Have We Reached the Bottom of the Stock Market Pullback?

Summary

Earn Your Leisure Podcast: Episode Summary Title: Have We Reached the Bottom of the Stock Market Pullback?
Release Date: March 16, 2025
Hosts: EYL Network (Troy Millings, MG the Mortgage Guy, Tom Lee)
Description: In this episode, the Earn Your Leisure team dives deep into the current state of the stock market, offering expert analysis and investment strategies. They explore whether the market has hit its lowest point, discuss the merits of value versus growth stocks, and examine the potential impact of NASDAQ's move to 24-hour trading.

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1. EYLU Relaunch and Future Plans (00:00 - 00:50)

The episode begins with Troy Millings announcing the exciting relaunch and expansion of Earn Your Leisure University (EYLU). This revamped platform aims to provide a more comprehensive educational experience for its members.

• MG the Mortgage Guy highlights the new features:

  “[EYLU] already includes monthly financial planning calls with me, book club calls with Troy, real estate calls with MG the mortgage guy, access to the home buying blueprint volume one and volume two. Part of the revamp will include 27 local chapters from across the United States. Live interactive teaching, hands on, not just pre-recorded videos. Plus 15 brand new curriculums.”
  [00:09]

• Tom Lee encourages listeners to visit the new EYLU website:

  “Head over to eyluniversity.com that's E Y.”
  [00:40]

• Troy emphasizes the expansion:

  “The biggest just got bigger.”
  [00:40]

Key Takeaway: EYLU is significantly expanding its offerings with live interactive sessions, numerous local chapters, and a variety of new educational materials to enhance members' financial literacy and investment knowledge.

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2. Analyzing the Stock Market Bottom (00:54 - 08:53)

The core discussion revolves around whether the stock market has reached its bottom amidst recent pullbacks.

• Troy poses the central question:

  “One of those questions that we get... people want to know where the bottom is, right?... Are we near it based on what you're seeing?”
  [00:54]

• Tom Lee provides his perspective:

  “No. 5, 540. 530 could be the bottom. SPY 5400.”
  [01:25]

• MG the Mortgage Guy references Tom's bullish outlook:

  “Tom Lee predicts, he said that this is the best time to buy stocks now and shout out to... he's predicting a massive rally in a couple of months.”
  [01:32]

• Tom Lee elaborates on why it's an opportune time to invest:

  “All the money's gonna flow in... All the greats are being quiet and executing... So if we get to like we are really at a point where if the market is off 15 to 30 in some markets now is the time to buy. We will have a nice rally.”
  [01:43]

• He further advises on investment strategy:

  “Buy in February and hold through October, November. You're going to get the Best return term of the day. Asymmetric risk to reward... Now is definitely a time to buy.”
  [02:05]

• Tom stresses the importance of long-term investment:

  “If you're looking to hold for the long term, long term investment only.”
  [02:20]

Key Takeaway: Tom Lee is optimistic about the stock market's near-term prospects, suggesting that the current pullback presents a prime buying opportunity. He advises investors to act now and maintain a long-term perspective to maximize returns.

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3. Value vs. Growth Stocks: Investment Strategies (03:23 - 08:53)

The conversation shifts to evaluating whether investors should pivot from chasing high-growth stocks to favoring value stocks amidst market volatility.

• MG the Mortgage Guy questions the shift:

  “Is it time to ditch the chase for big gains and bunker down to safe value stocks only?”
  [03:23]

• Tom Lee responds by emphasizing quality over sector:

  “The real value is buying great companies at a great price... If you're a professional investor, I will focus on hyper concentration. I want to remind you, you only need four or five good stocks...”
  [03:50]

• Troy and Tom discuss depreciation thresholds for different sectors:

  “I like 25. In tech, is there, is there a...”
  [04:57]

  “25% drop in the sector or similar if it's a high quality company... And if you join stock club, we get all sectors across the board.”
  [07:31]

• Troy emphasizes the importance of historical analysis:

  “Look at from a historical perspective... how many times in this history has it dropped 25... So when you see a rare moment like that happen, then you know this is probably a prime time to start executing.”
  [07:58 - 08:18]

Key Takeaway: The hosts advocate for purchasing high-quality companies at favorable prices rather than categorically shifting to value stocks. They recommend evaluating historical performance and sector-specific downturns to identify optimal entry points for investment.

---

4. NASDAQ's Move to 24-Hour Trading: Implications for Investors (08:53 - 11:59)

The final major topic addresses NASDAQ's potential implementation of 24-hour trading and its effects on different types of investors.

• MG the Mortgage Guy introduces the topic:

  “The NASDAQ is flirting with 24-hour trading. Will this be a game changer or will this be another thing to give Wall Street more power?”
  [08:53]

• Tom Lee cautions against extended trading hours for most investors:

  “It's a mistake for most people, the prime times are going to remain as prime times to invest... Don't fall for this trap and be very careful. Your trading plan should not change.”
  [09:09 - 10:37]

• Troy expands on the retail investor perspective:

  “This speaks to the retail investor... but like the house is going to win in that scenario when there's no value.”
  [10:37 - 11:00]

• He further advises:

  “I don't recommend it. It's just like I didn't recommend same day option trading. Like yeah. Can you make money doing it? Will a lot of people lose money? Yeah.”
  [10:50 - 11:00]

Key Takeaway: While NASDAQ's move to 24-hour trading aims to cater to retail investors and innovate trading platforms, Tom Lee advises that most individual investors should remain cautious. He emphasizes sticking to traditional trading hours with higher liquidity to avoid the pitfalls associated with extended trading sessions.

---

Conclusion

Throughout the episode, Troy, MG, and Tom provide valuable insights into the current stock market landscape, emphasizing strategic investment approaches grounded in quality and historical performance. They encourage listeners to take advantage of market pullbacks by investing in robust companies and caution against being swayed by trends that may not align with long-term financial goals. Additionally, they highlight the importance of staying informed and adaptable in an ever-evolving financial environment.

Notable Quotes:

• “All the greats are being quiet and executing.” — Tom Lee [01:43]
• “The real value is buying great companies at a great price.” — Tom Lee [03:50]
• “Your trading plan should not change.” — Tom Lee [09:09]

Final Thought: Whether you're an experienced investor or just starting, this episode of Earn Your Leisure offers actionable strategies and cautionary advice to navigate the complexities of today's stock market effectively.

Transcript

[Troy]

Earners. What's going on? Listen, EYLU is relaunching, revamping, retooling. That's right. We're creating a new educational experience that's more expansive. Shoti tell what we got.

[MG the Mortgage Guy]

Yes, 20, 23. We got a lot in store, a lot planned for you guys. So you know that EYLU already includes monthly financial planning calls with me, book club calls with Troy, real estate calls with MG the mortgage guy, access to the home buying blueprint volume one and volume two. Part of the revamp will include 27 local chapters from across the United States. Live interactive teaching, hands on, not just pre recorded videos. Plus 15 brand new curriculums.

[Troy]

The biggest just got bigger.

[Tom Lee]

Head over to eyluniversity.com that's E Y.

[Troy]

L U N I V E R.

[Tom Lee]

S I T y dot com. See you there.

[Troy]

I, I guess one of those, the questions that we get and it's kind of going over is people want to know where the bottom is, right? So like if we look at the emas, if we, if we look at the trends, is there a bottom inside? Are we near it? I guess in like 2020 it was the same type of question when we looked at Kovid and it was like wait, the market hit 13 000. I'm like wait, this thing could fall, where could it reach? So like are we near it based on like what you're seeing? I guess of the things I'm looking at, have we hit a trend line near the bottom?

[Tom Lee]

No. 5, 540. 530 could be the bottom. Spy 5400.

[MG the Mortgage Guy]

So Tom Lee, Tom Lee predicts, he said that this is the best time to buy stocks now and shout out to, you know, he's predicting a massive rally in, in a couple of months. What do you think?

[Tom Lee]

I agree. All the money's gonna flow in like listen while okay. Something I want everyone to take a look at when the market is in triage. Notice who isn't speaking. Buffett, Tudor Jones, Druckenmiller. All the greats are being quiet and executing. All the greats in private equity are executing. They're buying right. So if we get to like we are really at a point where if the market is off 15 to 30 in some markets now is the time to buy. We will have a nice rally. Probably come into app right after invest fest like the same way I did last year. So if I'm buying now, this should be the strategy. Buy in February and hold through October, November. You're going to get the Best return term of the day. Asymmetric risk to reward. So if I buy now, I have a higher probability chance of getting a 15 or 20 return now than opposed to if I did it two months ago. The market has come down to a level where I would want to invest. So if I'm getting in it on a spy 550 or 545, I, I can see probably by August or early September us being back at 600. Now is definitely a, a time to buy. If you're looking to hold for the long term, long term investment only.

[MG the Mortgage Guy]

There you have it. Okay, is it time to ditch the chase for big gains and bunker down to safe value stocks only?

[Tom Lee]

The real value is buying great companies at a great price. I know a lot of times we talk about sector rotation and this argument is coming up again. Tech versus value. The real value is to buy at the right price. Are there some value stocks that I like? For sure. Waste management being one, Caterpillar being another, Home Depot being another. Great. But if you think that you're going to be able to get away from technology stocks when it's the only thing really dry. Well not only but one of the main things driving GDP in America that in healthcare you're poorly mistaken. The real value is to buy at a deep discount and then concentrate. Warren Buffett's quote going to another quote. If you're a professional investor, I will focus on hyper concentration. I want to remind you, you only need four or five good stocks and technically if you need, if you have bitcoin, like how some of your big bitcoin maxes, you only need three good stocks after you have bitcoin. So I don't think this is time to rotate into value. But if you buy great companies at a deep value, you'll get a better return that way. What value indexes?

[Troy]

Yeah, I was gonna say like so growth stocks, value stocks. I know the percentage for depreciation is something that people try to figure out and will create their own strategy. Is it, do you keep it the same for, for both? Right. So I know, I think you, you had like a 25 depreciation. I always like to be between 15 to 20.

[Tom Lee]

Yeah, I like 25. In tech, is there, is there a.

[Troy]

Difference between value and growth or is it, is it, does it stay steady for both?

[Tom Lee]

I think every sector is different but a good exercise for everyone is go look at from the high of the market over a 15 year period, how far does it fall? Because every healthcare is different from let's say energy. Energy is different from utility companies but for tech I I usually ever wanted.

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[Tom Lee]

25% drop in the sector or emulate it if it's a high quality company. If you're looking at value companies, maybe 10 to 18% is somewhere I would like to get in but if you listen to the show, like I'm literally giving you guys the prices and companies of where to get in. And if you join stock club, we get all sectors across the board. But yeah, 25 in tech is why I usually like to get in for sure.

[Troy]

I know somebody's gonna like. I was looking at Apple's chart, I was looking at it on Friday as well. I'm just like, will this thing drop 20? It could, it could. But how many times I think looking at from a historical perspective is key. How many times in this history has it dropped 25. Right. And then so go homework or you.

[Tom Lee]

Go on chat GPT or claw and ask the researchers in his heart now.

[Troy]

And it will tell you so when you see a rare moment like that happen, then you know this is, this is probably a prime time to start executing. So if you're looking at where the bottom is with how many times does it drop 20. Where Nvidia, we've watched it drop 20 twice this year.

[Tom Lee]

Yeah, for sure. Right.

[Troy]

And even lower. So taking a look from a historical perspective of how that stock has performed, especially some of these, these Mega cap, any strong companies look at their historical perspective so you can start getting the inkling of. All right, this might be a good point of entry.

[MG the Mortgage Guy]

Okay, the NASDAQ is flirting with 24 hour trading. Will this be a game changer or will this be another thing to give Wall street more power?

[Tom Lee]

It's a mistake for most people, the prime times are going to remain as prime times to invest. Open, American Open, American Close, London Open. I know the illusion of having more access because the futures market has always been with 23 hours. There isn't as much liquidity during certain times of day. So you're not going to get a great trade at 8pm on a Tuesday night. I know they're trying to sell the illusion of inclusivity, but in a world that has been created around exclusivity, please don't fall for this trap and be very careful. Your trading plan as a result should not change. I commend them for trying to keep up with innovation. We have to give Robin Hood a lot of credit for making these innovations come through faster than ever. Because prior to them, NASDAQ or any other exchange had no, had no reason to do this. But your plan should not change at all. Like you. And also if you see spikes in like the noon session or a 7pm trade, it's probably going to be smaller firms who can't compete with Piper Goldman, Citadel, State street, that is Finding arbitrage in the market and you don't want to go against those whales that are in the market. So be very careful. But your trading plan should not change at all.

[Troy]

Yeah, I think this is, it's interesting right? This speaks to the retail investor, right? Because everything that you just named was institutional. So it speaks to the retail investor and again it speaks to innovation. And how are the new retail investors doing this if they're trading crypto? They've already been in 24 hours for sure. A lot of the, the new retail investors have used platforms like Robinhood because of the, the use case and they said it's a lot easier and they use gamification allegedly to help bait those people in. And so that, that's the interesting standpoint of it. But this, one of the things when we talk about trading is volume, right. So if you want to know like when it should be, look at, look at the volume and look at the times that volume is increasing versus the times that volume is decreasing. And so if you have it for 24 hours but nobody's trading and you're doing some of these derivative trades like where this futures I know Options doesn't do 24 hours. Careful yo it could get real scary really quick. And that only helps the brokerage, right? Because this is one of those things. I know we're not using gambling as, as a, as a focus but like yo the house is going to win in that scenario when there's no value. When you're trying to figure out how to get a trade in if you're not seasoned at this. I, I don't recommend it. It's just like I didn't recommend same day option trading. Like yeah. Can you make money doing it? Will a lot of people lose money? Yeah.

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[Tom Lee]

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[Troy]

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[Tom Lee]

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