Okay folks, so I've got a lot prepared for you today. So we are in this market right now where you have: Wall Street in a getaway car, being chased by the collapsed Banks First Republic Bank Silicon Valley Bank Signature Bank Silvergate Credit Suisse You look at the three key ones here in the US your signature, your Svb, your first Republic Well, those three were bigger than the 25 banks that crumbled in 2008. In terms of total assets, you've also got the big Tech layoffs. You've got the real estate decline.

real estate decline I Don't know if it's really declining that much in most markets, but if you look at the year-over-year trend in terms of total business activity, well, real estate transactions have dropped like a rock. and in a lot of the markets that did very, very well during the pandemic, well, those have been dropping pretty rapidly in terms of prices as well. Most markets are down just a little bit, though. Commercial real estate is down like a rock.

Lots of vacancies, vacancies, skyrocketing, a lot of people ringing the alarms on what's going to be happening with commercial real estate. You have higher interest rates of which the FED has signaled more are coming. You've had 401k days and their allocations imploding. You have the soft Landing fantasies, the crumbling bond market, and then inflation.

not to mention a lot of the other cop cars that are chasing like the geopolitical uncertainty with the invasion in terms of trade tensions with China in terms of a host of other trade issues in terms of new competition from Brics countries in terms of de-dollarization and so on and so forth. But so far, the fact of the matter is that Wall Street and really, the 2023 Stock Market has managed to outrun all of these cop cars that have been chasing it. Graphic here has brought to you courtesy of: R Stock Market On: Reddit They have great stuff, but the story behind this picture the picture behind this meme is this was O.J Simpson trying to run away from Cops Almost 30 years ago, here in La, people were watching the spectacle this Chase on TV And the thing was that no one genuinely thought that he was going to get away. They knew how it was going to end.

He was going to end up either dead or arrested, most likely arrested. You just can't escape this big of a swarm of cop cars and helicopters and worldwide attention forever. right? Eventually you're gonna crash or you're gonna get caught. You're gonna have to stop somewhere.

Still though, OJ made it quite a while. In fact, cops tried to take a stab at arrested him for about 45 minutes before they got him and in a similar way, people are looking at this stock market rally that has been running sharp as a blade and and they're saying the same thing. Hmm I'm watching it run I'm watching it go very, very fast. but but I'm also watching all of the problems chasing it and I'm wondering when this Market is going to inevitably crash.

A lot of people that have been Bulls this year are starting to rethink that now that the market has gone up so much. But on the flip side, there's another argument. There's another argument that says hey, sure, we're in the middle of a melt up, but maybe this melt up will keep continuing. OJ was kniving in and out of traffic for 45 minutes before they got him.

There are two really key arguments right now. There's the argument that says perhaps this police chase is just starting and then there's the argument that says yeah, this police chase has been on for a while. OJ has been driving for like 39-40 minutes. Well guess what, he's going to be pulled over soon.

So I want to present both of these here for you today. Okay, let's go ahead and look at Apple This is one of the main names that has been running this year and driving the market. it's up some 56 since Lowe's reached January 3rd of this year, and the vast vast majority of trading days for Apple have been untested, untested, green, insanely insanely stable, consistent uptrend, right? Very very few times in history have you seen a stock that can run this consistently for this long, especially at this level of market cap. And now Apple is at all-time highs now a three trillion dollar company.

I Remember when Apple became the world's first trillion dollar company 1 trillion back in 2018, which at the time I Remember reading articles that said hey, this is very, very frothy and is not going to end well? Well, now we've 3x that now Apple has consistently been one of the best executors and Tim Cook has been one of the best managers in probably business history. But where exactly did the growth in this valuation come from? Did it come from booming sales and new product from 2018 to 2023? I Mean certainly they killed it during the pandemic. but a lot of that easy stimulus money from Apple has consistently trended down. Those growth rates just aren't anywhere near Apple right now.

And one of the main differences from 2018 Apple and 2023 Apple is how much people are willing to pay as a multiple for sales. back in 2018, the price to sales ratio people were willing to pay for Apple was three to four and now it is over eight. so people are simply willing to pay more than twice as much for every dollar of sales. That means Apple has largely run on multiple expansion and again, sales themselves have increased huge from 2018.

But but they've also been declining since Q1 of last year. Calling into question why you'd pay all-time prices sales ratios for a company that is net slowing down the last six plus quarters. I'm not saying that Apple is a bad buy or that you should sell it, but what I am questioning is how much farther can this reasonably go Before you start having people question whether this is even worth it anymore. This was what was reported on their last earnings report quote: Apple on Thursday reported that it its Revenue fell three percent to 94.8 billion for the first three months of the year.

As consumers scale back spending on smartphones and computers due to looming recession fears, the company's Revenue was slightly better than what Wall Street had expected, but it nonetheless represented the second consecutive quarterly Revenue decline for the iPhone maker. Apple's net income also fell more than three percent from the year ago quarter to nearly 24.2 billion dollars. Now again, I Don't think that Apple is a bad stock by any means, but I think the question that investors have to be asking right now is okay. it's gone up 50 plus percent this year.

it's now at 3 trillion in market cap, But the fundamentals of the company are looking weaker and weaker quarter over quarter. And yet you've never paid more for sales and the valuation is continuing to climb. At what point at what point does it hit a wall? And I know that a lot of people when they want to invest in the market, they just go straight into Apple Even big funds, they're like, yeah, Apple has been a no-brainer for many, many years. Let's just pour in at an evaluation.

But again, when you look at this and you're looking at the business and what it's actually doing well, it's becoming increasingly obvious that Apple is not running because the company is so amazing, or that it's prospects in the next two, three, four years are so amazing, but rather that people just simply are willing to expand the multiples they want to invest and they're over allocating into the biggest of the big names. So the question that an investor has to ask if they're buying at these prices is, how much more upside does this company justify? How much more upside should be realized Here, Is there enough excitement in what their business is doing to justify another 500 billion or trillion dollar jump in market cap? I Would say no. Obviously, the market can be irrational, longer than you can stay solvent, so on and so forth. But still, how often can you get this kind of massive run without getting some some level of pushback if you suggest.

Right now in any Community really Online met a stock like Apple could seek any pushback after this massive massive run all year. They call you a Perma bear and say that you're A, but you can look the last 15 years you have Never. You have never had a period in history where you've had this straight up this sharp of a run to the Upside for six plus months without getting any any kind of pushback. But yet your average goal right now is looking at this and they're saying there is.

No. There is no pushback even possible here. And then you extend this out to the overall NASDAQ and you're seeing a very similar story. The NASDAQ has had its best start to the year.

In four decades, Four decades. it's up 32 percent in the first half of 2023, largely driven by AI excitement. and the question is very, very similar to that Apple question. It's not is the tech sector going to continue to have huge, huge growth both fundamentally and valuation wise over the next 20 years, but it's rather, is it Justified right now And can this continue to run? And how much longer can it continue to run? Okay, it's up 32 percent best in four decades, but what does that mean For the rest of the year, it's only July Are we going to get not just the best in four decades, but the best ever.

Are we going to double the best in four decades? It's hard to make that argument and that's what a lot of people in the Bear Camp for the rest of the year are saying. Could you build 32 plus moves on top of one another consecutively and consistently Half year after half year after half year year? Or are you going to see another sell-off? If you look at history, you're going to be hard-pressed to find consecutive 32 plus runs in the NASDAQ without any sizable drop usually 20 or more at minimum 10 to 15 percent. Bloomberg Just reported over the weekend that a lot of firms are starting to cut back or plan to cut back on Tech allocation. As a result of this, a spokesperson for one of the firms said quote Clients are getting a little nervous.

A lot of the return for tech stocks is coming from multiple expansion, multiple expansion. Paying more for things like earnings or sales both. Really not earnings growth. It's coming from multiple expansion, not earnings growth.

So we feel like it's time to mitigate some of the risk by rebalancing to equilibrium between growth and value. We want to see broad-based earnings growth to really justify those lofty valuations. So a lot of stock market participants are looking at this run and thinking something similar is going to happen real soon. To the end of the OJ Chase they think, hey, look at all of this, The signs are clear.

we are heading for the final inning of that OJ Police chess and at the end of the OJ Chase you're going to see a big knife down. Now let's go ahead and talk about a counter to this argument. So a counter for this argument would be hey, yeah, you very, very seldom We had a year for the NASDAQ that performed as well. This is by all means a very, very record-breaking year.

But remember, part of the reason that we've seen such a rebound is because we had such a brutal sell-off last year. So far, this rebound does not even completely recovered what happened in most names last year, yet alone accumulated any potential growth over that. The argument is that even if we recover to all-time highs this year, well, you're still basically just flat when looking at the year over year. Yet we also have this realization that there's a whole new hype cycle, something that might be much bigger than the.com Boom the artificial intelligence craze.

This argument says that perhaps we are in the early Innings of what could turn into a.com Style bubble, an environment where tech stocks and AI related names become inflated to levels that are well, well above where they are. now. the way that I look at this is if you were a short seller in the middle of the calm bubbles inflating. say back in 95 or 96, 97 or 98.

Well, you were very, very right that the fundamentals of the economy and risks to the top and bottom line of companies were very, very high. You were very, very right that there were a lot of shy companies just saying hey, we got A.com coming out. We're going to be selling some things online or just putting our info out online and that's going to be a big big boom. Well, you're very, very right that a lot of those ended up not being big booms and a lot of those went kaput.

A lot of them had no fundamental structure to them. You were very, very right to short them if you're in that period of time. But the problem is that being right on a business's valuation and being right on where the stock is going to go and on what time Horizon are two completely different things. But here's the thing folks, if you shorted them at any point besides, maybe a few months before the very top, you'd have been destroyed utterly destroyed.

I See comments all the time from folks that are like yeah, back at the.com bubble days would have been so easy, just short any.com stock and make money. But guess what? if you did that, you would have been destroyed because the bubble got bigger and bigger and bigger for years and years and years. And it was very, very unjustified when the bubble was here. And it was a lot more unjustified when the bubble was here.

But it didn't matter because it still inflated more. And likewise, you're starting to see a lot of people say hey, just short anything AI related this year and next year, you're going to be very, very profitable. But again, that ignores history that says that bubbles can inflate for a lot lot longer than you'd ever see possible. And if you're looking at that.com bubble era, well, we had a lot less money out there in the system.

Sure, the Fed's trying to drain it, but the FED in effect is just making a temporary maneuver to reduce the flowing of Supply to reduce how fast it transfers from one side of the economy to the other. But the overall Supply is still going to be very, very elevated. When all said and done. What if this inning that we're in right now is actually a pretty early inning and and what ends up happening is maybe you have a little bit of a sell-off but then all of a sudden you have another three years of pumping.

If you're a short seller on this pumps for years afterwards, Well, it doesn't really matter if you were right or wrong on the cup companies, you're still going to lose lots of money again. Were you right to short your average tech company in January 1999? Sure. But the NASDAQ more than doubled in the next year before it had its massive, massive sell-off that took it over two years to reach down to levels that would have made you a lot of money. and likewise, you probably would have been margin called before then, and you certainly would have lost almost all of your account.

That's why you've seen a lot of shorts capitulate and the argument here is that that might continue for the next two to three years. And think about incentives. I Know I mentioned this a lot, but think about incentives if you're the average. Wall Street Manager or fund manager of any kind.

Well, your main incentive is not to be right, it is to make money for your clients, making money in the stock market and being right on where companies should be justifiably trading or oftentimes at odds with one another. That's again why you see a lot of bears going and capitulating and saying hey, we still think that the market is overvalued and we're still huge Bears Yet we're buying into the stock market in droves because why? Well, stocks are going up and behind the surface. They they know if they don't buy in and their clients continue to lose money and lose out on this run. Well, they're going to get a lot of redemptions and they're going to make a lot less money on those yearly percentage on asset fees.

But let's go ahead and bring this back home for a second. and I want to give you my take on what's going on. So if you look over at the Vix, the Lovely Vix Evix, which I like to oversimplify and think of as the amount of uncertainty, anxiety, and fear in the market, Well, it's consistently heading down and it's at multi-year lows. Throughout most of the last five years, you'd see the Vix and it was much, much higher.

You had huge periods of spikes when you had pandemic uncertainty. The Invasion Trade Wars Inflationary Booms rapid monetary palsy shifts. Things are transitory. They're not transitory.

Powell's rear end isn't transitory. Everybody's debating all these things and so forth. but these days you're just not seeing that much variance. That much debate in these variables.

There's not the same level of debate. People's opinion on what is going to happen in the next six to 12 months is much, much less polarized than it was just a year ago. Certainly year before that, and a year before that, there were periods of the cycle where you'd have half of the market thinking that the FED wasn't going to hike rates at all and was going to keep rates at record lows. And then you add another half That was thinking that they're going to hike it substantially.

These days, we've had the hikes and projecting forward. There isn't much variance in predictions. People think, hey, maybe the FED goes up another 2 25 basis point hikes. Maybe one, maybe none, but there's not much variance that says yeah, he's gonna hike substantially versus not at all.

Some people back in the day were even thinking he'd go into negative rates, so you had massive variances. Now the variances are like this: It's very, very close. That closing end of the debate closes in a lot of the fear and uncertainty that you saw at the Vix and what tends to freak out the markets quite a lot. Without those things, you're either going to get a stable Market or one that slowly climbs up and again that's not just on rates, but that's on a lot of other variables as well.

and that trend is very, very clear and very, very stubborn when looking at the Vix and I think that that trend is pointed to continue through the end of the year now I Don't think if the Vic stays at this level or continues to go down I Don't think that's going to fuel another 32 rally. but but it could fuel another 10 rally. It could lead to an environment where you see a few months of selling off and then you see another return to all-time highs or where we are right now. I should say, but still, with very, very moderated levels of uncertainty and debate, you could easily see the market slow down but continue to melt up through the end of the year.

Now, of course, with the Vix trading at these levels, that also means that if you keep going down, you're going to be very, very overdue for another breakout because that is what has happened every time historically you've gone to those levels and it is my operating assumption that you're going to see that happen sometime around 2024, probably in January or something Along those terms where If the Fed isn't going to re-pivot into stimulation and you start seeing some of the economy really start breaking Again, you start seeing a lot of things trending in the wrong direction, which I think they are trending in the wrong direction as far as the economy is concerned. Well, then all of a sudden it's not going to take much for the vix to break out again and then what's going to happen? You're going to see all of a sudden another wave down for the stock market, but because it had rallied so much this year, it's going to be pretty pretty brutal. And for Traders I think that the next year, two years, three years are going to be very, very insane trading opportunities and opportunities to make money. It's probably going to be a disaster though.

For folks that need to be right on justifiable momentum and justifiable fundamentals, they have to be right on where the stock market is going. They have to match it to the economy. Those people are going to be losers again. But the people that are looking at the move and they're like what can I do to make money off this I think they're going to do very very well like they have done this year and like they've done almost ever every other year.

I Think last year was a little bit difficult, but if you're somebody that's a little bit more flexible and you're willing to play both sides of the move, and you're willing to buy the dip on stocks when they're fundamentally undervalued in ride momentum when it starts going up and play. The Melt Up but don't fall for the Melt up I Think you're gonna do phenomenally well. Anyways, that caps off today's video. Make sure to hit that ravishing like button and subscribe if you enjoyed it.

Let us know down below what you think the market is going to show in the next six months heading into 2024. Are we going for more melting up? Are we going for a down? Are we going for a stagnate heat though? Are we going for a stagnation? Period? Let us know Down Below Have a great and happy Fourth of July with your families. If we don't talk before then I Appreciate each and every single one of you and we will see you in the next video.