Hours before Jason Bodner went live with his Dark Pools Summit, markets surged higher. The Dow set a new all-time high. The Nasdaq wasn't far behind, even if it pared some of those gains on Friday. And the S&P 500 is setting up to be next in line.
If that took you by surprise, clearly you haven't been listening to Jason's warnings…
"Huh?" I hear you ask. "What bubble? Markets are up!"
See, this wasn't your typical financial bubble. This was a bubble in what may be the world's most important financial asset: cash.
More specifically, all the Treasuries… money market accounts… CDs… and even high-yield savings accounts whose "risk-free" yield is getting hacked to bits.
And this may be just the beginning.
Jason was adamant that anyone sitting on the sidelines in these assets was about to get a rude awakening. But nobody expected it to happen quite like this.
After the news from the Fed hit, I quickly got Jason on the horn for an impromptu interview to talk about his warning… and your best next move as the cash bubble unravels before our eyes.
This isn't your usual Profit Column. We're not highlighting a win Jason's already booked for his subscribers.
Instead, we're taking a different track and looking to the profits he's set to capture in the months and years ahead…
A century and a half ago, Western Union launched the first electronic wire transfers... and became one of the first stock market giants in American history. Now, major US banks are adopting a similarly new and powerful technology.
The Profit Column: Unraveling the Cash Bubble with Jason Bodner
Michael Salvatore, Editor, TradeSmith Daily: Jason, appreciate you chatting with me on such short notice.
I'm frankly blown away by what I saw this week. As soon as Jerome Powell ended his press conference on Wednesday, stocks were surging to new highs.
All the harsh talk from the past pressers was nowhere to be seen. It was the first dovish language coming out of the Fed in nearly two years.
They've all but confirmed interest rate cuts are coming, and soon — just like you said they would be.
This is obviously a huge cause for celebration… But you're concerned, too, is that right?
Jason Bodner, Editor,TradeSmith Investment Report and Quantum Edge Pro: I am concerned, Michael. I'm concerned about the trillions of dollars locked up on the sidelines, missing out on the next leg of what's looking like a long and strong bull market.
As you say, the Fed has confirmed that all but two of its members see interest rate cuts next year. Most of them see at least two on the table. Those interest rate cuts are going to weigh on Treasury yields — the go-to conservative trade of the last year. And that means the incentive to stay in Treasury bills is quickly dissipating.
And not just Treasuries, but the money market accounts… CDs… and high-yield savings accounts that are indirectly exposed to them.
Yeah, Treasuries had a violent reaction to the news.
The 10-year Treasury yield fell more than 4% from the day before. [Note: as of Friday afternoon, it's since fallen as much as 7%.]
That might sound small to our readers, but it's a huge move for such an important asset class.
So you're saying that folks should get out of Treasuries, or any equivalent, and get into stocks?
JB: Absolutely.
We're about to face an all-out financial panic. Just, not the panic most folks are used to.
Most bubbles end in panic-selling.
But I anticipate we're about to see investors panic-buy into the stock market… I don't even need to anticipate it. We're seeing it right now.
Everyone from hedge funds and major institutions all the way down to mom-and-pop investors are buying stocks hand over fist.
MS: And you'd know better than anyone.
Your Big Money Index tracks the investment flows of the world's biggest institutions.
And according to the latest readings, they didn't start buying today. They started buying weeks ago.
[Here's the latest chart of Jason's BMI. You can see the huge turnaround starting at the beginning of November.]
JB: That's because these Big Money investors saw the writing on the wall weeks ago… not long before I issued my first warning about the cash bubble.
So, that should be investors' first priority. If you're overweighted in cash, you need to get at least some of that into stocks ASAP.
[Note that the BMI has just moved into overbought territory. If it sinks below there soon, we should be cautious about new positions… and be ready to buy stocks at lower prices, should they come.]
MS: Now, I know you have some specific ideas about what stocks to buy.
It's the same idea as what's behind your Big Money Index — you're tracking institutional activity.
And right now, you're seeing Big Money buy signals on a bunch of stocks, right?
JB: Yes, and that's only possible due to my work building out dark pool networks during my time on Wall Street.
When I worked at Cantor Fitzgerald, I ran the central trading desk. It was my responsibility to connect multibillionaire hedge-fund clients with sellers — but without revealing who they were and what they were buying to the wider public.
This experience showed me the power of money flows. Money flows drive everything in the stock market. If you see signals that a Big Money institution is buying up shares of a stock, that's a strong sign that stock is set to go up, and fast.
I've used this technique to spot gains of 310%, 495%, and 684% over the past several years.
And right now, I'm seeing Big Money plow into growth stocks like nothing else.
MS: I understand you shared a few details about your favorite growth stocks during the Dark Pools Summit on Wednesday night. Can you share something with TradeSmith Daily readers?
JB: Well, I don't want to put too much out there. It wouldn't be fair to the folks who pay good money to get my advice directly.
But I will say that TradeWeb Markets (TW), a ticker you highlighted recently in TradeSmith Daily, is absolutely a target of these Big Money institutions. It actually hasn't run that much just yet, rising as much as 47% from the lows this year. But I see big things ahead for it.
Another one I recently talked about publicly, Dynatrace (DT), is up 23% since the start of October.
Both of these are currently above my buy price, so I don't recommend buying them now.
MS Either way, I'm sure folks appreciate you sharing the stocks that Big Money is after right now.
TradeSmith is not registered as an investment adviser and operates under the publishers' exemption of the Investment Advisers Act of 1940. The investments and strategies discussed in TradeSmith's content do not constitute personalized investment advice. Any trading or investment decisions you take are in reliance on your own analysis and judgment and not in reliance on TradeSmith. There are risks inherent in investing and past investment performance is not indicative of future results.
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