Felix Prehn Shares Insights on IT Outage Impact and Stock Market Moves from Felix Prehn — July 19, 2024

Felix Prehn, a prominent figure in financial education and the founder of Goat Academy, recently shared his insights on a significant IT outage that had substantial effects on financial markets. Alongside this, he provided an overview of stock market performance and future predictions. Here’s a detailed breakdown of the current market scenario and key takeaways.

Major IT Outage: A Global Disruption

On a historic day marked by the largest IT outage the world has seen, multiple sectors faced significant disruptions. The UK had to delay the sale of government debt, and numerous airports experienced severe operational constraints, leading to delays and forced landings. This outage was reportedly caused by an update bug affecting key cloud services

Key Points

• CrowdStrike and Microsoft: At the center of this disruption were CrowdStrike and Microsoft. Both companies saw their stocks tumble, with CrowdStrike down 12% and Microsoft trading lower due to significant Azure outages.
• Airline Disruptions: Approximately 16,000 flights were delayed globally, with major airports in the US facing severe constraints. This incident highlighted the vulnerability of relying on single cloud service providers.

Strategic Market Responses

Felix Prehn emphasized the importance of adopting a multi-cloud strategy to mitigate such risks. Companies like Palantir are expected to play a crucial role in this transition, making computing more complex and expensive but ultimately more reliable.

Stock Market Reactions:

• Pre-Market Trends: Despite the disruptions, the pre-market situation appeared stable, offering potential opportunities for informed investors.
• CrowdStrike and Microsoft: Both stocks experienced significant drops, presenting potential buy opportunities for those willing to navigate the volatility.

Tactical Investment Moves

Felix advised caution, recommending that investors take some risk off the table. He highlighted the importance of having a well-diversified portfolio and taking profits when possible. His current portfolio performance has been strong, with a $24,000 profit on a $30,000 investment for the year.

Portfolio Management:

• Profit-Taking: Emphasizing the need to take profits regularly and not to panic during market downturns.
• Small Caps and Growth Stocks: With the possibility of rate cuts in September, the outlook for small caps and growth stocks remains positive.

Stock-Specific News

Netflix: Despite reporting good earnings, Netflix’s stock saw minimal movement due to slightly weaker than expected third-quarter outlooks. This stability could signal a steady earnings season.

Barclays and Carlsberg: Investors faced difficulties due to the outage affecting Barclays’ investment accounts, highlighting the broader impact on individual stock positions like Carlsberg.

Positive Economic Indicators

Federal Reserve officials hinted at possible rate cuts, citing a sweet spot in the labor market and increasing unemployment risks. This could lead to significant market moves in the near future

Economic Indicators:

• Job Openings: A decrease from 12 million to 8 million job openings indicates a cooling labor market.
• Wage Growth: Average hourly earnings growth has slowed, further supporting the case for rate cuts.

Investment Tools and Strategies

Felix introduced an advanced trading tool designed to provide retail investors with the sophisticated data analysis capabilities typically reserved for banks. This tool leverages AI to refine buy and sell signals, offering enhanced accuracy and profitability.

Trading Tools:

• Momentum Indicators: Developed initially for banking use, these indicators have been refined for retail investors.
• Performance: For stocks like Tesla and NVIDIA, following these signals could have significantly outperformed simple holding strategies.

Conclusion

Felix Prehn’s analysis underscores the importance of staying informed and cautious in the face of market volatility. By adopting strategic investment approaches and utilizing advanced trading tools, investors can navigate disruptions and capitalize on market opportunities.