all right so hi guys how are you feeling

about the stock markets recently feeling

good about it i don't think so if you're

like most people you're probably feeling

really lousy about the markets and your

portfolio probably is down the last

couple of months you're not alone in

fact a survey of individual investors in

america found that

the level of bullishness is extremely

low in fact right now only

15.8 percent of investors retail

investors are bullish

and 48

are bearish and the level of bullishness

has not been so low and bearishness so

high

since 1992 30 years ago

so again currently the level of

bullishness is at 15.8 percent if you

take a look at the statistics going back

30 years the only time it reached this

law was back in 1992

so why are people so bearish right now

well who can blame them you've got a

confluence of a lot of things right you

have got sky high inflation now above

eight percent you have got it you've got

the war in ukraine which is excavating

this high inflation because of rising

energy costs and commodity costs you got

a federal reserve

that needs to bring inflation down so

they're going to raise interest rates

more aggressively and quantitative

tightening which is going to suck up

liquidity

out of the market so that's causing a

lot of stocks to go down the last three

to four months especially companies in

the technology sector and consumer

discretionary sector the market can't

seem to sustain much bullish momentum as

well so again from the start of the year

we had that very strong downtrend

and then we broke above that downtrend

resistance in mid of march

and we had a very strong rally going up

but then we started coming back down

again right we retraced all the web way

back down and right now we are actually

at the 50 moving average on the s p 500

and right at the 50 percent fibonacci

level

now what was interesting was a day ago

the market actually closed with a

bullish engulfing candle that said hey

maybe

this retracement

uh is done and we are ready to rock and

roll we already need to rally again but

then after this bullish engulfing

pattern yesterday

we had a bearish engulfing pattern now

um overriding that bullish engulfing

pattern it's kind of like you're playing

uno right it's a reverse and someone

puts another reverse cut to reverse your

uno card

so for now

it looks like uh this bearish engulfing

pattern we could see some more

bearishness

in the short term yeah and sure we could

go back down and retest the lows in

march we could all right and that's the

s p 500 and it's down about eight

percent so far this year uh how about

the nasdaq the nasdaq

uh is even more bearish right but very

similar pattern we had that

uh downtrend

we had that break of that downtrend a

very strong reversal up and then whether

we had it hitting the 200 moving average

couldn't break the 200 moving average

and reversing back down

at the 61.8 percent fibonacci level so

right now it's kind of like hanging on

there but again it closed the bearish

engulfing pattern so

right now if you ask me this kind of

like 50 50 in the short term right it

may

bounce back from here but it could still

go back down especially after that

bearish engulfing candle so

everything looks bearish right we've got

bearish news you got bearish markets but

you know something i'm actually pretty

excited about what's going on right now

and i'm actually very very bullish

in the medium to longer term

now first and foremost

if your portfolio is down

for the last couple of months

uh you are not alone right and it

doesn't mean you are a lousy investor it

doesn't mean that you made a mistake

because no matter how good an investor

you are

your portfolio can't go up every day

every week every month every quarter

there will be ups and downs it's just

part of the game right so my portfolio

itself well let me show you my portfolio

right

now to be fair to my

paying subscribers that subscribe to my

uip the ultimate investors playbook they

get to see my entire portfolio

line by line they see my

portfolio review every single month so

to be fair to them i can't show you all

my positions or they're gonna say it's

not fair so i can really show you some

of my positions but i can show you my

performance to be fair all right

so

it's one of my portfolios and year to

date i'm down about let's see well i can

just bring it up here um

let me just lock in

yeah so here today you can see that i'm

down

about 18.9 percent

so am i concerned am i upset of course

not no worries right because this is not

the first rodeo this is not my first

rodeo i've been to markets for so many

years and

every time my portfolio is down it goes

back even higher

eventually right

now the s p 500 is down eight percent so

far this year and my portfolio is down

18 or rather almost 19 so far this year

so i'm kind of like underperforming the

snp in the short term and again it's no

worries because historically every time

my portfolio

dropped and underperformed the smp in

the short term it outperformed even more

in the long run

so let me show you uh my

performance report over a longer period

because in the short term anything can

happen right and but it's in the longer

term that's what's important so i just

printed this out

this is a statement i just printed out

today boom

and uh

this is the last three years okay so

yep that january to april 13 as of uh

two days ago that's the latest you can

get and

this is my

portfolio

so the blue one is my

equity curve

and the green one is the s p 500 so

again like you can see

in the last few months here today my

portfolio is down

almost 19

right a lot more than the s p which is

down only eight percent so in the short

term you know i'm underperforming but if

you look at the longer term horizon over

the last three years

you can see i way out perform the s p

500 and in fact for example you can see

the covet crash same thing my portfolio

went down as well

all right you can't go up all the time

it has to go down to go higher

and in the last three years i'm up about

118

so so that's about

39 return a year on average right so

like i said as an investor uh your

portfolio is kind of like the market so

remember that the markets again they

don't go up in a straight line like that

and neither would

neither will your portfolio it's

impossible right if you see anyone's

portfolio go up like that

it's a scammer like bernie madoff right

that never goes down right so in reality

your portfolio is like the markets it

has to breathe in in order to breathe

out right breathe out breathe in breathe

out breathe in and you know something

the deeper it breathes in

the further you'll breathe out

provided you're holding good business

you're holding great companies

so while many retail investors may be

feeling concerned or lousy about the

markets i can tell you i'm actually

feeling very very excited right now

let me tell you why you see the way i've

been making money over the years is that

i buy great companies when they are

selling at a big discount to their

intrinsic value

usually only a few great companies will

be undervalued

but very rarely will many great

companies be undervalued you know what

it's happening now and it's really rare

the only time i've seen this happen

is back during the 2008 2009 great

financial crisis

and during the trade war in 2018 for

some companies and of course the copic

crash in march 2020 during those times

many great companies were undervalued so

it's really rare that this happens and

it's happening right now

a lot of good companies are very

undervalued and that's what's getting me

excited because

every time this has happened in the past

and i took advantage of it by adding

shares

that's when i made the most money

remember the more it breathes in

the more you breathe out but only for

great companies and i'm gonna show you a

few examples right now

so here are a few examples of some great

companies that are very undervalued now

how do i define a great company it's one

that is able to consistently grow their

sales

profits and cash flow over the long run

for at least the last five to ten years

these are companies that have got little

or no competition they've got a wide

economic mode a sustainable competitive

advantage and very low debt these are

great companies

so first on the list would be amazon

amazon has an intrinsic value of about

three thousand six hundred and sixty

eight dollars now of course if you want

to learn how to calculate intrinsic

value do take our value momentum

investing cost or you can take a cfa

where you learn how to do a discounted

cash flow analysis right but the point

is this amazon's worth roughly about 3

600 and it's currently selling at 3 000

so it's 18

undervalued and if you take a look again

at the

long-term history of amazon right now

from a chart perspective you can see

that

uh it actually hit the 150 moving

average on weekly candles

how often does this happen not that

often you can see

that it's not that often that it even

touches the 150-day moving average this

has only happened

uh very rarely in fact let's take a look

it's only happened like about

in the last 10 years

one

two it's only happened twice in 10 years

so it's a very very rare opportunity to

buy amazon

so cheaply

now some people think that amazon's

expensive because they look at a p e

ratio now don't be fooled

by

amazon's p e ratio which is um

let's see amazon's p e ratio let me look

for it here that's right okay

uh it's p e ratio is 46 times earnings

so people say hey that's really high

don't be fooled

for amazon you cannot look at the p e

ratio which is based on net income

because amazon they artificially depress

their earnings bastards so they show

very low earnings so they don't pay much

taxes

and

the reason the other reason of course is

because they make a lot of money but

instead of letting it flow to the bottom

line they throw it back into a lot of

heavy investments to strengthen their

competitive advantage so for amazon like

i said you can't look at profits you

have to look at operating cash flow or

you can look at the price to sales ratio

which is a more accurate valuation

measure right

if you look at the price to sales ratio

of amazon

it's only 3.32

price for sales ratio

now in comparison

tesla has a price to sales ratio of 18

times

nvidia has a price to sales ratio of 20

times

twitter

has a price with sales ratio of seven

times

so relatively amazon is freaking dirt

cheap all right

and again if you look at amazon

it's a company that consistently over

the long run grows its revenue take a

look at that revenue growth consisting

in the long run

right operating cash flow growing

consistently

as well as free cash flow growing

consistently there was a drop in the

last 12 months on purpose because again

they invested heavily in capital

expenditures but that's temporary right

so once that is over their free cash

flow explode once again so again

amazon is one example dirt cheap so i've

been consistently buying amazon at these

levels right another example is

adobe

so again if you look at adobe it passes

the steps or criteria of a great

business it has got

hardly any competition that is able to

offer the same suite of products as it

does it controls 90 market share of the

professional creative market and again

look at it in the long run the sales

revenue is increasing

profits are increasing consistently and

so is they are free cash flow

and again their company with relatively

very low debt compared to amount of cash

which they own and if you look at the

charts again

the intrinsic value of adobe is 612

now again my valuations are actually

very conservative if you actually look

at

morningstar that does evaluation is a

lot higher than mine so mine is already

with very low conservative projections

right but even then i get a valuation of

six hundred dollars that's what it's

worth

but it's now selling at 420 so it's 32

under value and again how often does

this happen very rare

if you look at the chart of adobe going

back 10 years you can see right now

adobe has retraced

to the again the green line the 150

moving average on weekly candles now how

often has this happened in 10 years

it has only happened

once here in fact it was close to the

150 in the 2020 crash and again it

happened uh back in 2016 where it went

near the 150. so it only happened again

twice in 10 years very rare for it to be

so dang cheap and again there are many

other examples maybe i'll show you an

another example

facebook all right let's look at

facebook

meta and again if you look at meta

facebook

look at the sales and profits it's crazy

all right sales are growing consistently

profits are growing consistently

operating cash flow growing consistently

in fact free cash flow increased like 60

percent year on year

all the way up right so this is a great

business

no doubt about it but the stock price

got hammered right because all this

negative sentiment and overreaction to

certain kind of news and again if you

look at facebook

the intrinsic value conservatively is

about 403 dollars and this doesn't take

into account their metaverse project

which to me is a bonus so even if it

fails who cares this valuation is based

on the free cash flow generated from its

legacy

applications like instagram facebook and

um

whatsapp right and again it is currently

at 210 so it's like almost at a fifty

percent discount

and on the chance you can see that

facebook is trading below its 200 moving

average on the weekly candles

how often does this happen not that

often the only time this happened was

during the copic crash

and during the

cambridge analytica scandal back in 2018

so you can see a huge upside potential

back to its fair value and beyond

as facebook starts to grow on a pe ratio

basis facebook is selling at 15 times

earnings

when they are growing their cash flow

and earnings by 40 50 60 so it is really

dirt cheap now as always this is not a

recommendation or advice for you to buy

any of these stocks

i'm just telling this to you because

this is how i think this is how i invest

i'm sharing it purely for educational

purposes so please if you want to invest

in something you're going to do your own

research but i'm just sharing with you

my thought process

now it's not just technology stocks that

are undervalued there are some really

good businesses that are non-technology

especially those in the consumer

discretionary sector for example

domino's pizza very undervalued right

now great business

starbucks

uh what else you have got nike these are

very good businesses undervalued as well

so what is causing this

big sell-off in the markets well of

course you've got that russia ukraine

war that's one thing but the other main

thing is the rising

long-term interest rates the yield on

the 10-year bond is rising so when the

long-term interest rate rises it

increases the discount rate

used to value companies so

when the long-term interest rate goes up

discount rate goes up intrinsic value

goes down

but it only affects

companies that are unprofitable now so

companies that have sales but no profits

they make profits in the future would be

the the most badly affected

by these higher long-term interest rates

so you can see over here the 10-year

bond

right

has been going up all the way right from

0.5 percent now to 2.8 percent how much

higher will it go my guess is it could

go up to 3 to 3.5 percent

but there after you can see long term

it's on a downtrend it will revert back

down eventually but it will still go

high in the short term so again as this

goes up companies that are not making

money that are unprofitable will get

whack the worst

but then you may say but adam in that

case adobe's making money amazon's

making money facebook's making what are

they going down

well because the baby is getting thrown

out with the bath water

so what i'm saying is that this is a

great opportunity

to buy companies

only the good ones only the ones that

are profitable because these are the

ones that are going to bounce back up

very strongly once the yields start to

tape off and come back down

but companies that don't make money that

are unprofitable

that are driven up purely by liquidity

and the fed

those may not come back or those may

take a long time to come back up

so a few examples of these companies to

be careful about again are companies

that are not consistently profitable

like

teledog right a lot of the companies in

the up etf are these kind of companies

i've mentioned this before and i that's

why i said be careful of arc etf many

months ago

for example if you look at teledog

it's one of those companies right where

yeah sales are growing but they're not

making money they are losing more and

more money

every single year

so

the stock price is pumped up by

liquidity without liquidity it's it's

worth nothing right another example is

new of course people are excited about

electric vehicles going to change the

world yeah but ultimately is it making

money

no it's not it's not making money yet

will it make money one day well hope so

but you don't know right so again sales

are going up but you know they are

losing money another example is c

which is

owns shopee right so again losing money

these are all

companies that can't survive without

liquidity the markets take out liquidity

they all fall

because there's no earnings no cash flow

to back up the share price

now i'm not saying that the market is

going to go up tomorrow right i'm saying

that great companies are looking cheap

and as an investor it's a great

opportunity to buy stocks in my opinion

but as always i tell my students never

buy at one go

always buy in trenches buy in stages

average in slow into the markets because

it could still go down in the short term

in fact if you look at the charts again

in the short term

we may still have a bit more downside

possibly

why because we close the bearish

engulfing pattern remember

reverse uno card reverse that reverse so

we could go down and re-test those lows

you never know right so what do i do as

an investor myself so in my investment

portfolio

great companies i hope i just hold it

because it's going to go up eventually

plus

i add more shares

along the way all right but at the same

time when i see the market going down

temporarily i'll use options to short

the market and make some short-term

profits during the short term

downtrend so for example if you

again take a look at my portfolio over

here

right you can see

um

i have a few

bearish option trades like i've been

bearish on the qqq

which is the nasdaq etf for the short

term you can see over here

i do have a short position small shot

position right i bought a bare put

spread on the triple q's i'm also short

on alibaba somebody said what you're

shopping alibaba you bastard you told us

to buy right okay

hold on

i have alibaba shares i'm holding it

because i think it's going to double and

triple in price eventually right but

short term it may still go down the

short term so i'm shouting baba using

options right i made

some money from there all right like for

example these are my baba traits

right so in fact i just

closed one right small profit i just

opened an another baba bear put spread

right so i've got a long term

investment position but i do trade

around that position sometimes if

there's a short term downtrend so that's

how i manage uh my investments and my

trades now

am i the only crazy guy who is seeing

this as a buying opportunity uh no guess

who else is buying stocks right now

aggressively corporate insiders

corporate insiders are people who are

working in those companies they are

working in facebook they're in apple in

nvidia they're working all the companies

and they are buying shares aggressively

with their own money now this is not

shares that the company gives them

these are shares that they buy with

their own cash that they have these are

not share buybacks it's not the company

buying back shares these are the actual

directors and staff who are buying

shares on their own accord and if you

take a look at where we are right now

corporate insider buys are at a

huge high

right and this doesn't happen that often

but every time you see huge insider

buying it means the insiders know

that their companies are dirt cheap that

is a great deal and that is when the

market starts to uh take off as you can

see historically i remember when i first

started this video what was the first

chart i showed you i showed you that

right now bullishness in a market is the

lowest it's been in 30 years right now

only 15 percent of retail investors are

bullish very very low and the only time

this has happened in the past was back

in 1992

so what happened in 1992 well if you

take a look at history of the s p 500

you can see that in 1992 we had also a

correction over here another correction

over here another correction over here

right three corrections so people

getting fed up market goes nowhere keeps

going down sell and the moment they sell

boom it goes up right

comes down again oh my god sell sell

boom

so it pays to be bullish when the

majority are bearish that's where the

big money is made and that's why you

know warren buffett always says the

stock market is a device that transfers

wealth

from the inpatient

to the patient so you got to be patient

and you got to understand the businesses

that you invest in if you invest in good

businesses

no worries mate they may go down in the

short term they will always go higher so

use it as an opportunity to add more

shares instead of being worried and

frustrated and panicking but of course

if you hold lousy companies that are

losing money then well that's another

story get rid of those buy good

companies instead

hope you learn something may the markets

be with you and i'll see you in the next

video

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markets be with you