Jim Roppel: Top Growth Stocks To Watch In 2021

okay hello everybody and welcome to investing with ibd sponsored by vantagepoint today is december 16 2020. i'm your host arusha paris and we have returning back to the show jim ropel jim is the founder of ropel capital management and star of growthstockmentor.com thanks for being here jim you were killing me with that star thing i said it i love to be here reminds me of christmas time i did it a year ago and uh it's fun thanks for inviting me i'm super happy to be here on today's podcast we are going to talk about the current markets we're going to talk about the evolution of a traitor over 30 years and then we will end the episode with some of jim's top ideas for 2021 and these are at this moment that we're not going to hold you to it jim for all of 2021 there so don't worry uh current market we are in a confirmed uptrend distribution days two on the nasdaq four on s p 500 jim what are your thoughts on this market i am you know i'm super super bullish on the opportunities i see in front of us i i think we're in we've been in a super cycle for quite a bit of time but it was punctuated by this c-19 virus which caused obviously a severe bear market but it has caused something even more profound which i think we're about to see and that is the pent-up demand of people who've been shut in and they just want to get out and live their life they want a party they want to blow out and they have some people are broke but some people have actually saved a ton of money i think the spending that's going to be unleashed by the consumer is going to be impressive uh so you've got a super cycle that is going to be punctuated by what i think is going to be a boom and on top of all that we have chairman powell who's like the drunk engineer of the steaming locomotive racing down the track hitting the handle of jack and jamming on the accelerator on top of a super cycle and a boom so i am so bullish on opportunities we're in a innovation cycle of digital revolution from payments to media autonomous driving data center semiconductors biotechnology we're in a renaissance of american innovation coupled with all these things together it's like all the stars are lined up and i forget these are my fundamentals that i think are the dominant fundamental factors but the market is acting on it it's not just my opinion those are my opinions on why we're working yeah but the market is in gear it's you can see it in the normal levels of extension being extended stocks are getting so extended like back in the day the 50-day was hard for leaders to hold now they're holding the 21-day exuberance is being played out in the market so it's not just an opinion uh these tidal waves are crashing into a shortage of shares and you know just remember we are all the architects of our own life nobody can stop you from capitalizing this rare gem we're seeing right now it's possibly a once in a lifetime opportunity in we're in the usa all this innovation is happening here and the markets are rocking now i'm a little fired up because i had a good day and we're having a great you know how many triple digit years do you have not a lot so everything's lined up but right short term there's a lot of excess the ipos we saw come out were excessive these spacks i'm very negative on i think there's gonna my old boss would say there's going to be tears and there will be tears on this i i can guaran as sure as the sun goes down tonight now the tmls are getting extended to a level that concerns me i am happy and what and what does uh tml stand just a true market leader thank you you know like a tesla or some of the amazing names we have and there's that's another sign of the quality of this market how many tmls are and they're just starting to do more a whole other crop emerged just recently um so but be careful there's going to be cross currents here one of the biggest down days we ever saw was on january 1st 2000 i think the nasdaq that day went down five or seven percent everybody wanted to sell their gains in the coming year to push taxes out uh 16 months if you sell today you have to pay in april if you sell january 2nd you pay 16 months later so now the market also has started to game this so we could see some real turbulence between christmas and new year's i i i'm concerned about those short-term excesses but long-term we are in a super cycle and the pessimism on the long term is very pronounced the vix closed at 22 and a half today the vix can come down to the mid high single digits that's long-term structural fear which we have not worked off and the average you know the redemptions in the funds we've been in net redemptions for two years this cycle will not end until we've been net contributions for two years we are way way off on that so economic boom secular super cycle fed drunk on qe um and punctuated by this demand people are wanting they want to get out of their house and go wild this is rare stuff we're seeing so speaking of rare now so some people bring up the the parallels to a potential 99. if that was the case uh you know and we're in the late 90s at that point what year do you think this would be right now do you think this would be a 99 or is this 98 or 90 95 even setting up on the line 99 a few years from now okay the innovations are the same actually possibly more pronounced than the advent of the internet that's what we had then but don't confuse the fact the fed the fed raised rates three times that year the fed is overwhelmingly uber powerful and they are like i said that the engineer is racing down the track on qe so the that's why we're seeing greater levels of extension i think this is a much more powerful environment and earlier yeah and well i mean even a lot of the companies that are doing well this time around versus 20 plus years ago they actually have earnings and sales and they're really strong companies correct the there was a plethora of no no earnings ipos like webvan and just crap and we do have some of that now i think it's more in the form of spax but we do have a much greater abundance of true technologies that are more durable and i think are longer lasting and it's broader than just the internet yeah we're looking at innovation in medicine devices biotechnology which has really been kind of a laggard sector just recently bios just started to hop out um this is broad-based much broader than just internet so one thing that that we've seen this year is you'll have a few days of you'll run into some kind of ceiling you'll have a few days of vicious vicious selling off then the market really recovers shockingly really quickly um so that is that that exuberance or is that just a a characteristic or a super cycle well it's very characteristic of a market that is so bullish it doesn't have time to digest uh a more gradual advance gives weaker holders a moment to get out instead of this race up and then a panic and then it the fed mark the market realizes the fed is still there and it just goes straight back up it a a more slow and determined market would be more have more perseverance and less volatility i think it's just the nature of the beast that it's i mean how many markets hold the 21 day this is crazy town and i love it um you know it's kind of like it i want to talk about crypto today but crypto is exploded out again and it is non-stop i think i just looked at hit 21 000 a few minutes ago wow yeah i thought it was close to 21 000 before coming on and we're gonna think of you we're going to have wicked corrections in this i mean i have a crypto hedge fund and i'm long as long as a human could be in this i bought more this morning in my own personal account on the breakouts so anyway the answer to your question is the short-term super volatile painful pullbacks is a function of the rapid ascent in my opinion yeah so so you know let's stick with the the the crypto topic because obviously that is in many ways the topic of the day even with all the stocks doing well crypto bitcoin going into all-time highs uh well first what is that telling you just kind of of the overall environment and uh so yeah let's go with that and then i'll lead to the next question okay we've got multiple things going on again this is the fed and but it's also global central banks printing at a wild rate and i i don't like to be a global macro investor because there is a lot of negative in the world and it can get you if you don't have a guard rail you can get off trend which i did terribly in 2013-14 i had two bad years i was overly pessimistic on central bank debt and just the euro zone problem but crypto is kind of like a put against that and the this is going to end horribly bad this the the fed the world is drunk on heroin of quantitative easing this this is going to end disastrously now japan i thought this was going to blow up in the late 80s japan hasn't blown up yet they have had a dormant 30-year stretch but right now you've got a massive shortage of coins there's only 17 million bitcoin in the world there will never be more than 21 million there's not a bitcoin for every person every every millionaire in the world beyond that the institutional adoption is going crazy we've got major conservative insurance companies putting 100 billion in 100 million uh bill a billion dollars we have paul tudor jones is coming in it's just institutional adoption it's just like bill would say with a stock how many institutions hold it did they just start or are they overloaded in it there's not there's a shortage of coins in quality coins miners per day the mining rewards that are mined are being consumed by like square and paypal almost exclusively right there any new money coming in is gunning this thing and i have to give a shout out to my partner in my crypto fund he passed away in the summer i owe it all to him if it wasn't for matt d'souza you know it it hurts my heart that he doesn't get to see this breakout at 20. he lived for bitcoin it was everything he was a legend in the industry you google matt d'souza everyone followed him so i owe him [Music] i wouldn't have a crypto hedge fund if it wasn't for him and now i've got my new consultant sam who was matt's best friend helping me out but uh this is clear supply demand institutional adoption it's a better gold the gold market is seven trillion dollars crypto is like 360 billion wow it's about the size of like nvidia the whole crypto market this can go radically higher but there will be volatile periods in the first run i think there was nine corrections averaging 37 pullback crypto is immature but also look out for in the more speculative phase ethereum is probably going to come on very very strong in the latter phase of this thing so i'm bullish on crypto so so that leads to my next question about biases because obviously crypto's a little is unknown to most people which i think leads even more to towards the reason to be bullish um but just talk about in general about overcoming biases and uh because we all have them and and part of getting better as a trader investor and even as a person is recognizing those biases and overcoming them talk about uh some some tactics that you've uh taken over the years to overcome them and uh really improve okay you just never ever ever ever ever violate the trend and that is a guardrail in itself having a mentor or a group of sophistic people at least as knowledgeable as you are way smarter and make sure you understand that they are there's a million people who talk there's people who write newsletters and then there's people who do okay be very cautious of who you let mentor you they will keep you in line and you know criticism that stings is true when eve texts me this morning and says you know you kind of have more names than you've had in a very long time it's going to be hard to get out of all that and i'm like she's right so having people there is your guard rail popping that ego is critical to six everybody i know one of the most famous successful traders in the world i i'm it doesn't matter he has a group he communicates with and he's considered one of the most successful traders in history he's alive today and he does it it's good enough for him it's good enough for me yeah bill it's good enough for me you need guard rails on position sizing stopping your losses sector weightings use of margin you have to have guardrails all around you because we're all flawed we're fallible our psychology makes us do ridiculous things you have to have guardrails in place because you're honestly you're going to be off your a-game more than you're on you need to have people pushing you back in on the road at least i do and and so now you spoke about mentors talk about growth stock mentor yeah what really inspired you to get i was surprised honestly when when you went and decided to do that because you're really busy you're managing three funds and so so it did surprise me that wow jim's going to take the time to do this talk about you know why why you started doing that and uh why you continue to do it it started with you you called me and said hey would you do the show and i i i loved it i enjoyed it i love to teach mentoring caddies at my club is something that is in the top five things i love to do i i i love to teach but bill bill taught me bill took the time to review my notes on charts and hand write to me and i'm like i i gotta pay this back and i love doing it you know doing this but uh listen growth stock mentor is a way for me to at first i had too many caddies coming in my office i i don't have time so now i can reach all of them i give it to those guys for free but i can communicate with a large amount of people i speak once a month i'll answer questions for two hours i'll answer every question that they send in i do weekly updates on monday after the close i listen to all the comments we sent out a form and said what can we do better and they want ideas that are actionable now so i try to do that it's your it's free to everybody for two weeks growthstackmentor.com uh my buddy adam gave me a whole bunch of things uh actionable ideas direct mentoring to you always the strongest stocks in the market but you know i'm somebody who really manages money i'm not just some guy writing an opinion who has no repercussions i'm i'm in these almost every stock i talk about i own yeah so that's it thank you for asking no no i don't honestly because i i got a i got a got to watch one of your videos and and it's like this honestly it's it's you just talking about about your thoughts on the market and uh i i i you know i personally thought it was incredibly valuable so uh i agree with you that having someone as a mentor has done it can really help you get through that learning curve i know when i started 20 plus years ago it was much much harder to just even like learn what a couple of handle is and all this kind of stuff so these days with technology like we you know really kind of wrapping it from the way we started this uh segment technology has changed everything it's changing all these industries but it's really changing the way we learn and how quickly we learn things so uh it's really pretty amazing that that you are doing this listen the answer to so many questions are what would bill o'neil do yeah will o'meal o'neil taught the masses of average middle class people how to gentrify their life it's good enough for bill it's good enough for me i answer so many questions would i buy this stock right here would bill you know on my shoulder would be kicking me or saying way to go you know would bill say give back and teach as many people as you can in an efficient manner yeah it makes perfect sense well and and to add on to that too when you're forced to teach this and really kind of go back to the concepts that bill taught all of us uh it really kind of holds you accountable too to go back to the fundamentals right it's helping you learn everything that much better it's great for me because i i i mean i know about my ideas and i have all organized in my ride the wave plan but when i have to verbally discuss them every monday yeah it forces me to be accountable and it makes me acknowledge my gaffes yes how many guys you see on mad money who come on there and they run their miles and the things blow up and they're never on the show again i can show up every monday so the market isn't an uptrend uh growth stocks are acting very well but remember manage that risk don't just go out running buying stocks be disciplined don't chase them let's take a quick break but when we return we are going to talk about the evolution of a trader and how jim has evolved from now to 30 years ago we'll be back stock market have you nervous with the hope for a cobia vaccine and a shifting political landscape it's virtually impossible to guess what will happen but with vantage vantagepoint you don't have to visit www.freestockcoaching.com and find out how vantagepoint's ai technology can forecast stock market trends up to three days in advance with incredible accuracy vantagepoint's patented technology analyzes huge quantities of global data in seconds stop guessing check out www.freestockcoaching.com and experience vantagepoint for free trading involves financial risk and is not suitable for all investors past results do not guarantee future performance jim ropel is our guest on investing with ibd sponsored by vantagepoint okay jim let's go over your evolution now 30 years ago you were doing really well you know and some of your trades were talked in uh john boyk's books uh how has things changed from 30 years ago to now what way have you seen what's different it's so different it's unbelievable i mean the speed with which trades occur um the information flow is lightning fast the reactions to information but you know as far as me evolving i look back at myself and i'm like how possibly did i not blow up 50 times like i i was so in the dark and had no idea i sometimes i didn't stop my losses i had no semblance of earnings and how it impacted stocks liquidity was something a lot of the stocks in boyk's book were fairly small that i made money in i there was so i was so in the dark it's hard to believe i i made it um you know but to cutting your losses number one better selection criteria getting a mentor um understanding the value of a cushion it's so underrated a cushion allows you to sit and let them grow and ferment uh well let's stop you there with the with the cushion part um because this is and this is something i struggle with too but this is definitely something that newer people are going to struggle with you're up 10 on a stock right and you're up pretty quickly now you're not necessarily dealing with oh my god i'm up i can really push it the the normal reaction the human reaction the amateur reaction is i better take the profit before it takes it goes away right talk about that because that for me i've gotten a little bit better as i continue to work on it but that is a hard one and and that in in many ways is one of those strengths that i that i see with you and that's why i like to listen to you because it's just like a reminder of uh hold for some of those bigger winners okay you get a leader and it shows you strength right away i am in there pounding that i mean i am buying buying buying i have no interest in 10 gain that's a that's a it's not even a base hit i people sell out of fear because that money means so much to them if it pulls back they're going to get all upset and they haven't had the experience of a triple digit winner or so you know so they also sometimes people don't believe the system they have and they think this is a one-time thing it's up 50 i have to take it to buy my car when they don't realize if you follow the method and implement consistently with discipline you're going to have strings of these things they're going to keep coming they're never we're in america this is never going to stop unless we kill the golden goose of capitalism right so knowing not being fearful understanding the process having cushion allows you to sit for those bigger gains the value of a cushion it's it's it's so hard to even expand on it so valuable you can't sit if you're up five or ten percent ten percent if i'm up ten percent on a stock i think there's a fifty percent chance or sixty percent chance it'll come back to the pivot we're just getting started okay you know you want to be up 200 in a stock you're looking at nine months bare min usually bare minimum in anything of quality you know it takes 18 months for the average cycle uh true market leader to get to get there and once you have cushion you can endure these pullbacks the evolution of a trader is understanding cushion and position size when you're up 10 that's telling you something you want to build that position i mean i'm i'm always adding a couple thousand here i mean even on very small digestions and just new highs you it doesn't do no good to have a double or a triple and have two percent of your account in it and most people never get there but the ones that do usually reduced all the way and i've done it yeah every mistake in the book i had nvidia one of the better stocks in my life and i i hit it really really big really really quick and then i sold before every earnings report and i sold i just i just i was a massive bungle i could have had a career trade on that thing speaking of earnings reports how do you handle learning sports what is like kind of the position size you're willing to go to if you have a decent enough uh profit and a decent enough cushion in it my theory is 50 to 80 percent of all the gains and stocks occur on earnings so if you're not in for the earnings report you're just not gonna get there now i'm ready i oddly i have this right here here's my matrix on position size gap down and max loss for accounts i know to the exact tenth of a fraction wow what my loss is going to be on position size so depending on my cushion for the year i know what i can withstand you know i i will only get involved with positions that i can take a 25 20 25 hammering on but you've you just look six beat and raise quarters is going to equal a life changer you want to go from first class to private jet you get six beat and raise quarters on say four stocks in your life give you a multi multi multi-millionaire wow but if you don't sit through those earnings reports right here bro i mean what inspired you to create that that matrix was there a specific kind of event that you you had to sit down saying you know what i'm i'm missing some of these opportunities i got to put something more on on a piece of paper so i can look at it objectively the origin of a trader i mean i've had my face kicked in you know and it goes to the to the temperature of the market how are earnings reports being received i mean after you see maybe a string of four or five that are not uh the market goes down or the stock goes down and then you have one that just gaps up and rocks i remember amazon did it like 10 15 years 10 years ago i switched from bearish to bullish on that alone i mean it turned my whole view on the market around risk management is the bedrock of the pyramid of evolution of a trader it's the it it's so basic i don't even talk about it yeah i mean it is kind of funny yeah i want to go into that a little more yeah you want to get it depends on how far you want to take it you want to get to that apex like the i and the dollar of the bill emotional control do you see a shrink once a month beyond the mentor are you willing to spend the money on to keep you in line i do what's with your physical condition can you run three hedge funds do a podcast after the close be prepared to answer a million questions and take you know all kinds of calls during the day you could have stamina are you eating right feeding yourself fruits and berries and you know do you have conditioning you have a trainer what are you willing to spend on this you want to be you know peyton manning you want to be tiger woods you want to be you know paul tudor jones you got to be in your a game in every component of your life how is your home life is everything under control so you can make great decisions without all this interference are you in tune with who you are that's the pyramid any goof can screen for 99 composite ranked stocks how do you handle them that's risk management that's knowing yourself that's being in good condition laird hamilton trains and works out like a fiend he travels the world he everything he does is about excellence in surfing you want to be number one surfer you want to be the number one golfer you want to be the number one trader what are you willing to do to get there and are you willing to do it consistently with discipline when you don't want to do it for 30 years that will make you a multi-multi multi-millionaire anyone can do it but you got to be the architect of your own life no one can stop you but you have to know what you want to go you have to have a plan and you got to determine how far you want to take it maybe you're just totally complacent with what you have you want to go up the rung that's what it takes and and one of those runs probably early on in in this evolution and and really starting to head towards the apex is doing the research for yourself it a lot of times in the beginning and you see that i i see this all time i'm sure you're going to start seeing this it's hey just tell me what ideas to buy that's the key that is the candy everybody but it eve did a research report for me i said i would like you to do a report on level of extension from the indexes i think this is really important and she blew it out she did this golden report she she was a senior level researcher for the federal reserve i mean she's a plus at this and i read it over and i kind of got the gist of it but i recognized she learned 90 more than i did when you do the research you really really get it i mean there's this kind of like the saying and i'm gonna butcher it but it says something like a smart man learns from his own from his mistakes but the really wise man learns from other people's mistakes well that's kind of a catch-22 if you don't have the pain of the mistake do you really learn yeah i think the the losses i took and the bungles that i en engaged in in mass and now still to this day just lesser so made me able to handle i learned more from the mistakes and doing your own research you when you do that research you read it it's much more it soaks in you can get the gravity of it when you do your own research i think you can get great ideas from anybody yeah but when you dig into them yourself then you really learn now speak you brought up mistakes uh and and in the end i agree with you i mean that's really where you're gonna learn i mean i had to break every rule in the book that that bill talked about before i was like oh yeah that's why they have these rules uh with uh talk about a recent trading make mistake that that you uh that you made you know because even though i mean one thing that i've learned is that even though you get a lot of the main things down you're like okay this is what i do you're still making mistakes they just might have been huge mistakes but what is a recent trading mistake that that you recently made i made two i think i made them this week today's maybe whatever the last five trading i bought solar edge and i told everybody on grill stock mentor this is a rickety base what did i told everybody this is a rickety base and i was lured in by my personal greed yeah that i saw that it was the number one group and i felt the wind would be in all of those stocks sales and i got stopped out like the day i bought the thing took a huge you know i took a a loss on it and got out and i bought canopy growth it's a 30 dollar stock with massive overhead it had a great breakout and it looked good but i always find that these low-priced stocks are the ones that i have losses in more frequently yeah i mean how i've been doing this for 30 years i made those mistakes this week okay i mean no um i got greed and ego made me want to harvest this massive year so i kind of maybe slightly overhedged um and i started to chase stocks that were declining selling in the money calls and i'm pushing the price down and i was too aggressive i you know the the litany of mistakes never stops it's recognizing him really quick and you know dude work you want me to go on i can go on yeah no no no go on a little bit more [Laughter] because you know because i think this is really i mean and the reason is it's it's very valuable for me and everyone else out there it's like here you've been doing this forever and if you're still making mistakes you're being human right and and that's what i that's what when i got mentors and i learned and i saw they were still making mistakes it made it was like okay i don't have to be perfect on this you just gotta you're just slowly improving and recognizing those mistakes quicker you clearly don't have to be perfect you do have to have risk management that is it's a zero defect policy it's what keeps has kept me in the game for 30 some years i started in 87. um the mistakes are just going to be there no matter what reversing them immediately when you have those losses uh staying in check with why the heck you do it and reducing that um dude i could go on and on about this forever but you don't have to the greats are wrong six or seven out of ten yeah you're gonna be wrong your default on every trade should be i'm gonna get stopped out yeah well i mean it just reminds me of i think there was a michael jordan quote right he's he's failed like a million times right missing all these shots and he's like that's why i succeed that's why i'm the best right 300 hitter yeah what they miss seven out of ten yes and they're considered elite they're good for 20 years they strike out three out seven out of ten they make 20 mil a year how many stocks do you have to get right in your life to fly private all the time just think about that you need four or five stocks to have five four to six beat and raise quarters position size correctly and you're there okay position size so let's go in the position size why do you consider position size correctly then when i was a cowboy when i was a kid i sometimes would put my whole account in three stocks and lever it up i mean i was a cowboy and that's how you have a 300 year you can do that but the risk is off the rails and if you have a family and kids and big responsibilities that's probably not viable i have responsibility to all my partners i i you know i i work for these guys i can't do that um for me in the fund you know my matrix shows me about 18 is about the perfect position in a in a bull market where earnings are being treated well because again if you have three stocks that double in a year and you have an 18 position you're up almost 60 percent yeah let's put that in perspective the greatest trader one of the greatest traders living today has averaged about 30 percent a year okay so you know and this is kind of a a call out indicator people who run their miles and say oh i'm up you know 100 100 oh if druckenmiller's up 30 they're not holy crap you know do the math compound out a hundred thousand a couple you know million dollars at 30 a year you're you'd eat the world exactly uh so i i want to i want to get back to kind of the having a a good community good friendships trading friendships things like that you touched on a little bit you talked about eve and you've been on the show before and she's amazing she made a lot of great stock picks too last year um talk talk about uh cubby bears cubby bears is one of one of your best friends i mean maybe my best friend look the beauty of dealing with traders who have been successful is they own their law they own they know who they are they don't make excuses for anything right anybody who makes excuses and says the market may uh cause me to lose this money or i got a dui because of the police or whatever you gotta if traders who have been there for a long time own their they own their mistakes they're real people um you know bob furman i the trading community that i associate with is a lot of elite people who help me keep me on my a game they're the best friends they're usually type a and love to party there's a lot of positives to hanging out with and the ideas we get and you know cubby bear says to me talk about um criticism that stings is true i'm very worried about the liquidity crisis that we're going to have when the quantitative easing ends globally he's like ropes you can't go negative on me like you did in 13 and 14 you're gonna have bad years he's like you gotta keep me on track you know that stung my ego my having people that you trust and are really qualified to discuss these things with you imperative to success so going off with that because because one thing you and cubby both love to do is go golfing talk about some lessons in golf that you've learned that you apply to training the hero shot is just the dumbest thing in the world you know you blow it off the tee you're in the woods and there's like a hole about four feet square through the trees to get to the green which is like you know tiger woods is gonna hit one in one in ten i'm gonna hit one in two hundred chip it out in the fairway play for bogey and go on you're gonna survive bogey yeah you're not gonna survive triple you're not you can't you can't shoot in the 70s if you make a triple it's almost impossible knowing that you can't be the hero you know in simple terms betting the 60 to one shot at all at the racetrack is just throwing it out the window right um golf teaches you you play golf with somebody you learn about who they are because everyone's going to make mistakes how do they handle it are you playing for money how's the pressure millions of people can write a newsletter you know many people can trade with the weight of fidelity deciding to let rip on a billion dollars worth of stock you own you know i was i love guns and i'm shooting at a range and this guy's like wow he goes you're a pretty good shot i go oh thank you he goes how good do you think you'd be if it was shooting back at you you know everybody's cool when they're writing a newsletter and they have no uh money on the line or when you're in a super cycle too right you know i mean listen there's an awful lot to be said for holding your winners in a super cycle yep look at the greatest winning stocks in history you know many people sold sold those stacks up 10 and 15 right most people now uh so going off of that with going back to the gulf where you're going to set you you're going to first hit a shot into the fairway to set up your next shot talk about your you can't reduce more than 30 a day rule because i i think that's really important especially for those who like to do all or none types of stuff guardrail it's a guard rail from my fear or greed i mean we have a follow-through day i may be fearful but i force myself to go 30 long if i'm if the market's just blowing up all around me i will not let myself sell more than 30 percent of the whole account in a day because it keeps me from just panicking but there this is very it's a nuance there are some rules can be amended on special occasions not like the little kid who says hey i want to sleep over you know uh this weekend and then the next weekend and every weekend is not a special occasion a special occasion occurs on your birthday you can blow it out on your birthday and you can diverge from that perfect health routine there are rare nuances where if you have three or four stocks climax running a day you might get you might end up getting way out of a lot of stock you know maybe more than 30 but how often do you have three stocks or five stocks climax in a day in your life that might happen five six times in your life max if you have a brilliant career so amending your rules of i like to buy stocks that are in my ride the wave plan when the market's closed you know i make the plan when the market's closed and i act judiciously when it's open but when i see an explosion in volume like a tectonic shift a tidal wave of money rolling into a stock on some revolution in you know clinical trials or earnings or a unknown variable that is now known i have to break that rule and i have to go get that stock but you have to know that through experience um i don't i buying extended is a classic rookie mistake bill said rookie mistake to me over and over again but sometimes you have to buy it 20 up and pay the top tick and then it may digest for three or four days and go into new high ground and you gotta double your position that's a rule i mean it's you have to know when it's a special occasion but you can't trade options every day you can't make 50 trades every day you can't you have to be composed 95 of the time and not break rules perfect so learning from others who have done it before is a huge way to get through the learning curve i think this segment is an excellent example of that coming up next jim and i are going to talk about a few ideas and some stocks that you might really like for 2021 stay tuned tired of reading about other people getting rich in the stock market today is your day vantage point's artificial intelligence has predicted countless market reversals helping traders weather any storm up to three days in advance visit www.freestockcoaching.com and find out how their ai automatically recognizes global market patterns well ahead of the news to help you pick the best trade go to www.freestockcoaching.com to join a free live training session today don't delay save your seat now we are back with jim ropel on investing with ibd sponsored by vantagepoint okay jim let's get into a few ideas here and and so now the first stock that we're going to talk about is uh you know we were talking about 99 before might as well talk about this one because it's starting to act better again qualcomm uh what do you like about this stock okay all these stocks i just want to say these are for a whole year and right now this market is really really heated up and i don't see a lot of really uber high quality names ready to be bought now so i would really like everyone to wait for some type of digestion in the general market where things are frothy right now and these names are not ready to be bought today but you said 99 so let's do this let's go to a a yearly or the longest chart you have what do you have monthly yeah do you want me to go back to 99 i can't go back to 99. no no no no right there that's totally cool okay okay here's your i'll go to monthly yeah okay okay look at that at 100 at 100 this stock has been fermenting for 21 years it's incredible okay i was in that some of that doesn't really skip all that this has just emerged out of a monster base and all of these true market leaders are rooted in fundamentals maybe just maybe this stock and xilinx are telling us that 5g is really going to get traction this year now any stock that comes out of a 21 year base is just completely got my attention now this is a large cap stock and it's not going to be this is a stock we can make money in but it's not a 99 rs with it if it's just too big it's not gonna it's tesla's so unique and rare this is not that this is a good stock that we can make money with but it has all the numbers i love um you know estimates for 2021 are for 62 earnings growth the margins are opening up to uh pre-tax margin has gone you know just popped up to 24 uh relative strength for a big caps 87 the last quarter's earnings were up they beat by 24 revenue growth 73 earnings growth 86 it's just technically very nice you know you look at the daily i'm sorry the weekly i'm sorry and you've got most of the big bars are blue i i just think this is a great stock for more conservative people uh i think paypal yeah let's let's go to well before we go to paypal uh with qualcomm now there there's one thing here where over the last few months it has been really respecting this 10-week line or the 50-day moving average on the the daily chart so it's finding classic support there yeah there was a pretty valuable lesson you learned from bill years ago about the the 50-day moving average right i'm sure you remember it why don't you share that with us well first of all it's another guard rail anything that is trading below the 50-day by more than four or five percent for a meeting you know on a friday close or more than three four weeks there's an issue if you sold all your stocks when they broke the 50 you would do you could do very very well if you had good selection criteria but bill told me he's like flat out i had an absolute juggernaut of a stock and i choked on it and he wrote on the notes you know he said never sell a stock with triple digits sales and earnings until it breaks the 50. and he wrote these stocks will go way farther than anyone suspects and if you look at like a c limited if you pull that up right now it's a really good example of a stock that has been look at that stock hold the 50. yeah exactly you know you get into these true elite gems there's your guard rail buy it grab some bench you can this stock you know if you took a stock from 50 to 200 you had a three banger look at how long it took okay it's three four quarters yeah how many 300 winners do you need to change your life with if you position size right here's perfect example buy it on the breakout and just do not sell it until it cracks the 50. and you know on a friday close or by a meaningful amount there's a 300 winner all you had to do was hold above the 50. and position size it's not gonna help you to have two percent in this thing or to trim it off because it's you know got listen when it got a little extended in the gym yeah right in there i would be hedging but i wouldn't sell my stock yeah perfect no i mean this is an excellent example especially since i think i did sell it around here i had it for this run but i did i reduced it way too quick but i still kept a smaller position and instead of adding back to this that's where i i said ah you know what what am i doing let me just get out i'll probably break i predicted at that point look once you get in and you have cushion if you sell it say it was extended around the 120 area 130 getting back at the 50-day moving average is a messy affair 50 moving averages are no lock not even close they touch it undercut it bang into it go back below they they fumble around and fuss around yeah it could take weeks oh and the the five to seven percent moves in there the odds of getting stopped out are extremely high when you get in at 70 and you have 100 points of cushion or 50 points of cushion grab the bench yeah you can't the understanding liquidity and cushion are two of the more evolved points in the pyramid of the growth of a trader yeah now this is so easy to say i'm running my mouth my son i bought it for him because it has this game called free fire it's a video game and i want to get my boy involved okay and so i don't ever look at his account it's so small like i gotta run these funds i don't i don't wanna so anyway he's just been sitting on it i would have paid you know i would have gotten nervous with this thing a bunch too i'm not immune to that it's easy small account right right no and a lot of times that's why i say these rules which others you know went up is but i'm really saying it to myself you know it's like i'm reminding myself you know don't sell these things before they break the 50 and all this kind of stuff um because yeah i mean you're human and you're going to fall all it takes is one that one week day right you're talking about eating right uh working out all these kind of things making making sure your mental frame of mind is in a healthy state just takes one day takes really one moment in that day meditate say screw it and get out of it right yeah you gotta i mean i'm not perfect i don't meditate every single day but a lot of times when i'm really cooked will die you know i'll just say i'm gonna not look for 15 minutes i'm going to meditate but uh i like that a lot there's a lot that goes into this yeah yeah let's go to another large cap stock this is paypal just started to emerge into uh new highs uh what do you like about these guys i like that it is super liquid like qualcomm but again you have super durable stable earnings 99 composite rating 28 earnings growth this year 20 next year in the lead for the public and the digital revolution like square super consistent uh fat margins pre-tax after tax now the relative strength is 88 okay again this is a lot this is a three 270 billion dollar market cap company um but don't ever say stock can't go higher because it totally can paypal could become one of the biggest financial companies in the world no reason it can't it's innovative digital revolution stable earnings and it's this stock shouldn't whip you all over the place it has it's going to have some bad days of course but the fundamentals all the technical variables check out 41 earnings growth 25 sales growth 23 after tax margins in a stock that trades 10 million shares a day at 225. the magic elixir is sky-high earnings growth in liquidity you have those two variables think about janus 30 fund they have billions and billions of dollars in there they only buy 30 stocks they can't buy some tiny little junk stock yeah so you have two companies one trades five billion dollars with a daily dollar volume and one trades a couple hundred a hundred million which one's going to have the higher p e of course the larger market cap because the institutions can't get in that little one right the pe on something like a paypal is going to be double or triple that small cap stock that they can't attract the institutional money until you understand liquidity you're just at a massive loss in this game without the institutions there you just you don't have the the fuel behind these things and also you know you talked about mistakes a painful one i got stuck in a some chinese stock 15 years ago i had like you know five days worth of daily dollar volume in the thing i couldn't get out you want to burn your fingers off you touch that stove and you try to pull your hand off and then like an elephant stands on your hand and you're just frying your hand you don't ever forget that me telling you guys all this you know it's you just you don't learn it until you get crushed and into if you're running a couple hundred thousand dollars or a couple million dollars liquidity you don't understand liquidity because you're not trapped in anything so you but when you are trapped and you're an institutional investor you'll never buy another piece of junk again when i mean a piece of junk a small cap stock with you know a very low average daily dollar volume those are non-starters for professional investors they're just not going to happen those are guys who are flip-flopping around 2 000 shares but the big money's never going there yeah so anyway i beat that up no that that makes a lot of sense uh and and with that we're gonna just keep getting smaller and smaller on the market caps exactly what i said not to do let's let's go to a mid cap we're gonna go with etsy all right this is really where i think the thunder money is made because from mid cap stocks evolving into large cap stocks exactly it's just this meaty middle part of the evolution it's it's somewhat proven this has a 23 billion dollar market cap it trades 3.7 million shares a day at uh two two i'm sorry 182 i own this thing uh only 180 earnings growth this year last quarters earnings 483 no relative strength 97 composite rating 99 and the after tax margins are really opening up they were 8.7 they're now 23.8 the i might be getting this wrong here i gotta delete that the pre-tax margin is at 9.9 it's it's evolving and it is a a thinner margin company but it's moving along pretty well yeah it's just when a stock has a little bit of this is a perfect size for me because i can get in there i can get i can put you know a lot of money into it by most people's standards and i can get out of it in a pinch if i have to and the upside's enormous what if these guys turn into ebay right i mean look here what's the eba why just to give you an idea it's only 37 billion whatever it'll be fine if it went from 23 to 37 would be a nice win for me i thought ebates would have been higher though well one one thing that that i also like about etsy and i do have some shares of etsy too uh is there is some good institutional ownership here i mean they're from we have five out of the 20 ibd mutual fund index stocks which are hand-picked by the ibds market team as growth funds uh really great growth fund managers and so five of them are in there including contour fund philadelphia counter fund is in there will dan off who's a legend right so uh for picking great great girl companies so whenever i see fidelity contra fund in there that's that's another nice notch uh for on its but on the belt about seeing that is fidelity those analysts who cover the retail sector they go to each of the fund manager's offices and the fund manager says hey what's your favorite stock he goes etsy so when you see it show up in contra you're going to see it show up and balanced and you know uh otc growing yeah so the the gem is finding one of those fidelity funds that took a small position because you know the analyst that talked him into it is going to go down the hall and talk to the guy who runs the other fund and they're all going to have it yeah you know so what is going to happen to a stock that's a mid cap or a lower mid cap stock where fidelity decides to put it in for their funds there's no question that thing's going higher it's a it's no you can't stop it it's not enough stock right no i mean that's a really good point yeah um and one that you know i don't always think about but yeah you always kind of slowly see them start going into the other fidelity funds let's let's go to another stock here and this is digital turbine it's been a rocket ship ticker symbol apps and what do you like about these guys it's digital the digital evolution coupled with the from a desktop to a laptop to a handheld these guys the fundamentals here are just it's so with the times uh and by let's it's not my opinion okay look at the earnings estimates for next year 205 growth the following year 33 estimates and another case of return on equity going from non-existent n a to 30.8 percent that's pretty significant they just started to have a pre-tax margin sales growth only a hundred and sixteen percent on essays 200 earnings growth with a 36.4 earnings beat last quarter and what do you know after tax margins have been ramping they were mid single digits not that far long ago now that's 20 percent relative strength what's that number 99 baby yep um it's it's cutting edge future technology now look i'm talking out of both sides of my mouth this market cap is 4.3 billion dollars this is it's beyond it's beneath my i can't really get involved with this but for the guys out there that want the candy and it's extended here okay i would not buy it here but we're going to have a pullback in the general market for sure guaranteed this thing pulls back it gets brutalized maybe it form maybe it holds up great and it does a flat base or will you get a bad trend up and handle yeah next year you know don't be shocked if the market caps 10 billion in december of next year if they locked throw up some more monster quarters their location austin texas bill used to talk about look at where the groupings of innovation is occurring they are domiciled in austin i mean that's a very tertiary thing compared to a lot of the other things we're discussing but it's important um you know i don't own it but i i think it's great it's very small but it this is the kind of thing you might win a stock contest with right that's right and what i did notice here that lord abbott developing growth is in it and and we're big fans of idaho vital balanced is in it oh perfect um okay let's go to one more stock here and this is one that has done really well uh and uh grove generation tickler symbol grwg and this is a micro cap so i'm i don't know if you're in it or not but this is definitely a small stock but you want to talk about trying to being in the right place at the right time at a beginning of a trend all right let's let's not kid ourselves here weed is overtaking the world all right let's gonna make the world mellow um you know estimates 176 growth this year followed up by 144 next year you know even these there was a big merger today with tilray and the other one canopy showing signs of life after just a you know a boom and bust period this thing is a fleet it's a spec i i don't even know if i can buy with my own money it's so small it has great accumulation as like eight weeks in a row up after that last earnings report it's digested it's popping out again there's no telling what this thing could do i mean i i see no end you know i said uh fed powell's you know knocking back a handle of jack he's probably knocking back some weed too the world is total it's become socially acceptable it's no longer stigma it's being legalized across the nation i mean it's accepted you know we have a we have a a psychedelic we have a mushroom stack that came public cmps it might be i bought something that's right i actually bought some of that that's a psychedelic yeah i thought that was really really interesting the world has changed its values to what's acceptable is not the stigma and there is real value proven with psychedelics for ptsd and all kinds of things you know the guys who were all running the club when i joined it when i was 30 or now they're all gone i'm getting to be the old guy so you know that's the world we're in grow group could be huge yeah look at this cmps i mean everything i'm saying guys own it you have got to stop your own losses don't blame anything on me be a big boy that's true that that that's so true this is all for informational and educational purposes only but we're getting a tremendous education from mr ropel here so way beyond that if you don't have self-responsibility you will never make it in the market ever if you are blaming other people for your outcome where you are in life the market's just not for you just give it up give your money to a pro this is the alt this is the ultimate accountability right the markets because everything else is especially like any a lot of other jobs there's some you know there's science there's more black and white in the market anything can happen and you have it's up to you to to manage your emotions and have those rules and accept your uh mistakes and learn from them and be responsible at all times that it's your fault and that way you have control so you can fix those faults the market is going to expose your personal weakness immediately within minutes of your first trade it's going to put the pressure on you you're going to determine are you greedy are you fearful just everything that ever happened to you in your whole life is going to come to fruition right before you the second you put your trade on yeah and i hate calling them trades i am not a trader i make decisions i think people who call them themselves traders are like i'm putting a coin in a slot machine i think they equate it like they're it's the action i'm so past that that the evolution of a trader is i make decisions and then i execute them i'm not in it for three seconds or three minutes or ten percent i'm in it for 80 200 that i'm trying to change my life and the lives of my partners i know more would buy a thousand shares of stock and take three points out of it then i'd rather i'd rather give the money away it doesn't make any sense to me well i mean i definitely for you're definitely one of those guests that that we have on is that leans much more towards the investor side versus the the trader side because you are going for those bigger kind of game you're trying to capture the primary trends right and and uh so and in the end like you said if you do it four or five times with a properly sized position it's it's life-changing so let's contrast that i've been doing this for over 30 years i've seen multiple cycles of day traders guess how many are still around i know one and he's broke and he's miserable a hundred percent failure rate wow 100 now i know a lot i know several people who become seriously rich like uber rich yeah by sitting what more do you need there is empirical evidence proof i mean it's not a it's not a random study this is a fact sitting in monsters and being patient is a life changer look at the richest people in the world bill gates sat with microsoft elon musk sat with tesla the gates the goulds the st people on the steel companies the gilded age they loaded up and concentrated and they sat their butt down in an innovative technology the railroads the robber barons they all made money by sitting yeah you know guys started monster.com he sold it for 5 million dollars yeah i want to get rich this is not tricky you got to let time work for you right i learned i bought multiple stocks and they went up fifteen hundred dollars and i'm like my god i could fix my car with that and i took the money and it went up it was when it went up ten thousand dollars in value and then i had another one i sold up ten thousand it went up thirty thousand and then i took some at a hundred thousand and went up half a million i mean you you at a certain point you go i'm i'm i'm comfortable now yeah i'm in this to win it yeah i'm in it for the big game i like it speaking of big gains and uh you know trying to get away from the markets a little bit we're gonna go off topic here a little bit to end the episode let us know some what are some of your favorite rock bands what what do you like to listen to when the markets are not there you know i we talked about this before and i was making these parallels what are the two things i would sleep out overnight for tomorrow's edition of ibd there we go when i was a kid i slept out for concerts all the time i always wanted to sit in the first couple rows music to me is about passion like the market it's a passion i mean it's it's dude i have spot i'm stunned spotify is not earning tons of money and much higher than it is right now um i love music i hit a you know an ipod i had 20 000 songs and i had a detachable hard drive i had so many songs in it but music has so many similarities to the market being passionate how hard you you know what you learn from songs the pain that those artists went through and they vent it through their music the meaning in some of the songs i listen to are so powerful and then the experience of a live show sitting in the first row or the first five rows with thundering motorhead pounding where your organs are shaking inside and you've got a legend on stage lemmy i mean i love motorhead i love you know live shows with people you love yeah experience um so i love hard rock that just drives me a little bit yeah you know god smack one of my god smack no favorite bands they just they're so venting of the anger and uh the tunes are amazing uh you know now listen i hanging out with younger people is so critical i was on a road trip with my for my buddies 30th birthday we went to utah rented a house went to state parks and hiked and rock climbed i did it with 11 30 year olds i watched what they did with their money what they talked about what they bought what they thought was interesting so i got hooked up with this band this guy's named justin childers and he's an amazing storyteller and his songs are so diametrically opposed to heavy metal or hard rock you've got to listen to justin childers super passionate and it it reminds me of i just looked at my spotify i've just added a lot of johnny cash one of the greatest storytellers absolutely the stories you hear in music in the the thoughts they convey but the really emotional meaning in songs comes out of like everclear in the offspring they talk about the neighborhoods that the poverty they grew up in drug addiction and all kinds of things they sing about it and the songs they rock so hard because they're venting this pain and emotion it blows me away and then you know you got the all-time great rock bands for parties like ac dc rolling stone yup van halen yeah one of the greatest ever bands you know all these phenomenal bands but going to live shows go see roger waters perform the wall yeah and sit in the first few rows it's just like well i actually had tickets to it before colby did we had we had so i still have tickets to write your waters whenever he comes back think about how pent up the desire to go to live shows is you're right you're right i mean people are going to spend bundles of money on the experiences and getting out yeah so what are your favorite bands well well roger waters is definitely up there i've seen him a few times pearl jams my number one i've gone uh i've seen them many many times here in the us but one one thing one one thing that happened was i remember they because in boston they love playing boston that's the second favorite city behind seattle because they're from seattle um but they said we love these cities we love boston but nothing compares to south america so i went to south america brazil uh and we we went a few shows like i have a friend in brazil who's in is brazilian and i got him into pearl jam and so a few years ago flew all the way all around brazil following following turtle gym and they're right it's nothing nothing is compared to 60 000 people knowing every single word of every single song it was nothing like i've ever experienced so that's an experience with your best friend and then making the effort going traveling to make it happen yeah what are you willing to do to make that happen right i love it i mean you're a rock star for doing that no it it is it is pretty cool and getting away i think the biggest thing getting away from from you know your normal life right uh and and uh just escaping and stuff like that and music in itself you don't have to go i mean that's even another experience but just even just getting away and listening to something to remove yourself from kind of the normal day-to-day thing of day-to-day pressures of deciding and riding the stock market totally so there are a few ideas both stocks and music that are worth considering worth adding to your watch list we're down in your playlist jim thanks so much for joining us today as always it was amazing and i'm sure everyone's gonna love it and listen to this over and over again mr big in america at least as long as we don't turn socialist anyone can do anything you're the architect of your life bill taught me to do this you can learn to do this you can change your life you everyone listening if you're not into in a private jet yet you can go there in america anyone can do anything merry christmas i hope you all have a blowout year as good as this one next year i want 2021 to be as good or better for everyone monetarily yes perfect so next week we will have kenny paul carrie returning back to the show and continuing his story kenny is the founder of case capital advisors so that's it for this week on investing with ibd i'm arusha pierce and thanks for listening and for this week's nilton charts make sure to go to investors.com podcast where you'll find details for each episode in the podcast episode section and make sure to subscribe rate and review our podcast if you haven't already we'd really appreciate it you can also send us your questions and comments to investing podcast at investors.com we would love to hear from you and may use your comments on an upcoming episode hey everyone thanks so much for watching investors business daily on youtube if you want to watch more videos make sure you hit that subscribe button so you don't miss a thing

Channel: Investor's Business Daily

Views: 23,363

Rating: 4.9461536 out of 5

Keywords: investor's business daily, PayPal, Etsy, Qualcomm, invsting trends, investing podcast, stock trends 2021

Id: 7dKw1D_RKFk

Length: 72min 3sec (4323 seconds)

Published: Thu Dec 17 2020