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Our next guest, Lucas Downey, co-founder of moneyflows.com, is with me now. And look, we you can't deny what a V-shaped recovery we've had. But you anticipate that there are sometimes days where we have a pullback and are those opportunities. Tell us more. Hey Nicole, good to see you. Yeah, it is not popular to talk about a potential pullback with stocks screaming day after day.
Uh, but we have a proprietary indicator that looks at money flows on over a thousand stocks. And right now it's been overbought, as you can imagine, for 25 days. And what we've noticed over time is whenever that line starts to fall from out of overbought, which we're not there yet, stocks tend to struggle.
And it's nothing major, but over the next month, two months, stocks are basically down around 2%. And that's all indices. So the note today was to tell people to prepare for a low liquidity August. There tends to be volatility and then obviously September is a seasonally weak period for markets. So you're going to pick and choose what names to get into here?
I mean, how do you decide what's a good buy on a dip? Well, what we try to do is we look for outliers, right? Where is the money flowing? And a great case in point would be Meta Platforms. This is a name that I've owned for a number of years. Uh first thing is you got to think big themes, right? What is actually working?
AI. Meta has all this data and they continue to just grow their earnings. What was interesting about Meta is their last time that they had earnings. This is back in April. Just remember how you know worried the whole world was about earnings. Uh they basically were saying that they were going to guide even higher.
their capex was going to go above and beyond what people were expecting. You can see analysts have been very bullish on this name. So, this would be the type of company that you would want to be looking for on any type of pullback. What's interesting is you talk about when the S&P gains X, then the one month later it falls this uh 6 months later the you may see a surge of this.
I mean, is there a theme here? I mean, it's hard for me to read all that. What's the uh real takeaway here? Well, the other part of today's message was looking at the steepness of the rally. I mean, we are in a historic time. If you look at the lows set in April and you look at the recent peak, uh the market climbed 26% in 63 trading days.
So, I was very curious. I went back through history, looked over four decades of data, and I only found, get this, 20 periods where the S&P had gained 26% or more over the same time period. And here's what was so interesting. A month later, stocks are basically flat. They're down about 6%. But they have never been lower 3, 6, 12, and 24 months later.
And if you look at the periods that this includes, you're talking about the global financial crisis where stocks screamed out of that bare market. It also happened in COVID. And those are the analoges that set up for what is happening today. We had forced selling in April. Everybody prepared for a great depression.
It didn't happen. And so now everybody is re-risking. And so months from now, we believe stocks are going to be meaningfully higher than today. Understood. I mean, so when you mentioned Meta, do you have a few other names you can share with me today? Yeah, another name that we've been watching is semiconductors have been super hot, a name that I've owned for a number of years and continue to buy on dips, Lamb Research.
So, as AI continues to just gather steam and devices continue to get smaller, these are the types of companies that are going to win and they're going to lead. uh just last quarter back in April, they gave earnings. They set their expectations well above the street. Those are the types of companies you want to be betting on on any type of fullback.
And we know semiconductors can get very volatile, especially heading into earnings. Yeah. So, you have Lamb and how many more are there? Let's hear the rest. Uh well, another one, uh Taiwan Semi, great name. We've been very positive on this stock. I think if you wait for this one to come in a little bit, they just had tremendous guidance.
So, the stock may continue to drift a little bit higher over the next coming days. But again, think big themes, big AI uh stalwarts in the in the industry. You need to be thinking about companies that are not super expensive on a forward PE basis, but these are the types of names that we're going to be focused on, and that's where the money is flowing.
Yeah. I mean overall so much of this is based on sentiment and how people are feeling and sometimes you feel down when the market sells off but that's your opportunity right that is I mean people were worried about yesterday there were rumors that you know they were going to get rid of Powell and the stock market sold off and then it rallied back so there's a lot of false starts as we're in the summer you just got to be careful focus on great stocks buy on pullbacks and that's how you're going to win.
Yeah, understood. Um, you know, when you look at the different indices, the tech heavy NASDAQ at a record again today, it sounds like you definitely lean towards some tech, right? Definitely lean towards tech. That's where the earnings continue to get raised. You know, if you look at what analysts are expecting for some of these large companies like a meta, like Lamb, I mean, the earnings continue to just the earnings bar just keeps going up, up, and up.
And as long as analysts are bullish and they continue to raise their numbers, stock prices are most likely going to follow that. All right, Lucas Downey, great to see you. Co-founder of moneyflows.com. Thanks for joining us on the show. It was a good conversation, Lucas. Thank you.
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