Podcast – Episode 93 – How to Trade and Invest in 2021


 

Podcast Transcript

Passive traders. Let me welcome you to 2021. One of the resolutions this year was that I was going to have a podcast episode every week. But this is the first episode of The New Year. And you are probably listening to this in February, which means I am behind, I apologize, I’m going to do my best to make it up and catch up and have at least one episode every week, if not more, depending on what’s going on in the markets and whatever lessons I need to impart.

So hopefully, we’ll be able to take care of that and catch up. I wanted to say thank you for having a wonderful 2020. Corona aside, you know, that impacted everyone’s lives to some degree, those of you who lost people, I’m greatly sorry, and my condolences. But when you look at the market and overall economy, not the economy, but the stock market economy and the stock market are two different things. We learned that in 2020, the returns and the investments that we made in the markets and our options trades did amazingly well. Amazingly, amazingly, well, I don’t know if we’re gonna have another year like that anytime soon. Passive trading, just keep but all of the strategies worked amazingly well. We have students that didn’t have a losing trade all year, as hard as that to believe. You know, I know I had losing trades, but they showed me their results.

And it’s like, no losing trades the entire year, and they’re doing fantastic. And they’ve continued to 2021. In this episode, I did want to talk about what we can expect in 2021, and how we can make money from it. So, you know, 2021 started relatively calm. We didn’t have any issues with the inauguration, Biden took control, and Trump left peacefully, no big deals, no rights, no, cool, no, nothing big. I mean, we have a little issue at the Capitol for a day. And those guys were beaten back and they left. And now there’s investigations and all that going on. But, you know, the government seems to be running smoothly. The Democrats do have control of the Senate and the House and the Senate, they have a 5050 with the tiebreaker. So they can get more stuff passed, but they don’t have complete control, because a lot of issues, they do need 60 votes in the Senate. So they’re gonna have to get all of their dems to vote in that favor, and then they’ll have to have 10 Republicans to vote for them.

So that’s probably not going to be an easy thing for them, that’s gonna keep a damper on things, meaning that they don’t get to pass every single thing that they want to pass, which is a good thing. Right? I think when it comes to politics, the less laws they pass, the better the last day and a few of the better. And I will agree with Trump on that, that every time they pass a law, they should take out a loan. No. But it is what it is. And as soon as long as we have, you know, one, either the House or the Senate in one control, and the other party controls the other one, that’s fine, that’s great, it works best. And the market does the best in those and people are normally happier. When you have both of them being controlled by one party, things can get really out of control.

The biggest thing for us is the Fed, the Fed continues to keep saying that they’re going to keep rates at zero, they’re waiting for inflation to come up. And they’re expecting more and more stimulus from the government. So as long as the rates are at zero, as long as the Fed is continuing to pump money, markets are going to continue to move higher. as they’ve done the last several years, we’ve had a very fed induced bull market that has just pushed stocks higher and higher and higher. And we’re probably going to continue higher. That doesn’t mean that they can’t go down. In the meantime, we could easily have a 10% correction, we normally get those once a year. easily. We can have overdue for one soon. Does that mean it’s time to bail? No, maybe you take some profits. And then if it comes down, then maybe you get back in, you buy the dip, because as long as offense keeping rates too low, it doesn’t make any sense for why the market will not go up.

We also have the democrats and Biden pushing for more stimulus and more unemployment coming. So that’s going to go towards people that are sitting at home and a lot of these youngsters have decided to put their unemployment checks and their stimulus checks and go gamble in the stock market. And so we have a lot of speculation, a lot of pumping of stocks, like what they used to do and the penny stocks really pump and dump that’s going on right now. With GameStop and AMC and all these other stocks that are just jumping up for no reason.

The beaten up names like those, they are going to continue to be volatile. You know, don’t expect similar things in other companies to cruise lines, airlines, all those companies. If there is a small chance, you know that a beat company or company is about to go out of business is going to turn around or have some good news, there’s going to be somebody to pilot in there, and then they’re going to promote it and say, Hey, this is great good buy this, buy this, buy this, and then the stock will rally. So just keep an eye out for that doesn’t mean that it’s a bad thing, necessarily, it’s part of the way the market works, of course, over corrections or whatnot, it’s fine. As long as the hedge funds don’t get killed, I’m happy. Or if they do get killed, I’m still happy.

The only time I’m not happy is when they get killed, and they have to dump all their stock, which leads to a few down days in the stock market. A lot of times in the history, you know, financial news doesn’t cover it. But you know, if the market goes down three or 4% 5%, in a couple of weeks, or in one week, especially, it’s because there was some very large player that blew up. And they had to sell everything in order to satisfy their margin calls that might be going on right now as we speak. Market was down today. And it might be because of that. So we’ll see. Now, what’s going to do well in 2020. Right, let me take a look at the agenda for Mr. Biden, the environmental names should continue to do well. So who is that? Well, the electric companies, the companies, anything related to electric power, wind power, solar power, and all of the solar names.

So there is a ETF called Tam ta n, which covers them, I own that. It’s done amazingly well in 2020. And I expect it to continue to go up as long as Biden is pumping more federal money into alternative energy. I believe the cannabis companies are also going to be doing the marijuana companies, you know, they haven’t done well, that launch for the past few years. But the democrats are more favorable towards marijuana and making it legal. Maybe there’s a push to make it legal nationwide, I don’t know, we’ll see. I don’t know if they have the votes to approve that or get it passed. But they’ll probably be relaxing some laws and make it easier for these companies to do something. So that’s definitely gonna, if anything changes in that regard, these companies are just gonna shoot up super high. Infrastructure companies are also going to be doing well. You know, the companies that build the roads, pipelines, all that kind of stuff. Caterpillar is one united rentals. Another one, that’s a good quick way to get jobs and people back to work is to start building stuff, looking at building homebuilders and construction companies going to continue to do well, home builders, usually they stay in the suburbs. And that’s where everybody’s moving to, there is a shortage of homes in the suburbs.

And so they are doing really, really well, lumber prices are through the roof. Right. But that’s because there’s so much demand. And with rates, so low, people are going to continue to be moving to the suburbs, people are leaving California, they’re leaving Texas, they’re leaving all these states that have very high taxes, and they’re moving to places like Florida and Texas and Tennessee, which have zero state tax, and land is plentiful, and there are plenty of cheap properties here. So if you’ve been thinking about moving to Texas, come on down water, fine. It’s hot as hell. But other than that, you know, if the mosquitoes don’t get you, you’ll be fine.

What’s gonna suffer is I believe the rates. So if you have a read, it’s probably not going to do well probably going to drop and there might even cut the rates or the dividends. Office Building rates aren’t going to suffer. Urban Development rates are going to suffer people, you know, reach that focus on properties inside major cities. And the malls are going to continue to do poorly. I just went to one of the biggest malls in Texas are not Texas, but in Houston. And there was nobody there. Weekends are pretty busy. Because we have a lot of people coming in from Mexico to Houston. But with Corona, they’ve closed the board on again. And so there’s less, there’s still people coming. But there’s less weekday man places dead. There was nobody there. I don’t know how they’re paying rent.

But those are going to suffer the stocks that shot up in 2020. In the work at home stocks, I believe they are going to suffer because they’re they’re going to be tapped out. There’s not that much more demand for something like a DocuSign. And most people that were going to start a Shopify store or you know, something like that they’ve already done, and they’re going to realize that it’s harder than it looks. And they’re probably going to lose customers because people are going to quit, you know, when they were all excited. And yeah, I’m going to work at home. I’m going to open my own online business and I’m going to go open a Shopify store. Okay, great. And then it takes a few months for you to realize that it’s not that easy, and Shopify is expensive, so I’m gonna shut this down.

So I think Shopify and DocuSign and those types of companies will do that, or do poorly, not as well, not for me, I guess, but not as well as it did and so the stocks are not going to rise. The unknown. Really healthcare, healthcare is an unknown. We don’t know how they’re going to react. Some of them are going to do well because of the vaccine rollouts. Others are not because there’s a shortage in Drugs, there’s a shortage in pills. And so if they can’t sell their pills, and they’re not going to make a lot of money, also oil companies, that’s a strange one, right? oil companies are unknown. Yeah, because oil is trending higher, oil dropped considerably. And then since the drop, it’s been going back over, it’s up to 60. And at $60 a barrel, a lot of oil companies, they make money. So oil companies, I think will do well, better than they did last year. Even with the headwinds, the reopening trade itself, like I said, I think that’s going to continue to suffer. And the reopening trade is basically cruise lines, airlines travel company, you know, entertainment places, all those places are going to continue to suffer, because Corona is not going away. We having the vaccine rollout, that’s fine.

But Corona itself is not going to go away. And the new variants and the new strains that are coming are coming fast and furious. It’s not just one Corona, it’s several Corona and then you’re having there’s one from South America, there’s one from Brazil, there’s one from the UK, and then who knows, we might have some of our own. So yes, the drug companies and the makers of the vaccines are gonna have to stay on top of this. And probably, they’re probably going to start changing the vaccine and make us take more than one next. So that’s going to be a very interesting scenario where, you know, oh, you have the vaccine from this company. Okay, great. Well, now you gotta go and get it from this company, too, because this one doesn’t cover from that.

And it doesn’t cover that it’s going to be, we’re not out of the woods yet. Overall, though, it’s still a stock pickers market. I’ve said that last year, I said it over and over again, every stock did not do good. The markets themselves overall did well, because they were carried by certain stocks, every stock not too well. It’s going to be contained, some stocks are gonna be trending higher, some stocks are going to be in the toilet, some stocks are just gonna be going sideways, and some are gonna go up, and then they’re gonna go down and they go up, and then most of them should rise until the Fed takes away the Punchbowl. Until the Fed starts making comments, they start changing. When they have their, you know, their meetings and their posts and their speeches, when they start changing their vocabulary. That’s when things are going to go south.

And if the market gets spooked, and if they think that the Fed is gonna start raising rates, as soon as that idea takes shape, we’re gonna go straight down, and it might be more than 20%. So I’m gonna be very afraid, because this move higher has been really, really extended. Probably never liked this anything happened before. And everybody’s talking about, oh, are we in a bubble in a bubble in a bubble? Well, if you’re talking about a bubble, then you might be in a bubble, right. And it’s an artificial bubble created by the Fed, and they know it, and they’re looking for it, and they’re waiting for inflation to increase while inflation is already here. Right? Well, prices are up food prices are up, I don’t know what the hell they’re looking for, or why they haven’t noticed it. But they’re gonna see it, they’re looking at unemployment, you know, unemployment is still there, because of the virus unemployment, it’s gonna stay there for a while. So I don’t know where this goes, I don’t know, if they’re gonna be able to have a smooth landing.

The first time they had QE. And after all that great depression, Great Recession stuff. Janet Yellen was in charge of the Fed, and they kind of had a smooth landing, you know, they were doing a lot of quantitative easing, but then they started taking it away taking away, she’s now in charge of the Treasury, which might be a good thing, because she’s had experience with this. And she might be able to help the Fed, if there are any issues. So that’s positive. But if we see something like that, then definitely I believe the market is going to tank. And so until then, we’re free to enjoy the spoils and have the market go up. When that happens, put some hedges on very, very quickly, get out of your, your bullish trades, lower the low, cut back on some of your positions, and then just wait and see what happens. And eventually things will recover.

And we will continue to be selling options, our positions. And we will continue to do well. We just might have some hiccups this year coming up. So beware of those, you know, expect, expect the hiccup don’t expect to be making money every single month. Expect hiccups to come. And that will keep you on guard and vigilant. Now, that’s it for my 2021 promotion or predictions. I do want to thank everybody that turned out and supported us for the live event that we had a couple of weeks ago in January. It was amazing. We had a lot of fun. We had a lot of people show up. It went off beautifully. I was you know, nervous and scared and everything went wonderfully well.

I mean, the second day in the morning, before we got started, we actually lost our internet in the office. That kind of freaked us out. We’re like oh no internet. But then, you know, five minutes later it hopped back on and we were able to start off without a hitch so that was wonderful. We got overwhelmingly positive reviews and comments from everyone that attended. So thank you so much. Thank you for that. I really appreciate And people have been asking, when’s the next one? When’s the next one? I don’t know. So far, I don’t have plans for our next one for high probability trading that we did. But I do think that I would like to do one for futures options. So, you know, maybe we’ll do a one day, this time, basically cover futures options, and why they’re important, why you should be looking at those as a good way to diversify away from stock options, you don’t have to leave completely, but I believe there’s a lot of that’s the new untapped market.

And so, you know, a lot of speculators and stuff are really coming in to the stock market game. But in the futures market, it’s wide open. And we just have to go in and take advantage of it. So I think I’m going to do a one day live event training on futures options and how to trade them and what to look for, and the differences and the pros and cons and all that stuff, how to get approved and whatnot. So if you’re interested in that, please let us know. Send us an email [email protected]. We’ll put you on a waiting list. We don’t have one now, but we’ll put you on it. And we’ll let you know when that comes. In the meantime, I hope you have an amazing year. Merry, merry, happy new year to you and your family. I hope you have another great year. You know, stay vigilant in terms of trading wise it should be in good year, but it might be a little bit Rocky. Other than that, I’ll be here. So if you have any questions, you can always email me and we will trade it together. All right. Take care and remember to trade with the odds in your favor.

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