A Clear Picture

Al salal Alykum everyone. I hope you are doing well. Today is July 1st and Tesla is trading at $210. Today, we're going to go over the increasingly click global picture and macro economic outlook based on the data that we have today and what that means for our investments. So without further ado, let's get started. As always, this is not financial advice, so be sure to do your own due diligence before making any investing decisions. So the inflation rate has fallen to the lowest level. It has recorded since March of 2021 and that was the first month, the first reading that we got that was above the feds 2% target. So this is somewhat of a milestone in terms of the fight against inflation. Now, there's still more work to do to bring it down to 2%, but we're getting there. We had a bump in the beginning of the year that brought up inflation and people started to get nervous, but we're coming back down again, which is good for the future of interest rates. It implies that there's a bigger probability that interest rates will go down in child law. Now, if we want to take account of the returns this year and what has performed the best, well, big cap, large cap, tech stocks have performed the best specifically the magnificent seven. So if we look at the MSCI World Growth or NASDAQ or the S&P 500, these are three of the top four in terms of asset class performance and they all include the magnificent seven in them. And you can see at the towards the bottom here, you can see the US small cap Russell 2000 that has performed, you know, at the bottom of the pack here. And actually historically speaking, I went over this on Thursday historically speaking, smaller caps have performed better than the S&P by a statistically significant margin. So these past few years have been really brutal on small caps. I think that there will be a recovery in small caps moving forward. And that's why we're adding a small cap portfolio to our PIF portfolios. So, yeah, I think now the data is suggesting that perhaps this may be a good time to get more serious about small caps, which is what in child law we will be doing. The magnificent seven, by the way, for those who are unfamiliar, we're talking about Google Amazon, Apple, Facebook, or meta Microsoft and video and Tesla, which has not performed well. And but recently has been on somewhat of a rally. And there are some good signs with regards to the near term future of the stock, which we'll talk about. Now, adding to perhaps the performance of the magnificent seven and the NASDAQ and S&P and US equities is the fact that the trading in after hours and pre market has actually surged as a function of a lot of brokers making this trading a lot more accessible to a large number of international investors, such as interactive brokers. So this means that a lot of international investors that previously may have not dabbled in US equities because of the time difference between when they are active and when the US markets are open. This barrier is less and less a factor for them as trading after hours in pre market as I mentioned becomes more accessible to them. And this bodes well for us equities as they are able to attract more and more inflows. And we're seeing this in the volume that's being traded pre market and after hours. So this may add further fuel to the rally that we're seeing in US equities and the indexes that are breaking new all time highs all the time. Now, in terms of valuations because it's always good to check on whether we're frother or not, if you look at the price earnings ratio, we are at the five year average. So 30 price earnings ratio is what we've averaged for the last five years and that's where we are right now. Now we are above the 10 year trend. We're right at the five year trend, but we're above the 10 year trend. So we're closer to where we have a frothy bent or not to bearish one, but it's not by a wide margin. So I think generally speaking, the statement, you know, valuations are reasonable is a close to accurate statement. Generally speaking, valuations in the US market are reasonable. They aren't. I don't think one can describe them as necessarily frothy. Now, the clear picture that's forming is with regards to liquidity. And I mentioned on this channel many times before, this is by far the most important metric that you need to keep an eye on rising tide floats all boats and rising levels of liquidity will float most risk assets. Hearing a lot of, you know, talking heads on YouTube, talking about, you know, Bitcoin to 30 K and and stoking fear and that regard. I don't think these commenters are focused on the right things. Liquidity is by far the biggest thing and the biggest factor that's going to determine the price of risk assets in the future Bitcoin in particular. And when you look at the countries in blue here, these are all the countries that are set to lower the interest rates that is make cash less expensive in 2024. And this will extend this pattern will extend into 2025. So basically all major economies with exception to Japan are set to lower interest rates in the remaining months of 2024. This will cause a rise in the levels of liquidity, which will cause a rise in the prices of risk assets. And so that's our thesis for this near term market. And that's the main reason why we remain bullish on it. And despite undeniable headwinds, geopolitical risks, you know, uncertainty about elections in many major economies. There are, you know, not everything is sunshine and rainbows, but as I mentioned on this channel many times, the main thing, and it's important for investors to keep the main thing, the main thing, the main thing with regards to macro is liquidity levels and there's a clear picture forming right now with regards to what it's going to look like in the coming months. InshaAllah, of course, I just look at the data and make an assessment based on it, Allahu alaam, of course. September rate cut is now expected after having a less than 50% probability for a while. Now the probability for a September rate cut in the US is above 60%. So we're at the 525, 550 rate right now. So the question is, there's a 58% chance that we get a 25 base points cut, a 5% chance that we get a 50 base point cut. That is according to what the market is pricing in right now, at least. We got a good omen or perhaps not, but a possible good omen for Tesla with BYD reporting their deliveries today. And Dave broke another record with regards to their deliveries. I mentioned before that I thought BYD was the most serious competitor for Tesla. Not much information about their FLE yet. I think this is going to be the main sort of factor that determines their future competitiveness with Tesla. I think the cars of the future while BYD has apparently gotten close to Tesla with regards to manufacturing EVs. And in terms of unit accounts, sorry, account of units sold has exceeded Tesla. But this says nothing about the average selling price per unit. Obviously the average selling price for Tesla is much higher. So in terms of revenue, Tesla is making much more money. But in terms of the manufacturing EVs, they are the most serious competitor to Tesla. But the car of the future is not just electric, it's also autonomous. It's also self-driving. And there's still a question about BYD's ability to compete with Tesla on that particular issue. Full self-driving, that is. By the way, full self-driving is the newest version, the latest version is being rolled out to non-Tesla employees. And will soon be rolled out to more and more customers. So perhaps this new sales record for BYD is a good omen for Tesla. And their delivery numbers that will be reported tomorrow in inshaAllah, the expectations are quite low. Obviously, if they perform well, as compared to those expectations, we should see a further appreciation in the stock price of Tesla. So to summarize here, inflation is cooling down or reached the lowest annual rate since March of 2021. Liquidity is set to increase, not just in the US, but all major economies with exception to Japan. The macro is providing a positive set up for risk assets, including small caps that have lagged in the past few years. And that's why we'll be adding a small cap portfolio to PIF inshaAllah. Now, a cool milestone that we reached for our growth portfolio is that our money-weighted rate of return has actually exceeded 100%. I think the number is actually higher right now. I took this earlier in the day. But that's cool to see. So we've exceeded our 100% money-weighted rate of return since we started December 12th of 2021. So almost exactly two and a half years ago in inshaAllah. And this is, by the way, this return was achieved in the absence of our largest position, you know, actually manifesting. So our largest position being Tesla still really hasn't moved in the last two, three years. It's off of its lows, but it's kind of been chopping sideways for the last two years. So I expect this number to actually increase substantially in the next 12 months and beyond inshaAllah. Alright, if you'd like to follow our PIF portfolios, make sure to do so by becoming a member, link to do so is in the description of this video. And with that, let's take some questions. What broker do you use to buy stocks? I use M1 Finance in the United States, and M1 Finance is not available outside the United States. Outside the United States, I think Interactive Brokers is a decent choice, and I would likely be using Interactive Brokers to construct our small cap portfolio. So basically MSCI World is the best bet until now for diversification ETFs. Well, it has performed the best year to date, so past performance is not indicative of future results or not a guarantee of future results, I should say. Really don't understand pre and aftermarket transactions. Are the types of limit or queue orders? No, they're not types of orders. They just refer to the timing of the trade. So in the United States, markets are open from 9 AM to 4 PM Eastern time. So if you want to trade before or after some brokerages will make that available, and actually increasingly, as I mentioned, brokerages are making that available and accessible to more investors that want it. But there's lower liquidity at these times, and some brokerages will actually restrict trading in those hours to limit orders. So you actually have to do a limit order because the lower liquidity means that the execution price may be very different from the price when you actually submitted the order. A lot of countries taking on debt also definitely need to keep an eye on that. The countries have it way worse than the United States. I mean, the United States at least has a vibrant economy. A lot of these countries, especially in Europe, they have the debt without the economy. Mount Gox coins has the effect of their repayment been reflected on BTC prices. I think that there is definitely a headwind here in July with regards to Mount Gox coins and redistributing them to the rightful owners and the selling pressure that may come from that. But I think if we look beyond the possible bumpiness that we may experience in July, this Mount Gox thing issue has been a dark cloud over Bitcoin for a very long time. And so if we get it out of the way, it's very possible that we get a really strong rally in Bitcoin afterwards. Thanks, Sushad. Yes, please do like Abdullah. I really appreciate it. Says my Allah bless you with more and more. Thank you so much. May I ask how did you start with zero? I mean, there must be some cast that you deposited first. Well, yeah, I mean, yeah, I think our first deposit was like $300 in the in the account that I showed you guys, but we that is when I didn't make an existing account public and then build it. I, when I started the membership in PIF, I started with an account with a zero balance and then I added money to it so that people who started with us, you know, when we started and when dollar for dollar actual mimicking our trades, they've actually had the same exact performance, the same exact portfolio, same exact return. Is interactive brokers hello to use, though? I believe it is unless there is something about it that I don't know. Please do share in the comments if there is. Are these outside market hours available, not available to us investors? No, they are available. And actually, many major brokerages have after hours pre market, our trading Robinhood, I think now has it. Interactive brokers, many other, I think, brokerages will follow suit as people become more and more addicted to trading, which is why I always recommend I'm on finance for US investors because you can only trade in a very short window of time every day. So that takes away the likelihood of making a rash decision with their investments. You have to like sleep on your investment decision before you make it. So that's why I like I'm on finance and I advise people to use it. Alright guys, do leave a like. Let's get this to 100 likes like we have been. Become a member if you aren't already. Until next time, make sure to take care of yourself. Salaam alaikum and peace be upon you all.