Key Takeaways from the Investing with IBD Podcast
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Mark Minervini, a two-time US Investing Champion and author, joined the Investing with IBD podcast to dissect the Federal Reserve’s May 2025 policy decision, recession risks, and market dynamics. Here are the critical insights:
- Fed Policy & Economic Uncertainty: Jerome Powell emphasised data dependency, with “uncertainty” dominating the narrative. Minervini notes most near-term risks (e.g., tariffs) are priced in, but further downside hinges on recessionary signals.
- Secular Bull Market Context: Long-term bull markets thrive during moderate, consistent GDP growth. Volatility in real GDP pre-1980s disrupted markets, but post-Volcker policies smoothed cycles. Current conditions suggest a cyclical correction, not a secular breakdown.
- Rate Cut Scenarios: Historical composites show markets perform strongly post-rate cuts in non-recessionary slowdowns (blue line) versus recessionary cuts (red line). Minervini leans toward a 1998-style recovery: potential retest of lows before resuming uptrend.
- Sentiment & Cycle Work: Bearish sentiment (AAII surveys at extreme lows) and bullish cyclical tendencies (presidential/10-year cycles) suggest a potential explosive upside—if tariff resolutions emerge and volatility subsides.
- Stock Participation Critical: Only 30% of Nasdaq stocks are above their 200-day moving average—a sign of weak breadth. Minervini waits for improvement before committing capital: “I don’t care what the index does; I care about participation rates.”
- Volatility & Risk Management: Recent “megaphone patterns” (widening volatility post-breakout) highlight a “hard penny” environment. Minervini stresses cutting losses at 7–8% to avoid geometric damage: “Not losing big is the key to winning big.”
- Patience Pays: His 600,000% career return was achieved averaging 40–50% cash exposure. “Exposure doesn’t matter; position sizing does.”
Actionable Charts:
Final Thought: Minervini’s pivot from 15% losses to 75% gains by enforcing strict risk rules underscores a universal truth: “The market speaks daily—listen to its feedback.”