2023 In Review | Podcast Episode #384

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Hey, I’m Ryan Mallory and this is my Swing Trading the Stock Market podcast. I’m here to teach you how to trade in a complex, ever changing world of finance.

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Learn what it means to trade profitably and consistently, managing risk, avoiding the pitfalls of trading, and most importantly, to let those winners run wild.

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You can succeed at the stock market and I’m ready to show you how. Hey everybody, this is Ryan Mallory.

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with Swing Trading the Stock Market And today’s episode, we’re going to do a little bit of a 2023 and review now.

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If you recall one of the previous episodes that I did, I talked about what I learned from 2023, what I would do differently, what I want to change about how I trade in 2024.

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Now I’m really looking back on the year that was 2023 and really my take on it, expectations for the new year and so forth.

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So there’s no e-mail today. I’m not going to read anyone’s e-mail that will start back up next year.

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This will be the last podcast episode of 2023. So each year it seems to me that there’s like this overarching theme to the stock market and often

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times crazy enough, it seems to start, even if it’s completely different or opposite to the year before.

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It starts in January and it that theme persists throughout the whole year. Now that hasn’t always been the case, but of late that has been over the last, I would say five or

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six years. I think perhaps with the exception of 2018 that has been the case each time.

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So in 2018, you had the double top quarter 4 meltdown and it was essentially October and December with some crazy selling.

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And in between those two months, November of that year you had a dead cat bounce that took place. The market ultimately bottomed at the end of December.

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I think it was like the day after Christmas you had like 1000 point rally on the that was a real face Ripper.

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And then the theme that continued throughout 20/19 was the recovery from that sell off. And then of course 2020 everybody remembers what that was.

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The market got off to a pretty decent start that year. Almost seemed like it was too good to be true.

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Really an easy trading market. In January and then February this virus started spreading and people started taking note of it and

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then you had this six weeks sell off that took place when the whole economy started shutting down. That was the COVID sell off.

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It was pretty big. People were saying that that was a recession.

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In hindsight it was really a self induced recession. But when the Fed cut the rates down to zero, you had your Zerp in place, your zero interest rate

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program, and the market took back off. And throughout the rest of that year, the market just went sky high to fight odds people weren’t

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even working and the market was just going through the roof because everybody was getting STEMI checks.

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Everybody was trading those STEMI checks in the stock market. It was one of the craziest things that I had ever seen in my lifetime with the stock market.

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And I know I’m gonna get to 2023 here in a second, but I’m just trying to lay the groundwork for that 2021 you had the continuation of 2020 where the market just continued to rocket higher.

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You had to GMBS Bros that came on to the scene. You also had all the Wall Street bets folks and trading like the vegans that they were, Bitcoin and

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Dogecoin and all these other cryptos became a huge thing to the overall market. And then 2022 you had the start of tapering and you had a huge sell off that started in January of

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that year. I think the entire market was down over 20% in 2022, but then in 2023, which is where we find ourselves at right now.

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Just one trading day left. 2023 rallied like Madden.

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Stocks like NVIDIA went from the 140’s to the 500’s. Meta went over 100%.

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Apple was over 50%. Amazon was up crazy amounts.

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The entire market was essentially controlled by about 7:00 stocks. And all of this was done on this belief system that AI was going to be the next great technological

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achievement in the history of mankind. justlikethe.com was a huge catalyst to the 90s. That’s what people were making out AI to be, which I think AI is pretty cool.

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There’s a lot of things that you can use it for. There’s things that I use it.

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But let’s be honest, AI is really just like the next search engine. It’s search engine two point O.

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What do you do? You ask good questions.

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What do you do with a search engine? You ask it questions.

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It gives you answers. That’s really what AI is doing.

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AI is not really AI. It’s really a label that people are putting on everything.

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AI is only AI as if it disobeys you and are they allowing it to disobey you? No.

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If it starts to disobey everybody and does what it wants, starts going Terminator on folks, people are gonna have issues with the whole AI rollout.

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You’re gonna see that come to a halt really fast. So really, it’s a fancy algorithm.

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Is it impressive? Absolutely.

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But in the end, it’s really like a the next generation search engine. That’s why they’re putting it on all the web browsers, right, because it’s essentially an aid to to

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searching the Internet. And along with AI, you have the hopes for seven rate cuts next year.

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That means after the January meeting, every meeting thereafter in 2024 is expected to be a rate cut.

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So that’s the thing going into 2024.

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So 2023, let’s review it a little bit. January, we had a huge rally to start the year and it really was a preview of what was to come later

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on in the year and in the middle of the year, huge rally to start the year became extremely overbought in that first month of trading.

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But in February you started hearing about this looming banking crisis, particularly among the regional bank, and in March you had some of the largest bank failures ever.

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Silicon Valley Bank. Remember that one?

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And there was numerous others and things were looking really bleak there. In March.

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Everything was selling off hard and fast. But then the Fed stepped in, just as it always does and bails out the rich, bails out the banks.

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Banks bails out corporate America for their stupid decisions, leveraging and going way out there on long term bonds.

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And then when the interest rates rose, those bonds became greatly devalued. And so they couldn’t get out of them without taking on steep losses.

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So what does the Fed do? They create a program, BTFP, the bank term funding program, I think is what it stands for.

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Correct me if I’m wrong on that, but BTFP and what does BTFP do?

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It allows them to swap out their bonds and get cash.

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Now they got to pay it back in a year. But what do you think the banks are going to do?

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They’re going to go ahead and take any bond. Can I do this?

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No, but the banks can do it. They can swap out their bonds for cash and then they can start lending that money out, making

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interest on that that they wouldn’t have been able to earn with the bonds that they had on their books.

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Now what the heck is the FDIC program for if we’re going to bail out the banks anyway, right?

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So billions and billions of dollars, I think $131 billion was the last reading that I got, has been

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lended to banks have been where the banks could swap out their losing bonds for cash.

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So that happened in March and then the lows of March where the banking crisis came to a full head to

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July. Everything is fine again in the market rallies, market rallies nonstop.

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And then August through October, rates started going up and stocks started going down.

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So then you had this like essentially during that period, August through October, you had a reality check.

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And then October through December, suddenly there was no reality check.

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Traders started buying the hype that there was going to be 7 rate cuts next year.

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In 2024, AI became very prominent again.

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Everybody was buying the dip to close out the year.

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With one day to go. The market’s on a nine week winning streak on the S&P 500.

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Everything is trading at all time highs as a result of the end of year rally that took the NASDAQ up

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over 20%.

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over 20%.

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During this time, did earnings matter? No.

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Apple actually has declining earnings year over year, but yet the stock trades at all time highs.

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You have a 2024 election ahead of us where there’s likely to be a very tumultuous period for the United States as it elects its next president.

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But the market doesn’t care about anything right now, except for what is the Fed going to do next. Now let’s talk about that going into 2024.

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Why would the Fed cut 7 times next year? That means again, after January, they’re cutting every meeting on average 1/4 of a point.

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What would be the basis for that? It would have to be that we’re going into a full blown recession.

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Is recession good for stocks? Traditionally, no.

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What does a recession mean? It means companies are not making as much money.

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Consumers are spending less, consumers are cash tied. They don’t have a lot of money to spend.

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And right now, going into what would likely be a recession, if we’re going to cut 7 times, we have a consumer that has more debt than ever before.

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Inflation has hit harder than ever before. Some people will say, oh, inflation’s coming down.

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No, it’s not. We are still going up.

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The rate of inflation has come down, but we’re still increasing prices every single day. Freaking Amazon.

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I got an e-mail today. Yes, I’m an Amazon Prime member.

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Why? Mainly because of the free shipping and the quick delivery.

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But then they send you an e-mail saying we’re gonna actually start putting ads on your videos and on your commercial.

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Why? Because we want to make more money.

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They’ll tell you. But no, they’ll try to say, well, we’re really just trying to bring you better services in the new

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year. We want to just continue to improve on our offering.

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No, they’re trying to improve their greediness, their lust for money. And it’s OK to be a capitalist, but it’s somewhere along the way the consumer has to tap out.

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So what do they do? Oh, but if you want to keep your Amazon Prime streaming free, you go to this 299 additional charge

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on your plan and you don’t get any more commercials. Really.

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So Amazon needs another 3 bucks. That bad off of me?

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Company that makes billions and billions of dollars needs that kind of money. Crazy way of thinking, but most people will do it.

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I’m not gonna do it. I refuse to do it.

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In fact, one of my resolutions in 2024 is to cut down on streaming services because I think most of them are just trash anyways.

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And who And and there’s really honestly not that much on Prime that we watch anyway, so there’s no chance that I’m gonna be paying another 299 for that crap.

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So going back, I didn’t mean to go on that tirade about Amazon, but it does tie into the bigger picture here with 2024 dreams broken or dreams become a reality.

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That’s really the conundrum that we’re faced with the 2024 Do we get the seven rate cuts?

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And if we do, does that result in a a dream becoming reality?

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Or does those seven rate cuts that Wall Street is so adamant about happening result in the recession that really kills stocks?

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Cuz I really don’t know how you can have it both ways where the market continues to rally in the face of a recession.

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I mean right now that’s what we’re doing, but the rate cuts is really what it’s rallying off of. But if those rate cuts come to fruition, what does that mean?

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It means that a recession has hit the economy. I don’t know why the Fed would cut rates seven times next year that aggressively when, by the way,

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they actually have come out this past couple weeks and said markets way ahead of what we’re expecting to do next year.

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We’re wanting to be higher for longer, but the market’s doing a completely different thing. the Fed right now is projecting 3 rate cuts, markets projecting 7.

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So they’re way ahead of it. But let’s say those expectations come down some that would likely result in a pullback in the market

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too. If the same logic applies for 2023 where the only thing that matters is the Fed.

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And if you get those seven rate hikes, that’s likely gonna be a bad sign for businesses because we’re gonna be under a full blown recession.

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I think the AI theme will continue into 2024. I think that’s gonna be a big deal.

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I don’t know how a lot of these companies can sustain throughout the entire year though the kinds of valuations that they’ve been holding all throughout 2023, like Invidia holding a PE of over 100.

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Now at some points of this year it’s held at PE of over 200. I mean Apple has a PE over 30, traditionally it’s been around 17 to 18.

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So extremely high valuations. And that’s a company that’s become more of a value company, more along the lines of like a GE or a

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Walmart or a company that has kind of maxed out its growth rate and it’s just a nice steady consistent performer.

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So again, we’ve seen all throughout and most particularly with the last five years these themes that strike the market in the beginning of January and I’m, I’m really curious to see what that theme

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will be in 2024. Do we see a brand new theme come to fruition where perhaps people start to sell off in 2024, We’re

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entering 2024 historically overbought, I mean I’m talking about extremely, extremely overbought.

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We’re riding into 2024 on a nine week winning streak.

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Assuming the final day of the trading year goes off without a hitch, can the Bulls really keep it up for another year?

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Following the year that we just had huge gains? And it reminds me a lot of what we saw in 1998, where you had the SPY go from like $120.00 a share

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down to $91.00 a share. And then it ended up rallying over the course of the next year and a half from 91 all the way up to

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155 before the.com bubble finally fell apart. And I do think there’s the potential for something like that to happen where 2022 wasn’t necessarily

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the top of the market, the end of a bull run. In fact we didn’t even record a recession then we’ve yet to get that recession and I could see where

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similar to 98 where we had that 20 plus percent sell off followed by the epic run thereafter that 2022 was similar to 1998, 2023 was that run higher and then finally this market tops out.

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Now I’m not trying to sit here and be doom and gloom. If the market wants to rally hard next year and rally 12 months out of the year, fine.

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I will get long and I will buy it to the long side. I’m just really trying to provide some scenarios to think about, to ponder and to not be surprised

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if they do happen. This is not me trying to hold a crystal ball and say this is what’s gonna happen.

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This isn’t some, you know, podcast where I’m trying to scare the crap out of you. I’m just trying to give you some scenarios to think about.

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For instance, like if we get the seven rate cuts, what does that really say about the broader economy?

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Would that not signify that the Fed was forced, because of the economy, to cut rates far faster than what they had expected going into 2024?

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And if they’re being forced to cut rates that fast, it’ll likely mean that we’re in a recession. So 2023, what a year it was.

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It was a frustrating year to me from just dealing with some of the craziness that we saw, some of the unexplainable rallies that took place.

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But it was also a year where I I feel like as a trader, I grew a lot. I found some holes in my trading that I found that I could approve upon and do better for 2024.

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And that’s really the best that you can ask for. I live to trade another day.

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I live to trade another week. I live to trade another month.

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And now I can say I’ve lived to trade another year in the stock market. If you enjoyed this podcast, I would encourage you to leave me a five star review on whatever

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platform you’re listening to it on. send me your questions ryan@shareplanner.com 2024 is going to be dependent on your questions.

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I want those questions, keep sending them to me. I will make podcast episodes out of them.

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And I want to thank you for a wonderful 2023. Thank you for listening.

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I don’t know how you guys do it. Sometimes the episodes are great.

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Some of them, you know, you could tell them a little bit off. But overall, I have very much value and appreciate everything that you guys have meant to me have

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become to the show. This is your show.

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This is a show that you guys create with your question. And I just provide some answers or at least to the best of my ability.

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Thank you guys and God bless you all in 2024. Thanks for listening to my podcast Swing Trading the Stock Market.

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If you have any questions, please feel free to e-mail me at ryan@shareplanner.com.

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All the best to you and I look forward to trading with you soon.