🔴 How to Time the Market (w/ Milton Berg)

Milton Berg’s distinguished career includes stints with the titans of the hedge fund world, including George Soros, Stanley Druckenmiller, and Michael Steinhardt. In this conversation with Real Vision co-founder Grant Williams, Berg explains how he developed a framework for spotting major market tops and bottoms. He provides examples from history, speaks to some of the signals he’s looking at right now, and warns that many investors ignore turning points at their own peril. Filmed on July 10, 2019 in New York. Watch more Real Vision™ videos: http://po.st/RealVisionVideos Subscribe to Real Vision™ on YouTube: http://po.st/RealVisionSubscribe Watch more by starting your 14-day free trial here: https://rvtv.io/2xdIDmo About The Interview: The smartest minds in finance sit down for incredibly deep-diving discussions. Peer-to-peer conversations between the rock stars of the financial world. About Real Vision™: Real Vision™ is the destination for the world’s most successful investors to share their thoughts about what’s happening in today's markets. Think: TED Talks for Finance. On Real Vision™ you get exclusive access to watch the most successful investors, hedge fund managers and traders who share their frank and in-depth investment insights with no agenda, hype or bias. Make smart investment decisions and grow your portfolio with original content brought to you by the biggest names in finance, who get to say what they really think on Real Vision™. Connect with Real Vision™ Online: Twitter: https://rvtv.io/2p5PrhJ Instagram: https://rvtv.io/2J7Ddlw Facebook: https://rvtv.io/2NNOlmu Linkedin: https://rvtv.io/2xbskqx Milton Berg, the Turning Point Master    / realvisiontelevision   Transcript: For the full transcript visit: https://rvtv.io/2xdIDmo GRANT WILLIAMS: Yes, exactly right. So taking that into account, how do you then start to build your own framework using that and applying it to tops and bottoms? MILTON BERG: So what I try to do is say, is the market actually a random movement, which we were taught in the schools? Actually, the CFA program goes with random movements, modern portfolio theory. Or is a market not necessarily random? Is there some edge you can have? Of course, Benjamin Graham did not believe the market's random because there wouldn't be an undervalued stock if the market would be random. It would be efficient. Everything would be traded at intrinsic value. But the reality is I found that the market generally is random. On a day-to-day basis, you have the talking heads on TV and you have the analysts giving research reports every day, trying to analyze the reason for today's move, the reasons for tomorrow's move, maybe the reason for the next week's move, most likely explaining the reason for last week's moves. But I found that on a daily basis, on a weekly basis, movements of the market are random. However, there are particular times when the market movement is very far from random. When the market generates data that tells you the market's close to a top or has topped, or the market is close to a bottom and has a bottom. So what we call that is turning point analysis. Turning points at turning points, the data generated by the market is no longer random. In fact, if you take a bell curve, for example, and it lets you track something simple as five-day volume. You look at the average five-day volume, ascent of the curve. You look at the extremes. You'll find that the extremes of five-day volume are associated with turning points. Now intuitively, it makes a lot of sense because you know at a market low, everyone's selling their stocks. It's at high volume. But people haven't looked at that as a technical indicator. We say, we're not going to be one of those who panic and create the five-day volume. We're going to wait for five-day volume, greatest in one year, greatest in two years, greatest in six months. We track these kinds of things. And that tells you that an impending turn in the market we see. That's just one indicator, an increase in five-day volume as an example. GRANT WILLIAMS: So let's just jump back in time to '87 because that was a call you famously got right to the day. It's extraordinary, reading the story of your work around '87. So take us back there and talk about in the days leading up to that. And perhaps the month before September, what did you see, and how did you go about making use of that? MILTON BERG: Well, we saw a spike in volume on August 11 of 1987, a big spike in the five-day volume that we look at. The market actually peaked a couple of weeks later, less than 2% above that level. So that was the first indication that something was going to change. And the logic of it is that if people are-- why would the volume increase after the market's up 30% of the previous 12 months?