Opinions
Keith Richards A Comment -- General Comments From an Expert A Commentary COMMENT May 22, 2025
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In classic computing, programming is done with 0s and 1s. Quantum computing lets you do things with 0s, 1s, and a whole bunch of things in between that are called qubits. They allow the computer to run a lot faster and, therefore, to do higher computational things.
He's brought in a bullseye chart to help explain the ecosystem. The bullseye is the hardware, which provides the essential computational foundation needed for quantum calculations. Second circle is the software and algorithm development side -- translates hardware capabilities into actionable software solutions. Finally, you have the applications that deploy the software solutions to specific industries and sectors.
With qubits you can do faster computations and more of them. For example, a lot of medical experimentation is a series of tests and misses. If you can do this faster than you could before, you can shorten the timespan of finding the right computation to reach a medical solution. Another example would be supply chain logistics, and computing the most efficient route more quickly.
Today, stocks slid as treasury yields rose. The budget deficit is front and centre now. When we finish budget negotiations to result in a bill, people will focus on Trump's promised tax cuts should be great for growth. The bill is inflationary, but will juice the whole economy. We will grow our way out of the deficit. The bond market will calm down.
Everyone's concerned about tariffs. His firm is working around that by following their rules. He was very heavy in cash through most of the winter. Quantitatively, he has seen a couple of reasons for getting back into the market and has been stepping in over the past month.
There are also some signs from the fundamental side of potential slowing and recession, on both sides of the border. He doesn't want to step in aggressively. He's been buying value, but is still holding tons of cash. He's trying to buy equities that aren't correlated to the overall stock market.
Markets rarely make V bottoms. Covid in 2020 did do that, but that's rare over 100 years of charting. Usually, a market falls and then does some ups and downs before deciding to continue with the bull market. Unless this is another of those 1 in 100 years V bottoms, he's wary of stepping in too aggressively.
He has a quant model that tells him when risk is high. His risk model went into neutral, and then it moved ahead of the 50-day MA and then the 200-day MA, so he stepped in some more. Yet he's still over 25% cash.
If we take out the highs on the S&P, then he has proof that we are moving back into a bull market. But we haven't done that yet.
He's recently been talking about this on his blogs and videos. Right now, he prefers silver over gold (though he still holds it). Silver has a catchup trade to do, it's just getting started. Silver's still somewhat below its all-time high, whereas gold took out its high a year or so ago.
He owns lots of silver, but only started legging in early 2025 or late 2024. Silver futures chart is in fine shape. Coming down to the trendline now, so probably a good opportunity. When things get overbought, he takes profits, and goes back in later at a lower price.
Bases are good, and they say that "the greater the base the better the case". He loves base breakouts; he wrote a book called Sideways on that topic.
If a stock breaks out for real, it needs to stay above resistance for 3 days to 3 weeks. And then you start legging in. There's tons of potential on a stock that breaks out.
Essentially, he looks for lower highs and lower lows. Also the 200-day MA and the 50-day MA. If these are breaking, he takes another leg out. It depends on how much cash you want to raise. He does a quant reading once every month, in the first week, and it's called the Bear-o-meter (see it on his blog). If it's neutral or bearish, he's going to look for more cash (though neutral would mean raising less cash).
Usually, the amount of cash he'd raise each time would be around 3%, but could be 5-6% or more if things get really ugly. The economists always say "it depends", and that's his answer too.
He offers an online trading course on his website.
Not his area. His associate is a CFA, and so they do use fundamentals at his shop. Whereas Keith pays attention to nothing but the charts. Even in April, the tape is going to tell you what's going on.