 What's up guys? It's Eric here. In this podcast James and I share some stories talk about the overall market and give some tips on the current small cap market So stick around listen up because you're not gonna want to miss this one What's going on guys? We're back in another episode after this podcast Today's just Harry and I we're gonna be kind of talking a little bit about the large cap market overall How markets and economy are moving and then we'll kind of touch on small caps and in kind of what we're doing there And how the how things are shifting in that area So I mean, I guess we can start off kind of talk about the overall markets and economy. So right now as of like last week You know the Fed raised another three-quarters of a point We got news yesterday that meta is gonna be laying off thousands of employees We don't really know the extent of how many employees but definitely it said upwards of over a thousand and Apple had kind of come out and said that the production in China was gonna be really slow They're saying that it's because of China's zero covid policy, which I don't know if that's accurate It could just be because of the economy in the actual like Market in China's pretty China's pretty fucked right now Pretty crazy right now just but there I mean they there was a lot of rumors that the zero covid policy was gonna come to an end And I think it kind of shocked people That they announced that it wasn't And I think I think right now like the overall stock market. We've just been bouncing around and I think I almost I've changed my my stance a lot on things recently where I think I think that potentially over the next couple months to years We just might be a stock market that kind of bounces around It's almost like every day you wake up right and then bulls are like up the bull market starting again and bears are like No, this is just a this is just a it's a bear It's a rally in a bear market and you know, it's gonna go down and I almost feel like Realistically there's nothing coming down the pipeline that's gonna change one way or another like I think people Are slowly starting to recognize like we are in a recession I think that layoffs and stuff and slowing up production and pausing of hiring Yeah, is is really starting to wake people up to the fact that we are in a recession But you know, that doesn't mean that the market's gonna continue down either It doesn't mean just cuz we're in a recession or even potentially depression at the time That the market's gonna continue to slide it could just mean that we're gonna bounce around for a long time I mean if you look at the past Like stock market history like, you know, a lot of times, you know markets bottom During a recession and then just kind of our stagnant, you know I mean, we could be in this period of like 1970s where the market really was just not returning much Yeah, but it wasn't crashing every day either. It just we you know, we might just be there So, you know, I don't know. What do you think about that? But I Completely agree with that to be honest. I just think there's so much Uncertainty around just literally everything, you know, um, yeah Like for instance just last week you had you had Canada going out and only raising the interest rate by point five Yeah, and so everyone thought oh the United States is gonna only raised by point five to they must be in it together. They must be You know the the United States and Canada must be kind of like teaming up. They're gonna only raise by point five It's gonna be good. So the market rallied on that and I think a lot of people were caught off guard by Just the Fed was like no point seven five That's what we're raising to and we've traded a lot lower since that FOMC meeting. So, yeah I think that's also something to kind of look at is that, you know, everyone is betting that They're going to save the market Everyone is betting that they're not going to be as aggressive Everyone's betting and you know, even when you it's an interesting environment right now because when you talk to people I feel like there yes, there are a lot of people who are worried, but you know, when you talk to my neighbor like Well, I guess like my old neighbor when I used to live in my parents house, you know She texted me the other night and she was like, hey, what do you think about the market? I'm gonna retire soon and I was like, yeah, yeah, okay, okay And she's like, well, I'm just gonna retire anyway because the market will go up again You know, there's a lot of people making a lot of investment decisions right now Based on the fact that all the market will go up again. All the market will go up again So that kind of tells me that maybe we have a little bit lower to go Just because of the fact that so many people just are on face by this like yeah When you talk to working people who are out there, you know, not that we're not working people, but you know, like Yeah, working class people, you know, um a lot of them just have kept their head down and Are like now like the market will go up again. It's fine. Don't worry about it You know, so that kind of tells me that maybe the opposite will happen, you know I think so too. I think we've been conditioned dude I think we're conditioned to think like since 2009 like right after the financial crisis that I think that we're just conditioned to think that the market's always going to get saved I think that we always think the fed's going to step in and save Save the world from ending kind of thing in terms of the economy But but this time I feel like Jerome Powell does not want to go down in history as the only guy that lost to inflation I don't think he wants to go down in history as a guy that could not fix the economy and fix the market So I think he's going to crush everybody because he has to I think he unfortunately has to basically wipe out a lot of wealth That was built over the last 15 years I mean, I'm pretty sure and don't don't quote me on this but I'm pretty sure the stock market in the last You know 12 13 years since the crisis has averaged like an average of like 15% returns or something ridiculous like that And it's like you think about that in terms of overall wealth and compounding. It's huge So I think that he realizes that that we just got way too out of control with spending We got way too out of control with money printing and everything and and he's going to do it You know, so anyone who's not close to retirement stuff like of course, I'd be a little anxious I talked to a lot of older folk who are like At that point we're in the next five to ten years They were looking to either stop working or even stop working sooner and now they're like wait a second You know, we're so used to making this much money every year because the market's been so hot We've been in the longest like secular bull run for the free So as long as we've we've been alive at least and you know now these people are going to enter a phase Where maybe it's protection time, but when you're close to retirement and you want to live off your investments That's when it gets hard, you know, and I think people are soon going to realize that I think I think a lot of people who are relying on their real estate as retirement Are going to come into a hard point You know my girlfriend and I actually this weekend in the last couple weeks We're looking at condos and houses in the area and You know, it just doing the simple math of it like there was a really nice condo we found and you know With the price of it even putting down 20 percent our mortgage would still be really big just be Considering the interest now I'm not complaining because I did have plenty of time to lock in a low interest rate if I wanted Just kind of at the point where we're looking now and it's it's crazy So like, you know, if those people like my parents, for example If they were relying on not saying they are but if they were relying on their house sale for their retirement Because the market is slow, let's say, you know now trying to sell a very expensive home to new buyers Who are getting locked in at seven over seven interest rates and you're you know I think the math of it is like if you buy a seven hundred thousand dollar home, you put down 20 percent Your mortgage is still going to be like five grand or something like that Which like to an average person is pretty like pretty ridiculous. Yeah So I think we're just like I said, I think we're we're going to enter this period of just like a lot of uncertainty A lot of slowness, you know and just anxiety in people and as the economy Gets worse and as people realize it. I mean, I notice it every day I think all-time frustrations are at an all-time high with people Stress is at an all-time high with people lack of savings is at an all-time low credit card debt is high Midterms are coming up where I think that we're going to run into a lot of political issues With either side accepting The outcome I think in general that's going to affect the economy in fact the market You know, like I said, I don't know if that means the stock market will go down Because I don't think the stock market is necessarily a hundred percent reflection of the economy But I do think we're just going to be bouncing around for a while. Yeah, I think so too And maybe we're going to look back on this podcast and be like wow, you guys are completely wrong It went way lower. It went way higher or whatever. I don't really see a cost for going higher though I I think I think we're pretty optimistic saying that we see a sideways chop You know, I think that that's the more optimistic stance right now Rather than people saying oh, it's going to go lower. It's going to go lower And you have to wonder what the agenda really is, you know Like I mean if you're a federal reserve chair And you see housing prices go out of control and covet It's like why didn't you hike then and everyone was like, oh, well it was covet. It was covet, but to me like during covet and maybe this is just because I I was working all the time like there are a lot of people complaining in canada about the lockdowns But fuck I left my house whenever I want. Um, I went out whenever I fucking wanted to You know, yes, the bars were closed for a while But I could still pretty much function on my own. It wasn't yeah for me. It wasn't that that fucking terrible of a time I saw I saw from my perspective people going to work I saw people getting stimulus checks that were still working their jobs at home. I saw People spending an absolute crap ton of money And it was just for me like You know, yes, we had a pandemic, but it wasn't the worst-case scenario You know, like to me the worst-case scenario is fucking, you know, 50% of the population just gets wiped out, you know Yeah, we're trying to get what I saw um, you know, we had yes, we We did have like the economy impacted a little bit, but I saw things ramping up. I saw sales booming for all those major companies I saw people spending a lot of money. I saw, you know, people were at home. They were online shopping. They were doing this They were doing that people were drinking partying having a fun time and they were still working and still getting paid and so It was really hard for me to understand like Like is that what a pandemic is going to be? Everyone's just at home spending a fuck ton of money getting stimulus checks from the government, you know, so Again, they could have like then they didn't choose to And now we're in this position now. Everyone's like all deer in the headlights. It's like For a lot of us we saw this coming like we've been talking about this for a while We saw that this was fucking coming now. It's here and people are still in denial so we probably have a little bit lower to go and I think they're just going to keep getting aggressive and aggressive and aggressive and aggressive and they're just going to try and wipe everything out Like you said Yeah To me and this is to me. This is a fact. I don't I don't I know people who will probably disagree But I think the economy will be impacted negatively way more Not the stock market. The economy will be impacted way worse With the looming recession, if not the pressure then it was during covid now people initially will say how can that be possible? We were closed the reality was spending was out a crazy all-time high during the pandemic I spent money like crazy actually during that time the you know, I was I was always drinking fine like nice bottles I was I bought cars like I mean I was spending because I was also bored like yeah restaurants and bars were slower Some of them are closed, but that doesn't mean spending stopped Um, you know, we were all partying more if you look at like like we what we we said like the stripper index, right? Like money is going crazy like down in miami miami We saw how many videos of these nft guys or like anyone just how many fucking videos Do we see if people fucking popping bottles every single night in miami and it was like when you look at it back then I actually this is why I agree with the fed like really being aggressive because that just goes to show like I think as a country We got saved too many times We had too much money available going out at such we had free money I mean you could buy a two million dollar house and have a really cheap mortgage getting locked in a two percent or whatever And with all the stimulus going on. I mean, I know people who had no business getting stimulus checks getting stimulus checks Um, you know, and when I remember we talked about some previous podcasts when stimulus checks went out You know, if you went to the mall you'd see lines out the door At louis Vuitton of people who and not trying to judge people by like what they look like or anything But like you could just tell these people probably had no business spending thousands of dollars at louis Vuitton Um, you know, and it was it was just uh, we got to a period of time and I think in our country where Uh, like godliness and you know, just overall just over spending got crazy I see more teslas on the road than I ever have and that's I have a tesla It's an expensive car to have and pay for it monthly and I know people who have them that should not have them And I think we just got ahead of ourselves as a country. So I think By powell kind of getting aggressive and like kind of crushing the market in the economy It's gonna have to happen because if he pivots too soon and if he gets if he takes his foot off the gas We're probably gonna have the same issues in two to three years. We're probably gonna have to reevaluate in two to three years Or at least now We're gonna wipe out we're gonna really I think wake people To get aggressive like we're gonna wake people to fuck up like people aren't working right now people who are saying that That working an hourly job at a grocery store at duncans or anything like that isn't worth it I think those people are gonna wake up and realize wait a second I need to actually work for a living to be able to afford my life and my lifestyle I can't just float by in the bare minimum anymore because that's just not what our country's made off of Off of it's not what the economy is made off of And I think if long term you want the economy in america to thrive because Face it american economy is the world economy. That's just how it is It's unfortunate other countries have to deal with how we Expend in what we do and our dollar affects them, but that's the reality So if you long term want success in your country and in ours We need to fix the economy here We need to fix the market and and get people back on track to realism You know free money doesn't exist countries have negative interest rates at point that doesn't exist It's not real, you know 10 mortgages as crappy as it sounds You know, maybe that has to happen So house prices come down so that average people can afford it and maybe they're tight for a little while But maybe people will start stop spending outside of their means and stop spending with arrogance because That's what that's what's kind of needed right now. Yeah, and I also think that You know, we kind of have two things that play in that we've never really had before and One thing is social media, you know, I was watching this documentary last night And this this guy had already made like a documentary on netflix, but on 60 minutes last night they were talking about Uh, you know, they had that guy on they were talking about social media and you know I'm not necessarily the biggest fan of like cnn or like anderson cooper all that type of shit But you know, it was interesting to watch how they were just talking about how social media affects people And I think during the pandemic that was at an all-time high, you know, we had people who Were posting old traveling pictures some were traveling overseas You know, you got the louis v bags the gucci Everyone's like saying everyone's showing off and then that kind of creates a fomo. I think for the lower class Oh, I want to be a part of that. I want to be a part of that And so you kind of have this battle of rich versus poor trying to kind of compete against each other You know the rich people who are buying the nice bags the poor people who are trying to keep up And it kind of created that toxic mess during covid where you saw a lot of people who didn't really have the money Go out and spend it on all that designer shit, you know like even now still I mean and rolex like the prices are Uh, starting to come down right now But do you remember at the height like how hard it was to get a wash or how hard it was to get anything You know, richard melz were going 200k over asking price. You had rolex's going, you know 50 percent over asking price in some things. I remember alex went on a trip I forget where he was. I think he was in florida and he sent us a picture and he's like boys check this out There was not a single fucking rolex in that store. So what does that tell you? Like the one percent is the one percent for a reason. It's the one percent of people So when you have rolex is being sold out, it means that okay that has kind of trickled down lower There are people who are you know, and I'm not saying middle-class people can't afford a rolex or can't afford this It's just I feel like Maybe during COVID it was a good investment, but it's not necessarily the best investment now um, you know as prices are starting to come down, but To me that's kind of what what I was seeing was just everyone was trying to be Flexing on everyone and it was kind of a toxic culture and another thing I see is that I think people who have money Got really fucking pissed off at what they saw, you know, if you look at the top like There's point zero zero zero one percent of America the people who own the big corporations The people who are working hard every day like if you're a billionaire in America, you are working very fucking hard You know had this conversation with another friend of mine on my deck and uh, we're talking and he's also a trader And he's like I'd never want to bill though because those guys work fucking hard And I thought about it for a while and I was like, you know what you're right Like look how hard e-law must work so that top one percent And the reality is is that those can those people control the government Those people control they have the money to lobby u.s. Congress. They are very aggressive When they want something done and when they want something done they go out and they fucking get it because they're billionaires They're worth a bill and they have the money and I think you saw a lot of those upper one percent Really pissed off in covid people go out with You know buying a bunch of teslas or doing this or doing that everyone's wearing a Rolex You know, I think you had a lot of those people pissed off And I think that's part of why the fed's so aggressive right now Because I think a lot of those people came together lobbied the united states government and we're like we're gonna fucking crash this thing And I that's just really how I kind of feel I know it's kind of like a little bit of a tinfoil hat type of conspiracy, but I think you did Pissed a lot of those ultra rich people off And that's that's where we're at right now. We're gonna hike. We're gonna hike We're gonna hike and they're gonna fucking crush you and they're gonna make sure that you go back to work And package your fucking food and do this and do that because that's where I think they're at They're pissed. Yeah, you look at the small cap market right now There's not as many people trading, you know, if we had two million people trading before we only have 50k now So it's like, you know, they they have successfully I think crushed a lot of those Stimulus whatever people but I don't think we're there yet, you know Yeah, I think um I think the reality is like America as a country is built off of a lot of principle of like you come here You work really hard and you get to live the american dream Which means, you know, you get to have a house you get to have a car and be with your family and all that And I think we just unfortunately got too far from it and we let politics kind of put a wedge in between What's right and what's wrong and how we live our lives and people got way too crazy people got way too overextended, you know The stock market Like we said over the last 12 13 years returned an unreal amount of money Which is a lot of fake money on I would say on paper and a lot of people, you know Like as long as you're in the casino kind of thing, you know, the money's the money's real But you know the second that things kind of come down the money starts to go away and you're like wait a second like I I've been spending like I I have all this extra money and and now that the market's getting hobbled and I really would have been greedy It's going to affect people So I always think the best thing and I always talk to my friends about this But the best thing you can do is just like, you know You know, it's I think a really a better flex than having a Rolex and stuff because like there was a period during the pandemic Where I have a friend who works works for Rolex and He's still a distributor and I asked him as like could you get me something and he was like no He's like I have a list of 50 people that want a watch and most of them shouldn't be able to afford it But I think they're they they're just bending over to get it because flex culture became huge and and I think the Really a sexier flex and the cooler thing is having stability and security in your life Having a life that you can afford and not being stressed all the time You know, if you make a hundred thousand dollars a year, but you have $300,000 worth of lifestyle that doesn't make sense in long term. You're going to be stressed You're going to be unhappy and things are going to affect you more You know, I've I've tried to build a life for myself where politics don't affect it as much Um, you know, whoever's in an office. Yeah, it's some years tax are higher some years tax are lower But they always get you one way or the other, right? So it's just comes down to being secure and not stressing so hard about that stuff And I think just everyone got too far, you know The only reason you're really stressed right now But the market and the economy is probably because a lot of people will overextended. They've spent too much money Um, you know, whereas reality we're at position as younger investors, I guess to to really build wealth long term, right? So Well, we're fucking lucky, bro That like I can sit here all day and complain about this that or the other thing I can sit here all day about spending two dollars more for eggs or four dollars more for milk or whatever I mean, you're probably a bit luckier than me because you're american and i'm fucking canadian and things are just expensive here But um, for the most part. Yeah, like When I say that you're luckier than me, it's just like, oh, I have to spend a couple more dollars on the grocery store But we're not going to be wiped out by this, you know, there will be people who are wiped out by this, you know Um, for the most part, I'm going to just keep cruising on by because in in covet I literally just put my head down and I worked And when I lifted my head, um Uh, I moved into a new place um bought some shit and uh Now i'm just really chilling, you know, I didn't go too hard. Um, and uh The only trip I really did go on which I should be traveling a little bit more Um, that's my own fault. But just because my girlfriend's in her master's like we haven't really been able to yet Um, but you know, I went out to utah. I had fun Um, you know chilled with Alex and bow that was super fun And then put my head down and went back to work, you know, and you had the market was slow for a couple months but In reality, you know, it affected my mental more than that affected my, you know, the income Coming in, you know, like uh, the income was slow too Just off the market But it was more mentally that I was having problems then when you actually look at the p&l It really wasn't too too terrible, you know, it wasn't losing a shit ton of money So I think that yeah, we're we're talking in like a lucky position. I do feel bad for some of the people who Um, like aren't really receiving the wake-up call yet Like I feel like the fed is sounding the alarm and like we're still like a little bit early And once this kind of catches up over a couple quarters, you know, I'm really interested to have to see how this kind of plays out You know, dude, what's that saying? I think it's Warren Buffett. He says like when times of economic hardship come We find out who is like swimming with their pants down or something like that Yeah, I forget that quote, but it's like it's true And I think the two people that are gonna be revealed here and this coming like next years or so are gonna be people who overspend People who are way over leveraged and have uh lived outside of their means and then on the flip side It's gonna be unfortunately people who are not of economic means and aren't doing as well financially because the reality is like during The gas is going to go up after the midterms that I'm almost I'm 100 positive of that Um, and when gas goes up, you know what rich people are going to complain about it They're going to say oh, it's costing me more money to fill my Mercedes AMG, you know G-wagon or whatever, but there's not it's not going to stop them from driving anywhere Nothing's going to stop them from taking their vacations going away during the summer and all that stuff and extra $200 a week is not going to change their lives But the people it will affect are the people who are way overspending and the people who don't have the money So we'll see I mean again, we can we can kind of banter about this all day But you know it's going to it's going to be telling and I don't think anything changes until we receive major news You know and I still think this is just going to be a multi-year thing and you know as far as small caps go right now It's like I think there I think opportunities are there. I actually I actually in my opinion find um on the short side I need a few more weeks to really like confirm this in myself but I think the opportunities might be better because I feel like after ilag and after um HUD I the other day like I just think a lot of short sellers are are almost scared Um, and I think it wiped out a lot of them and I think that a lot of moves are actually pretty clean right now Um, we we still lack a little bit of range and I I do hope like we do start to get some range Um, like I don't I'm not going to short things that are up 20 percent It's just to me. It's not worth the mental capital, but I'm gonna you know, I do hope that we get some more and I think opportunities are maybe around the corner. I do think for you and for longs It's it's just tough right now because there's just no confidence on the confidence on the long side I mean, I I did I've you know, I've been starting to pick it up a little bit. Yeah, you find it Yeah, it's been getting better for me. Definitely last week. I saw you know, we're starting to change in the right direction I think um, but but you take those opportunities Like you take those opportunities and then like, you know what if you go through a slow week Then it's like all right, whatever. I hit a I hit a banger, you know, you're not going to press You're not going to come into the market today after hitting a $3 share home run on friday and be like I need to make two dollars a share today three dollars a share today. Yes, exactly, you know, you know, which is huge Yeah, and maybe I will fucking uh make a two three dollars your day today, but uh, you know, you just have to have your expectations in track I'm not expecting that. You know, maybe I hope the kind of uh Uh, you know stuff can kind of set up for me, but you know, we'll see it And also I just want to say one more thing about the large cap market Just as we're kind of transitioning in small caps is that also I read something the other day Like what happens if the company has cut all the dividends, right? They're like, hey economic hardship is That that's coming and I'll it'll be interested to see how people react from that Because there are a lot of older people that are living off those dividends who have money Who are down on the air that are like, well, at least I have the dividends When they got that it's like, oh fuck You have you have dividends and you have corporate profits in excess, right? That's what that's what leads to companies being able to give dividends raise dividends In the reality is when you start to see I I think in my opinion the last domino that is holding strong is apple If we start to see weakness in apple, then I think there's going to be a huge change in like the market sentiment But yeah, um, you know, that's like Warren Buffett's biggest holding right is apple And I think that's because of their dividend structure and in the stability But dude, once you see a like a little chink in the armor there That's when it's going to start to get to get real with a lot of companies. I mean, I think so too Yeah, I think just pull up a daily of meta. It's fucking crazy. It's crazy meta carvana All of them what are what's what's some of the rest of them? Oh, I mean On snap, you know peloton is almost a penny stock And I know in peloton is like the one of the like as a product is something that only wealthy rich people can afford and like It's a very nice product, but they're trading it like five dollars a share. I'm pretty sure Yeah, all the wealth the wealthy people were like fuck. I'm cutting my subs Yeah, that's it. And now you know what now they're back in the gyms like It's just I mean it was someday we should do a podcast We can talk about actual like companies and like what they do and like why we disagree or agree But but I mean it's it's crazy, man It really is so you know just like I like you said this as we're kind of I guess we're coming up on the time to wrap it up But you know, uh Unless there's something else to add but you know, just right now It's just about managing expectations in small caps day to day trading and in large cap returns You know, just you know, the market's not always going to be in our favor Um, you know, I'm talking to a lot of guys right now or way better than me about expectations and trades to take and you know Situations to avoid and it's like, you know, just right now. I'm like today's monday november 7th or whatever it is And I don't even know but it's like, you know, I'm still going out and popping a few bottles this week Listen mondays haven't been my day for the market for a long time I've noticed that for my setup mondays just aren't decorated right now And so I I'm pretty much off on mondays like I'll come I'll show up and if an opportunity That's like an a plus or I don't even believe in a plus anymore five an opportunity shows up That's worth it. I'll take it but pretty much I'm um, you know, I'm just Taking it day by day and that's all we can do right now Yeah, exactly And that's what I've really been doing too is just You know, I think a big thing for me as well though has been I always wait for the open now I never trade pre-market. Yeah, if things go up things go down. That's okay. I'll manage the sentiment, but I never trade pre-market anymore just because Um, I know for you like sometimes it's like getting a good fill You know open when the shit fades but like for me, it's just like not really worth it anymore Rather just preserve my capital to the open chill watch Um, and I know like Alex doesn't really trade like short in the pre-market that often either But like I feel like it just really depends on the day. Sometimes you're gonna have shit fade pre-market Sometimes you're gonna have shit run pre-market. You know, you just really have to be able to kind of size up the day And I think for the open, you know, that's helped me kind of tremendously to be able to say It helps me manage my expectation My expectations at the open as well because if we have a shit that's just ran from like two to five You know, maybe I'm not going to be as aggressive on that stock and maybe I'll look for others You know, but there's so many situations that I think like we've just been like trained and conditioned for And a big thing is just not being emotional. So you can just be calm cool and collected, you know And I think that that's very important for me Yeah, I just spent the whole weekend actually like going over charts and stuff because you know, I had a pretty good week The first week of november For the current market environment But I need to find ways to eliminate the cuts I'm taking because like the way my my style works is like I take multiple cuts but on the way down as long as the stock has ranged like um, it's it's well worth it But I want to be more in the the mentality, especially during this market sentiment where like I want more confirmation rather than just like Anticipating breakdowns, right? So So it's just I think there's always room to improve and I think kind of like you said It's just you can't be in a rush right now. You have to kind of wait for The right opportunities to come up and just not be not be so in a hurry to get get involved because you know what if you miss You miss it sucks, but it's like, all right, you know, but I also don't want we don't want to take sub par setups and just cut away our actual equity so Yeah, I mean unless there's anything else you really want to add. I think that's pretty uh No, I think that's pretty good Yeah, James is just fucking dropping everything right now. I'm just um, oh man No, I think that's pretty good. So thanks everyone for uh, we're listening and we'll catch you for the next one. Yeah, later guys