• Current read is 59 on the fear greed index vs 63 last week.

• Market is still greedy which means to be cautious! We just caught a HUGE move & you need to ensure ratios are in check & prepared for volatility (as always)

• Market Fearful = Potential Opportunity/Deals. (consider buy calls/sell puts/buy shares)

• Market Greedy = Potential Over Valuation. (consider buy puts/sell shares/take on less risk)

• I like to be bullish when there is extreme fear

• I like to be bearish when extreme greed.

• Opportunity is out there, just gotta find it!

• 30 year fixed mortgage rate increased to 6.57% Today, vs 6.46% last week.

• 10 year treasury bond yield fell to 4.55% Today, vs 4.59% last week

• 2 year treasury bond yield increased to 4.12% Today, vs 4.08% last week.

• Interest rates didn’t do much this week.

• As I always say, interest rates are gravity!

• As interest rates/bond yields DECREASE, stocks become MORE attractive because bond yields go DOWN which makes the risk free bond look LESS attractive.

Hope everyone had a great week!
Here is this week’s newsletter!

The market just had a really strong move off the recent lows, so do not be surprised if we take a breather here.

That does not mean I am bearish.
It does not mean I think everything is about to crash.

It just means the market ran up a lot, valuations are not screaming cheap anymore, and this is usually when people start getting emotional again. They see green, they start chasing, and they forget that more trades does not equal more money.

Sometimes the best thing to do is nothing.
Sit. Be patient. Let the thesis play out.

Right now, I am still looking at the market through the same Big 4 that we always talk about.

1. Interest rates.

2. Valuations.

3. EPS growth.

4. The economy.

Everything we talk about flows back into those 4 buckets.

Inflation is not out of control right now. The market is nervous about oil and whether oil could push inflation higher, but as of now, this is not some runaway inflation disaster.

Interest rates are still a big deal. The market is pricing in the idea that rates could stay higher, or possibly even move higher. Personally, I would be surprised if the Fed hikes from here.

If rates simply stay steady, or eventually move lower, that would be a bullish catalyst because the market is currently pricing in some of that fear.

Consumer sentiment is still very weak, but I do not put too much weight into that by itself.

People can say they feel terrible about the economy, but then still go out and spend money. That is why I always compare it to someone leaving a bad restaurant review while still eating at the restaurant.

What people say matters.
What people actually do matters more.
And right now, the hard data still says the economy is okay on balance.

The biggest positive right now for the market is EPS growth. Earnings season has been very strong. A large majority of S&P 500 companies have beaten earnings expectations, revenue has held up well, and EPS growth is running way above normal.

That matters a lot!

Yes, valuations are a little hot. I still think the market is probably 5 to 10% overvalued right now. But when earnings growth is this strong, higher valuations are more justified.

That is why I am not bearish.

I just think this is a time to be patient, keep your ratios in check, and not force anything.

The market does not need to crash to become more attractive. It could simply go sideways for a while while earnings keep growing underneath the surface. That is how things become cheaper over time without the stock market having to fall apart.

This is also why patience matters so much.
Stocks do not follow earnings every day.
They do not follow earnings every week.
Sometimes they do not even follow earnings for months.

But over the long term, stocks WILL follow the profits (EPS)
But you MUST be patient.

Buy good companies for less than what they are worth, with strong profit growth, strong moats, and enough time for the thesis to play out. (this is why I only do 1+ year options)

Meta, Microsoft, & Nvidia are similar examples. All had periods where the stock went nowhere while the business kept improving. That can be frustrating in the short term, but it can also make the stock cheaper, safer, and more compelling if earnings keep growing.

Most retail investors miss that.
They chase after the stock already moved.
They panic when a good stock goes sideways.
They confuse short term stock movement with long term business value.

But the value of a business does not change 5 or 10% every single day.

The stock price does.
The business does not.

That is why I care way more about earnings, valuation, moat, revenue growth, and the Big 4 than I care about random daily stock moves.

As for positioning, I am happy with how I am allocated right now. I still have lots of market exposure. I still like the long term setup. But I also have some bond exposure and flexibility because the market is not dirt cheap after this bounce.

My sold put assignment value is still in check.
My ratios are still in check.

If the market keeps going higher, great.
If the market pulls back, great.

I want to be positioned where I can survive volatility and capitalize on it.

That is where most people mess up. They are too aggressive after the bounce already happened, then too scared when the real opportunity finally shows up.

Right now, I would say I am long term bullish and short term cautiously optimistic.

The Big 4 still looks okay.
The economy is okay.
Interest rates are okay for now.
Valuations are a little high.
EPS growth is very strong.

That is not a panic environment, but it is also not a be reckless environment.

So the plan is simple.
Stay patient.
Keep ratios in check.
Do not force trades.
Do not chase hype.
Do not let short term noise knock you out of a long term thesis.

The market will be bumpy.
There will be pullbacks, freakouts, headlines, volatility, and moments where people act like the world is ending again.

That is normal.

The market does not care that you want instant gratification. It does not care that you want every day to be green. It is going to do whatever it wants in the short term.

But over the long term, buying good companies for less than what they are worth works.

Yes, it’s boring.
But boring is usually where the money is made.

Onward and upward!

As always, I am rooting for you and want nothing but health & wealth for you and your family!

-Brandon

10 DAYS IS WHAT’S STANDING BETWEEN YOU & A CLEAR PATH TO FINANCIAL FREEDOM.

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Economic/Earnings Calendar For May 25-May 29:
(all times in pst)

Monday May 25:
Market closed

Tuesday May 26:
Iran Deal?
Zscaler Earnings (post market)

Wednesday May 27:
SalesForce Earnings (post market)
Snowflake Earnings (post market)
Marvell Earnings (post market)

Thursday May 28:
7a New Home Sales
5:30a Initial jobless claims
Costco Earnings (post market)
Dell Earnings (post market)

Friday May 29:
5:30a Personal Income
5:30a Personal Spending
5:30a PCE Inflation Data
5:30a GDP Data

Everything will be broken down in real time in Discord!