VRA Investment Letter: Generational Bull Market. The Ability to Lever Up is Unprecedented.
/Good Thursday morning. By this time in 2022, Tyler and I had completed our research for The Big Bribe and were about 80% finished writing the book (my 4th, Tyler's 1st). Frankly, we were stunned by what we were finding along with the fact that we weren’t hearing these facts discussed on Wall Street. In most cases, when we shared the information and data that we were finding about our 5 Big Bribe Megatrends, people looked at us like we had two heads. Biden was president after all…so we understood
As the bear market bottomed in October 2022, we had gone aggressively long US equities. Since then, the S&P 500 has gained 61% with the tech/growth heavy Nasdaq up 87%. Based on our work this generational bull market has years to run (from July 2022).
“We’ve entered a generational bull market driven by an innovation revolution that will power the economy and markets higher for years to come. It’s a structural bull market, the most powerful kind, with American companies and consumers in their strongest financial condition in decades, likely ever. Each time we make this statement we’re barraged with “what are you talking about? Aren’t you listening to what the media is reporting?” No, we aren’t listening to the media, nor to the well established PSYOP of negativity that’s in place.
Instead, we pay attention to the data:
- Home prices ATH
- Net equity in homes ATH
- Credit scores ATH
- Consumer net worth ATH
- 39% of homeowners have no mortgage, also an ATH
- Over the last 15 years consumers have cut their debt to disposable income by 25% with corporate debt to market cap sitting at 50 year lows.
- The ability to lever up, for both the consumer & corporations, is unprecedented. We believe this will be a stronger, broader and longer lasting bull market than the 1995–2000 dotcom meltup, with the semis and tech leading the way.”
Nvidia; The Most Important Company on the Planet Hits $4 Trillion Market Cap
NVDA has become the first $4T company (still the case this AM), on the heels of last weeks golden cross buy signal, which we covered at the time.
Yes, NVDA is nearing our most overbought readings (EOBOS) and yes, we have paused our buying, but as Goldman Sachs wrote this AM in their new NVDA buy rec, “NVDA has figured out how to monetize AI”. From our cost basis of $106.50 we have current gains of 55%. Last: $164.50
For more than 15 years the VRA’s primary “market direction” indicator has been the relative strength chart below; the Semis to the S&P 500.
From exactly the 4/7 bear market lows, we see that the semis have led the markets higher. Until and unless this most important repeating pattern is broken, stocks are headed higher. We own the king of the semis Nvidia (NVDA).
Housing is Ready
As covered above, the long-term macroeconomics of housing…the most important sector (along with semis) and the single most important consumer asset…are remarkably strong. In fact, they’ve never been better. Once mortgage rates decline, housing stocks will get red hot. We want to own them now.
Total home equity in the US is now $34 trillion (ATH) with 40% of homeowners having paid their homes off completely (ATH). If you understand what this means, there’s a zero percent chance you’re bearish on the housing market. Once rates start to fall a mountain of liquidity will be unleashed into the broader economy and the stock market.
Household debt to asset ratio is at its lowest level in 50 years. The ability for homeowners to lever-up is unprecedented.
Truflation; Inflation Has Fallen to 1.66%. J Powell, what are you waiting for?
XHB (we use non-leveraged ETF’s for chart work) is breaking out of a compressed triangle and nearing the 200 dma. To see our VRA Recommendation join today for our FREE 14-day trial
VRA Bottom Line: the VRA Investing System is flashing buy signals from the two most important sectors for the US economy…the Semis and Housing…we want to own both aggressively.
ATH in Bitcoin
For a brief minute yesterday BTC traded at $112,000, a new ATH. The charts look good for a move to $120,000 to $140,000.
Until next time, thanks again for reading.
Kip
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