Jeff Kikel: Hello, Cents of things. It’s Jeff and Ron here once again with another weekly

update of what’s going on in the world. Ron, how you doing,

Ron Lang: buddy? Good morning. Good morning. Yes. Never never a dull moment in the markets

and the economy and geopolitics and domestic politics and just keep away from social media

and you’ll be healthy.

Jeff Kikel: Yeah, that’s I I put myself on a December social media diet. Where I didn’t

really look at social media for a month and amazingly, I am no, no worse off for

Ron Lang: wear. Oh, God. The only thing only going to get worse As we get into the spring

and summer, it’s only going to get worse. Oh, I know linkedin. They got to control that

I don’t [00:01:00] want to see that crap on linkedin, but we’ll see

Jeff Kikel: what happens.

Jeff Kikel: Yeah I mean it I think linkedin’s picking up a little bit more as a social media

platform But it’s still probably 10 years behind everybody else at this point

Ron Lang: We’ll have to see. All right What do we want

Jeff Kikel: to lead off with today?

Ron Lang: All right so everybody knows we just had a Fed meeting this past Wednesday

and the 31st.

Ron Lang: And one of my favorite things, Jeff, is just a rail against economists. Because

look, we know the market is manipulated. We know there’s big money. Behind the curtain,

pushing things around. And, last year in a comical way, starting in April, May, when

we started the podcast, Oh, there’s going to be one or two Ray cuts in the second in

the second half of the year, probably Q4.

Ron Lang: Anticipating, probably something bad was going to happen. And we thought saw

things starting in, August, September, and October, and then we saw that,[00:02:00] literally

historical run from the end of October till January. And what happened? Did we get a rate

cut in November, December? Oh, here’s.

Ron Lang: And then here, if we look at December 29th. They were look, they were predicting

up to six rate cuts in 2024 with the first rate cut in December, a 73. 4 percent chance

rate cut in December, right after the Fed announced. We’re not going to do anything

in January and most probably they don’t foresee anything happening in March It now went down

a month later to 36.

Ron Lang: 4 Changed other than fed speak. Here’s my other favorite thing. Sorry for

the rant But here we go. What has the fed and the fed governor has been saying for the

last 12 to 18 months? Higher for longer, [00:03:00] right? As long as unemployment stays, strong

and the consumer is resilient. Why would they lower rates?

Ron Lang: There’s no reason for them to lower rates higher for longer. That’s been the mantra,

but then you get the talking heads, the pundits, all the business media has to talk about something,

lowering rates. When are they going to lower rates talking about in October, November pivoting

and all that other BS.

Ron Lang: Here we are two days later after they announced probably no rate cuts in March.

Now, mind you, a month ago was 73. 4 percent. Right after the Fed announcement, it was 36.

4 to lower it. So as of this morning, I had to do this, right? 19. 5 percent. Of a possible

rate cut in March, what changed in the economy?

Ron Lang: What changed in the markets? Zero, nothing changed market manipulation folks.

Sorry, it happens. It’s out [00:04:00] there. The speculators, the big fund managers, the

venture capitalists, the hedge funds, the private equity, right? They’re all look, you’re

just the sailboat and they’re the wind and the sail and they’re pushing you around.

Ron Lang: And this is where we are. So wipe out all the noise, right? Put earplugs in,

but you don’t need to worry about this. Nothing to see here. Nothing to see here. They’re

trying to create fireworks for you to look at nothing to see here. So what are you, what

are your thoughts? I’ll just shut up. No,

Jeff Kikel: I feel the same way.

Jeff Kikel: It’s just I, the more I’ve, I guess I stepped back a little bit from, I

typically don’t watch much of the pundits on TV. I listen in the car just to keep my

self abreast of what’s going on. My routine every day is. I go to briefing. com and I

look at what the earnings reports are, what the economic reports are going to be on the

calendar.[00:05:00]

Jeff Kikel: I go to investors business daily and I check out the, what’s going on in the

market and their take on things. And I just honestly stopped watching the, CNBCs of the

world Fox business. I watch one show on Fox business, which is Charles’s show, Charles

Payne’s show in the afternoon.

Jeff Kikel: Probably the most rational person I’ve seen in the markets. And even he will

tell you that things are manipulated. And so we just don’t, I just don’t want to even

play anymore. I got to that point where I just I don’t. Want to

Ron Lang: play, you can’t have an investing thesis and investing mantra if all you’re

going to do is try and consume economic data and all this other information, because it’s

a loser’s game,

Jeff Kikel: it’s fool’s gold.

Jeff Kikel: And once again, with these guys with the earnings, or the interest rate cuts,

okay, so we could have, a potential chance of one in March, why would they lower [00:06:00]

there? There’s no reason. There’s absolutely no reason that they would lower it. And it

was funny today.

Jeff Kikel: I heard, that, like I said, I was walking past the thing and, oh the earnings

are the economics, the, Look good because we’ve got a good jobs report. Okay, it’s one

jobs report and two Why would you think okay, so it’s great. Why would you think that we’re

going to lower interest rates?

Jeff Kikel: Because of that. Just to let you

Ron Lang: know the fed futures is showing better than a 50 percent chance Of still six

more six rate cuts this year between now and the end of the year throwing out march Yep,

throwing out march and still showing more than a at least a 50 percent chance Of a rate

cut for six more times this year.

Ron Lang: Yeah, I’m looking at one to two, but in the second half of the year When something

breaks, yeah, but we’ll see what happens there. Yeah, and

Jeff Kikel: once again, we’ve still got you know we’ve got a whole year of politics ahead.

I just saw something this [00:07:00] morning It’s nine months away from the the election.

Jeff Kikel: I’m like, oh god What can happen in nine months?

Ron Lang: I don’t know, but you better put on your your suit of armor. Yeah,

Jeff Kikel: absolutely. It’s just. I’ve just I pretty much hate politics, but oh my god

It’s just gonna be a crap show coming up for the rest of this year

Ron Lang: So it’s a and you know what?

Ron Lang: It’s a blood sport. It’s an absolute blood sport I find it to be very interesting

to take a quick right turn and then come back I don’t know if we talked about this or I

went on a rant once before but I find it very interesting all the media outlets tv stations,

whatever, you know in order for them to Take on commercials, right?

Ron Lang: Commercial they have to vet out the company. They have to make sure that the

product and services that they’re offering that what they’re trying to state is true.

It’s not embellished. It’s not elaborated, whatever they have to vet those out except

for political ads, [00:08:00] say anything they want.

Ron Lang: They can say anything they want. They’ll take the money and put it on the air.

Yep. And people are sheep. They’re going to, they’re going to listen to it and follow it.

And it’s crazy on both sides. That’s why I don’t, it’s going to be a tough election season.

It’s

Jeff Kikel: an interesting thing that I ran a couple of my friends social media campaigns

that were running for like local office and the hurdles we had to go through with social

media to get approved.

Jeff Kikel: To be on there for political ads and stuff like that. It’s like massively huge.

And then once you’re, it’s you’re a made man. Once you’re in, they don’t monkey with it

at all. We had no problems at all. Not like we were, yeah,

Ron Lang: they probably have some censorship on it on extreme things.

Ron Lang: I’m sure the most part, you could say that person was responsible for the Kennedy

assassination and the let it go. Yeah,

Jeff Kikel: absolutely. Like I said, it, there is nothing when it comes to that, but then,

other times it’s. Yeah, [00:09:00] this person said such an OK, we’re banning him from Facebook

for life.

Jeff Kikel: OK, why? Why do we not have, or are we allowed to have discourse at this point?

And it’s just you’ve got people that are making decisions that I just don’t understand the

decisions that they make sometimes when it comes to who they censor and who they don’t

Ron Lang: know. I hear you. Okay. Now we are moving on to trade school.

Ron Lang: Try and understand trailing stops. And this is something we’ve been applying

for many years. And while the market is at a top and while we see that the ground is

a little shaky, that the market is standing on and structurally on how do you maximize

your profits? So we’re going to keep it simple initially.

Ron Lang: Talk about what a 10 percent trail stop is. So if the current price of your stock

is 20, you put in a 10 percent trail stop. That means [00:10:00] if the stock goes below

18, you’re out, right? So you own a thousand shares of ABCD stock at 20, it goes to 18.

You’re out. You’re down two bucks, but let’s say the stock moves up to 25.

Ron Lang: Your trail stop moves up again, 10 percent to now 2250. So you’re now up 5,

but you wanted to maximize your profits and you didn’t want to lose more than 10 percent

at its current level. So if the stock drops to 2250, you’re out and you make 2 and 50

cents. Per share on that particular trade Now the stock moves up to 30 your trail stop

now moves up to 27 if the market pulls back or whipsaws and let’s say it whipsaws down

to 28.

Ron Lang: You’re not out [00:11:00] The stock moves back up again. You’re still in the black.

You still have you still have margin in there, but now the stock whipsaws down to 27, you’re

out of 27, you’ve made 7 per share. So this is basically. A beginner, intermediate understanding

of how a trail stop could work for you. Do you put this on every position?

Ron Lang: You wouldn’t put it on fixed income positions necessarily, but you certainly may

put it on some of your high flyers. Obviously, if it’s a taxable account, an investment brokerage

account that you’re in, if you’re out and you have a profit, you’re going to have a

tax consequence. So you need to think about how much you want to do it.

Ron Lang: So if you have a thousand share position, maybe you just want to say, I’m

out on 500 shares at 10%. You still want to hold your position because you don’t want

a large tax consequence. So now let’s get to the next step and let’s get into a little

bit [00:12:00] more advanced. So what you can actually do here is that let’s say you

have a thousand share position.

Ron Lang: You want to basically, you’re not gonna get a top tick on this, but you want

some out at 5%, you want some out at 10% and you want some out at 15%. This is something

to consider. So let’s say again, you bought it at 20, it went all the way up to 30, and

you’re like, wow, I think we may be at the tip of the iceberg here.

Ron Lang: How do you protect your profits, right? 5 percent trail stop on two 50, 10

percent at two 50. And then you’re out if it goes down to 15 percent on the final 500

and you’ve maximized your profits as much as you can on this position. So the purpose

of the strategy is you’ll have no more than a 15 percent stop, but you’ve maximized it

on the way down.

Ron Lang: And let’s say you’re out at five. Percent, right? You’re out at 2850, but now

the [00:13:00] market goes back up again to 35. You’re still in on your other 750 shares

and go from there. And my last point is the old adage is bulls and bears in the market

make money, pigs get slaughtered. Yep. So if you think, Oh, I’m going to top tick this

thing all the way up, Hey, you shouldn’t be the one in charge of your account and you

shouldn’t be the one in charge of your strategy.

Ron Lang: Do you do something similar? Yeah, I

Jeff Kikel: typically only do it on our individual securities. Because those can be, the ETFs,

typically they’re not going to have big moves in any given day. And it’s easy for us to

manage those positions, but on the high flyer individual securities that we have we’ll put

trailing stops on it just for the simple fact, I can’t sit here and watch everything every

minute of the day.

Jeff Kikel: It’s just too much work and it’s just impossible to do from a, an individual

Account manager’s perspective. This [00:14:00] is a great way to just simplify the process.

We also do that and forget it. Yeah, it’s set and forget. We also do this on some of

what I call the income machine, which is our.

Jeff Kikel: Some of the securities that we have that are real high dividend payers, which

typically they don’t move much. The only time they really move is if there’s some kind of

an update to the dividend where they’re going to reduce the dividend. And I do having trailings

on those because, something could happen and it moves and I want to be make sure we’re

out of it.

Jeff Kikel: Then we can reevaluate that position and see do we want to go back in At the current,

new dividend rate.

Ron Lang: I was asked this by a client. You cannot do this to mutual funds No, maybe there’s

a custodian out there that does it but I know the couple of custodians that we use Can’t

why is that the case?

Ron Lang: Because mutual funds settles at the end of the day. Yep. So If you get a 15

percent pullback and you have [00:15:00] a 10 percent trail stop, you’re not going to

get taken out of 10 percent on a mutual fund. So you can’t use trailing stops on a mutual

fund. You can do it on an equity stock, an ETF, and you can do it on a preferred stock.

Ron Lang: And

Jeff Kikel: basically, it’s an order that’s put in through the broker onto the systems

that sit out there. Now I will say there is one little caveat that I placed to this. I

do not do these at like specific price, like 27, I will do it as an exact 10 percent on

the drop side. The reason for that is, is there tends to be like these little price

ranges.

Jeff Kikel: That are there that once again, market manipulation can push it down to that

point and then sell you out. And then the thing can pop right back up. And I’ve seen

that happen, and it just annoys the living tar out of me when they see small order sitting

out there and, there’s like a whole bunch of small orders out there [00:16:00] at a

specific kind of price.

Jeff Kikel: And somebody will manipulate the market down enough to pop it, and sell off

those things. And then the stock goes back up. So I tend to do them at really oddball

prices and stuff like that. So that I’m not in with the rest of the crowd. On the quote

system.

Ron Lang: And again, this isn’t for everybody.

Ron Lang: If you’re a long term investor and you got 20 or 25 year horizon line and high

quality stuff, this isn’t really for you. If this is in a position that you’re like,

Hey, look, going to need the cash. Want to go more conservative. I want to be able to

maximize profits on the upside. This is a perfect way to put it on a select position.

Jeff Kikel: Yeah, totally agree. And it’s. Once again, it’s stuff that I, I don’t want

to have to manage all those positions that way either. So we do it on things that, our

especially if a client brings in, I’ve got a lot of clients that have Apple stock, cause

they’ve gotten it through work and we use this heavily with those [

at that point. So you want to, that’s an instance where I would do that kind of, couple, multiple

trailing stop orders down so that we’re selling pieces off as we

Ron Lang: go.

Ron Lang: And the other way to look at it is this way. Let’s say you got 10 positions

in your account or portfolio. And one position is just outsized, right? It’s now like 30,

35 percent of your overall portfolio. You want to reallocate, but you’re like, wait

a minute. It’s still in trend here. So put a 5 or 10 percent trail stop on 20, 30 percent

of it.

Ron Lang: Cause you want to reallocate that money to something else, but you don’t want

to get out now. You want to ride that trend as long as you can. Trail stop is perfect

if you’re looking to do a portfolio allocation, but you don’t want to get out of a strong

runner.

Jeff Kikel: And I guess [00:18:00] that, the best part of it is it’s hard to make that

decision.

positions.

Jeff Kikel: Just to make sure that, they don’t get pounded down too far because, in some

will say it’s real easy to sit there and go, you know what, I’m up 90 percent in the stock

or in this option or something like that. It’s just so easy to go I’m just going to

keep letting it run and letting it run.

Jeff Kikel: And I’ve seen a position move, especially if you’re doing anything in the

options world, it’s not unheard of to see a position move 20 or 30 percent in a day.

So you’ve got to have some pretty wild, wide things, but it’s you also miss out on, having

a great opportunity to make really good money in your accounts.

Jeff Kikel: If you’re not, yeah, if you’re not making sure you’re disciplined about when

you’re getting out of some of these investments,

Ron Lang: just for something for people to consider, talk to an advisor, but I will give

you a heads up. I believe most of the custodians now do offer trailing stops. Some do not.

I know 5, 6 years ago, there were people that said.

Ron Lang: [00:19:00] Ron, why can you do it on your account? And I couldn’t do it in my

personal account just because the custodian might not have offered it for a lot of retail

investors, like the Schwab’s of the world and whatever they had you trace, they had

to offer it to the retail investor. Cause they they smartened up.

Ron Lang: They realize that it’s a legitimate. Strategy that they needed to employ every

now

Jeff Kikel: and then and I think technology had to catch up too because this is it’s an

order that although it’s published to the market It actually is maintained like a lot

of other ones are you know, it’s those, you know Let’s say a limit order or you know stop

order or something like that.

Jeff Kikel: Those are transmitted directly to the market And you’re out there on that,

on the market, the trailing stops or something that’s maintained on the brokers, books, and

so their platforms, so they had to catch up with technology

Ron Lang: and get it. I know trailing stops have been around at least.