The Practical Islamic Finance Podcast

🌟 The Smartest Market Recap: 11-22-2024 🌟

• Rakaan Kayali

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🌟 The Smartest Market Recap: 11-22-2024 🌟

In this episode, we will cover:

  • Intro & Market Overview
  • Stock Performance: Tesla, NVIDIA, and Indices Recap
  • Bitcoin Near $100K: Key Insights
  • Dogecoin and Solana Beat Bitcoin's Growth
  • US Economy and Interest Rates: Fed Updates
  • Tesla’s ChatGPT-Like Moment & RoboTaxi Potential
  • Bitcoin Mining Efficiency: Iris Energy Leads
  • Viewer Q&A: Altcoins, NVIDIA, and Tesla Splits

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ABOUT OUR PODCAST
Our podcast is about helping people ethically build wealth. We cover a broad range of topics including stock and crypto investing, product reviews, and general financial well-being.

DISCLAIMER
Anything you hear in this video is an opinion. It is not personalized financial advice. Make sure you do your due diligence before making any investment decisions.

As-salamu alaykum, everyone. I hope you are doing well. Jemaah Mubarak. Yet another interesting day in the markets. Really, investors wait months and years to experience a market like we are. or have been experiencing since the beginning of November, really. And things are looking bullish. Things are looking like they could go up even more. We'll talk about some of the reasons why. Studying with the indices and looking at their performance today, the Dow Jones was up point nine seven percent. So about a percentage point. NASDAQ was up point one seven percent. The S&P up point three five percent. Russell was up close to two percent. So basically all the major indices were in the green today. The VIX cratered ten percent. It seems like the investors have forgotten about the geopolitical tensions that were Top of mind for investors earlier in the week, Tesla was up three point eight percent and it continues to churn higher. After a long hibernation period, it has come alive. NVIDIA pulled back a bit today. And Bitcoin miners did rather well. I'll point out IS Energy recently. was up close to eleven percent today. PLO continues to be very strong after the merger. The initial reaction, which was concerning to some investors, but inshallah the message I relayed to PIF members gave them confidence to ride that out and experience the gains that we have had since then. Mister was up, MicroStrategy was up six point one nine percent. I really do think that Bitcoin miners have suffered a bit in terms of their performance from all of the attention that MicroStrategy has been getting. And I do think that MicroStrategy is overbought at this point. I think that a lot of its appreciation has to do with derivatives and options on MicroStrategy that cause market makers to have to buy the stock. And right now the valuation for it, it's tough to justify because really the playbook that MicroStrategy is using is not proprietary. It's not defensible. Anyone can do it. It's true that the more people do it, the better MicroStrategy ends up because the higher the price of bitcoin the higher that the price of bitcoin goes and so microstrategy doesn't mind at all if other companies are to follow its lead in terms of its playbook and issuing equity issuing debt and buying bitcoin this is true but why a company like this would command such a multiple on the actual crypto that it holds is I think there's a question mark around that. I think that as other companies copy it, I think there'll be less of a multiple compared to net asset value for MicroStrategy. But right now, Bitcoin miners, I do think, have been impacted by this focus on microstrategy because a lot of investors who are looking to gain a leveraged play on Bitcoin have opted to go the microstrategy route and as a result have left some Bitcoin miners undervalued. As it relates to Bitcoin itself, the high, we experienced ninety nine thousand eight hundred, so very close to one hundred thousand, the largest candle for Bitcoin ever. We are up more than forty percent this month. Now, the question that I think an intelligent investor should ask themselves is if there was someone who is interested in crypto investing and they have, let's say, one hundred dollars or two hundred dollars. At a hundred thousand per Bitcoin, just about, will they be interested in buying Bitcoin with that a hundred or two hundred dollars? Or will they look to something like Dogecoin and buy some of that instead? I think that probably a lot of investors are going to opt to buy the smaller cap, but tried and tested cryptos versus Bitcoin. And I think we're seeing that in the percentage gains that a lot of these cryptos are enjoying. So if you look at Dogecoin, for example, it's up one hundred and fifty six percent. in november so yes bitcoin's return was impressive but dogecoin did close to triple that or even four times that in terms of percentage return in november and more investors are going to see this and this may put a lot of pressure, upwards pressure on Dogecoin's price, which is what we want to see. And even Solana, Solana is up fifty two percent. So it to beat Bitcoin in November, despite Bitcoin having a historic month. it too beat on a percentage basis the performance of Bitcoin. And so I think you're going to see a lot of investors catching on to that. And especially as greed builds and FOMO builds and the feeling that they've missed out on something builds, it's going to cause them to look at other cryptos and see where they can make up for lost time. And winning assets like Dogecoin and Solana, I think, will benefit from that. Now, the strength in the economy comes or rather the strength in the market comes on the heels of news that the economy isn't doing too bad either so u.s applications for jobless benefits fell to two hundred and thirteen percent remaining near seven seven months lows which means that the probability the likelihood of the fed cutting interest rates in december is lower because why would it cut interest rates if the economy is doing well? And in fact, if you look at the Fed CME tool, we can see this playing out. So the percentage probability for an interest rate cut in December is falling. So it's now at fifty two point seven percent a day ago. It was fifty five point nine percent a week ago. It was sixty one point nine percent. And yet despite this, the market keeps chugging along. And I think it's because even if the cut doesn't come in December, I think investors are anticipating that the cut will eventually come after that. So maybe the timeline changes, but the general trend does not. And looking at the liquidity levels, we are seeing some money coming off of the sidelines and into risk assets. So if you look at money market fund assets, they have experienced a decrease of twenty two point two one billion in the last week. And there's close to. Well, now there's six point six five trillion left. So there's a lot of money left on the sidelines. But we are seeing some movement from money market funds to risk assets, which is obviously bullish for risk assets. This thank you to Aqeel who shared this on our Discord. By the way, before I forget, nothing in this video is meant to be personalized financial advice. Make sure to do your own due diligence before investing or before making any investment decisions. and we have a thirty five percent off for a limited time promotion going use code boron twenty four at checkout to get your thirty five percent off limited time limited number of uses I've said this probably a hundred times now so uh be sure to take advantage of the promotion while it lasts so akhil shared this in our discord thank you akhil and this has a comparison of the bitcoin miners for the months of october and it looks at iris energy and what is very impressive here is that if you look at the fleet efficiency and here you want lower numbers so the lower the number the more efficient Iris Energy is at sixteen, which is the lowest number amongst these Bitcoin miners that are being compared. I think the closest may be Bitfarms at twenty one and CleanSpark is at twenty point nine. If you look at the Bitcoin mined per megawatt, it's one point two two, which is way ahead of the average again closest here to iOS is clean spark one point one three and a bit digital one point zero eight and then the revenue per energized um pay the hash one thousand five hundred and twenty three it's also near the top I think second only to Hive at one thousand five hundred and fifty dollars. So really, if you look at their October performance, Iris Energy has been really killing it in terms of their Bitcoin mining. And alhamdulillah, today we saw a nice little pop in Iris close to eleven percent and they report their earnings on Tuesday. We'll have a detailed analysis of those earnings when they come out, inshallah. One of the reasons why Bitcoin has been doing so well, and I mentioned this yesterday, I thought the most impactful influence on Bitcoin's price this week has been iBit and the options that are now available on iBit, the basically largest Bitcoin ETF in terms of assets under management. And the reason why these these options are impactful is because Market makers, when they sell a call, for example, and this post from Infra is really good. I highly recommend it if you want to understand the impact that options have on demand and supply for any given asset. So typically when you're buying a call or a put, you're buying it from a market maker. And the market maker, when they sell a call, they will end up having to buy the asset in order to cover themselves in case the call gets exercised. Because a call that allows someone to buy an asset at a certain price, if the price reaches the call option strike price or exceeds it, and it is exercised, well, the market maker has to come up with that asset. So they'd rather have that asset already than buy it on the market at more then what they can sell it for, what they're obligated to sell it for, and delivering it and taking a loss. So the more calls get sold, the more market makers have to buy of the asset that the calls relate to. And so if you look at the distribution of calls to puts on iBits options, they are basically three to one. So three calls are sold for every one put. So this is creating a lot of demand for Bitcoin from market makers because they need to cover their and because they need to cover their their obligations in case the call options are exercised so a very interesting read it's how gamma squeezes happen and if you'll recall the games gamestop saga and this is how that happened so Assuming this snowball continues, we may get a case where, you know, we have another version of GameStop, except this time with Bitcoin. And we could, you know, bust through the hundred thousand dollar price point in a big way very quickly. Moving on to other news, Tesla stock has acted as a replacement for legendary replacement to Uber for legendary investor Brad Gerstner, and he mentioned, and this is very exciting, he mentioned the full self-driving as a chat GPT-like moment, and I've been actually saying the same thing for a while now, that Tesla will eventually have its chat GPT moment, and it will take off like NVIDIA has in the last two years. I really believe that. And if you look at what he says, he says, let me say at the start, Dara Khosrowshahi, the CEO of Uber, has been an incredible CEO. He's dramatically increased free cash flow, increased competitiveness. We love the company and it's inexpensive. However, leading up to the election, we've been taking down our position size and rotating it into Tesla. Why? because as I said before we had a chat gpt moment with full stop driving in twenty twenty four and I think twenty twenty five is going to be all about robo taxi we were present at robo taxi day we were impressed by robo taxi for uber they have to get past this moment where they have a hugely disruptive force coming in the case of tesla and now we know that the trump administration is going to push for a massive regulatory change so that will be good for waymo and it will be good for tesla uber has a few waymos in its platform but we want to see how it plays out yeah so this is a I believe it's an existential threat for uber tesla's full self-driving is and I don't think waymo is going to save it he thinks um grisner continued I think eighteen months ago nobody would have said that this was winner take all or winner take most actually a lot of people were saying that uh they would have said everyone was going to have self-driving capabilities actually that's not by the way hedge fund managers even the legendary ones I mean, a lot of retail investors are way smarter. I'm just going to put that out there. So don't get too in awe if you read the title legendary hedge fund investor. Oftentimes, just the average investor knows a bit more about the topic than they do. They would have said everyone is going to have self-driving capabilities. This is actually not what everyone has said. I have not been saying that for years. I've been saying that it's going to be a winner-take-all or winner-take-most situation. Tesla is running away with their full self-driving capabilities. The only other game in town really is Waymo. And this is another proof that he doesn't really understand what he's talking about. Waymo is not another game in town. Waymo is a geofenced solution that works on a very limited a number of locations in comparison with Tesla, which is based on vision. You don't have to add anything to the car in order to activate full self-driving. Whereas with Waymo, you have a bunch of LiDAR and other hardware that you have to attach to a car, thousands of dollars in expenses in order to make it into a taxi that can take you in a very limited geographical area without having a driver. So he still doesn't really get it, but it's interesting to see hedge funds starting to get it with regards to the Tesla opportunity. All right, with that being said, do leave a like. If you enjoyed this live, I'd really appreciate that. And now I have the like and subscribe button, just static images to remind you in case I forget. So, yeah, I would really appreciate a like if you enjoyed the video. And don't forget about that promotion for PIF membership. Let's go to questions. None of you. Nice to see you. I haven't seen a question from you in a while, none of you. Please talk about NVIDIA. All of that and other growth stocks, a possible crash is circulating in some economic discussions. What's your overlook? So I will tell you a possible crash is always in discussions. At no point in history of the market will you not find commenters that are very convinced that a crash is upcoming. But I think more money is lost waiting for a crash than in the actual crash. If you have good assets, If you own companies and assets whose thesis will remain intact, crash or not, then a crash is just a fire sale. It's like the promotion that we have on PIF membership. Take advantage of it. We don't have a promotion because PIF membership is less valuable. In fact, it becomes more and more valuable with time. So just because it's on sale doesn't mean it's less valuable. It's more valuable now than it's ever been. And so take advantage of discounted prices. You see how I tied all that in? I'm gifted, really. Salam, Rashad. Nice to see you. Mohamed, salam. Wa alaikum salam wa rahmatullahi wa barakatuh. Salam, Musa. Musa says, would it be a good time to exchange Ethereum for Solana now? Well, I've been saying this for the last, I don't know how many months, but... This is what I would do. I would exchange Ethereum for Solana. I have no Ethereum in our PIF crypto portfolio. And it's been years since I've had any. Rashad says, NVIDIA demand eventually will slow down. Do you think it will affect BTC move price from the AI mining view? Well, for the foreseeable future, I just see robust demand for NVIDIA, so I'm not really worried about that right now. I see you, MK. Yeah, I've kind of written off CleanSpark for now, just because of the management incentives, although the The company isn't doing bad, but I have to say, when we did exit CleanSpark, we exited it in the twenties. And so I'm feeling pretty good about leaving CleanSpark. I think right now it's in fourteen-ish. Yes, Rashad, inshallah, we'll have a PIF meeting for PIF members and we'll welcome all the new PIF members. We'll have that on Sunday. I will be on the road, but I will inshallah, make sure to have it and just, you know, take a victory lap together as members for our portfolios, inshallah. Salam, Maruf. Nice to see you. Salam, Zuhair. Nice to see you. Salam, Jasir. Jasir asks, which broker do you use? So, I have, so some brokers that you can consider, well, it depends on where you are location wise. I actually sent out a newsletter a few weeks ago that basically summarized the responses I got from people with regards to where they live and what broker they use. So, um, but for me, I think Robin hood is, is I'm kind of, I've warmed up to it a lot. I think it's a decent brokerage. Charles Robb is a decent brokerage. Fidelity is a decent brokerage. M one finance, um, in the UK, you have trading two one, two globally interactive brokers. So you're just a Google search away from, uh, from figuring out the best brokerage for your area. Maru says, will you be going back to creating regular YouTube videos? Yes, I inshallah will. I really enjoy these lives, to be honest. They're really exciting for me when I go live and I'm able to interact with people. But I do like sort of the deep dives that you can do with sort of pre-recorded videos. So I may go, I will inshallah go back to that. But I won't stop the lives. I'll just add it inshallah. So regarding MicroStrategy and using zero percent debt, I will say that any loan wherein there is a benefit to the lender involves REBA. So even though there's zero percent interest, there are other ways that the lender benefits, not the least of which the origination fee. So Any loan that's not given out of charity, and the MicroStrategy loans are not charity, any loans that it is not giving out of charity is a REBA-based loan. Hey, nice to see you, Muhammad. I just joined. Wa alaikum salam. I just joined the community. Happy to be here. I recently bought some Nosana. Update on Nosana incoming, inshallah. Inshallah, Muhammad, we will be looking into alt, but to be honest, our portfolio is killing it. So, I mean, we're not going to fix something that's not broken. I mean, the three top positions that we have are basically the three biggest winners of the month. So I think we've been doing pretty well. We may look on the margins in terms of our alts, how we can optimize there. But I think the course that we've chosen is a really good one. And it's showing up in our returns, alhamdulillah. Do you see yourself reducing BTC exposure by the end of this bull run? Yeah, I'll probably rotate some of my BTC exposure into Tesla. Tesla doing another stock split. I think eventually if it reaches the same prices, it'll do another stock split. I don't like Cardano at all, Lubna. And welcome to your husband. I know you, unless it's a different Lubna. But yeah, welcome to both of you. As it relates to Cardano, I'm really not a fan of it at all. If you look at the number of users they have, it's pitiful. I mean, I've seen more people at an In-N-Out burger joint. Yeah, no, not a marketing degree. I took finance and computer engineering. I mean, microcomputer, I mean, it's a compelling idea, but we just got so much going on. Good for us. So there's no reason to dilute our exposure if we don't need to. Really depends. So whether, you know, five or ten percent of crypto is too conservative really depends on your financial situation, your goals, etc. If you're interested, you can schedule a consultation with me. A link to do that is also in the description. Yeah, absolutely. Amen. I do think that there's actually a lot of opportunities abroad. I have to say, like in terms of the Muslim world, there are, I'm very, very bullish on the Muslim world. And perhaps in twenty twenty five, we'll have a portfolio dedicated to investing in the Muslim world because there's a lot of really great companies coming out of some up and coming countries. Turkey obviously comes to mind, Indonesia, Malaysia come to mind. And then, you know, you'll be surprised, but there's a lot of activity coming out from Afghanistan. I'm very bullish on that country. If they can just keep the peace, inshallah, and avoid any wars for next decade or two or three, they can really, you know, build something special there. So, And inshallah, we'll be able to help out, you know, companies globally in these emerging countries in the little way that we can, uh, through investments in the most promising companies. I really think that there's a lot of, in the next, in the next few decades, there's going to be a lot of amazing companies coming out of those regions. Nice to have you, Ayman. Really glad you joined. Hamid says, if someone wants to invest in K and can't invest in Tesla due to its price, where can they put? Well, I'll have, I'll tell you this. A three-fifty seems expensive now because It's basically, you know, it's all time high for the year, but it's close to an all time high for the stock. But three fifty will seem cheap. In a year or two, it'll seem very cheap. So I'm not really sure I buy the argument that, you know, you can't invest in Tesla because it's, you know, too high. If you have a long term horizon, then I think you can. Okay, so Boston Darija asks, can you share your group's portfolio return in whole year to date? Let me actually check that out for our growth portfolio, which is our largest portfolio. And I'll give you the exact number. Let's see. Year to date, our money weighted rate of return is ninety seven point seven three percent, so close to one hundred percent. So we basically doubled our money this year. That's not that's not bad at all. And I actually sent a summarized view of all of our four portfolios. And we've doubled our money there as well. And we've taken some profits along the way. So I think we're doing extremely well. And I think PIF members can confirm that. And so if you're interested in an investment that inshallah will pay off many times, the actual expense, Obviously, I can't guarantee that, but historically it has, inshallah. Then consider the PIF membership. Discount code, as I mentioned, is in the description. Do leave a like if you enjoyed this live. Subscribe, hit the notification bell, and enjoy your weekend. Talk to you PIF members on Sunday, inshallah. Assalamu alaikum and peace be upon you all.