Avoid This Trap!

Salaam Alikum everyone. I hope you are doing well. Today is Tuesday, July 16th, and Bitcoin is at 64,300. Tesla is at 255, or just under 255. And today we're going to check in, see where the markets stand. And I want to give you a negative wisdom that I've actually learned from experience. And hopefully this saves you some money in this bull run. So without further ado, let's get started. Do leave a like. Thank you all for all of the likes. I really do appreciate it. This is not financial advice. Be sure to do your own due diligence before making any investing decisions. So as if the market needed an additional reason to be bullish, how indicated yesterday that he would not be waiting until 2% inflation was reached before deciding to cut rates. Now we already knew this. I mean, this is pretty common knowledge that the impact of monetary policy is lagging in time. And therefore you want to cut or raise interest rates prior to you needing to do so. So you want to basically front on the inflation numbers, because the impact, as I mentioned, the monetary policy is lagging. This is what Powell confirmed yesterday, the market liked hearing it. And I think this is adding to the markets rally. Now it's important to keep in mind that the inversion of the yield curve, that is when the short term rates become higher than the long term rates have always been 100% of the time have always been proceeded by a recession. So our recession comes after yield curve inversions. And this time around, we've had the longest time after a yield curve inversion, which happened April 1, 2022 without having your recession. So we are due for a recession. It's taken a lot longer than historically for that recession to come around. I do think that every session, if we do experience one, will be a mild one. It's not going to be severe, unless, of course, any number of the many geopolitical risks ends up manifesting itself. But I do think a recession, if it happens, will be mild. That being said, the history speaks for itself and that a recession has followed a yield curve inversion without fail every single time. Now, small caps are outperforming. I mentioned this last week that I thought that this was going to happen and this was going to be a trend. So you can see the Russell 2000 index. If you look at the last week, really, it's been up close to 11%. Whereas the S&P 500 is up just over 3%. And so there is a rotation happening into higher smaller caps. And this makes sense in light of the interest rate cuts or anticipated interest rate cuts, which the market now seems almost certain about them happening this year. These impact smaller caps more positively than larger caps. And like clockwork last week, I mentioned that we were in fear territory and that that has historically been a great time to buy. And indeed, we've seen a bounce from the fear region in crypto into close to greed. We've kind of skipped the neutral region and gone straight into greed. It always works like this, right? When you're in greedy territory, you need to be taking profits, making sure that you're adjusting your position sizes and allocations for a drop. And then the opposite when we were in fear territory, I think it's time to sort of go far more far out on the risk curve, because historically, fear is a good time to be buying. Interest in Bitcoin is picking up. So if you look at the Google trends, so look at searches of Bitcoin, you can see that on the last 12 months, you can see on the right hand side, there is a pickup in interest for Bitcoin. This typically coincides with a pickup in price for Bitcoin. Bitcoin ETFs have been consistently green for a week now, so there's more inflows than there are outflows in the Bitcoin spot ETFs, and this has reflected itself positively in Bitcoin's price. However, the MVRB Z-score is still healthy. So I keep a close eye on this and a number of other metrics with regards to Bitcoin to see where we are in the cycle. And we are still right around the two range for the MVRB Z-score. This is something that compares the market value to a realized value and the standard deviation of that. Typically, we have peaked around seven for the MVRB Z-score. This time around, we may peak a little lower than that, but I think this shouldn't be a concern until we're probably above at least a four or five. And actually, on a percentage basis, they've actually done better than BTC over the last week. So expect that trend, I think, to continue. Alt are showing signs of recovery, and they will start with the highest market cap alt and move to the lowest market cap alt. And until we're at the tail end of this boron, and we'll see the very small micro-alts doing extremely well. And this is where I want to actually emphasize this point, which is that when we get to the tail end of this boron, and we see these smaller cap and riskier assets flying, right? And I see a lot of people posting about how much returns they've earned, and even in your own portfolio, you may see the higher risk, smaller cap positions doing way better than the lesser risk, larger market cap positions. And you may decide, hey, why am I so invested in these larger caps? I should be in these smaller caps. When you do that, when you have this train of thought, you're too late, right? Typically, what happens is, at that point, people move money from their larger caps to their smaller caps. And at that point, we're at the tail end of the cycle, and the smaller caps fall a lot harder than the larger caps that do. And then you discover, oh, I was being greedy when I should have been fearful. So this is the point I want to make. This is the lesson that I've learned over many years of investing, is that be aware, be very cautious of that line of thinking. I want you to not fall into that trap. The time to position yourself into riskier assets is when people aren't really thinking about them. And then once they've run, then you need to be thinking, okay, let me take profits. Let me reposition here. And make sure that you have actually a plan and stick to that plan. Don't overcome with greed by the stories of other people. And by even your own portfolio, looking at the positions and their relative runs. And the image that was on CNBC today of these two traders was probably the happiest, most greed-inducing image that I've seen on CNBC. I mean, this is an ear to ear grin on each one of their faces if I've ever seen one. So just be wary of the euphoria that often takes over the market in times like these. With that being said, if you'd like to join a community of Hello Conscious investors that are always looking out for one another and giving each other some really good advice and keeping one another grounded, as I'd like to say to also, but holding on to the truth and holding on to patients. Make sure you join our PIF community and link to do so is in the description. You get to follow our portfolios by becoming a member. We'd love to have you. So with that being said, let's go to a question. So I hope it's all as well. Gold hit an all time high today. Mike Berry also bought a huge position into it recently. Would you invest in it? No, I wouldn't. I don't think. I think gold is right now. The gold of the future is Bitcoin in my assessment. And so I think Bitcoin will outperform gold by a lot. I think, I mean, basically, if the crypto is comfortable, generally speaking, it's okay to stake it. There may be some exceptions there, but generally speaking, I think that's the wrong. How do you view analyst ratings in tip rank and Morningstar and others? Are they legit and reliable? Well, look at the analyst's ranking. Some analysts are pretty good at what they do. Some are really not. So I would definitely take into consideration the source. Do you think a broadening is happening or rotation? I do think a rotation is happening from larger caps to smaller caps. Because as we saw in a previous live, the larger caps are now at a PE that's north of 20, whereas the smaller caps, many of them are at a PE of less than 15. So this is why I think it's really an opportune time to start our small cap portfolio. I have two names that I may add into our smaller cap portfolio. One issue I'm having is with interactive brokers because I have a new account. Moving money to interactive brokers is actually slower, but the channel we will be making some purchases this week in trouble for smaller caps. Do you think a broadening is happening? Sorry. Some are coming. You mentioned the small cap electric company that you're doing investing in previous live. What was the name of the company? I think you're referring to flux. It wasn't a. Yeah. So I mentioned flux in a previous live. FLUX. Hello, mortgage opposition in the US. I am not aware of it. Perhaps I'll do a video on that. I've just been so busy with so many different things. Abdullah said, Salaam, where can I come? Salaam, how do you view analyst rating? I'm sorry. Is this repeated? Guys, please don't repeat the question. I'm just going in row in order. So please don't repeat your question. So I don't repeat reading them. People are saying that there is extreme resistance at 69K for BTC. Do you agree with this? No, I don't think so. Thoughts on Kimberly Clark? I mean, typically people think that and this, you know, often the case that before round numbers, so maybe like at 70K, this is a round number and change in the handle from a 6 to a 7. Often times traders will set their limit orders right below that change in handle, which is something that I do as well, but I don't think there's anything necessarily, you know, special about 69K. If that's why you're asking. Thoughts on Kimberly Clark? You mentioned them in a video a few years ago. Well, I haven't looked at them in a while. So yeah, don't really have much to say about them right now. If you're a salam brother again, would you anticipate a salam ATF? I actually think should happen or at least, you know, progress on it should happen soon. It seems like a logical next step after the fear of ATF. How do I teach my kids investing? This is a very good question. This is a very good question. Well, this is kind of a so the very first thing. Now you may I think that this is not necessarily for related, but it's actually very related. So the very first thing to teach your kids is to be a good person. Being a good person helps you become a better investor. And so this is a more philosophical thing for me and this commentary is a bit more philosophical and perhaps it, you know, not many people like it because it's not the answer that they're looking for. But what I would say is that, obviously, the world always moves towards whatever the will of Allah's power is. And so to understand what the will of Allah's power is, you have to be a good person. Being a good person allows you to understand the world and understand, therefore, you know, where it's going. I should refine this thought and give it in a more clear way. But the closer you are to Allah's power, the more you have insight into where the world is going. And really investing is about where is the world going. And so that would be the first step. And so I'll have more concrete lessons perhaps for your kids in the future. I would recommend taking the course that we have. That's for elite members. I haven't had an elite member say that the course wasn't good. But all the reviews of the course have been positive. So I would take the course and maybe even though it's not necessarily for younger, it's not for kids. If you can take some of those lessons and make them simpler for your kids, I think that would be effort well spent. What do you think of Johnny aviation? I think there is perhaps a lot of opportunity in aviation generally. But I think maybe a bit too early to go heavy into aviation. I may be wrong about it. Regarding being fearful versus greedy doesn't the market from time to time show you some signals that make you change your plan. I mean, sticking to the plan is not necessarily something good, right? Yeah, so I think you should have flexibility with regards to what the world is telling you and adjusting accordingly. But the adjustments you make have to be adjustments to a plan. And so you still have to have a plan. You may adjust that plan, but you still have to have a plan and stick to it unless something really unanticipated. It reveals itself. And it says, Jessica, look here for the answers and the informative consistency. It's my pleasure. We are welcome in Charlotte and I really want to thank everyone for tuning in, to be honest, these streams. I mean, a vital component of it is the audience. So thank you very much for tuning in. Samalikimakan, thank you and the PIF team. It's my pleasure. The content he shares extremely important. Well, thank you. I really appreciate that. Two names, not one. Yes, indeed. I did find two names in Charlotte. Samalikimakan, Samalikimakan, just want to thank you for all your hard work. It's my pleasure, Salim. It's been a year. I'm a PIF member already made under that. Well, that's awesome to hear. That really fills me with happiness. Thank you for sharing. Thank you all, guys. Wai Yakum, Rachea. Thank you all for tuning in. Leave a like on your way up. I'd really appreciate that. Till next time, take care of yourself. Samalikim and peace be upon you all. Thank you.