Transcription
The view of my portfolio is currently a lot of fun. Always new all-time highs, and I catch myself wanting to look at it more often. But when I looked at these charts today, which I will show you in the next few minutes, my frown lines, which are already quite deep and large, became even larger and deeper. And what that simultaneously means for my portfolio, we will discuss in this issue. First, I found, and I won't tell you the source, I'll tell you why at the end, this chart, which is about Big Tech, meaning the Magnificent 7 plus Afgo, so Broadcom, AMD, and Micron, now making up 48% of market capitalization. I already thought, I thought we were somewhere around 30%, and then I saw that whenever a bubble burst, be it the 20s, when things went up, or when the NI was so strong in the 70s, or when we saw the Japan bubble or the Dot-com bubble, it was always the case that when the market capitalization of the heavyweights went towards around 40%, then the bubble burst. Wait. Whether you are really standing correctly, you will see when the light turns on this earlier. Can you remember that? So here I have to tell you, whether this chart is correct. You will see if you stay until the end, because there is really something to it, but it should be enjoyed with caution. I must also say something else. The very first article I read, it was about, it has nothing to do with today's topic. It's just my personal note, and that is the mountain of debt. According to Bloomberg Economics, Germany's debt is expected to continue to grow in the coming years and even reach highs of 80%. In the base case scenario, meaning the most likely scenario, we will reach 80%, but it is also possible that it could even go towards 100%, meaning the highest level of debt within the next 9 years. The following is decisive. When the debt ratio was so small, interest rates were also so low. And I remember very well when I was still an active member of a gentlemen's club. So I go there now, but back then I was too young for it. A professor of economics came and said, Germany must save more. And then I thought to myself, no, Germany can borrow at zero cost. But now, when financing costs rise significantly, we are starting to borrow. According to the latest studies, unfortunately, the debt is being used to plug budget holes instead of really making investments that actually move the country forward, especially when it comes to infrastructure. Because one thing must be clear, look, for Spain and France, it is still expected that by the year 2035, they will have the same debt ratio of 100 and 110%, while Germany will be at 80%. It would be downright disastrous if we continue to borrow only to plug budget holes instead of making real investments. And these charts actually make me at least as worried, even if they are not dangerous for my portfolio in the short term. What about Iran and the USA, and no matter which side you are on, I don't want to offend anyone, but the negotiations between Iran and the USA remind me a bit of "Good Times, Bad Times," although I must say, I haven't watched a single episode of that, but I know that this series has been around for over, I don't know, 20 years, 30 years, I have no idea how long it's been around. And it just keeps going. So, it seems like it never stops. So, on Sunday, we are done, and today I open Bloomberg. The USA has attacked Iran. So I don't know if you're following, but this reminds me of "Good Times, Bad Times," and it's also difficult because it makes it incredibly difficult for us to assess where we actually stand. Did Trump only attack to look good, so he doesn't have a bad deal, or did he attack because the negotiations are really threatening to fail? I can't keep up anymore. I really have no idea what's next. We have to work with what we have, which is either a deal or a real escalation. Until then, one must be cautious if one wants to predict the next major move in the short term. What is true now, however, is that the Strait of Hormuz will be closed for 3 months this week. 3 months. That was supposed to take only three days. And we clearly see that this rising oil price is impacting growth expectations, namely GDP growth for the world. Before the oil price went up, we expected growth of about 3.3%. Now we have reached 2.5%. That is real. And what I have been telling you all along in this context is, the longer the oil price stays high, the stronger the economic downturn. And that we are seeing this reality in the economy, but not yet in stock prices, we also see when we look at, for example, "Spiel in Blau und Weiß" (Play in Blue and White). MSCI World Consumer Stocks or MSCI World Consumer Staples, and they keep rising, while consumer confidence keeps falling. This is a crocodile mouth pattern, and then the question is, do you stick your hand in there, and then the thing snaps shut, and you are the one who lost the money. Someone has to lose here. Either consumer confidence has to come back up, or these stocks have to come back down. Because if consumers have no confidence and say they are not spending money, stocks cannot rise, that it cannot continue to rise indefinitely. We see consumer confidence here again. On the other hand, we see rising prices or the stock prices of Walmart, and with the latest figures, reality is catching up a bit, because the high energy prices are causing Walmart to say that consumers are spending less. So what do we need? We need either a correction to happen, because then the market says, no, we've hoped enough for three months, the strait isn't opening, or the strait must open, and consumer confidence must shoot up. Who wins in the end? No, it's just an absolute danger. And then I come back to a chart that I showed you weeks ago and said, watch out, people, everything between 120 and 90 is a kind of yellow zone for the oil price. If we go below 90, then the economy can grow again at the old pace, then inflation concerns are over, and then we can also say, yes, cyclicals can meet the expected earnings. In the event that we sustainably shoot above $120, not just for a day or two, then book the recession card, then we will see profit declines for S&P 500 companies, for Eurostox 600 companies of 20 to 30%. But that is not the case right now. We are right in the middle of it and fully involved. And here one must say the following. The longer this sideways phase lasts, the longer the braking distance, and the more dangerous it is that this car will eventually be stalled. And therefore, that prices are at an all-time high, while the Strait of Hormuz has been closed for three months. This is becoming increasingly dangerous. We need a deal soon. I said, I believe that by mid-June this deal should be there, and I told you I see three possibilities here. Either I am mistaken, and everything opens up very soon, what do we get then? Then we get a broadening of the rally from tech and AI towards cyclical values, towards chemicals, towards everything that is energy-intensive. If it takes diplomatic time and remains until mid-June, then we will get another pullback. And in the event of a military conflict, I told you, I believe then the Eurostox 50 will undercut the lows we saw in March. That still stands. I need to take a quick look at where I am with my idea. While we have this in the real economy, we have seen on the other hand that AI is powerful, and I am constantly trying to explain to you, AI and Big Tech and all the hyperscalers are doing this here because they have been ignored by stock market investors for half a year. They were undervalued. We have repeatedly discussed with you here why I said Big Tech, Nvidia, other AI stocks are very interesting. But even in times of AI, in times of automated trading, these movements are massive. That is, from mid-March until today, we have gone from, say, one simple standard deviation below the average P/E ratio of the last 5 years, to now two standard deviations above the average of the last two years. Not only that we have to say, yes, the earnings were great. Yes, the prices were cheap, but now you have to say, man, you have already priced in so much that hardly anything else fits. And that then leads to saying, yes, AI is wonderful, but if you look at producer prices, look at how the costs for chip manufacturers are driving producer prices significantly upwards. This means that AI has also become a danger, because it can further drive inflation. Plus, now I will say, yes, these are the AI stocks, and this is the S&P 500, and this is maybe, I don't know, this is the so-called Anthropic Circle, this is the OpenAI Circle, and they are making a meager 80 or 100%, but the stocks that have risen more than 200% in the last year are space exploration stocks, and while they are making money here, this is all just hopium. And when it's hopium, look at this, it rises, consolidates, rises faster, consolidates shorter, rises faster, consolidates shorter, and rises even faster. If you watch these issues regularly, then you know, I always tell you, this is the chart technical definition of a bubble. That's why I sold my silver at the beginning of the year, for example. And now one has to say, they don't even make money. Folks, this smells like a bubble, and it's dangerous. Now you might say, oh, the whole market will crash. No, we also had, for example, at the end of 2021, the SPACs, you can remember that, that was the new type of IPO, when all these SPACs were launched, and when the altcoins shot up. Well, we saw more that certain assets went into a cash trap first, and the broad market didn't have to be sold off. Nevertheless, this shows us that we are entering an absolute overextension in certain areas of the market, and that is naturally dangerous. And now we come to this introductory slide. And on this introductory slide, I checked again, so AI Big 10 are currently at 39%. Okay, one could say, yes, but that's already relatively high. And how do they get to 48%? This is a website that provides a graphic that has been processed by AI. And this goes back to the latest report by Mr. Partnernet from Ambofer, who says that all the IPOs are coming now, be it in the field of space exploration, be it in the field of AI with OpenAI or otherwise. By the way, I can only tell you again, we bought Softbank shares in November or December, because I told my clients back then, something is coming our way, we are buying Softbank now, it is still undervalued, the stock, and then we are in on this bet. Now everyone is talking about it, getting clicks, okay, they can all be click masters. I am 100% ahead with Softbank. Within a few months, I am happy about it. This 48% should only come if the bubble gets even bigger through IPOs and even more is invested in it. That means it is only an assumption, firstly. Secondly, in the Roaring 20s, there was an entire sector of industry compared to the rest of the market. Here there were 50 stocks compared to the rest of the market. In the Japan bubble, it was also an entire sector. I don't think the entire market capitalization of Japanese stocks compared to the market capitalization of the rest of the market. In the Dot-com bubble, it was so-called New Economy versus Old Economy at 46%. In other words, we have never had it that only ten values had such a strong weighting. So, if you want a bubble, you already have it. The reason it looks like this is simply because these companies are currently earning massively. So it remains as follows: if the Strait of Hormuz opens early and the market makes another massive overextension, caution, especially my favorite indicator for market selling, the BOF Bullbar Index, it went above eight at the beginning of the year for the last time. And I can tell you, if it goes above eight, then I am ready to take protective measures for my portfolio. And this is the next thing I find totally dangerous. Wait, but I'm not doing it yet. Why not? Personally, in February, we were even at 9.6. I like it when it goes towards 8.8, 9. I like it when the chart shoots up again, then I can take protective measures. Didn't it fall before? Yes, but now, even if we see that the cash ratio has fallen back to 3.6% for actively managed funds, a totally low cash ratio is dangerous. Even if we see that the Bullbar Indicator is pointing towards selling again, the market doesn't have to fall. If the price goes above 8, then the S&P 500 falls between, attention, 2 and 3% on average in the coming 2 months. Sometimes more, sometimes less. At the moment, the push from below is too strong. At the moment, the momentum is still too strong, and this sell signal is not strong enough for me personally yet. That means, I will take protective measures when the market rises further, when this Bullbar Indicator moves even stronger into this selling zone, then I will take protective measures. For me, this is not the time to be invested in the market with, I don't know, 120% of my capital. Quite the opposite. And it is a time when here and there, especially if you are in the bubble-like parts, for example, space exploration, where you can take profits. And I told you last week, because we have made so many profits in the AI hyperscaler area, we have partially already realized these profits in a smaller portion. That means, if the market falls by 30%, I will fall with you. It is not a time to add to risk. Especially because we have "Good Times, Bad Times." Not a time to be maximally bearish, but a time to do this or raise an eyebrow. Because one thing we must also know, if we look at, for example, the technology sector, which is currently booming so much. Do you know that the technology sector ran sideways between October 25 and April 26? At its peak, it made a pullback of 16%. So, if you are a long-term anti-investor, well, this thing was already quite expensive here, because it had already made a rally of 81% in just 230 trading days. And now it's making a rally of 50% in 33 days, meaning less percentage-wise, but also in a shorter time. Why shouldn't it just run sideways to make the next wave from this consolidation? The idea of many small investors is, yes, I'll sell now and then buy back in later. If you are a long-term investor, the market can consolidate here, because these top 10, which we have talked about, are still making massive profits. Now I've forgotten to photograph my performance. I have finally managed to show you how our performance has been in recent years. Jaden and I invest together, because we always had it in two portfolios, and now we have managed it. I don't have it here, but I can tell you, we have been beating the S&P 500 with our trades and investments together since 2022. Plus, we usually have cash left over. And last but not least, with our trades alone in the last 25 months, I have closed 22 months in the positive. It's possible that it won't go so well for a couple of months now, but this is what we can do. And if you feel like trading and investing with us, we have a great offer for you, and you can tell that my clients are absolutely dear to my heart by the fact that instead of selling my products, I am now busy providing you with content again. And in the end, I think to myself, I have a promotion. If you like working with someone like me, who values content 1000 times more than marketing, then I am the right man for you. I look forward to you joining us. Feel free to go to Google. Today, I am totally happy about it. I don't know why someone wrote us a review again. Look at it. Feel free to look at our reviews, and then you are cordially invited to trade and invest with us. I have the honor. Thank you for your attention, and take care.