Gareth Soloway on Forecasting NVIDIA’s Market Position, Risk Management, and the Future of Investment Strategies

What does the future hold for NVIDIA, and could its impact rival that of Tesla or Cisco? Join us in this episode as we sit down with veteran trader Gareth Soloway to dissect the market forces at play. We delve into the psychology of market behavior, the saturation of the AI chip industry, and the looming competition that could shift the landscape. Gareth offers his seasoned perspective on China's potential role in this market and whether NVIDIA's dominance is sustainable.

Shifting gears, we analyze the transportation ETF (IYT) and the head and shoulders pattern shaping market sentiment. We uncover the stark disparity between major indices and the Russell 3000, revealing hidden weaknesses beneath the surface. Our discussion extends to consumer debt, inflation, and the Federal Reserve's maneuvers, providing a holistic view of the economic landscape. We also clarify the nuances between interest rates and credit risk, shedding light on market liquidity conditions.

In the latter part of our conversation, we explore a variety of investment strategies, emphasizing the balance between right and wrong calls. Gareth highlights "fat pitch" trades and opportunities in emerging markets like China and Brazil. We also delve into the overlooked potential of palladium, the evolving narratives around Bitcoin, and the promising yet underperforming biotech sector. Wrapping up, we stress the importance of risk management and strategic trading approaches, offering listeners a comprehensive guide to navigating today's complex market dynamics. Don't miss out on these essential insights!

The content in this program is for informational purposes only. You should not construe any information or other material as investment, financial, tax, or other advice. The views expressed by the participants are solely their own. A participant may have taken or recommended any investment position discussed, but may close such position or alter its recommendation at any time without notice. Nothing contained in this program constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments in any jurisdiction. Please consult your own investment or financial advisor for advice related

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Transcript

Speaker 1: 0:09

my name is michael guy, a publisher of the lead lag report, as well as, uh, overall, uh crazy guy on social media at lead lag report. Uh, joining me for the rough hour is mr gareth soloway, who's a little bit crazy himself, but I think in a better way than I am. Gareth, I know you're done the media around. I know a lot of people obviously know you and follow you, but just introduce yourself, or maybe reintroduce yourself to the audience. Who are you? What's your background and why in the world are you as good as you are?

Speaker 2: 0:36

So my name is Gareth Soloway. Like you mentioned, I've been a trader for about 25 years In fact, it might even be a little bit more than now so I've been through the ringer and I think that's really what has made me into the trader I am today. And when you keep getting burned doing different things, you eventually learn. Some learn faster than others. I think I took a lot of time to learn myself, but basically you just learn that certain things work and certain things don't, and you start to understand that the markets are a complex organism of human nature and psychology and honestly, that's been the biggest breakthrough that I've ever had in trading is understanding that. Chart analysis is really just understanding human nature, greed and fear, and that's what it comes down to. You throw in a little Fed printing of money and it makes out the market. So that's me in a nutshell.

Speaker 1: 1:28

All right. So you used the word the market and I put a post up a little bit earlier today saying well, now we're down to one stock as the market. Yeah, that is the truth. We went from max seven to just one Yup, and apparently there can be only one Highlander. Maybe it is 100% right, which is actually an interesting analogy, because I think the only way that Highlander could die is you have to chop off the head, that's right, so let's go with that analogy.

Speaker 2: 1:56

Now the question is is NVIDIA the head or is the Federal Reserve the head? Ah, okay, so that's a good the two G's, jerome or Jensen.

Speaker 1: 2:03

Okay, so help me out here, because you know I've been very wrong on nvidia.

Speaker 1: 2:08

Uh but I've been saying yeah, and and, by the way, I think a lot of people have been wrong because if they were right, they would have been levered at that initial spike up a year ago and held on to instead of trying to trade it. But never mind that the um. There is this saying in markets that the generals fall to the soldiers. Right, it's a narrow that breath gets. At some point, the weight of that concentration in that select number of stocks falls to everything else, which is sending a very clear message in terms of weakness, which, by the way, was always my thesis for why I thought NVIDIA would be in trouble. I'm not going to use the word I kept on saying on Twitter subjects, and obviously I've been wrong, but the reality is there's a lot of weakness still beneath the surface. What's it going to take to take off the head?

Speaker 2: 2:51

What's it going to take to break NVIDIA? Oh my goodness, and that's the big question. So, number one, we have NVIDIA, which today I'm looking over here it's adding 21.6 points to the S&P 500. The S&P 500 is up 5.6 points on the day. So basically, the S&P would be down 15 points today if it wasn't for NVIDIA, which is pretty astounding in and of itself. The closest competitor in terms of adding points to NVIDIA is Apple, which is adding 2.33 points to the S&P. So I mean, at this point, this is a one stock market and we would be negative today if it wasn't for NVIDIA.

Speaker 2: 3:28

Now for it to end, there's got to be a point where you get max bulls on board, because the story is not going to die yet, right? I mean, the AI story is going to continue. I think it's going to be a scenario where it's death by a thousand cuts on NVIDIA, where over the weekend, we heard, I think China's putting $65 billion to work in building out their own set of chips, ai chips which will eventually permeate the whole entire system, right? So if we remember what they did, what China did with solar panels, they produced them so cheaply and then they flooded the US markets and the world with cheap solar panels, that it crushed all the other solar providers and essentially, we had to put tariffs on it. I guess that that would be one of the ways that you would see this kind of party end for NVIDIA.

Speaker 2: 4:16

I also just think that anytime you have a product with margins in the 70 to 80% level, essentially capitalism takes care of itself, and what you're going to have is every other company AMD, intel, I mean, you name it Broadcom producing we're starting to produce AI chips, which eventually crush the margins, right, and so I think that's really the end game here is I look at Tesla in 2021 and how hot of a stock it was, and then I look at Tesla now the margin's getting compressed. We have all of these other things and my guess is, looking two years down the line, that's Nvidia in the future, but again, that's a long way off.

Speaker 1: 4:55

It's funny you mentioned that, because the analogy everyone throws for Nvidia, including myself, is it's Cisco from 99, 2000. But I hear more and more people making the argument this is more like Tesla of 2021. It might just be a hybrid of the two, or maybe this time it's different, in which case NVIDIA is going to be the entire stock market, which, at this point, if it continues like this, is going to be the case. I want to get your thoughts on the narrative that's out there that this utility strength is because of the sudden realization that AI is going to use a shit ton of electricity. Now, I am very skeptical of this.

Speaker 1: 5:27

I have myself argued that, if AI is real, that three things need to happen Utilities do have to outperform, small caps have to outperform because they benefit from the productivity enhancement of AI from their margin perspective. And bond yields have to collapse because AI is inherently disinflationary. I don't care how much debt the US government puts out there, it's disinflationary, deflationary, as technology always is. So now, suddenly, the narrative is that, well, utilities are strong because of all the electricity demand coming down the pipeline. The problem and I want to get your response to this, the problem that I have with that narrative is that it doesn't explain why consumer staples are outperforming consumer discretionary since February. Doesn't explain what looks to be some strength building in healthcare defensive sector. What's going on? What's happening with this utility strength? Is it this AI narrative or is there some defensive posture in taking place?

Speaker 2: 6:19

So it's probably like we were talking about with Cisco and Tesla. It's probably a combination. So investors, especially in this market, have this willingness to chase anything that is hot and if, whatever the hot story it was GameStop for a little while, then it was AMC, then it was FFIE, we saw money chasing those. And so I think there's this beginning portion where institutional money starts to recognize the problems in the system and starts to rotate their capital and then the retail investor and the investing public has to say, well, we don't want to believe that the economy is really maybe going towards recession. We're not hearing that from the Federal Reserve, we're not hearing that from our government officials and the stock market's at all-time highs. So you know what it's got to be the AI narrative, the electricity narrative Heck. Last week, first, solar had this monster run of like 40% because some analysts said, hey, this is actually an AI running. Because we are seeing this rotation of smart money, the big money, the institutional money, towards the utilities for the safety side of things, like we've seen in past recessionary periods. And I'd just like to point this out is that number one, transports just broke a head and shoulders neckline. So head and shoulders. For those of you that don't know is a bear pattern. Um, the transport's never made a new all time high from 2021. And now you have a breakdown in their charts.

Speaker 2: 7:52

Number two we have many economic indicators. I'd love to discuss more about this with you, but you know you have things, for instance, rising personal debt like things that are staples of pre-recessionary periods are starting to pop up left and right. Rising personal debt, inverted yield curve, consumer confidence down three months in a row, slowdown in the housing market, increased layoffs in certain industries except the government's been hiring a ton of people to kind of make up for that. And plus, we've seen a lot of people taking multiple part-time jobs because they can't find a full-time job. So all of these things, to me, are signals that we should be concerned about. But the stock market is a lagging indicator in that way that the investing public is chasing return right now, and it's not until it's kind of too late that we start to see the stock market roll over.

Speaker 1: 8:39

All right. So actually I'm glad you mentioned the transports because that also confirms the idea that it's defensive posturing because transport should be around. Maybe just give a little bit of an educational lesson on Dow theory. Now I will preface this by saying when it comes to transports, I'll preface this by saying I always joke that Dow theory should not be a theory. It's been over 100 years. It should either be or not. So you always have to take this stuff, I think, with a grain of salt. But why are transports important from a technical perspective?

Speaker 2: 9:06

Yeah. So the essence of it is that when you have the Dow transports moving up, number one it's basically the staple of the US economy, right, it's how many things are being shipped back and forth. It's the demand for shipping which ultimately cycles through to the consumer. So when you have transportation stocks that are lagging and starting to roll over, there's a reason there and we've heard about. Actually we haven't. I shouldn't say that the mainstream media is not necessarily reporting on the transportation companies that are laying off people, but there are a decent amount of layoffs going on in the transports and it basically just essentially tells you that the Dow theory is telling us that when you don't have the transportation's index essentially moving in that direction in the upside, there's problems in the underlying markets and I think that's what you're leading to with the transportation stocks breaking down as well. So you might be able to explain it better than I. But essentially, the transports for a strong economy, you need the transports going up, essentially.

Speaker 1: 10:07

Yeah, I mean, it shows you basically to your point. Economic activity yeah, it's transporting goods, right, so you'd expect that that should be beneficial if things are strong. I will ask a question from the audience, and I'm wondering about this too. Gareth, what happened to the man bun?

Speaker 2: 10:22

I don't think you got a haircut, come on now, yeah, so basically it was summer and um, and in florida here it gets really really hot and and I was getting annoyed with having to take care of it and all that stuff. So I just said, you know what, let's get rid of it, let's let's start the summer on a on a good note, uh, kind of a beachy note, and uh, that's really the essence of it. It wasn't anything more than that. It was just kind of getting tired of it and it was getting hot here.

Speaker 1: 10:45

You're not like Samson, where you cut the hair and you get less strong, just to be clear. I mean, your skill is not-.

Speaker 2: 10:49

Well, thank you so much. I appreciate that. But if you want to show my chart, let me show the head and shoulders on this. If we pop this up because I think people find this interesting, is that? So this is the head and shoulders I was referring to on the IYT, the transportation ETF, and we can see here a shoulder head and then shoulder and then what we could see here recently is the breakdown right here below the neckline. This is called the neckline, where you connect kind of what I consider the armpit to the armpit, and essentially what you can do is you can do what's called a measured move here.

Speaker 2: 11:18

To calculate the target, you take the highest point of the head, you drop a plumb line straight down and then you take that $7.50 level from the break point and you bring it down and, interestingly enough, it basically brings us into this level down here. So essentially that's what I was talking about there. And then, if we zoom out, here's the previous high right. So here's your high right up here in 2021. And we could see we did a double top, but now we've rolled over. Versus the S&P, the NASDAQ have just ripped through those 2021 highs and have gone much, much higher. So it's just an interesting chart to pay attention to, a chart that not a lot of people are talking about, but I do think it's worth people to realize what's going on here with the transports.

Speaker 1: 12:02

Okay, now you mentioned transports never hit the 2021 highs Right Now. This is something I've been harping for the last year and it's now gotten to the point where people think that I'm a perma bearer because I keep saying this, which is just completely nonsense. Anybody that's tracked my work knows that that's not the case. But he makes this point that you look at the Russell 3000 index. Yes, Right now, 70% of stocks literally in the Russell 3000 are trading below their 2021 highs. Right now, 70%, that is small caps and mid caps obviously skewed more towards small caps. We'll talk about that. 58% of the Russell 3000 actually never even overtook the 2021 high once. In other words, that 70% number I told you was because you broke the 2021 highs on the upside and then retraced back. So my point is that there is a lot of weakness and it seems like you can argue the bears have kind of been right, not in the market cap weighted headline averages, but when you look at a lot of the constituents beneath the market surface, it's been kind of a terrible three years.

Speaker 2: 13:05

Yeah, yeah, and I think what's so important here to understand it, and this goes to the MagSix. I call them MagSix now because Tesla's kind of fallen apart, but in reality, you're right, the biggest players are lifting the indices higher and there's so many stocks. I mean you could go through a bucket list of these names Starbucks and Expedia, which is travel, right. Starbucks, which is consumers. You've got Disney, you've got, you know, wday today, which is work day. I mean, all of these are now moving towards almost 52-week lows, yet the indices continue to move up and, you're right, there's so many names out there that have really been crushed on the back of whether it's lowering guidance and the consumer starting to break.

Speaker 2: 13:46

And I think this is really important is that you know, we always talk about, and you'll, everyone always hears that the consumer is the backbone of the economy. Economy, well, the consumer now has 1.1 trillion in credit card debt. There's phantom debt that's $500 billion which is buy now, pay later. Um, we have auto loans, we have mortgages, we have rents that are just continuing to kind of be horrendous, and you have this disparity where you still have decent consumer spending, because 62% of the US has stock holdings and the stock market keeps making new all-time highs, which makes people think, wait, I'm richer than I was last month, I can keep spending. But what happens when that doesn't occur? And the bigger question I throw this back to you, michael, is what are your thoughts on inflation? Because I don't see how the Fed, first of all, can cut rates with all-time highs, with markets at all-time highs. And number two is, unless the markets fall, how is inflation coming down? Because the consumer is still generally at least the wealthier consumers are still spending like crazy because the markets keep going up.

Speaker 1: 14:43

Okay. So last year I was very public in saying I thought the Fed over-tightened. Last year that changed in November when Powell effectively liquefied the system by getting the market to think six cuts were coming, because the effect of that was credit spreads were starting to widen towards the end of October when I was like peak bearish, and then they completely collapsed. The differential between high quality and junk debt really just narrowed and narrowed and narrowed. Yeah, and that's a way of looking at liquidity. Right, if credit spreads are tight, ample liquidity, because the market's basically saying there's no default risk by highly levered debt issuers. As spreads widen, that means default risk is rising. That's liquidity coming out. That's a re-evaluation of low volatility likely. Turning to high volatility, I'm with you.

Speaker 1: 15:31

I don't see how the Fed can possibly cut rates with credit spreads this tight because, yes, they will unequivocally re-accelerate inflation. They need, I would argue, they need credit spreads to widen. They need there to be actual stress in the system, which I have been very wrong on in my timing. I don't think anybody had on their bingo cards. You'd go through all this turmoil in the bond market and it's purely industry driven, not credit risk driven. I have to tell you, gareth, I'm totally blown away. People don't understand the difference between rates and credit risk. Totally different dynamics. So yeah, now, having said that, can they still cut rates?

Speaker 2: 16:15

Yes, I think they would cut rates because there's concern about something coming. I keep going back to this point. I still think Japan is the risk part and I thought that what was so interesting here and I'll bring up the USDJPY and we can kind of take a look at it here but one of the things we have to recognize is that the US has shown big concern about the intervention, potentially of the Japanese central bank and, by the way, there's no doubt they did intervene right here. I mean, this was the way this fell, as suddenly as it did. That was an intervention, but the US government has come out and said, hey, we don't, please don't intervene. We're kind of warning Japan not to intervene, because one of the ways that Japan would have to intervene is by selling US debt. They're the biggest holder right of US debt, and what does that do to interest rates? Does that then take power away from the Federal Reserve to control interest rates and potentially spike interest rates if Japan starts to unload US debt as the biggest holder there? And so I do think this is a huge risk. And notice how look at this I love the chart here here was your pivot high right to here, right to here.

Speaker 2: 17:15

When they intervened, we went right back to that. That's called the scene of the crime. It was the breakout and we retraced to the breakout and then look, we're starting to creep higher again and my guess is, within a couple of weeks we're back at these highs. And then the question is does Japan have to intervene again, and what are the repercussions of that? So I agree, this is something that is huge, and remember, debt to GDP in Japan 250 plus percent debt to GDP is a big gorilla in the room there.

Speaker 1: 17:46

I have to tell you I don't understand how people don't understand what exactly is happening when it comes to Japan. I mean, I keep going back to that. There's only one of two scenarios now Either they let it keep going, meaning they don't intervene again, in which case the yen shorts are going to press like hell Right. I mean, there's record shorting going on as far as speculative positioning on yen futures. But on top of that, if they do intervene, it wasn't enough last time, so they have to probably panic and do something even more aggressive, which then sparks a squeeze right in the yen, and that's where the reverse carry trade dynamic comes out. Now it could be the case that that's why treasuries are trying to are meandering a bit here, because there's concern that intervention by Japan means they have to buy in, sell dollars. Well, if they have to do that by selling treasuries first to get dollars, then that's going to put pressure on our government bonds here in the US.

Speaker 2: 18:37

Yeah, yeah, no, this is. It's definitely just one of many things, and I think one of the things that blown me away is how low the VIX has gotten, michael, in terms of being down at the 12 or sub 12 level. With these potential risks out there and to me it's usually hedge funds are the ones that are protecting themselves with these buying, let's say, calls on the VIX or protect themselves by owning the VIX, and it doesn't seem like it's happening at this point. There's so much focus on just being long.

Speaker 2: 19:07

The market, even in spite of the Middle East and China, taiwan issues, ukraine and Russia issues, and then you go to even domestic things here with whether or not the economy will slip into recession. What about the elections? Will there be issues with the elections in a few months? And then again the dollar yen issue as well, and again, I'm probably missing about 10 different risk factors, but the markets are definitely just kind of saying we don't care right now, and that's what makes that. When that happens, that makes me scared Like that makes me on high alert.

Speaker 1: 19:40

Comment from I think it's your YouTube channel. Why is Michael filming on a 2010 Motorola Razr? Apparently, some of you are complaining about the blurriness I'm not sure why showing it's blurry.

Speaker 2: 19:49

You're so much better now. By the way, you were a little blurry, but it's gotten much better.

Speaker 1: 19:53

I'm trying to be a little bit more accentuated in the fasting and how I look and feel nowadays. I wanted to be blurry a year ago when I was a lot heavier.

Speaker 2: 20:01

Okay, there's another comment and I want to get your thoughts on this, because I know you, by the way let me just point this out I love how a majority of the comments are on my man bun and your blurriness versus the quality of content that we are speaking about. Hey man that leads to the bigger issues within the United States and the world right now you know what I said.

Speaker 1: 20:17

Most of these comments are from AI that are being run on NVIDIA GPUs, so you can tell that the large language models are clearly just messing with us.

Speaker 1: 20:26

Okay, so you mentioned you've been a trader for a long time. I've been a portfolio manager for a long time. We get things right, we get things wrong. My approach is rules-based, yours is more discretionary, and I see some comments from people that just say oh, here's a couple of guys who have been wrong on many, many things. And I always go back to this point that everyone is wrong and everyone's right. In this business, it's about the magnitude of being right relative to the magnitude of being wrong that matters.

Speaker 1: 20:52

There is this impression out there that the best traders are the ones that are right. Often, it's completely not true. You have to be right with size. You can be right 20% of the time, as long as you hit home runs. That's how you end up outperforming. So let's talk about where the fat pitches are. What are some of the big next trees, in your view, that you're eyeing, that you think might be coming? I think it's clearly volatility, and again I go back to it's credit spreads widening, because, to your point, when you talk about low volatility, that's tied to credit spreads. That's been the whole thing that's been missing in this cycle. That's why I've suffered in my own strategies using treasuries as the risk-off option, because you have not had that flight to safety sequence. It spreads so tight. But what are some of the real layoff trades coming up?

Speaker 2: 21:40

Well, first of all, I would love to say that there's a layoff trade, but in my history I can tell you that every time you think it's a layoff trade, it's usually not. It's just the nature of the market always keeping you humble, and I've gotten plenty of calls wrong and I'll get plenty more in the future, and we all will. But I do think also it's like you said, it's important to recognize again, it's the long game, it's not the short game, it's the long game. But I think, for me at least, in terms of some of these layup trades, I love the idea and again, one of the big trades that I called out over about six months ago was starting to go long.

Speaker 2: 22:07

China. China started to have this beautiful move up and one of my favorites is the K-Web here, and in fact, I don't know if you can flip over to my chart, but this was what I had isolated down on my chart. Here there we go and you can see that we had this beautiful channel and it came off of this V bottom here. And then anytime you spend this much time digesting the move up here, which was a reversal, so see how fast it went up, and then all this time where you're staying inside of that move. That's very, very bullish. And look at how we got above that line, consolidated and then had the big breakup. So I continue to think the pullback here in China, granted, are there risks there and please understand folks, anytime I'm investing, I'm investing small amounts because you want to stay diversified. So I just want to just point that out. I think that's super, super important because you will go broke if you go all in on any one position. I've found that out many times in my early career. But the key here is, again, the pullbacks. You buy pullbacks on this trade.

Speaker 2: 23:01

In my opinion, I think, assuming that China doesn't do anything crazy, then China is a great place to go. I also love the EWZ, which is Brazil, and what you'll see is and look at this chart amazing trendline going. This trendline goes back. If I go to my weekly chart, we're going back to 2010 and look at the breakout that's occurred and the consolidation, and to me, this again is a great setup for a big move up. And what you'll notice is a lot of my favorite trades are moving away from US centric type investments, because I think the US is way overdone historically.

Speaker 2: 23:34

Michael, I know you're equally as old as I am I think you are at least and basically there was a day 10, 15, 20 years ago where a large cap, mega cap, play back. Then the PE ratio was in the you know what 10, 10 was reasonable, maybe 12. Um, here we are with Apple, nvidia and all these others. 30, 30 is the new 10, I guess, or the new 20. Um, I don't think that lasts forever and I think money has just been drawn into the U? S, but eventually we'll go elsewhere for other economies that are going to do better, that maybe have a better situation going on.

Speaker 1: 24:10

By the way, I'm with you on China. I've noted that that strength seems to be confirmed by copper. China is the largest importer of copper, so there is some consistency there. I saw a comment from somebody on the Fat Pitch Point, red Pill Finance saying Fat Pitch equals Palladium. Now I've written about Palladium also.

Speaker 2: 24:32

Actually, that's one of my favorite plays, and I'm long Palladium right now too, actually.

Speaker 1: 24:38

Let's talk about it, because I think there's a lot of I think justifiably so attention on gold, which I keep on saying is sending a warning. I probably so attention on gold, right, and which I keep on saying is sending a warning. I still think that it's sending a warning. But let's talk about palladium. Is there's gold, there's silver, and then nobody really talks about palladium, which is why it probably works.

Speaker 2: 24:53

Yeah, and that's been one of my favorites. Right now I have my chart up of palladium here and basically what we've seen is, you know, gold and silver are the flashy ones. Those are the ones that everyone knows about, but we forget about these other ones. And for me, let me explain my thesis for being invested. So I have a large stash of gold.

Speaker 2: 25:11

I hold gold because, for me, when I look at the US debt nearing 35 trillion and I look at the Fed balance sheet, what? Seven and a half trillion? And every crisis it doubles, if not triples. Right, and then they reduce it by 10% and they say, oh well, we've reduced it by 10%, let's back off now, because, god forbid, we go back to the pre-levels and we would kill the economy and kill the markets. But essentially there's no real way out of this. I mean, again, you can either raise taxes and crush the economy that would be one way to pay down the debt but what politician? Show me a politician that's going to be reelected in four years, that's going to raise taxes and actually do that. It's just not going to happen, and so you're basically going to have to print our way out of this and the end game is precious metals are precious, they're traded in dollars, they're scarce, just like Bitcoin, in all fairness, and that really puts me in a position of saying, well, what's rare?

Speaker 2: 26:05

Well, guess what? Palladium and platinum are actually, I think, about 10 plus times rarer than gold and much rarer than silver. And so if I'm looking for something that has rare aspects to it, palladium the chart on palladium is like coiling here for a breakout, in my opinion. I mean, look at this chart, this consolidation down here, and it's trying to break out above this trend line.

Speaker 1: 27:07

Any thoughts on this Ethereum ETF and sort of this next hopeful surge when it comes to the crypto space? I've noted this before and again folks, I'm not an anti-Bitcoin guy, I'm just anti-stupid narratives.

Speaker 2: 27:20

I really like store of value. I'm rolling that by the way.

Speaker 1: 27:22

No, it's like the store of value in inflation. It's been a phenomenal investment. I've never once argued Bitcoin has not been a phenomenal investment, but the way that people characterize this stuff is just definitely doesn't make sense. But it seems like every time you get excitement around Bitcoin at $70K, it immediately drops, $70k, immediately drops. And now there seems to be this narrative out there that okay, now the Ethereum ETF and that's to have a halo effect that maybe benefits the Bitcoin side of things. Where are we when it comes to crypto? I know you've been yourself maybe skeptical. I saw some comments saying oh, you were bearish on Bitcoin at an earlier price. Okay, when things are that volatile, it can hit that price again very quickly.

Speaker 2: 28:00

Right. So I was bearish at 60, 69,000. I said it would go to 20. When it got to 20, I said if the stock market collapses, it could go as low as 10. The stock market obviously didn't collapse. I think we all can agree we're at new all-time highs.

Speaker 2: 28:12

I do like Bitcoin itself because of its scarcity aspect, just like I like gold, silver, palladium, platinum. I like that aspect. I do think there are issues that people don't want to talk about with Bitcoin, for instance, are you really Remember the ledger is a ledger, right? I mean every, every trend. So it's really.

Speaker 2: 28:31

There was a narrative for a while that was like oh well, bitcoin is, you know, you get to keep your independence, you get to do what you want. Well, that's not really true now. Right, so it loses that. Now the big narrative is oh well, the institutions are adopting it. Oh my God, if you told people five years ago that that was going to be the narrative, they would have freaked out. We don't want institutions to adopt it. Oh my God, we want this to be the people's thing. But that's the driving narrative that people are going with, which is fine.

Speaker 2: 28:54

I'm for being in place when they go up and being in place when they go down on the short side. But to me right now, the Bitcoin chart just purely looking at the chart it's actually not a bad chart. You do have consolidation I don't know if you could throw my chart here, but we do have consolidation. Above a channel, there was a downsloping channel, so you basically had the bull run from 40,000 to 70,000 or so. Right up here right, that's 74. Then we've gone into this consolidation area. We broke above here and we're staying above it. So that would keep me on a bullish bias.

Speaker 2: 29:29

And I think one of the things and, michael, I think you're in agreement with me on this is that what people have to understand is that you can have short-term biases, being I'm plenty of times I'll go short Bitcoin, but I might love it on the long-term right. And same thing with gold. I'm still a mid to long-term bull on gold, but I'm actually short gold right now. I'll flip that around as soon as I make some money to the downside. So I think that's also important for people to remember. I think people take highlights from what you say in one particular situation. They kind of take out all the caveats that you put in there and just say, oh well, he said this and then it goes the other way. But you have to look at the big picture and look at multiple things like what's the timeframe?

Speaker 1: 30:10

And I think that's very important. I don't know if you've been watching the biotech stocks at all, but part of the reason why small caps have lagged if you're going to stay away from the zombie company argument could be because there's a lot of these very small biotech companies that are also holding back the indices the Rusty Dell type indices and they've been kind of left for dead, because the alternative argument would be all the money's gone into Eli Lilly and the GLP-1 craze and everything else, sort of grabbing all the mindshare. As far as the healthcare space goes, Biotech's been a terrible performer since 2021. And I know there's a lot of granularity in terms of individual stocks, but any thoughts on if biotech could be a surprise winner? I happen to think that it will probably be a momentum leader as healthcare itself becomes a beneficiary of money coming out of tech. But biotech looks really interesting to me.

Speaker 2: 31:02

Yeah, so I agree with you on that. I think the craze over the GLPs that's kind of been overplayed a little bit at that at this point. If we go to the charts and we look at the Eli Lilly chart, check this out, it's actually a really interesting channel here. So so we have Eli Lilly that was above this line. It finally broke back in and now the line has become resistance, and so if Eli Lilly breaks below this level which is around 765, it actually should have a pretty big corrective move. And I do think that, again, as popular as these are, the same thing that's going to happen to NVIDIA is going to happen to these guys is that everyone out there is going to produce them and before you know it, you're going to be able to get it at your local pharmacy for $5 copay or whatever. It is very minimal cost on these GLP-1s. So I think that these are probably long past and I think money is going to rotate out of these names, and one of the ones that I like, at least, is Biogen. B-i-i-b is the symbol on this, and if we look at this, this chart is a pretty big company, decent sized company, and it came down right down here had a big bounce and is now retracing, and it's interesting just to look at this pattern here. It's almost like a little inverse head and shoulders if it curls back up, but I think this would be an interesting one.

Speaker 2: 32:15

I'm not such a. I used to play the more of the really micro cap ones trying to hit a home run, and then I would always like lose on them. So so I really focus on the larger cap ones. But I do think the, the Biogen charts an interesting chart down here, and there are other ones, but I always look at, like you know what one of the other ones Pfizer. Pfizer is another really interesting one. Here we had a breakout, so this was in this big downtrend. Then look at this little bit of a choppiness here we broke out and now we're retracing and honestly, anything around 27 is a buy on Pfizer, and I think you start to play the rotation out of the, the Lili Lillies, back into these names. I think even um, what was the other one? Was it BNY? Bristol Myers, bristol Myers is another one that's gotten crushed in it, and you know, these are the ones where I would probably look to especially as a safety hedge for the overall market, because they probably won't go down that much in a bear market.

Speaker 1: 33:06

Yeah, and actually I think that's sort of the main point about the defensive behavior. Right, the utilities and healthcare tend to move the same. Another comment which I want to bring up, which I think goes to your earlier point about the comments Somebody here saying thank God that the main button is gone, and I do want to ask you this Was this like coming to America with Eddie Murphy, where they just cut it off like that and he charged you 50 bucks because of inflation? Is that Exactly, exactly?

Speaker 2: 33:29

Is this like coming to America with Eddie Murphy where they just cut it off, like that and he charged you 50 bucks because of inflation. Is that exactly what happened? Yeah, it's so funny too. I'm looking at some of these comments and it cracks me up. It's like I just said about the time frames and being short gold, and this was like oh, you're going to get wrecked as the gold's going to go. And I'm like dude, I still have a massive pile of gold that I'm still holding on the long side. It's a short-term trade. Please understand the timeframes. Oh man, I know you get frustrated with it too, michael. Oh, no, dude.

Speaker 1: 33:57

Actually I turn my ex-account private because I'm just done with the insanity of people that don't. I think what happens is you still have a lot of people that are alerting. They have some success, which is why we do what we do right. There's nothing wrong with that. But the thing about being an alerter when you have early success is you think that the pros and you can debate whether we're pros, but we have skin in the game, which I think qualifies us as pros that we don't know what we're saying. And then they say things like oh, you've been bearish on a video all last year, how's your short doing? And it's like okay. First of all, I'm the first one, unlike you, to say don't short. I know it's very hard to do systematically. Some people like you could be very good at it tactically. But even if you're short, you might have a short thesis on the short term Doesn't mean you're going to be holding it for years.

Speaker 2: 34:42

No, it's like the Markets go up over the long term. Shorts are shorter term trading opportunities.

Speaker 1: 34:48

Yeah, and you can be bullish and bearish at the same time, depending upon timeframe. I don't understand why people don't recognize that time. It's more than just what's your position. Over what timeframe are you taking on that position?

Speaker 2: 35:29

Right, and it's the thought process that when you say one thing, that 10 years from now you must feel the same way, and a real trader isn't like that. A real investor isn't like that. There are people that fall in love with people. I mean, how many Tesla investors fell in love with Tesla and Elon Musk? And man, when I was shorting Tesla when it was at its all-time highs in 2021, people were like, oh, you're going to get wrecked. Oh, my goodness, and it's like dude. I've been long and short that stock a hundred times since then and made money generally almost every time. But it's all about the timeframe. Timeframe is very, very important.

Speaker 1: 36:05

All right. So let's talk about managing risk. Because let's say, people do want you short in video, not investment advice. I'm against shorting, even in video, and I've written plenty of articles about that and done posts about that. And yet inevitably people will say how's your short doing Gaia? Again, you're not paying attention. But let's say, somebody wants to take a bearish bid on NVIDIA Because the generals going back to the earlier conversation will fall to the soldiers at some point. The problem with shorting a mania is that it can get more manic, and I think it's very clear. It's very clear. We're probably in a blow off top now and we're in this potentially final phase of mania, but that can be a couple of months. It could be 50% higher from here all the way down. Stupid things get even stupider when you're in these kind of environments. But you still want to take a bearish bet. So how do you manage the risk there? Because we know shorting has unlimited risk. On the upside, maybe you do put. You're at least limited somewhat. But talk about that.

Speaker 2: 36:57

Yeah. So I think the key is right. It's how much are you putting into that trade? So again, there are ways to leverage and then there are ways to mitigate that by lowering that amount.

Speaker 2: 37:10

And just one of the biggest things I learned and I learned this the hard way is when I go into a trade, I go in not expecting to win. I think that's the mentality most people enter an investment with. They're like, oh man, I can't wait till this goes up a hundred X and I make that type of money. I go in and I say, well, I might be wrong on this, so I'm just going to dip my toe in the water right here and test the waters and then just see how it behaves. I have these factors, I have this thesis on this trade. Let me just test the waters because I've been wrong enough in my life where I know that that can happen and I think that's important to recognize. So I think that's one way.

Speaker 2: 37:38

Another way you could do it is you could do it with options, because you know your max loss is 100% of that options trade. The only thing with options, again, is that you have time as an issue there where it can expire at a certain point in the future or will, and I think that's very, very tricky as well. So my biggest thing is I have no problem with people doing longs and shorts, but just manage your risk by going small. There's nothing wrong when you try to make a million dollars. You go broke when you do it the right way and do small amounts. That's how you build real wealth and, honestly, that's how it worked for me in my career.

Speaker 1: 38:13

I'm sure you've seen some of those posts on Twitter slash X of people that are like I'm going to make a million dollars tomorrow by doing a put option on NVIDIA and then, oh my God, I just went broke. Yeah, and it's like this is another sign to me of we have to be close to some inflection point. And again, I know I've been wrong in my timing on this, but I remember I was doing an interview with David Lin this is like a year and a half ago, right towards the very end of 2022, and we were talking about how I think it was his, his, uh, his cousin who's like a kid or something was was talking about dogecoin and and cryptocurrencies and didn't know anything about it. He just wanted to gamble because he thought it was funny. And I said to him very clearly I said this bear market doesn't end until this stupid shit ends.

Speaker 1: 38:56

I mean, the clip is clip is still there. I look a lot heavier in that clip, right. And then you had this huge move in 2023. That's fine, but again I go back to most stocks are still below 2021 levels. So it's a weird bull market, maybe even a bear market, still for most stocks. No-transcript.

Speaker 2: 39:27

Yeah, and I think that's part of the gambling mentality is when the gambling gets to the point of. I mean, if we look at 2021, right, when was the market in the topping phases? When GameStop, amc and all these others were running, and then we had the bear market in 2022. And now we've just in just a literally a week or two ago, we've seen the same stocks making moves again where there's no fundamental factors behind why people are jumping in. They're going with the greater fool theory that oh, it's going to run 300%, and then I can just dump it to someone else later on. And we saw, obviously those stocks came right back in a lot faster than they did in 2021 as well.

Speaker 2: 40:02

So I think that when you get to the point where you say, wow, there's no logic anymore behind this and it becomes that insane, you're right, we're very, very close to something, and timing is the tough thing. But remember Michael Burry, I mean back in in 07, he was, everyone was laughing at him, he was early, Right, and then then what ended up happening? And so so timing is always a thing that I think you and I we've always been a little early because we're we're, we see things down the line, like I think I think in trading like a chess player, right, four, five, six, 10 steps ahead, which makes me say, oh my God, look at this coming down the pike, let me prepare. But in reality it does take time. Markets take time, just like the real estate market. I mean, we can see what's going on there, but it's slowly slowing and it will slowly start to go down over time. But yeah, it's going to take a while, but it is close. It is close.

Speaker 1: 40:53

Oh, I can't hear you. I love this comment. A more serious comment I work at hear you advisors all day long and I had several advisors even earlier today say they've got conservative clients of theirs that they're managing assets for saying I want NVIDIA and it's like you got to be close. I don't know when. I know you can't backtest it. It's more of a feeling and I'm much more on the quant, rules-based side, but you just got to be close to something breaking. And, by the way, it's interesting that all this is and I want to get your thoughts on this too it's interesting that all this is happening seasonality-wise, as you're entering the worst six months Sell may go away period, which doesn't mean stocks have to go down. Sell may go away just means stocks have lower average returns in November to April. But all this is kind of converging when, anyway, seasonality-wise, things are starting to potentially turn regardless.

Speaker 2: 41:55

No, yeah, I mean, the seasonality is a good point to bring up, but I think even more importantly is how does the Fed maneuver now? Right, so we're at a point where the consumer is clearly starting to be stretched and then it's really the lower to middle income consumers that are invested in the stock market. We've seen McDonald's even say that, hey, we're losing people that can't afford to come to McDonald's because prices now are three times higher or whatever they are. But at a certain point things will definitely unravel more and more and the question is where does inflation, where is inflation at that point, and can the Fed act aggressively? And the markets?

Speaker 2: 42:31

I think that's part of the issue here is we have now been, as investors, so conditioned to just assume the Fed will bail us out every time. It's almost like the parent where they're right behind their little kid and if the kid falls over, they catch up. They never let the kid fall down and be like wow, that can happen. Let me learn from that and let me kind of figure out how not to fall down. No, we're going to catch you every time, and that's the mentality that you now have, because the Federal Reserve has programmed the market in this way, and I think that to be honest is not. We've talked about what happened in 08, 09. Whenever this does collapse, it is going to be far worse than that it really is.

Speaker 1: 43:09

Well, it almost has to be, because every single round of stimulus creates more leverage, which creates more fragility, which creates a bigger drawdown. That's right. You never really flush the system long enough for the deleveraging to take place, for things to actually be healthy from to resume and start higher. I want you to talk for the final few minutes about verified investing, everything that you're doing, your service, your site. Like I said, I give you a lot of credit. I've had plenty of people on spaces. I've interviewed over 600 people on my podcast and I think a lot of people are smart, but they don't actually have skin in the game. I think you do. I do believe oh, I do no and I do believe that you have the integrity. I do believe you have the integrity. I hope that doesn't come back to haunt me, as it has come with some other guests, but I think you're among them.

Speaker 1: 43:53

I appreciate that. No, no, I'm just talk about that. Just kind of do a pitch on what you're doing.

Speaker 2: 43:57

Thank you so much. And listen, verified Investing is the website that I've started with a bunch of traders and investors, and essentially what it is here is it's a compilation of everything I wish that I had as a trader or an investor, right? So not only do we have shows where, literally, I talk in the game plan every morning and give kind of my game plan, my thesis for the day, what's looking to move, what the levels are, but then, as we scroll down, you have this area where these are like the latest kind of my version of tweets, where it's the kind of the insight data, what's important to the market. And then, even below that, we have things like the verified pro charts, which are the verified pros posting up that are part of this. And, by the way, we're continually bringing in new pros that want to participate in this and my goal is to make it the website where people can come to for data-driven analysis and, by the way, data-driven doesn't mean it's going to always be right, but it's what are the probabilities favoring.

Speaker 2: 44:55

And just to show you guys, down here we have economic charts the earnings calendar is here, the economic calendar is here, so all of the data that you want, even down to the heat maps, as well as the fear and greed for crypto and stocks and the Fed Watch tool, updated daily so that you have one place to go or investors have one place to go. And, of course, we have services here and we have lots of educational stuff, but when it all comes down to it, it's at this point in my career I'm kind of winding down my career. What can I create that will last beyond me? And this is the website that I hope I will lure in the best of the best traders and investors and they will come together to make something that investors can find real value in.

Speaker 1: 45:42

You can tell I do this totally on my own because I'm like clicking away after doing this. So I'm trying my best. Folks, everybody, please make sure you follow Gareth Solway and also follow me. The final thing I want to ask you because I know you went through this. I think you had a time. I don't think you have it currently, but I think you went a time also on your Twitter X account where you went private on your posts, which I did about myself last week. Help me out.

Speaker 1: 46:03

At what point is that worth undoing? Because it kills the impressions, kills the clicks For me. I just got tired of the insanity and I have a very particular vision. In an ideal world, I get my credit event finally, and then I return to the public side on twitter, slash x with just one tweet melt up, because I will be as bullish as it gets as everyone. It's like somebody said to me when's the last time you were bullish? I said it was last time. Everyone's bearish. Yeah, I'm not a bear, I just I'm trying to read the tea leaves and and I have a contrarian take in general. But uh, how did you, how did you figure out when to undo that, if assuming you don't have the private post on anymore, so no, so basically, what I did was I just made it to verified accounts that they could, so, like.

Speaker 2: 46:45

My thesis is that Twitter has become, or X, as you call it. It has become a cesspool of bots. Slash just the people that want to kind of the lower, you know, like all the base level stuff. Lower, you know, like all the base level stuff, like, and there's a lot of people out there that just want to take you down because they view you as being successful, whether whether that's the and they're not in the, you know, it's just the nature of it. And so there was a point where, you know, I would just be like you know what at least make them verify their account so that they're not truly hiding behind some fake account and fake name that they have, and that was kind of my thing there.

Speaker 2: 47:17

Now, in terms of just removing it, the key is, can you get to a point where you just don't even read the comments anymore? And that's the sad part, because I know you and I both want to read and we want to respond and we want to help people that are asking good quality questions, but on X, it's kind of like dude, it's not worth it anymore and I hate to say that, but it's kind of like dude, it's not worth it anymore and I hate to say that, but it's kind of gotten to that base level where it's either you don't read them at all and you leave the cold comments open, and then you get lots of interaction and they spread it around, or you do something like verified accounts or whatever, and then it does limit it. There's no doubt about it. But listen man, it's the world we live in today. I've been a big believer that social media is probably one of the biggest downfalls of society.

Speaker 1: 48:09

Not that it doesn't do certain things that are good, but when you have girls and boys feeling bad about themselves at the age of 13 because of what they're seeing on social media, that's just garbage. Man. Amen to that, Everybody. Please check out Verified Investing. Follow Gareth, Follow me and be respectful in the comments. It's not that hard. We're all right and we're all wrong. That's how this business works. Thank you, Gareth. I appreciate you.

Speaker 2: 48:22

Thank you so much. I appreciate you too, Michael.

Speaker 1: 48:25

Thank you for having me and thank you everybody for commenting and for watching live. I will have this edited and on my own stream, as I'm sure Gareth will as well in a couple days. Thanks, everybody.