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Good afternoon, I welcome you to a new video. Technology stocks have come under considerable pressure this week. There's a shift in favorites. Here we see the chart of the NASTAG 100, and in the video, I also show how investors like Stanley Dragon Miller are investing. Good afternoon, my name is Urban Jele.
You know me from the after- work portfolio. These are today's topics. We'll look at the short-term development. Are there some trend reversals in the NASTAG? Other markets are performing somewhat better. And then we'll move on to the long-term perspective. Lin Elden has released a newsletter where I've summarized the most important points for you and the consequences for how to invest well right now.
So, let's start with the short-term view. The NASTAG 100 has now broken out of this upward trend channel to the downside. It has shown three black candles in a row. It does n't look as good as it has been for a while. And the reason why the NASTAG went down is, among other things, this chip stock ASML.
Although it exceeded earnings expectations, both for profit and revenue, this company gave a weaker outlook instead of 8. Billions are now only expected to reach 7.3 to 8 billion for the next quarter, and this weaker outlook has put significant pressure on ASML stock. We see here that it simply crashed from 1060 to 960 in a single day immediately after the figures were released, and then fell even further.
That's almost 20% from its high of $10,000 to $0. This has more or less dragged the entire sector down with it. We see, for example, Denvia, which doesn't look so good anymore either. It has a double top, and if it should break below this neckline at $120, then, technically speaking, the next price target for WD Sector is somewhere between $90 and $ 100.
At the same time, we see Nvidia, which is quite far ahead in terms of valuation. Of course, it will massively increase its profits in the coming years; at least that's the expectation. But the price of the black line is still ahead, so it will take until it reaches a fair valuation according to this model with a price-to-earnings ratio of 36, which isn't that much.
But until it reaches this fair valuation... It would essentially have to wait two years, so according to this model, it has already anticipated the price for the next two years. Of course, a growth stock like this can always anticipate even more, but first, it should be noted that Nvidia is already somewhat overvalued at the moment, and that's why Stanley Dragon Miller switched from Nvidia to Palland.
Let's take a look at Palland here. Here we see the chart. Let's take a closer look. We can see that it has had a really nice upward trend since 2023, and even in recent days when AI stocks and chip manufacturers like Nvidia were under pressure, Palland continued to make new highs. Stanley Dragon Miller is invested there.
Let's take another quick look at his performance. He outperformed the S&P last year, and he tends to make large, concentrated bets. That means, he says, that large investors concentrate a lot of capital in stocks they are convinced of, stocks they have researched. He has, of course, done that with Palland, and now we'll look closely at this valuation model to see if the stock is reasonably poised to achieve this earnings growth of the next few years.
The price reflects the past few years, but it hasn't yet advanced beyond the recent highs of 2020/21. This means he sees more potential here, and the company operates in security software, alongside AI. It specializes in security software, and there are recurring attacks, for example, on the CDU (Christian Democratic Union).
Now Bavaria has reacted, and together with the Free Voters and the AfD (Alternative for Germany), the CSU (Christian Social Union) has passed a law allowing the police to use Pon Pon's software. This software is now in use in Bavaria, which is naturally positive for Palantier. Now let's look at the long-term outlook.
In the short term, as I said, the stock is under more pressure, especially Nasag. Other sectors are showing signs of weakness, for example, Russell 2000. But now let's look at the long-term perspective. What does Alin Elden say? She says that spending policies are no longer as strongly influencing the stock markets.
Let's look at interest rates; this is the newsletter. She says the interest rate cuts are coming soon. Interest rate cuts won't bring anything to the US economy, as it's generally expected that they will begin in September. She argues that these cuts won't be very effective because the economy is already desensitized to them.
Let's look at what she means by that. We're looking at the 1950s to 1990s, when the economy was still sensitive to interest rates. Bank loans (in blue) were always significantly higher than government debt. Of course, there were exceptions, like in the early 1980s or the 1970s, when government debt was briefly higher than bank loans.
This applies to all the bonds currently on the market, more or less. But normally, bank loans were always higher than government debt. When interest rates are lowered, it can stimulate the economy because loans become cheaper. When interest rates are raised, it can slow the economy down. These were useful mechanisms for steering the economy.
But today, it looks like government debt is already higher, especially after the 2008 financial crisis and the current coronavirus crisis. Government debt massively exceeds bank loans, leading to the conclusion that the economy is no longer as sensitive to interest rates as it was in the 1950s to 1990s.
Instead, government spending, which is always linked to this high level of debt, now largely determines the economy. Let's look at the politics of Trump, who, after last week's attack, is clearly the favorite for the next election. At the same time, Biden's popularity has plummeted, and another candidate, Camila Harris, who wasn't considered to have such great chances, has also suffered.
So, Trump seems to be winning this race. This has led to pressure on uranium ETFs, for example, where it appeared that both would win. There are even some correlations where the uranium ETF was high. This is related to the fact that both parties' policies are, well, in favor of Ukraine and against Russia.
And the uranium that comes from Russia, especially the enriched uranium, is supposed to be converted to a different type of uranium in the next few years. The domestic economy, essentially promoting its own uranium industry, naturally drives the overall uranium market forward. However, if Trump, for example, reverses some of these developments, uranium stocks will come under pressure and lose some of their gains.
This is, of course, more of a short-term effect. In the long term, I still consider uranium promising because of this gap, meaning there's significantly less supply than demand for the next few years. But in the short term, Trump could certainly put further pressure on uranium stocks, and they don't have a very good formation here either.
It looks similar to what happened with Invidia, which had a double-headed pattern. But here, you can imagine a shoulder-head formation if it falls a bit further. So, at the moment, it doesn't look so good in the short term, partly due to the Trump effect. But let's get back to the long-term view and these high deficits associated with this increasing government spending policy.
We see these deficits here as being so much higher than they've ever been, and, for example, higher than before the Vietnam War—no, shortly after the Vietnam War, sorry. One similarity with the post- Vietnam War period is that we now have simultaneously high deficits, even higher than back then, and lower unemployment.
The situation was quite difficult, and the state's only option for reducing this high public debt was to devalue it through inflation. That's probably why interest rate cuts are coming now, even though inflation is only above 2%. If they don't happen, there will be a fiscal spiral that's almost impossible to escape.
Debts will keep rising, interest payments will increase, and even more debt will have to be incurred. On the other hand, and this is important, the interest rate cuts coming now, or the multiple interest rate cuts expected for next year, will hardly help US companies, says Linn. We have a similar situation in Europe; most European countries, like the US, pursue similar policies, and we also have high debt.
Just as interest rate hikes haven't caused much harm, interest rate cuts won't be as effective. One would have to go into more detail, but I'll leave that out for now. This is due to the different maturities of interest rates. For example, we're seeing an increase in bankruptcies, and according to Linlden, this trend is likely to continue.
It won't stop immediately just because interest rates are lowered. On the one hand, the effect is delayed, and on the other hand, it's not as helpful anymore because, as I said, we're no longer in an interest-rate- sensitive economy, but rather a fiscal one. This means that companies primarily benefit from government spending programs.
In Germany, this has been somewhat misguided, I would cautiously say, over the last 10 years. It hasn't always been conducive to economic growth; in fact, it's been quite the opposite. We're seeing one consequence of this. But of course, someone still benefits when interest rates fall, and Lin Ellen says her favorites are emerging markets because they had many problems where interest rates rose due to punitive monetary policy.
They will benefit and breathe a sigh of relief when the US eases its tight monetary policy, i.e., when interest rates fall. Emerging markets can experience significant relief from their dollar-denominated debt and an economic boom similar to what they experienced. We experienced something similar between 2003 and 2007, and again between 2000 and 2007.
This was a phase following the technology crash of 2000-2003, where conservative stocks, considered fundamentally undervalued, emerged. Simultaneously, emerging markets were also performing well. We're seeing something similar now, with the Nasdaq under pressure and the Dow Jones and Russell 2000 reaching new highs.
In India, there are various ETFs available. For example, you can find several on the Just ETF website. Here are a few examples, and they all gained approximately 30 to 35% last year. Even in a casual investment portfolio, emerging markets might be rotated into the IV1 strategy. However, you could simply add an India ETF to your portfolio.
Wiemer is not offering investment advice. At the same time, he says that by 2025, it might be necessary for the Federal Reserve to take further measures – the next bazooka, as they say. What needs to be extracted to keep the banking system functioning smoothly and well, to supply it with reserves, and in this environment, gold and Bitcoin will naturally continue to perform well.
That's Lin elden's opinion. And one stock that's particularly exciting right now, which will release its quarterly figures on Wednesday, is Newmond. I also have it in my portfolio. We can see how nicely it has risen this year. It exceeded expectations in its last quarterly results, and at the moment, with a gold price of $2400 and production costs of $1400 per ounce of gold, Newmond is highly profitable.
The question, of course, is whether these positive prospects are already reflected in the share price or whether the stock has further potential. We might see that on Wednesday. I'm definitely keeping it in my portfolio, also because of the good long-term outlook due to this whole monetary policy situation and the problems in industrialized countries.
Finally, a little note about my options course—I'll call it an ad break here. First, a reference to this book by Julia Spener, for me the best options book in the German-speaking world. Here, for example, we see the valuations, which are n't so easy to see here. 385 reviews, 4.6 stars from the US original, and this book is really very good regarding risk and money management.
My options video course is ultimately the perfect complement to the book. Here's the performance I've personally implemented with options using the two strategies I share, because it essentially provides two concrete strategies parallel to the book. There's also an offer for Julia's Spear below the video.
In May, I asked my options course clients who was profitable and who was losing money. Three-quarters were profitable and only one- quarter were losing money. Most of my clients had only been trading options for 6 to 9 months, or even less. So, to conclude, to summarize this video: In the short term, the stock markets are under pressure, especially technology stocks.
In the long term, spending policies determine the stock markets. We see, for example, how Donald Trump, even though he hasn't even been elected yet, already has so much influence that he can make certain stocks rise with simple statements. For example, when Taiwan was criticized, he demanded that they pay a kind of protection money for the US protecting them from China.
For example, Taiwan's stock market has crashed, so unfortunately politics is having an increasing influence on the stock markets. Lin Ellen says we have a fiscally driven stock market, and this means that interest rate cuts in industrialized countries, i.e., in the USA, Europe, and Germany, no longer have much of an effect.
Unfortunately, this also does n't particularly alleviate the current crisis we're experiencing, as evidenced by the number of company bankruptcies. In her opinion, emerging markets could benefit in the next cycle. I've already introduced you to the India ETF, as well as precious metals and Bitcoin. Thank you for listening.
Have a nice Sunday. And as always, the disclaimer: I don't know your personal situation. This video is not investment advice. I don't recommend buying any of the stocks I've shown here because I do n't know if they're suitable for you. I hold some of these stocks myself and could even profit if you buy them.
Read through everything carefully if you have the time and are interested. Thank you for listening. Have a nice Sunday. see you next time
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