, it would just recover and it would probably recover quickly.

It didn't matter what the stock was, what the valuation was, how many negative articles were on the stock, the stock would rebound and so traders were taught to buy every single dip no matter what. Don't ask questions on the valuation because dips will be re-bought and it encouraged a ton of people to join the market, which is a very, very positive thing. But it also reinforced this behavior of two things: Number one: not asking questions on what you're buying or asking about the valuation. and it also encourages instant gratification if it doesn't provide instant gratification.

sell out, move somewhere else was what the 2020 market taught you. We were in a period where if you made a video or a article saying that a stock has reached its fundamental value and is now way over it. You get chewed out by the comment section because guess what, the market just keeps going up and that stock kept going up. You are in the situation of unchecked euphoria and optimism, which definitely has pros and cons.

It's very, very fun for people who are in way before the unchecked optimism, but it's very, very dangerous for people who get in at the top of that unchecked optimism and nobody ever really knows where the top of that is. But these days you're having the complete opposite problem. You're getting unchecked dysphoria and pessimism. Once again, the market is teaching traders that valuations don't matter.

Don't ask questions about the valuation, Just sell. Doesn't matter what price interest rates are going to be rising, years of Fed tightening is ahead. Inflation is going to be so bad that your kids are going to be paying Elon Musk's entire net worth for a simple loaf of bread in 2020. You had all these people that said, why would I do my due diligence? Stocks just go up and the market trained them.

That was correct. You just keep buying stocks no matter what happens, and you make money. And probably fast. In 2022, the market's teaching you.

hey, if you buy the debt, you're going to lose money. If you do your due diligence, you might even lose more money in both market environments, You were taught the same lesson. Hey, fair value doesn't exist for stocks. The market is just going to keep going up and up and up over your stupid fair value.

And right now, the market's just gonna go down down, down, down, Way below your fair value. One thing that a dysphoric market and the euphoric market have in common is they like to remind you that the fair value doesn't exist for a company. It's only what the market thinks it's worth in the present, not about what the company's doing. However, what the market wants you to ignore is that over a long enough time horizon, you have both cycles, both optimism and pessimism and the fair value.

If you're good at calculating, that is going to be the no Bs answer to what your business model is worth regardless of where the market is trading. And so if you buy it with a fair amount of wiggle room below your price target or your fair value estimate over a given time horizon, then you can play the cycles without worrying too much. But what tends to be the case unfortunately is that retail participation tends to expand at the highest pace during times where an asset class is at a new peak. Whether that's the small cap market, the big tech market which we're seeing now start correcting, despite at the end of 2021 seen a lot of retail rotate into that, it tends to be the case that the most amount of retail people are interested when they're at new peaks because they look at the prior chart and they say okay, I see where the trend is heading, I'm gonna buy in and then if they're lucky, the trend will continue for a little bit, but eventually it ends up dipping again and then most of the people get washed out and they never return to the market.

But the issue is when you think really really short term time horizon, you totally ignore that cycles are normal and we all know that cycles are normal. But the payment you feel when You buy something at a price that you felt was right and then it immediately dropped because of whatever catalyst tells your emotional system that you're not met for the market. You're a loser. You suck.

It's also true that a lot of people disproportionately will look at only positive things when they're deciding to buy a stock, and then the minute it goes down, they'll look at only negative things. That way they can make up their mind and just have the research correlate with what they already decided. But the issue again is the market always switches from cycles of optimism to pessimism and then back and forth. And if you're somebody that just got involved in the stock market for the first time in the last couple of years, whether you started in early 2020 or in early 2021, you may have only seen only green, or you may have seen only red and you may feel like okay, well over my time, Horizon: In my experience, it's only been positive, or it's only been pain.

And thus, that might be what you actually identify the market with emotionally. whereas in reality what you should be identifying the market with is how it trades over the long run, which is a mixture of both. But tilt it to the upside if you're picking the right companies at the end of the day, no matter what, the Catalyst blanket optimism, optimism that spreads to an entire sector where everything just keeps going up and up and up because it's in a specific sector that's a massive inefficiency and things are getting pumped up way too fast. But on the flip side, blanket pessimism where everything gets sold off dramatically.

Whether that's because of interest rate concerns or whatever is also an inefficiency. A lot of growth companies are getting sold off algorithmically at the same rate, despite having completely different cash flow pictures despite having completely different revenue trajectory pictures, and being in completely different industries. Many of these are going to be making tons and tons of money in the upcoming years, but the market's treating them all as garbage because they're in one specific sector and they fit that criteria similarly. They were the best thing in the world just a year ago.

Buy at any price. I remember during the Kova drop in 2020. every single stock that I ever liked was down 40, 50, 60 if you were even down 80 percent. The only thing that was really up during those original days of the Covet Drop that we liked was the fix which was multiplied version of the volatility index and that thing was a beast, but everything else was down massively.

All of the favorite companies that we had huge conviction just destroyed in valuation within three weeks. I used to frequent a ton of trading forms and there were so many retail traders that joined in 2018 and 2019 that just got completely blown out, completely destroyed in that drop. And they said to themselves, i'm never ever coming back to the market. This is terrible.

I don't want to risk this happening ever again, and perhaps the speed at which that dip recovered was an anomaly, but still, the dynamic is always the same. Looking at short-term pain as an indicator of long-term results is not the way to go. You can't control the macro environment and every negative catalyst for the market always seems like it's endless. But if you're slowly buying the dip on stocks that are doing numbers that make sense, eventually the market will reward you.

And if you're lucky enough to be in an overly pessimistic cycle like we were back then and I'd argue we are right now. you'll get rewarded with extra alpha if you bought the original dips in the first couple of weeks of this crash, you may have felt like an idiot for a few weeks, but if you slowly average down on your highest conviction plays and stayed looking at the bigger picture, you'd have been able to make use of one of the biggest opportunities that we've had in several decades. But Charlie inflation is going to impact the short to medium term valuation of a company that I like and speculation on inflation is all across the board. How do I know if I should buy it or not? Well, I would argue that judging the trajectory of inflation right now is very similar to judging the trajectory of the damn Govit virus during those early days of the Kobe Crash.

It's a guessing game. No one really knows where it's going to go. But what you do know is that many companies that you like are trading well below what you saw as a fair price and now similar to then you don't know how long the market is going to take to reward that and agree with your valuation. It could be very, very short term.

It could be long term, but you don't have control over the market, You don't have control over what the Fed does or where inflation goes or how bad supply chain concerns get, But you do have control over buying. The dips on companies that you believe are very, very below fair value, and you don't have to do it all at once. In fact, it's very possible that supply chain issues persist for longer than a lot of us expect, and you see valuations have substantial more dips. But I believe if you have a company that you value at a certain price, you should try to average way below that price when you get the opportunity.

And if you get better opportunities, even better. And if you feel reluctant to do that, that's fine. But you have to go back to your analysis on the companies that you're considering dip buying and reanalyze them because if you're not confident buying them at below the price that you think they're worth, that means that you're not confident in your analysis. Some crashes are fast and painful, others are slow and painful.

This one's a little bit more on the slow and painful side, but the biggest sell-offs always lead to another period of massive, massive opportunity. And that is something that I hope that a lot of new traders that may have been stuck in a really, really bad period of the market so far in their experience understand and are able to stick around to see. We don't know when that's going to be, but we do know that the best bet is making sure to understand that we have both positive and negative cycles and in both, the market gets overly pushed in one direction or the other, and if you fall for that, you're gonna get screwed on both sides. Anyways, that caps off this video.

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