Ep. 319 Mark Minervini's Tactical Strategies For Adding Exposure At A Critical Market Juncture
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Hello and welcome to another episode of the Investing with IBD podcast. It's Justin Nielsen here, and we are coming to you on a Fed day today. It's May 7th, 2025. We just finished hearing from Powell about an hour and a half ago as he wrapped up his press conference. And to help us make sense of

Fed, the economy, recession, and really the market, we've got Mark Minervini. So who better than someone with decades of experience, two U.S. investing championships under his belt. How many books are you up to now, Mark? Five? Four, but I'm working on a fifth. Okay. Okay. So yeah, don't want to steal the thunder there and put the pressure on you for that deadline. But welcome back to the show, Mark. It's always great having you here. Yeah, it's great to be here. Yeah.

So I got the pleasure of meeting up with Mark for his birthday bash. I mean, I think we were all coming from coming away from that with such astounding, astounding appreciation for your drumming skills and everything like that. So not only is he a championship investor, but race car driver, drummer. And gosh, you are just a man of many talents. So, yeah.

But of course, what we have you on for the show today is your investing knowledge. You have Minervini Private Access, where you instruct so many subscribers. And I got to meet a lot of them, a lot of IBD folks there.

Just a real dedicated group. And yeah, it was really a great time seeing your subscribers and the knowledge base in action. We have incredible, incredible members. Some of the most beautiful people I meet from all around the world at those events. It's awesome.

Yeah, yeah. So let's get right into it. And maybe we start with just a little bit of a reaction from you on the Fed. I mean, it seemed kind of like, well, this was no big deal. There's a lot of the waiting game here. Jerome Powell was talking about, you know, we've got to wait for the data. And

At this point, that data isn't saying one way or the other which way to go. He did say uncertainty. I didn't tally how many times he said uncertainty, but that seems to be the fear right now.

Yeah, I think most of the fear as far as what's in the immediate future is baked into the cake. We've come off, you know, about 20% off the highs. And most of the tariff issues, without having some big surprise, I think most of that, again, is baked into the cake here. And now further downside in the market is going to be hinged upon a recession, right?

And whether we slow down significantly or if this is something that we can come out of. And quite frankly, you know, there's a there's cross currents here. You've got the economy weakening a bit, but then you've got the potential for the Trump tariffs to create inflation, which could offset that. And that just goes right back to when we have a chart for the Goldilocks economy. This is something that I point out quite a bit.

quite often and from time to time, uh, the, to get, to keep us a bull market going, a sustainable, when I'm talking about a bull market, I'm talking about a secular bull market. You're going to have cyclical corrections along the way within a secular bull market, but to keep that long-term secular bull market, though, that happens during periods of, uh, moderate to low consistent, uh,

growth, real GDP, if you will. If you look at various different statistics, I like to look at the real GDP and you see when it's in a tight range and there's not a whole lot of volatility there, the market sustains itself in a long-term bull market. We have not disturbed that yet. That's still in the range where

You know, there's not a disturbance or disruption in this long-term bull market, although, you know, this is certainly a cyclical correction and probably will look at it as a cyclical bear market. Right. So, again, just kind of walking through this chart, you can see that certainly in the 60s through the, you know, through 85, there was a lot more, it seemed like, bulls.

a little bit more violent move movements in your, uh, growth versus non-growth. And then, uh, after 85, uh, after, you know, some of Reagan's policies maybe, uh, could be, um, attributed to, you know, some of that lessening on the volatility, maybe a little bit more of the fed, uh, after Volcker, uh, getting, um, a little bit more on top of the, uh,

on top of things, but beyond the great financial crisis, you know, you, and of course, COVID, you really haven't had the big swings to the negative side that, that we saw prior to that. And there's, there's a lot more to that chart than maybe meets the eye right away, but you're, you're certainly honing in on, on part of it. And that is, if you look back prior to the 1980s, you'll see these wide swings of,

in the real GDP. Big periods of high inflation and then recessions. And you see the market doesn't go very far. We went a long, long time with the market not able to make new highs. And that's the type of environment that is not conducive to sustainable markets. But what happened is the government learned how to flatten the boom-bust cycle and it

You know, of course, we know it as QE now. And that's going to happen again. I mean, if this economy starts slowing down, this country doesn't like pain. The citizens don't like pain and the politicians don't want to, you know, don't want to vote again for pain. That's something that, you know, I have to give Trump some credit for. He's willing to, you know, go in there and take an approach that is a short term approach.

approach of serving pain for a longer term. And quite frankly, you can disagree with the methods and the way that it's unfolding or the way he's approaching it, but certainly

this needs to happen in a number of ways, not just with tariffs, but in a number of ways that we need to take some shorter term pain to get longer term results. Now, again, long term, you could say, well, this bull market's been going, this has been working. And those drug

Druck and Miller and a lot of smart guys and guys that know this more than I do as far as the macro stuff, you know, all feel, and I do too, that someday, you know, we'll probably pay the price for that. And our future generations, who knows, maybe we'll end up in a 1920 situation at some point because we've leveraged ourselves so much. Right.

Well, you know, I want to go to the next chart that you pointed out. And I think this is real interesting because we, you know, we're really focused on the Fed. And now, of course, these recession fears are coming a little bit more top of mind, you know, because, again, as you said, the Fed is really focused on the Fed.

There is that expectation across the board. I think one thing that everyone can agree on is that there might be some short-term pain here and the question of whether we go into recession or don't go into recession. So can you explain this chart real quick? I mean, we've got a red line and a blue line for those of you that are just listening to this and not seeing the chart. And this is what the composite of what happens after a Fed rate cut starts and whether there's a recession or not.

Yeah. So very simply, if there's if there's a recession and then, of course, the Fed would lower rates to spark the economy and to to to create liquidity and that would improve the market improves from there. Usually the market will discount liquidity.

recession and will already roll over. And then as the Fed starts cutting, the market improves shortly after. And you can see, taking a composite of all the instances that that's happened, that the market did improve over the next 12 months. That blue line is just a composite. However, if there's no recession and the Fed lowers rates in a non-recessionary environment, meaning a slowdown but not

a full-blown recession, the effects of the rate cuts are much more pronounced and you get a much stronger market. So right now, that seems like that's the scenario that we're in. And if you take a look at cycle work, I also brought you a chart looking at the cycle work going forward. This takes in account a couple different types of investments.

information, a composite and also the presidential cycle. You put all that together and we've got very strong tendencies going forward. I'm not sure if you have that chart.

Here it is. Yep. We have very strong tendencies going forward with the cycle work. Now, we also have a lot of bad news baked into the cake here. A lot of worry. I mean, there's a lot of fear in the market. If you look at the sentiment surveys, it's pretty bearish. The AAII is like at levels...

some of the most bearish levels that you've seen since they started the survey. So there's a lot of quick, it seemed like it got there quick. It got there very quick. And sometimes they're right for a while, you know, you'll get that sentiment shift and, and the sentiment shift will be correct. It's sort of almost like a trend follower in the beginning, but when it persists and it gets at extreme levels, um, you know, that's where, uh, going the other way, uh, makes sense. But now, so we've got the cycle work. We've got, um, this potential for a rate cut and,

And because so much of this fear has been baked in the cake, if we were to get some resolution on tariffs in a positive way, let's just say this starts to work, you know, in a way that is not as much as everybody feared.

and we get the rates to come down, you could have a very explosive market to the upside. So I'm not saying that we can't go lower. We can't back and fill. This can't, maybe won't be a longer bear market, but certainly the stage is being set for the conditions that there is the potential for a very explosive upside, but some things have to change. And definitely, uh, the, the tariff situation needs to have some type of resolution. We need to see some type of, uh,

light at the end of the tunnel or some type of clarity, particularly with China. And so just to, again, kind of describe what's happening in this chart here, we've got the blue line in this case, and...

Basically kind of an equal weight on the one-year seasonal cycle, the four-year presidential cycle, and the 10-year decennial cycle. And then is that comparing it to what's actually happening on the Dow Jones Industrial Average? Right. You see that orange line is what actually happened on the Dow Jones. So this is sort of like some pent-up –

upside here. We're going in the opposite direction. Now, you can look at it in a couple of ways and say the market's weak relative to it. But again, the tendencies are bullish. And I think when you put that together, like I said, if there is a rate cut and we don't go into a full blown recession, you're going to see a market that you can move to the upside very quickly. I'm in the camp of more than I think this

Probably the worst case scenario here, if we don't go into a recession, that's the big caveat. If we can avoid a recession and the Fed moves quickly, I think we're more in the kind of situation of a 1998 where maybe we go back, test the lows. It takes a little bit more time and then we're back in gear with the longer term secular order.

bull market um some are comparing this to 2018 where it's going to be just a v recovery there's also i've been hearing talk and i actually spoke about it this morning with my members about how the last 20 years have seen more v recoveries and that that's becoming more the norm um

And what I would like to caution people is don't get too hung up on an idea and think, okay, oh my God, this market's going to be a re-recovery and just take off. I got to get invested because in 43 years of doing this, and when I say that, it scares the heck out of me because of how old I am.

It still feels weird to say that. But yeah, 43 years I've been doing this and I have never once seen, nor have I seen in my historic studies where the market being one that

as more rounded out recoveries or v recoveries has changed anything on the individual stocks where you would have to alter the way you approach trading individual stocks from either whether you're a canceling guy you're trading from a couple of handles uh you're being a little more forensic on it and trading it from the low cheats and cheats and the the vcp characteristics that i my signature setups they're they're all pretty much homogenous um

That hasn't changed regardless. Sometimes you have to wait a little longer. The V recoveries run up the right side and you don't get the setups right away and you got to wait for some pullbacks. And sometimes you get them even before the market even really gets off to the races and you got a lot of setups that happen later.

prior to the market taking off. That happened in 1990. That's happened in a number of periods in my career. So the main thing is to really just look at the individual stocks. The indexes are, especially the Dow, 30 stocks. The

S&P 500, 500 stocks, capitalization, price weighted. I mean, these indexes are completely distorted to what the average stock is doing. Yeah. And I guess to that point, I mean, I think of like the, you know, the recovery from the 2008 great financial crisis.

It seemed like, you know, 2009, when we finally started that recovery, it was a lot of things bouncing off the bottom. It was your Fords and your Bank of Americas that had gotten down to a dollar that were initially, oh, you're up to $5 now. That's a 500% move. That's right. It seemed like it took a little bit of time before the growth came on strong. Okay, so 08, 09 was probably the most treacherous bear market.

In my career, and I know O'Neill agreed with that. O'Neill at the time, I remember him saying that that was...

the most difficult period that he had seen. And like you said, you had stocks, you had, you had GE and AIG, you know, these companies that have been around for a hundred years were penny stocks. You know, they're $1, $3, $3 stocks. And then, yeah, they go up and they double and go from, you know, $2 to $4. But there was a lot of volatility around that low. And that was an exact example where if you got in there and you pick the low and

You could have lost a ton of money just in the market recovered. You got it right. And you start buying these stocks. Now, mind you, if you were cutting your losses and you were, I mean, maybe if you just went in there and held your breath, but I cut my losses on the volatility and I was getting whipped all over the place. So I just pulled back and waited and just waited for better entries at higher prices. Yeah.

So since we're going back in time, and to your point, I mean, I think if I remember correctly, didn't Citigroup actually have to do a reverse split so they didn't get delisted or something like that? It was crazy times. I know Citigroup was definitely down in a single digit. I don't remember about the reverse split, but yeah. Data is everywhere, but is it ready for consumption?

Morningstar developed the language of global investment data. So you have the right ingredients to help you shine. Morningstar, where data speaks. So, um, let's, let's go ahead and take a look real quick. I'm going to pull up the NASDAQ, um, and I'll just, uh, you know, kind of, kind of show what, what happened, um, after the, the 98, uh, time period that you were talking about. Of course, we had long-term capital management, um, that was needing the bailout after, uh,

Russian Ruble, the Asian Contagion, in terms of currency was going on. So to your point, this index, the NASDAQ at that time, really had a strong move in September. And this is, by the way, this was the first follow-through day that I ever played. And I made the mistake of, OK, that one failed. And so then I didn't play the one that worked.

I was like, oh, you're not going to fool me this time. And of course, that was just an absolute wrong thing to do. But I was a year into it. So I think I was definitely still on the learning curve. But it was certainly a move up to that 200-day moving average line that got turned away for another leg down. So this is one of the scenarios that you're ready for just in case. Right. Well, so –

This is where I'm looking at this as maybe a potential analog for the current market where you see how we've we we sold off. We undercut the 200. We're coming back up back to the 200 day. It's a very similar look to where we are now, where you came back to that 200 and then you came off and you undercut those lows and it got real scary and that put in the final low.

And then it ran up the right side there. So if you look at the current market, you know, it looks similar if around that period that you're up by the 200 day. Yeah. And that's so this is a logical place where the market would pull back. Now, the question is, is it going to pull back and.

really pull back and this is going to be a bigger bear market? Or are we going to just pull back here and maybe we start building right sides and it's just a short-term pullback and we do recover in a more V fashion? And the real answer will be is if stocks set up

Because as you're pulling back here, this is where you'll see those tight right sides and you'll get those entry points. And then from there, you'll get some breakouts. And are they working? Are they failing? As of right now, we've tried a number of names and most of them have failed.

A lot of a lot of the stocks. Yeah, a lot of the stocks have failed. And when I say fail, they've just experienced too much volatility for me to stay on board. Just getting, you know, bucked off or we're going into earnings and we're not willing to hold into earnings because we haven't been able to get any traction to get any cushion. So another thing, too, if you want to go back, you want to start taking a look at a little bit of history. We got it. If we could bring up the chart.

Well, actually, maybe the IBD 8585. I like to look at the IBD 50 and the IBD 8585 because these are more aligned with stocks that I would trade. I think it's a truer look at the market if you're going to look at a more narrow index. And you mean for the current, right? Yeah. Well, I don't know if you have the chart that I sent you. There was a chart with 8585 index. Oh, yeah. Let me go to that. Okay.

Yeah. And I'll explain a little something here, and then we'll morph over to some history with the NASDAQ too. Yeah, right here. Yeah. So if you take a look at this, just before we went into that bear market decline that went lower back in 22, that's the question. Are we in that sort of frame where you break below the 200, you set up –

but that setup fails and maybe you break out. Like you could have, you probably sucked in some people there on that big up day or that up week and then it reversed and then it came off. And that's where you try some positions. They don't work. You get stopped out. You're back in cash. So that's the question. I mean, are we, we might be in that stage at this point and we need to go lower. Now, if you bring up the chart of the NASDAQ with the percentage of stocks, yeah, it's,

So if you take a look here, and as a matter of fact, we have another one too, right? This is the weekly. So this is the weekly. So right now, I want to show you a couple of things. One, if that period, 22, if you go back to 22 in that first quarter, you can see how you rallied back to the 50-day in the NASDAQ, right? Look at the participation. It's in the 20s, right? There's not many stocks participating, and you only just came off the highs, right?

Now, later, when you go lower and you're around the lows around January of 2023, you're at the lows. But look at the participation. You've got 50% of stocks, over 50% of stocks, NASDAQ are above their 200 day. So the market is improving significantly.

on the individual stocks while the index actually correcting more. So now fast forward to now, you've got that same first leg down and see the participation is very low. So even if the index bottoms here and it moves higher, well, you don't have a whole lot of participation. And one of my main rules is that a stock has to be trading above its 200 day moving average. And the 200 day has to be in an uptrend for me to even consider buying. So right now, that means that most of the market is

is not a i can't consider these names because they're not meeting that criteria so i don't really care what the index does i care what this participation rate is and when that participation starts increasing then i start looking at more names i get more buy ideas and the market's healthier from from an individual stock basis

So that right now, we're still early here. Even though we may have a bottom in place, we're not improving enough with the individual stocks that have that participation. And maybe you could talk a little bit about the patience that's sometimes required here because a lot of people are like, oh, okay, we've had this news come out and –

you know, of course now it's priced in and things can't get any worse. We had the worst behind us. Um, and so they can always get worse. Right. Exactly. Um, and, and there's also kind of that, uh, Oh, I want to buy at the bottom, you know, Oh, the things are at a discount. So I want to get in, in at that point. So, um,

How has patience served you well in your 43 years of investing here? Well, my discipline and my patience is the key to my success and is my strength and is probably my advantage over most people. That's the real key. But to me, it's really simple. And let's bring up a couple charts here. Let's bring up a couple individual stocks. Let me get a little list of names here. Let's see. What are some names that we recently...

trafficked in and got beat up in because most of the names that I recently bought knocked us around. So because of that, I've never been able to get large in the market. I'm just trading really, really small. So I never really understood how it's difficult to stay large.

or be patient because all I do is just play some small bets. And until the small bets work, I don't place big bets. And when the big bets work, when the small bets work, I start building on that. So if you take a look at something like maybe even TATT, here's one that came out of a base recently on April 17th. And then the very next day, wham, it gets slammed and

And now it's come back. It's back up close to those highs that are close to 31.80 today. But look at the volatility. You see, I'm not going to be able to make it through that. That's going to knock me out. So and that's been the case on a number of these names. AP.

Another one. Bought this. This is a stock that broke out. Little small gap on the 28th of April. Very next day, wham, gets slammed. Now, again, see, it's higher. And you could say, oh, I should have held it. I should have never gotten scared and knocked out. Well, who knows? That could have turned out to be something disastrous that kept going lower. You have to manage your risk. You have to manage your risk in real time. You don't get to see the future. That's all in hindsight.

Um, uh, GRPN Groupon Groupon took off on earnings, uh, back in March, um, was a power play high tight flag type setup, tried to emerge, started moving into new high ground around the 24th, 25th next day. Wham gets slammed. Um,

you'll see it over and over and over. Even stocks that started off pretty good, something like TG Therapeutics, TGTX. Yeah. Yep. That tried to go on 21st of April. It had an outside day, ended up closing bad that day. Then it recovered, went into new high ground. And then just recently going into earnings, wham, gets slammed into earnings. T2, we still own T2, but it's because we bought it last,

coming out of this base and then sold after getting hammered on a bunch of names said, you know what, we're not going to fall for that anymore. We're going to, we're going to take some off into strength and finance the risk and make sure if it comes back in, you know, we've already cushioned ourselves a bit. So now they just had, there's going to be a delay in their game or something. And that took the stock down, but we've already taken some off. So we're, we're still holding through that, but look at, you see the volatility, something like a G E O the geo group, you know,

Pretty decent base. Started trying to come out of that base. No real volume, but recently has rolled over. Earnings again.

uh, had earnings, uh, uh, and just rolled over today. Uh, let's see what else? K I N S another one, pretty good base, right? Coming out on the 29th next day, wham gets hit. Um, I could go on and on and on. There's, there's a, there's a ton of these names. Um, ATG is one that we just bought four or five days ago. That's holding up right now, but who knows how long that's going to make it. Um,

Netflix is holding up really good. I think Netflix is doing some really, really great things. And Netflix is growing.

well beyond they're doing things well beyond just renting movies um and all this capital that these companies have like netflix and amazon um you know they're they're uh they've got a monopoly now that the mag 7 these big names have a monopoly that's bigger than when the when the rockefellers and the and the morgans uh you know had the the rails and the and the oil businesses it's uh

It's a bigger monopoly than that. The new rubber baron, huh? And I do have a position in Netflix myself, but yeah, to your point. Netflix is acting really great. Yeah. Yeah, it's really acting good here. And to your point, like this is, if I remember correctly, this is around the time that their first original programming came out. You know, they had their disastrous pricing model kind of, you know, really tank things. But House of Cards was the first original programming. And I mean, you can see what a move it's had.

Yeah, since then. Yeah. So now when you can only point to a couple names that are working and a whole bunch that have this volatility, that's what I call a hard penny environment. It's just not an environment that...

I didn't get into the stock market to get an ulcer. I got in the stock market to enjoy it and have a challenge that's fun and be passionate about something and make money while doing it as a business. So I'm going to wait for what I call an easy dollar environment, and that's when –

you know you're picking up money off the floor and it's it's very simple you buy the breakouts they work and you cut your losses and there's not a whole lot of volatility so if you go to the you know you look at the vix to pull up a chart of the vix here i look at it in a couple ways um

And I'll go to the chart that you, you know, here's our market search chart, but I can go to the chart that you provided with the comparison if you want. Pretty much the same thing. You know, we've got, we use Ned Davis research for a bunch of our charts. Let me go to that real quick. Sure. So the volatility is pretty, still pretty high at this point. And

A couple of ways we look at it. One is when it gets over 28, you get to that 2830 level. That's what we call a bear market warning level where that's where you can bottom there. If it's a shorter term correction, you'll spike above that level and you'll and you bottom around that level. So you start looking for the type of action that you would see follow through day and so forth. But it also is enough volatility that you've got to be very quick to move and

get the heck out of there if it doesn't work. If you don't see that bottom, you saw that volatility came up right around the highs in 2021 going to 22. And that was the start of a bear market. And then you see when the volatility comes way down, that's where you get that nice run. And it stays down pretty much the whole time until July, August of last year. And now you see the volatility starts to pick up and then we top. So

I want to see that volatility come down. I also look as far as how it's trending. I have another chart. You'll see there's the trend of the volatility. You can see it's trending up and it's relatively high. So I want to see that trend start to turn down. I want to see that absolute level come down. But more importantly, forget everybody focuses on the VIX. I don't have to look at the VIX.

I just look at the individual stocks. And what I just showed you prior to this of all those stocks whipping all over the place, that's all I need to know. When that's the results that I'm getting from making my plays of stocks coming out of bases, that's all I need to know. And I'm going to stay small and I'm going to stay mostly in cash.

And this is such an important point that people need to realize is, look, the market is speaking to you every day. It's giving you feedback. And whether you choose to listen to that feedback or not, I mean, that's up to you. And certainly you can say that that does take experience to kind of

maybe translate and interpret that feedback. But the feedback is there on a daily basis, whether you're making progress or not making progress, where that volatility is increasing or whether it's decreasing, whether it's that hard penny environment or the easy dollar environment.

So I think those are just some real key nuggets there that everyone needs to really pay attention to. And this is one of the things that was you were drumming, drumming in back in January was, you know, know your numbers, you know, know how you're doing in the market. Know when things are turning against you. You know, don't don't go by your feeling. Just look at your numbers because that will tell you so much.

Look at your batting average. Is your average gain lower than normal? Is your average loss larger than normal? Is your batting average very low? Or is your percentage of winning trades, you know, getting down into 20s and 30s? That's usually a sign that it's not a very good market. If you're up in the 40s, 50s or higher and you're running 50, 60 percent, well, then that means, you know, things are working better.

You're not going to be right all the time, but you certainly want to be able to run at 40 or 50 percent if you're doing things the right way. That's that's that's a long term sustainable batting average. So those numbers are going to tell you everything that you need to know now.

a lot of people are focusing on, they look back and you see, and even I've pointed this out, that we've had these large spikes in volatility. We had three consecutive days that were over 4.5% down. These have happened right around the crash of 87 low, around the 2008-2009 low, around the 03 low, around the COVID low. So yes, we may have had enough volatility and we get a washout and you've

put in a low in the market but like i said before and it's certainly oh wait was the you know was the granddaddy of this where there's so much volatility when the market's trying to search for a bottom that you're better off sometimes just waiting unless things are working great you know in that first follow-through day and you're buying stocks are working great then you then you can ramp up but usually you get some backing and filling get whipping around and you

Trying to get the low, it just defeats the whole purpose of getting into a market that's an easy dollar environment where the volatility is less. Now, recently, once you get that sort of washout, then we're looking for, you know, the sentiment's real bearish. Everything's been, you know, the market's down. Now we're looking for that shift, you know, looking for the follow-through day. Along with the follow-through day, I look for thrusts.

Some people have been pointing out the swag thrust. You've got the 10-day advanced decline thrust, 2 to 1. You've got a couple different swag with the 90% volume thrust, 9 to 1 volume. Another one, if you bring up the S&P 500 with the three-day price thrust indicator, we just recently got a buy signal on that, which is...

um the first day has to be up a percent and a half the second day at least 1.15 and the third day at least one and a half percent it's pretty rare but that's also occurred around the 87 low around the 2003 low 2002 low um the 08 09 the covid so again and also the most recent bear market uh the

And we just had that again just now. So there are some signs that we've come off the lows and maybe the bottom's in or you get an undercut like in, if you go back and you look at, oh,

08, 09, you got that thrust and then you undercut those lows. But then that was the end of it. So I think that's why I'm still thinking we're in a situation like maybe 98 where we come back, either we come back, back and fill or we come back, test the lows, undercut the lows. And that's where the bearishness really picks up. And then we finally put in like you got duped that last time. You probably won't get duped this time. Mm hmm.

Totally makes sense. And, you know, this is something that for people that have not read your book, you know, the whole idea behind the volatility contraction pattern, the VCP is that the volatility contracts, you know, and what we saw in this last month was not volatility contraction. That was volatility expansion where and we still have that to a degree where news is tossing things to and fro. There's a little bit of uncertainty and, you know, that can be that can be a little challenging.

We call it the megaphone, the megaphone pattern. When you break out of a tight area and you're coming out of a base and then you undercut and you whip below the pivot or the base and now you're actually, you're widening. Your volatility is widening. It's like a megaphone. You don't want a megaphone. That's the last thing you want after you buy your stock and you're buying breakouts. Mm-hmm.

So, you know, I want to shift gears a little bit because I'm looking at the YouTube comments since we're live here. And one of the things that is kind of a common question here is a lot of people are using market surge and they're aware of kind of the…

the work that you did with market surge to kind of come up with this Minervini trend. And there's a few that we have here. So we have, and by the way, for those of you that have market surge, you will find this under reports, go under stocks, then go under technical. And if you just kind of scroll down, you'll see these Minervini trends, one month, one to four months, five months and five months wide. I'm not seeing it on my screen. I'm not sure if you're actually.

My screen looks like it's kind of frozen up, but I'm not sure. Okay. So I guess the question that I'm getting from YouTube, and I'm just going to check with my producer to make sure that things are showing up on his end.

to confirm that. Yeah, so the producer is saying that, yeah, he is seeing it. So I just want to kind of ask you real quick, can you just walk people through this, how they can use this to kind of get ideas? And does this tell you any information? I mean, I know some people track the numbers. So right now, the one month Minervini trend is 62 stocks in there. We've got 117 stocks in the one to four months. The five months has 387 stocks.

Right off the bat, that's low. So that tells you, right. So there's a perfect example. Normally, you'll have 1,000 stocks, like when things are going really well, maybe 900, 1,000 stocks. And now you've got 300. So that agrees just what I said with the NASDAQ 200-day moving average, where you had about 70% of the stocks below the 200-day. We have the same thing. We're only about

30% of maybe the available names that would normally be above their 200-day in a stage two uptrend, which is other criteria, not just the 200-day. That's why you're not going to see the whole market at any one time. But usually when things are going really well, I've seen 900 names, 1,000 names in that screen. So that could be used in one way where you look and it's

sign of maybe a washout, you know, when everything's been beat up for a while. But you want to see that improve and you want to see those names, that list start to grow. In the meantime, though...

The real way to look at this is the same way that you used the blue dot on market surge is where you're looking for the strength that's within the weak market. So a stock that, you know, if you've got a market where the NASDAQ and the S&P are below the 200-day moving average, the 200-day is in a downtrend, you're in a bear market, but you've got stocks that are

holding in a stage two uptrend, those are names that you want to look at if they're coming out of a base. I refer a lot of times back to 1990 because

That was a period where it was a pretty treacherous bear market. And there were stocks that they didn't even get below the 50-day, let alone the 200-day. Yeah, I mean, it was really something else. If you look at maybe the S&P 500 or the, I don't know what index you're looking at here, but- This is the NASDAQ, but I can pull up the S&P 500. That's the NASDAQ, yeah. So if you look at that, right, look at that picture of the NASDAQ. And now bring up Amgen.

You're going to see a drastic different picture. Look at that. Right. Yeah. So, right. I was buying Amgen coming out. And I did not change the date, folks. I mean, you would think that I changed the date in order to make that happen, but no. And I was buying Amgen shortly after this, not right here, but shortly after David Ryan was buying it.

Bill O'Neill was buying it and a lot of fund managers were buying it because really great things were going on. Yeah. Now you see you're starting to build out that base there. And if you go and look at the market, that's in October. The market is at its lowest point right now. It's just coming off the lows and it had just made a follow through day right around here. If it's if I'm right, maybe just after this, you get the follow through day. So you're down by the lows here.

And you go forward just a little bit more and you get a follow through day back just a little bit under the 50 day. Yeah, right there. That's the follow through day. You go back, look at Amgen. Amgen has been holding up like a champ well above its 200 day moving average. Yeah, look at that. That's where I'm buying it right there. Coming right out. If you look right there. Yep. I'm buying Amgen there in 1990. No different than what I would be doing today. Exactly the same thing. Yep. And

And, you know, I guess that's another point is a lot of people, you know, they talk about the tariffs and it's like, oh, these are, you know, this is the worst level of tariffs since Smoot-Hawley back in the 1930s. And so, of course, this time is different. But how many times do you hear this time is different? Every time. Every single time I hear this time is different. I've been hearing it's different for 40 years. And I'm sure Jesse Livermore heard it in 1932. Right.

Yeah. And it's just not it's just not different. It's never different. It's the people are people. The only thing that changed are the names of the stocks and the names of the traders. Right. That's it. That's that's everything else. Stocks go up. You're earning a lot of money. The stocks go up. The economy recovers. I mean, you know, unless, you know, if you're one of these people that are bearish on America and you think the Great Depression is coming, well, then, you know, we're all screwed.

Right. Yeah. Yeah. We have a lot more to worry about. We have a lot more to worry about. But O'Neill, O'Neill eased my my fears about that. You know, it's something that he talked about quite a bit. And, you know, even even coming out of those periods, great things happen. We just got to be patient to wait. And then in terms of like how.

How quickly you can get invested. And again, this is something that a lot of people don't realize is, again, by listening to the feedback of the market, you know, you can ramp up pretty quickly when things are working for you. And again,

Um, you know, so a lot of people fear that, oh, if I miss a day, like, I mean, everyone points to April 9th, of course, and oh, the NASDAQ was up 12% that day. So if you missed that, you missed, you know, a 12% gain in the, in the market, how could you be so late? But, you know, again, I just want to stress that you, you're, you're,

And I think, again, you have a lot of history to go off here is that there is a lot of time if this market is going to be a true strong bull market. Isn't home where we all want to be? Reba here for Realtor.com, the pros number one most trusted app. Finding a home is like dating. You're searching for the one. With over 500,000 new listings every month, you can find the one today.

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could. You couldn't do that back 30, 40 years ago. You couldn't go in and out like you go in the market now. It just wasn't feasible for a number of reasons. Commission structure, bid-ask spread, technology, and being able to place a trade quickly. And now you can place your trade from your phone while you're going down the street and your autonomous driving is driving a car. So that's the only thing that's changed is things have become faster and

It's actually much easier now. But here's the big, giant, enormous myth and the most ridiculous part that people don't. When I say ridiculous, it's not because anybody's stupid or they're doing it on purpose. It's just you don't think of it this way or realize the math behind it. So let's say in a period of a year, let's say you're a swing trader. And over the next year, you would do 200 trades.

And if you were to do those 200 trades, let's just say, you know, your average gain is 10%. Your average loss is 5%. You're right. 50% of the time, half of them are losers. Half of them are winners. You're a winning trader. If you do that, right? Okay. 200 trades. If you were to go and get into those 200 trades, let's say four stocks at a time, or even on full margin, and you went eight stocks and then you sold out and you made those trades, right?

versus you bought just one at a time. You were never, ever more than 25% invested. Let's just say the entire year you were 75% cash. You only bought one stock and you bought a 25% position versus four 25% positions or eight 25% positions all in whenever the opportunities presented themselves. Meaning that, okay, I got to get in there. When things are good, I'm going to load up and

I got to get exposed or I'm not going to get as much return if I don't have the exposure on. Well, if at the end of the year you can get off the same 200 trades,

What would your return be if you did them one at a time with 70% cash versus if you went in there all of them at the same time or you load it up, you know, one of the, one of the times you built up where you're a hundred percent invested or fully margin. The answer is the exact same return. Yeah. The only difference is you would have probably more volatility if you had all that exposure. Now the question is, can you get off those 200 trades? Could, could,

could investing more at the same time allow you to have more trades on in that time period. But we're just saying, all things being equal, you can get off 200 trades in whatever the period is, one year, two years, you name the period. You can get 200 trades off where you're in and out. If you can do that, exposure...

doesn't matter. The amount of exposure you don't have doesn't matter. Your position sizing is what matters. So if there were equal position sizes and you were to just do, even if there were 10%, let's say there were 10% position sizes and you were to do 300 trades at 10% position, it wouldn't make any difference if you were 90% cash the whole year and you were never more than 10% invested than if you were 100% invested or fully margin. You'd have the exact same return. So this whole idea of

I got to get invested is absurd. It's absurd over my career. Um, you know, again, I don't have the exact number, but I know it's over 600,000% that I've made on my money in my career. Um,

whatever that comes out to annualize, you know, this, I have only been invested probably on average 40%, maybe 40, 50%. I'm, I average being in cash at least half the time, if not even more often than I'm in the market.

Right. And I think that gets back to your point. You know, you are very strategic about when you invest. You're not in this to get an ulcer. You're in this when the environment is right and when the trade is right. And, you know, again, using that feedback of the market, those volatility contraction patterns and…

Again, when things are more favorable, because the truth is, you know, even in a good year, there are times where you don't want to be in the market at all because of the downtrend that's going on. Yeah. Well, you know, at our master, some people might be scratching their head now going, wait, what did he just say? And I'm sure some of you are trying to make heads or tails of what I just said and what it means. Yeah.

In our Master Trader program, the Master Trader program that I do every year, there's a section called Mind Blowing Math where this is just part of it that I talk about. We go in depth.

and really show how you get to that big return with a low risk and how it's unnecessary to do a lot of the things that you're convinced you need to do. So where you can have your cake and eat it to a certain degree, where you can get big returns with the low risk. But to go back to what you just said, your point, I mean, you go to 1995,

The Dow was in new high ground for months. I think it was April, mid or late April before I even started really getting invested in the market. And if you bring, I don't know if you bring up a chart. Yeah. So you see there. I'm going to have to learn how to type. Maybe bring up the Dow. Yeah. April, April of 95. Yeah. So I didn't even start really getting heavily invested until,

Right here, look how the markets run up there. We're a new high ground, you see? So I missed a low by a mile. I was up 412% that year.

That was a big year for me. That was a game-changing year for me. That was the year that I really, my capital had gone from a very small amount to a respectable amount. And then that year, it went from a respectable amount to a big amount. And that was where I, yeah, I was at a completely different level from that point on.

And, you know, I think one other thing that a lot of people need to recognize, and I appreciate so much how often you say this, that you were not immediately successful at trading, you know, that you had you had to kind of slog through it for a little bit. You had to have persistence in this. A lot of crying. There's a lot of nice, right? Cried, literally. Yeah.

A lot of, what am I doing? Absolutely. I never really thought about quitting, but I did think about suicide.

I didn't think about jumping off a bridge, but I quit it. Yeah. Well, and to, you know, again, your credit, I think one of the things that, by the way, with that, yeah, a lot of people just don't realize that a lot of times what it comes down to is that post analysis, knowing your numbers and again, learning how to listen to that feedback of the market to really kind of change things. Was there, was there just to kind of maybe wrap a bow on this? Was there one thing that you feel like,

this is when things changed you know like it finally something clicked for you absolutely so so when i first started i did not know my numbers i didn't have a clue i didn't have a strategy i was buying stocks that were beaten up and down and were low price and low pe and buying names that i thought you know were buying stocks just because the name was solid and it was down um just like a lot of people would do they'd be buying apple or whatever when it when it's down but

Then I realized that regardless of how good the company is, there's still risk. And these companies go down, they stay down, and they can stay down more than I can stay liquid. And it's just a time factor. So one morning I got up.

And I said, enough is enough. I got to get to the bottom of this. I got to see what's going on because I'm not even sure what's happening in my trading. So I went, looked at all my trades and I said, I just want to see if I cut my loss at a certain level, an arbitrary level, if it would improve my performance and if managing risk is really important.

what's important here because I would be doing good and then I'd have a couple trades torpedo me and next thing you know I'm not doing good anymore and at the end of the day I look back and it was because of you know five trades that I held that

Turned my performance from pretty good to terrible. So the results were amazing. And I tell this story in both my books. It's what I call the result. What do I call it? I haven't talked about it in so long. Where you adjust your... The result adjustment exercise. You adjust your results...

and go back and just cut your loss at an arbitrary level. I did it at 10%. You might want to do it even lower nowadays. And I went from a 15% loss in my portfolio to a 75% gain. As a matter of fact, this is what got Larry Height, which is one of my all-time favorite people in the world, certainly from a trading standpoint. He was one of my mentors from Market Wizards. Later on, Larry called me out of the clear blue. He called our office and said he wanted to speak with me.

And Bob Weissman, who many of you know, called me up and said, Larry Height is on the phone and wants to speak with you. I said, Larry Height from Market Wizards? He said, yeah. I got on the phone. He said, you know, I read this section in your book, and I love your book. And this section, I literally copied the page that I sent it to all my grandkids, my kids. I showed it to everybody. And it was about this. It was about this, how that

from that 15% loss to 75% gain by just changing the loss, by just moving the loss up. And all I did was my average loss was about 15%. I just moved it up to 10%. It was just a 5% increase. It wasn't very much. And that changed everything. So I

I actually thought I made a mistake. I had to go back and do it again. And then I did it a third time because I said I must have made a calculation wrong because there's no way it could make this big of a difference. Then I said, well, maybe, you know, survivorship bias and, you know, maybe I would have got knocked out of some names that would have came back. So I started really going through the numbers and it actually improved even more as I dug into the numbers. And I'm like, OK, no.

This is it. Today's the day. I'm never, ever allowing a stock to go down more than X. And I drew a line in the sand. And this is where O'Neill came up with the 8% rule, the 7-8%. There's a reason why. Because 7-8%, once you go past that,

mathematically, it starts working against you. 10% needs an 11% gain to get even 20% needs a 25, 50 needs a hundred. So losses work geometrically against you. So the pivotal change was, I said, I'm never losing big again. If they're going to beat me, they're going to have to nick me to death and I'm going to have to lose a hundred times. You know, there, there's, there's no way I'm getting, I'm getting beat on a big loss ever again. And,

Never turned back from there. Since then, I think I've had three down years of single digits in 30 some odd years. Yeah, that's incredible. And again, I think a testament to putting in that work to kind of really figure out the risk management part. So critical. And it seems like that's one of the things that...

pretty much every legendary trader has in common. They are just so focused on the risk management, uh, making sure that they, they don't lose big and that they can, uh, stay in the game. Not losing big is the key to winning big. It's that simple. Right. Well, Hey Mark, it's always a pleasure having you on my friend. And, uh, for those that aren't aware of, um,

Some of the offerings that he has, again, four books out there, a fifth on the way, not just about trading, but mindset of a champion. There's a lot to be said for the mindset that you have to have to really be successful in anything you do. You have your X account that has great knowledge.

that you're dropping all the time. That's at Mark Minervini. And of course, there's Minervini Private Access, which is, again, a very elite group. Really great information that you're sharing with your subscribers that people can find at Minervini.com. We have a Master Trader program coming up this, I think it's in November, where registration is open. And of course, Market Surge is our exclusive sponsor.

Yes. So we are always pleased. So pleased. Again, so many of our folks are at those events. It was so great being at your event in January. And thanks so much for coming on the podcast again, Mark. Really appreciate it. It's awesome to talk stock. Thank you. Appreciate it. Thanks for having me.

Thanks. Thanks again. That's going to wrap it up for us this week. Thank you so much for joining us and thank you for all the comments and YouTube really appreciate it. Uh, quite the audience coming and a lot of people appreciating Mark's wisdom. Uh, I, I know I certainly do, um, hope that you tune in with us next week. We're going to have Mike Webster on the show. We're going to be talking about average true range ATRs and how the volatility in a stock, uh,

you can use this measure to kind of decide what stocks you're going to get into. So, uh, hope you tune in for that next week and we'll see you then take care. Data is everywhere, but is it ready for consumption? Morningstar developed the language of global investment data. So you have the right ingredients to help you shine. Morningstar where data speaks.