00:00What about the rest of the playbook? To the extent that you are following the president's words or the Treasury secretaries, where do you follow the money to?
00:10Well, I think one of the things you have to think about here is that the stock market has already adjusted to a lot of this good news, right?
00:21And you wind the clock back six weeks to early April, the market was down 18 percent, the VIX hit 50, and there was an expectation that things were going to be very bad.
00:35And the investors got too one-sided on the short side.
00:40And so that presented a great opportunity to be more optimistic.
00:46Today, you know, we've gone from the old saying, the sounds of cannons to the sounds of trumpet, everything is great.
00:53The VIX is down to 18.
00:54The market is 18 percent higher, and it's priced in a lot of good news.
01:00So I'm a little bit more cautious today than I was six weeks ago because when you get that level of panic,
01:09it usually is a much better time to buy than when everything is perceived as good news like it is today.
01:15And I'm sorry to be a downer.
01:19You know, I actually am shocked.
01:20I'm shocked to hear you be a downer, Andrew, because I feel like for the last year and a half, you have been the bull in times when things have gotten tough.
01:27You totally have.
01:28And so to hear you kind of negative to me feels like a tone change.
01:32What do you do in this scenario if you're still feeling this cautious?
01:35Yeah, so I was very optimistic 2023, 2024 because we had a 25 percent decline and I saw a high level of pessimism towards equities in general.
01:46But as we came into this year, I saw a lot of, you know, expectations, price targets for the S&P was very lofty at the beginning of the year.
01:53And we saw a lot of retail flows, flows turned very, very positive.
01:58And that's usually symptomatic of a third year of a bull market.
02:02You get a lot more optimism because, you know, the reality, you know this, people frame their viewpoint looking solidly in the rearview mirror.
02:09The rearview mirror wasn't a bear market anymore.
02:11It was two good years.
02:12The market was up 67 percent.
02:13So the expectations were too high.
02:17And now the good news is some of that has been washed out.
02:20But that's just the reality of a third year of a bull market.
02:24You tend to have a pause year.
02:25I just think, you know, look, the market goes up 67 percent off the low.
02:29It's time for a little bit of pause.
02:31And in those periods, you get a lot of volatility.
02:33And I think you can make a lot of money in a volatile year.
02:37But you just have to be willing to tack against conventional thinking or what is embedded in stock prices.
02:43And there was a more embedded bad news a month ago than there is today.
02:49And that makes me a little bit more cautious.
Be the first to comment