Investing Secrets for IPOs, Bitcoin, and AI

**SPEAKER_1** (0:01)
Welcome to the Money Tree Investing Podcast. Stock market, wealth, personal finance, value stocks. Invest in your life.

**Kirk Chisholm** (0:11)
Douglas for our Money Tree Podcast listeners. Welcome to this week's show. My name is Kirk Chisholm. I'll be your host. And today, I'm joined with Doug Heagren. Hey, Doug.

**Douglas Heagren** (0:17)
Hey, Kirk. Good to be back after a week off. Hope you didn't miss me too much and you dried your tears.

**Kirk Chisholm** (0:23)
Well, we can't miss you if you don't go away, Doug.

**Douglas Heagren** (0:25)
That's right. Exactly. Every once in a while, I got to remind you of my value.

**Kirk Chisholm** (0:29)
Yeah, no, it's good. It's good to have you back. You know, we're officially in June, as first week of June. Now, typically, the markets operate within a framework that is somewhat similar but not really predictable.
This year, however, I feel like things are oddly predictable.
And here's what I mean. Most times, trends don't change when a month ends, and they don't start when a month begins.
But this year, that's exactly what's been going on. So January, precious metals did great, although the last day they didn't, but close enough until the end of the month. And then a lot of areas in the market did well in February, especially just general equities and industrials and energy, and materials, staples did really well up until February. And then the war started March 1st, beginning of the new month, and then it ended because apparently the war was over, according to Trump, at the end of March, and then April began, and then the market shot up for a month, and then last month, and then June hits, and all of a sudden the markets are selling off. I feel like we're in a simulation. I hate to say that because some people believe that, but it's really weird. We've had a really weird year this year. Why were the markets going up? I don't know. Why are they going down? I don't know. Well, maybe it's because Trump restarted the war, but regardless, the war that had already ended, but apparently it didn't end. When you notice patterns in the market that other people don't see, it's really interesting. When everyone starts to see it, the patterns stop working. It's kind of like a self-correcting mechanism. When everyone's doing the same thing, that's when it stops working. And naturally, you'd think that because if everyone is buying tech stocks, well, eventually, there's no one else to buy tech stocks, and then the only place they can go is down. That's just how market system works. When everyone is doing the same thing, at some point, that's going to end, and that applies to all areas of the market.
We've been talking about this for a while, but the markets have been odd in the last two months. And last week, we talked about each separate sector. We have 11 sectors in the index for the S&P 500, and out of those 11 sectors, one of them has been doing well. The rest were just kind of biding time, just kind of staying flat in the last two months, and the technology sector has pulled all the weight.

**Douglas Heagren** (2:55)
The technology sector or what in the technology sector?

**Kirk Chisholm** (3:00)
Well, it's a good clarifying question. So if you look at the technology sector, it has done extremely well over the last two months. Within the technology sector, there are multiple sub-sectors, one of which is semiconductors, which has really been pulling all the weight for the sector in the last two months. Software has actually started to come back in the last month and a half. So software had been obliterated, rightfully so, because a lot of companies aren't going to do well with AI in the future. But apparently, everyone thinks that's okay, and software sector has started to come back. Primarily, the returns have been through some of these though.
And a lot of people don't know that, and they just think, well, the markets are up, everything's doing well. Actually, earnings have been going well. So, earnings season is more or less over. And we still see some companies here and there. There were some this week, and there'll be some smattering of some over the next month or two. But basically, earnings season is over. And overall, earnings were good across the board. Now, if they were good, why hasn't the market taken off? Don't know. Maybe because it's overvalued. There could be many reasons, but it hasn't. And we've seen huge changes in stock price after earnings. We've seen some 5, 10, 15, 20 percent or more moves in stock prices. And these are not small stocks. These are some of these are big stocks making these moves after earnings season. What that shows me is that people are vastly off balance with their portfolios. The thing to keep in mind is it's really easy to get excited and to want to put all your money into the areas that are doing well. But the hard part is you don't know when that's going to stop and you don't know what's going to violently change. I mean, as of right now, the semiconductor sector is down 4.6% when the S&P is down less than 1%.