Stocks Are 'Pornographically' Overvalued | Chris Irons, Quoth The Raven

Summary

• Market Outlook: Chris Irons describes the current stock market as "pornographically overvalued," driven by excessive liquidity and passive investment flows, leading to unsustainable valuations.
• Economic Concerns: Irons believes the economy is on the brink of a significant slowdown, with rising credit card and auto loan delinquencies indicating underlying financial stress.
• Investment Strategy: He advocates for investing in sound assets like gold, silver, and emerging markets, while expressing skepticism about the sustainability of current market valuations.
• Market Dynamics: The market is heavily influenced by a few large tech companies, with passive investment vehicles like ETFs contributing to distorted valuations.
• Potential Risks: Irons warns of a potential market correction driven by overvaluation, unsophisticated retail investors, and systemic financial imbalances.
• AI and Speculation: He views the AI sector as a potential bubble, similar to previous speculative manias, and cautions against over-reliance on AI-driven narratives to justify market valuations.
• Fed Policy: Irons criticizes the Federal Reserve's monetary policy, suggesting it has created unrealistic market expectations and could lead to a loss of confidence in the financial system.
• Long-Term Strategy: Despite short-term market uncertainties, Irons remains bullish on precious metals and advises maintaining a diversified portfolio to hedge against potential economic disruptions.

Transcript

So, we're at this jumping off point now that really to me seems truly unprecedented. And I think if I had to sum up my my economic outlook, I think the economy is on the cusp of grinding to a halt. Um, I think just in general we have a broad, you know, pretty wide overvalued market full of crap and we are so overdue for a real deleveraging that just, you know, this market needs to shed its skin so badly. Every third company is like a total fraud or not generating cash or just a story stock. So, I think everything's in a bubble to be honest with you. [Music] Welcome to Thalul Money. I'm its founder and your host, Adam Tagert. Chris Irons is the author and publisher of Quote the Ravens Fringe Finance, which has risen over the years to become one of the most popular financial newsletters around, currently sitting at number 25 in the list of top financial substacks worldwide. His take, as you'll see for yourself in just a moment, is unconventional and unapologetic, and it often succeeds in putting its finger right on the heart of issues. Chris has a talent for declaratively stating in simple words exactly what the rest of us are all thinking, but perhaps haven't succinctly voiced yet. So, what's his view of the economy and markets right now? Well, let's ask the man himself. Advanced warning, though, folks. Chris's colorful presentation style uses a fair amount of profanity. There are more than a few fbombs in today's discussion, so proceed accordingly. Now, with that out of the way, Chris, thanks so much for joining us today. Hey, happy to be here. Love your show. Hey, Chris, thank you. Huge fan of your work. Um, really fun to finally have you here on the program. This is the first time we're meeting. Um, you know, as I mentioned in the, uh, in the intro here, uh, you're a guy who's become very popular. um even though your take is quite different from a lot of people in the macro space um I love how you uh the range of topics that you cover but that really that's the way in which you cover them and I'd even try to describe it more but I think folks will just get it through the course of this conversation. So um probably the biggest favor I can do to folks is just to dive right in. I got a whole bunch of questions for you. A lot of it based on recent um articles that you've written. But just to kind of help people get a sense for how you see the world, let me hit you with this one. What's your current assessment of the economy and the financial markets? Uh we're in a completely unprecedented situation the likes of which I don't think there's any historical comparison. Um, I mean, sure, people of my ilk in the Austrian school sound money, you know, they'll bring up the fall of the Roman Empire and things like that, but really it's with what we have going on today and the digitization of markets and some of the things that I think are aggressively kind of gooseing the market into this stratospheric valuation territory. Um, we really never seen anything like it. Um so between the area where the Fed is right now which is stuck between a rock and a hard place and people will say oh well you know the 70s they've been here inflation we've never been here with the amount of debt that we've had uh really on what feels like the cusp of you know some big questions being asked about our sovereign debt picture and our currency. Um and the Fed feels like their hands are really tied. It feels like, you know, right now, I'll sum it up. We've got a stock market at all-time high valuations. So, if you look at the market on a combination of a number of valuation metrics, Bloomberg just put out a piece saying when you combine those, the market is at its all-time high in terms of its valuation. If you pick those things out individually, market cap to GDP, K Sch Shiller PE, those types of things, we are either at or damn close to all-time high valuations. That stock market at all-time high valuations is in my opinion right now being driven by a couple of things. It's here a because of the tremendous amount of liquidity that the Fed has injected into the system most recently during COVID but dating back you know to 2008. You know, we have a market that priced in gold has essentially been in a recession since then. Um that nobody really seems to notice because the nominal price of the market continues to move higher. Nowadays, you have seven stocks that are driving the market. We increasingly see that decliners are outpacing advancers in the NASDAQ and in the S&P 500. Yet the indices still often trade green for the day which is a function of a way that a lot of these indexes are weighted putting a lot of weight into names like you know Nvidia, Tesla, Amazon, Microsoft. So you got a handful of companies that are driving the indices higher. The bid for those companies uh comes from a combination of an incessant kind of passive bid, which you know, Mike Green is really the king of talking about, but other people have started to speak about recently, which is your forced buying from uh you know, pension, retirement plans, and ETFs, which have become kind of a tail that waged the market dog. You know, the the spy ETF used to go up because its components would go higher. Now its components go higher because people are buying the ETF. Um in addition to the passive bid, you have in my opinion options gamma driving you know the flows in markets significantly. If you read like sharp websites like Zero Hedge, which you could say what you want about it, but I think Zero Hedge has some of the sharpest analysis in the financial world top to bottom that you're going to be able to access for free. the the analysis is sophisticated enough to help you learn things that you don't understand and it's deep enough to help you understand what's going on under the surface of the market. If you look at what people like Zero Hedge post about when they're posting analysis, a lot of times it's often talking about options flows. It's talking about put to call ratios. It's talking about, you know, what CTI they're going to be, you know, or CTAs they're going to be forced to buy and sell at which levels. um and options gamma helps drive a lot of these short-term and ultimately what I think will be longer term momentum moves. So in essence, you have a growing portion, a bigger slice of the market nowadays that doesn't, you know, buy and hold Microsoft, you know, or go pick up a portfolio of blue chips and sit for wait for its dividends and wait for it to appreciate. You have an entrance of an entire generation of you know young absolutely psychotic speculators of which you know I was one just like 10 or 15 years ago but that have entered the market and the only thing that they know is the options market. So you know the way that the gamification of markets what they say has changed things. You look at like how easy it is to buy options on the Robin Hood app. Um what happened during the GameStop saga with the giant gamma squeeze in GameStop. Um and I think and the growing sector of the grow the growing slice of market participants that are not institutional but they are you know really unsophisticated novice investors. And if you go on something like Wall Street Bets on Reddit, you don't even see people posting photos of owning equity. Every single post, the wins and the losses are options. And so what happens is when people go out and they buy call options, the dealers that sell those contracts are forced to go in and buy the equity, buy the underlying uh as a hedge against the contract that they just sold. Uh which basically means they have to buy stock. They're being forced to buy a little bit of stock. And I think between the options flows a you know psychological um assurance in investors minds that the market can't go down and the Fed will always bail them out which I think is a you know will be will become a giant uh black swan at some point. But e everybody's psychology on the stock market has been so drastically altered by monetary policy over the last 20 years that people just believe nothing bad can ever happen. Um and so that psychological kind of framework that they're in combined with the purchasing of call options combined with the uh you know outsized buys of high valuation names from the passive bid which hasn't slowed yet. Um, and you have a lot of tails wagging the market dog. So you have the market going up what or I think is what you know is for a lot of the wrong reasons and uh and instead of analysts coming on CNBC and saying things like I'm saying now like your guests say which is market cap to GDP is you know it's two sigma deviation higher than it's ever been or you know if we were to revert to the historical PE mean we would drop 60%. these types of inconvenient, you know, ideas. What happens is you get a bunch of [ __ ] on the sell side who don't want to, you know, piss in the punch bowl who go on TV and backfit a [ __ ] narrative to fit what the market is doing instead of looking at what the market is doing and then an analyzing that accordingly. And so between cowardly analysts, cowardly financial media, you know, unsophisticated investors, and brand new market mechanics that force buying where there has never been in ways that there has never been before, you know, hooked up to a fire hose of liquidity that hasn't stopped. uh you have what we have now, which is what I think to be a pornographically overvalued market in a basically batshit insane investor psychosis which has persisted for the better part of a decade. And I think right now we are on the precipice of reality hitting in a way that I don't think people are ready for. And why do I say that? I say it because, you know, real rates have been positive now for the better part of the last two or three years. You know, I pointed this out two, three years ago. I was early. The market has made me look like a fool. That's fine. I can deal with it. My, you know, subscribers know that I every other piece is a man culpa for me and I'm okay with that. You know, they know I'm learning and I know they're learning. We give each other grace. It's beautiful. But where we're at now is we are 2 to 3 years into this positive real rate cycle and the very last drops of liquidity remaining from CO are starting to dry up and the economy this lag has you know basically you have a huge debt bubble in 2021 or whenever they started raising rates 2022 you know the positive real rates is like putting a [ __ ] time bomb into the plumbing of the economy. But it has to kind of make its way through the economy, which is your lag between monetary policy and what the economy does, that delta um before you start to see the results. And then as the Fed cuts after that, once the time bomb makes its way through the plumbing of the economy and you start to see things like the jobs report we just saw last Friday, these little signs AAA rated CRA, you know, being defaulted on crazy private equity marks that no one is going to be able to find a realistic bid for when these people need to get liquid. Um, all of these little black swans that are floating around in the market that that ice is starting to crack. Now, the jobs number shows that that passive bid will may eventually start to wind back, which is a problem in and of itself because a lot of these funds don't have the cash to redeem people. Meaning, when people go to redeem from these funds, they're going to be forced sellers of stocks instead of forced buyers of stocks. Um and at the same time it's also showing cracks in the economy which when that happens you get deleveraging you get uh a slowdown in discretionary spending and that's when the E denominator in the PE starts to fall and then you have you know a 40p market that all of a sudden looks like a 45 PE market just because earnings are dropping. All of those things are starting to happen now. While they're happening inflation is running at about 3%. We have a president that's begging the Fed to lower interest rates and the market will eventually force the Fed's hand to lower interest rates once we have some type of sharp deleveraging which I think will happen and I think we were days away from in April seeing a real [ __ ] show a big major not systemic but much larger systemwide margin call after liberation day that will happen and there will be something that the Fed and the president can't do to stop it. Um and then the Fed has the option of lowering rates and eventually, you know, assuming the bond market cracks up, buying bonds or doing yield curve control. Um what is going to happen when the Fed does that with inflation already at 3%. Your guess is as good as mine. Um but there really doesn't seem to be a historical analog to point to that say we've been here before and this is what's going to happen. The only thing I know is there's going to be some type of mathematical and common sense blowoff valve where something is going to go wild that hasn't gone before. I don't know if housing prices will crash and then they'll double. You know, we're going to see some type of crazy distortion in the market as all of this plays out. And that's why, as my readers know, you know, I'm love to own gold. I love to own sound assets. I love to own uh you know, things that can't be printed. Um that's why I'm in emerging markets as opposed to US equities. I prefer a lot of world markets to US markets now. Um but mainly, you know, my trade is being diversified both in and out of the dollar and mostly in, you know, gold, gold miners, silver, silver miners, a little bit of Bitcoin, little bit of real estate. Um because, you know, and it you don't know where it's going to go. You don't even know what to root for. Like do you root for a deflationary depression where you know we have something worse than the great depression that happens and the market corrects and you know the free market people will tell you okay like that has to happen the tide has to come out or do you root for the sharp deleveraging followed by hyperinflation scenario which puts a nice pastel uh you know shine on everything in nominal terms. the stock market goes higher, but like at what cost? You know, people are being brutalized in the dark machinery of night by the inflation genie, which will then be running at, you know, whatever 5% which is really 15% or, you know, 7% which is really 17%. So, we're at this jumping off point now that really to me seems truly unprecedented. And I think if I had to sum up my my economic outlook, I think the economy is on the cusp of grinding to a halt. You see it in credit card delinquencies. You see it in auto loan delinquencies. You see it in the amount of margin debt out there. Um all of those trends are going to continue. You see house housing prices starting to blow off a little bit. Uh the way that deleveraging works is, you know, discretionary spending goes first, then people don't pay the credit card bills and they don't pay the auto note and then they don't eventually pay the mortgage. So it kind of goes in that order. First they sell off the risk assets, you know, to raise cash, then they start defaulting on the littlest things all the way up to the house. We're already, you know, in the second or third tier of that house somewhere. It's just nobody really notices it and nobody's doing anything about it. That will accelerate as a the leveraging continues. So the economy to me, you know, is approaching that mathematical certainty that I thought positive real rates was going to were going to take us to three years ago. We're just only now reaching it. As far as the stock market, you know, look at the distortion of the market during COVID. I mean, what happened? The market went down 40% and then the NASDAQ tripled in like three years. The NASDAQ's an index. Okay, an index tripled in like the three years after that. Not [ __ ] normal. You know what I mean? Like this is not 1985 buying shares of the top 10 best dividend payers and just sitting on them. Like this is a totally different stock market. So, as far as what's going to happen and what what the best case scenario is, I I couldn't even tell you. I just that's why I like owning gold. I can kind of sit back and bear witness to this unprecedented experiment in monetary policy history and human history play out and you know do what I do on my blog which is run my mouth and talk [ __ ] and uh you know be thankful that I have people there to listen to it who I feel like I should be billing uh they should be billing me by the hour instead of me billing them by the month. Wow. All right. Well, look uh interview's over. You answered basically every question I was gonna ask you there. So, thank you for having me on. Great. Yeah. No. All right, Chris. Uh, so phenomenal kickoff to this and honestly, you touched on so many issues that I'm hoping to talk to you about. Uh, we're not going to have time obviously in this hour to get through all of them, but I'll do my best. Um, and I think folks are getting a good sense for a how you see the world, b how your mind works, and uh and and and c uh you're really validating my my description of you as a guy who can just succinctly and colorfully put his finger on the heart of a matter. Um, so okay, so you you talked about the the high level of overvaluation in the stock market. Um, I think you called it pornographically overvalued, which I think is such a great description. Um and uh you know we we we we to a certain extent we've got this uh you know unstoppable force versus a movable object collision coming ahead right where you say we've got this this market that's been driven by all the things you talked about the passive capital flows whatever um it hasn't mattered right it's just to make money just be long and hold strong right um now you're saying look we're we're combining that and the whole crazy investor psychology uh that's wrapped around that that is h hurtling towards the reality of an economy that is slowing um and we're starting to see increasing cracks in here and um you know basically one of those two things is going to have to matter more than the other right and I get the sense from you you think the economy is going to win out for understandable reasons there's going to be some big reckoning here some probably massive surprising and probably violent repricing change any of my words if you disagree um that's then going to require you know, some sort of reaction on the central planners. Um, I think you think that's probably going to be pretty extreme. You mentioned, you know, the Fed stepping back into buy some more QE. Maybe it takes a form of yield curve control, whatever. Uh, I believe that's probably a big reason why you own gold and the precious metals and stuff that you think that'll benefit from current trends anyways. But if we get to that kind of big rescue, then yeah, that's going to send the prices of that stuff to happen. It's it's it's a foregone conclusion. What else are they going to do? What are they going to do? They gonna let the bond market crack up, right? Right. I mean, let yields go to 10%. Like, no way. Because as soon as they start to slip, you know, we saw that's like emerging market [ __ ] right? We saw stocks and bonds both selling off at the same time in April. And so, so what are they going to do when that happens again? And I felt there was one night watching the 10-year where I was like, this is it. Like, I was, I stayed up, I was laying in bed. I stayed up till like two 2 o'clock in the morning just watching the 10-year-old, which I never do that anymore. I don't just sit in front of the computer and just watch whatever. And I was texting with uh I don't know, some some woman at the Wall Street Journal, some reporter, I forget her name, but I was DMing her on Twitter or she DM' me and I DM' her back or I I sent her a message about a tweet that she put up and we were we were talking about it and I was like, "This really feels like it's it." And I I think I said the same to Guy Dami, too. I was like, "This this feels like it's it's going to break." Like it was such a weird thing to witness the 10-year yield just kind of almost losing it like almost spiraling out of Right. Run away. Exactly. And so that'll happen again. And when that psychology starts to, you know, I don't know what Bent did other than, you know, maybe he said to Trump, look, we got to put a pause on this because shit's about to get real. But there will be a a point where the bond market really does crack up and because everybody's thinking like this now, you know, it's not like this this was like the uh the 2% case of this happening years ago. Now it's like 15% of the people out there are thinking about it. Like people that are sharp that understand monetary policy like it's no longer the elephant in the room. Like it's, you know, it well it is the elephant in the room. Like everybody can see it, you know, like it's and so it it's talked about on podcasts like yours. It's talked about, you know, you got guys like Gunlock talking about it even. It's even seeping into the, you know, cowardly financial media a little bit, bits and pieces. And I think Scott Bent understands it, too. And so, you know, what are we going to do? like it's it's going it's like it's like inflation, you know, like psychologically once you lose it, it's gone, you know, and so then it becomes a self-fulfilling prophecy. The the first time that, you know, the first time we move up whatever 30 basis points in a day or whatever the threshold is to be considered an extreme move that gets a lot of news coverage about, holy [ __ ] look at the US bond market. The first time that happens, then it becomes a snowball rolling down a hill and there's just there's nothing left other than for eventually that to get to a point where the Fed steps in and starts buying bonds. Okay? And so, you know, presumably, look, right now market don't care. Um, so even though maybe 15% of the people are paying attention, the remaining 85 are they're they're all in, right? They're buying their call options every day as you said earlier. uh in many ways maybe the the retail this this massive retail buying we're seeing right now is the psy joining the poker table at the end of the game right so um if things break in the way you think they they could um you know we get a a big downdraft in prices that again catches everybody by surprise it changes that psychology that you're talking about right and and to try to get that psychology repaired and get people back into you know get you out of freakout mode yes the central planners are going to have to step in, but presumably given the size of what you see coming, they're going to have to step in with an awful lot of firepower, a lot of unnatural acts to try to reverse all of that. And looking by your face, I think you Yeah, it's a gross understatement, right? Because that's what they did during co is that the only difference now is that more people more of the populace understand how that like the last time they did this. How many internet memes did you see about, you know, Jerome Powell and the money flying off the printer, you know, like and that that clip of Neil Cashari going, "The Fed has infinite cash. The Fed has infinite cash." Like, you know, so people started ridiculing them five years ago, which you know is essentially a loss of confidence is what what it's going to develop into. The next time it happens, the QE will be that much larger. It will be, you know, what Larry Leard calls the big print, right? um except now we have more of the nation empowered to understand exactly what's going on than we ever have. And this was a factor of both inflation being a political football during the last election, but also you know things like Bitcoin, which whether you love it or you hate it, in order to talk about it, you need to have a rudimentary understanding of monetary policy to begin with. And so again, to go back to this generation of young psychotic, tattooed freaks of nature that are like in the stock market, you know, so many more of the 20 year olds in the country know what the Federal Reserve is and how it works now more so than ever. And of course, as soon as you learn how it works, your immediate comments conclusion is a Ponzi scheme, right? Like that's what mine was. Like, how can this be? like it's it's the polar opposite of all of the laws of economics and finance I've learned my entire life that apply to me personally, corporations, you know, anything. So like it's got to be your first thought that like this is insane. There's no way this could go on forever. So assuming half the people think that and we have a whole new chunk of people now that understand monetary policy that never did before the environment for the next print is going to be you know peak humiliation and probably potential confidence loss in the Fed. Um, and now there's all these exit ramps. Allah, Bitcoin, gold, whatever you want to say. Right. And in the Fed by and by connection the US dollar, right? The the purchasing power of our free currency. Yeah. Right. And and so now like the regular mom and pop people like my dad, you know, who was like a mailman for 40 years, like he didn't have time to sit down and figure out like why inflation happens, you know? He just he knew what he earned. He, you know, knew what things cost and he said, "Okay, we have to spend less than, you know, than I than I earn in order to save." And that was enough to provide us with a great life. But like, you know, he's not going to get done working 6 12 hour days at the post office, come home, cook dinner, sit down at the dinner table, and be like, "Hey, what do you guys think about this [ __ ] monetary policy? Like, do you think I you guys think Alan Greenspan's lying?" you know, like I mean it's like but now there's a you know most people that didn't before the people that were too busy out there actually generating products or services or doing things to move the economy and the country forward those people now understand it in a way that they didn't before. So it truly is going to be like the stage is set right everybody's like hey here's what we all think the Fed's going to do. We'll get our sharp deleveraging somewhere. CRA will set it off. Auto loans will set it off. Who knows? Something will set it off. Some guy eating a donut wrong in Belgium, you know, affects the price of an ETF somewhere that kicks off, you know, a 10,000 domino transaction that results in the NASDAQ opening limit down. Like, there's a million things that could happen, but that will happen. And then the stage will be set and everybody's going to be like, "All right, [ __ ] Time to dance, Fed. Let's see what, you know, let's see what all these tools are that you keep talking about." which of course everybody knows there just one tool and just print unlimited money and that's it. There's nothing sign fact that they're building a $2.5 billion building unless most of that is you know some type of new technologically futuristic safe to store gold which if it is I understand if they're building that of gold bricks okay but otherwise yeah other than that like what like what do you need all this stuff for? You got a lady who, you know, is one of 12 people that controls the price of the world reserve currency where every quarter basis point move in interest rates sets off a quadrillion dollar aftershock through the global economy who can't [ __ ] not commit fraud on our mortgage application. Like, is it the best and the brightest of like what we have? So, forget about the fact that like these people are setting the price of money, which they shouldn't be doing to begin with, but like I don't think anybody really has any idea what they're doing. You listen to Pal and and I like Pal actually. I do think he's like, you know, he's got a little bit of a backbone. I like him a lot better than I like yelling. But he gets asked these conferences like, "What's the neutral rate?" And the answer is, well, you know, we 12 governors, everybody's got an opinion, and I don't really know. And it's like, great, we'll know it when we see it. Yeah. Right. Yeah, it's it's more of a feel, you know, like and all this talk about a 2% inflation target. Now they're saying, okay, well, employment could just cause us to throw that out the window. Hey, by the way, we have to choose now between, you know, stable prices and maximum employment. Now, we can only choose one. So, now we got to work the gas to the break at the same time. It's just distortion after distortion after distortion. You know, if the economy was a house in like the year, you know, 1970 before we went off the gold standard, every little tweak that we've done, whether it's taking the dollar off the gold standard, I listened to that speech the other day, too. That was uh Nixon, right? Whoever it was said, Yeah. said, "We're doing this to, you know, to protect the strength of the dollar." I'm like, and sorry to interject, but we're doing this temporarily, you said. Yeah, exactly. Well, there's nothing more permanent than a temporary government program. Y, but he said like we are doing this to, you know, protect the strength of the dollar in like the second sentence and you're just like like [ __ ] off. So anyways, if the if the economy of markets were a house, then every little tweak that we've made has been like a different addition on this house. And here we are in the year 2025 and our little house has become this like milelong monstrosity that is just like so topheavy. There's so much [ __ ] and so many distortions in the market now that the next one is going to be that little Jenga piece that just topples the whole thing. And that's why now you have people talking about, hey, where are all these giant gold deliveries going from, you know, from the futures market or like what would a debt jubilee look like? Like so we're right there. It feels like we're knocking right on the door. We are at the edge. But keep in mind, I've been saying similar things for the better part of a decade because it hasn't made sense to me since I learned how the system worked. So, they've been able to perpetuate it for, you know, since I started talking about it enough to make me look like a fool, which I appreciate. But uh so maybe they can continue it going forward, but right now it really does it really doesn't seem like there's a way to do it without without blowing something out. Whether it's the price of gold going to 7500 or it's a collapse in another market or you know the the government having to take whatever the auto market and subsidize it. There'll be some [ __ ] It's like what they did with the regional banks, you know, and that, by the way, that was just a symptom of what's going on because you got banks and regional banks specifically that not only have, you know, tons of exposure in treasuries because they had the genius idea of putting their money into, you know, treasuries while they were yielding 0% or, you know, 50 basis points. You know, bonds are lower since then. So they haven't taken marks on those bonds because they don't need to because they're treasury bonds. But that doesn't change the reality of the fact that like the bonds aren't worth the same. And these are the same banks that if you you know there's a bunch of them. I'm not going to go through the names, but what I'll say is there's a plenty of lists online of regional banks with massive commercial real estate exposure. And I would encourage everybody to look at it and, you know, see if your local regional bank is on that list. My parents bank was on that list. I told them, "Move your money from there." This is like a year ago when I was looking at this because commercial real estate is an area where you have a ton of, you know, subprime crap that hasn't been marked properly that, you know, you you have AAA rated stuff in the commercial real estate space that's that's being defaulted on. I mean, that is essentially what happened in the housing market, you know, during the big short, right? you had the AAA bonds and the, you know, the high creditworthy stuff. It wasn't just the B and C rated crap that wound up being defaulted on. So this, you know, the commercial real estate is not as big as the US housing market, but it's still a sizable portion of a market. And what happened is that started to slip when Silicon Valley Bank disclosed on that Friday that they needed to fire sale equity to raise a billion dollars or whatever it was. By that Monday, they had $50 billion dollars in like redemption requests or something ridiculous. And that's how quickly things can change. It's like COVID. One night I was the world's biggest fearmonger and nobody wanted to listen to me about how serious they could get. The next day we woke up and people were fist fighting over toilet paper at Costco. So things can change very quickly and you know commercial real estate is kind of teetering uh on the brink and we saw that with you know the the Fed basically have to bail them out with the bank term funding program back in March a couple of years ago. So, that's one of many little spots in the market that I think could slip. And I think we are on thinner ice than people know. And I think that um we have more market participants now that are in the mindset that nothing can go wrong than ever. And I think the rest of the market participants have been coddled so much by monetary policy and by the [ __ ] cowardly media, financial media specifically, and their inability to ask pointed critical questions about individual companies and the macroeconomy and the Fed. They've been coddled so much that I wrote I wrote an article called the next market crash will break our fragile brains because that's what I really think is going to happen. I think we're going to see you know I put out a post we're going we're going to get pushed out of our financial safe space that we've lived in. Yes. I I put out a post as I was watching the numbers in China go up in December 2019 and you know doing the very easy look if I can do it anybody can do it the very easy deductive reasoning that like or you know logic problem of like hey we got a million people flying back and forth between these two countries this thing's already here we just don't know about it yet and I wrote in December or January before the Olympics were cancelled before you the basketball season was shut down before we even had a case count in the US before anybody was paying attention to it. I wrote, "It's time to start doing some mental gymnastics because the psychological effects of this coming here and us not having our heads wrapped around it, at least until our allies in South Korea and Italy were able to make sense of things, um, it's really going to put a lot of mental stress on people." And I put that out on Twitter and the response that I got was out of control with people just telling me like, you know, calling me a fearmonger. I had one guy f found my phone number and called me, you know, and said, "My girlfriend's a nurse at so and so hospital in New York. Like, you're not helping. Like, you're you're setting off a chain reaction of panic, you know, and I'm just like, all right, all right." Like, the response I got was like that. But then, you know, looking back now, you see what the psychological scarring of CO has done and you saw what it was like when we were in the midst of it. You people that won't shake hands. You have police beating people in the park in Australia for taking a walk. You have the, you know, Coast Guard arresting a guy on a paddle board out in the middle of the ocean surrounded by 10 miles of nothing for not wearing a mask. So this I think is going to be a similar type of situation where I I don't think people understand how bad it could get and even if it doesn't get bad even if we see a 20% draw down or a 30% draw down and then we just stay there for 10 years like Japan like that will be a different kind of like brutal psychological death march for people that I don't think anybody is ready for or most people aren't. So, I don't know. You know, I try not to be a pessimist. I try to objectively examine what the facts are and make my decisions accordingly and not just gravitate towards the worst case scenario. But I don't know how anybody could look at the fiscal picture and the monetary picture and the economy in our country and the stock market and say, "Hey, this is a great time to buy stocks. Everything's fine." Like, I don't know. All right. Maybe it's Maybe it's because I didn't go to [ __ ] Yale. You know what I mean? Like maybe it's cuz I don't have a PhD. Maybe that's the problem. You know, maybe it's because I'm using stupid like math 101 like where 1 plus 1 equals two and that doesn't make you a racist, you know, for saying that. Like I don't know. Well, no, it's one of the things I appreciate about you. So, I I I did go to some of the, you know, bigger brand schools for undergrad and for my my MBA. And um I have found in my journey Chris that um more of way more often than not reality if you can explain it you know in a single sentence using you know fifth grade words um then you're you're usually pretty much a lot closer to where reality is where when you get too caught up in the the wonkiness and the formulations and and all the justifications of why it's different this time or why we're smarter this time. That's usually, you know, where we fall into trouble. So, look, next time you find somebody that, and look, I own Bitcoin, right? But like next time you bump into somebody that owns, you know, whatever Ethereum, be like, "Listen, uh, Ethereum's $4,500. What are you paying for?" Just, you know, something like that. Explain to me simply what you're paying for. Like, you're paying $4,500 for what? And just listen to somebody try to give you an answer on that. This goes back to the Peter Lynch. If you can't illustrate it to a fifth grader with a crayon, right? What did he say? Like an investment idea to a fifth grader with a crayon. Yeah. Then it's like if you don't understand it, you shouldn't be invested in it. That's it. That's a great rule. That's one that like I don't even have to give a disclaimer on almost all my stuff. I say, "Hey, I'm not a professional adviser. I don't give investment advice. No series 63, no series 7, no FINRA registration, no SEC registration. Not just a guy trying to figure [ __ ] out. That one I don't even need to give a disclaimer for. If you don't understand it, don't invest in it. That goes for, you know, your local banker handing you a sheet this thick about [ __ ] annuities or some wealth product that they want to put you in some [ __ ] where they're going to take a fee. It goes for Fartcoin. It goes for [ __ ] you know, binary options on the price of donuts in Belgium. If you don't understand it, don't invest in it. That's a great rule. just sit there and you're better off just putting up your money on the table and looking at it and losing 3% a year because even then you'll probably have 10 or 15 years of runway before the government inflates away the value of all that money whereas if you put it into something like you know shitcoin you can lose 100% of it in five minutes and you know thank you for playing. All right. So, we have this pornographically overvalued um market that's driven by rampant speculators right now. Um the instrumentation is all wacky because we have very few uh companies that are masking you know the the um weakness of all the others. Economically that is that market is bolted to this teetering huge Jenga tower that you just described. Right. So a big question here is um okay well like what are what are some of the factors going to be that could be that last Jenga piece that puts what you think could happen into motion here and you gave us you know one idea with the commercial real estate um uh you know we we you talked also about just how you know rates are higher for the past couple years than they've been in a long time. It's a much more indebted economy that just works as like a a corrosive gravitational force on pulling economic growth down. Um but really kind of and also and also taking the tide out on like where all the speculation and debt and like underperforming uh businesses and things like that are like that's a corrosive is a very good word because what it does is you know would just it's just naturally eats away at the cushion that people are afforded by cheap money and that cushion allows underperforming businesses to continue operations. It allows, you know, people to speculate with significant leverage on, you know, things that they're taking losses on. Um, and so, you know, the positive real rates, it's, you know, when when the economic machine starts to grind slower, which is what these positive real rates do over the course of time, very, very slowly. Um eventually one set of gears somewhere jams up and that's where you know you have your your first domino to fall. So it might be CRA. The thing is like you know what's going to be the catalyst there. Is it going to be like you know another major like AAA default? Is it going to be I just saw a headline yesterday. I forget the company. Been in business 20 years. Miami commercial real estate company filed for bankruptcy. Is it going to be, you know, a major massive S&P 500 company, you know, under stress and doing a, you know, fire sale of equity the way that Silicon Valley Bank did? Uh, it could be anything. We we we don't know. There's lots of wiggly blocks in our Jenga Tower here. But, you know, as you were saying earlier, like this went on longer than you thought. Uh, there's the old time expression that, you know, the market can remain um irrational longer than you can remain solvent, all that stuff. And part of that you have to appreciate as I know you do that if you're betting against this, right? If you're betting on the breakage, you're betting against the entire status quo, right? Because every corporate CEO, everybody in in, you know, Capitol Hill is trying to keep the game going and they will do more and more unnatural acts to try to keep it all together. But to your point, at some point, the wrong block is going to get pulled and the whole thing's going to start to to to tip over. One of the things that's going to be sort of, you know, once it gets started is going to be a hard thing to to stop is going to be when the unemployment rate starts really taking off here, right? Yeah. And as as more people start losing their jobs, you know, they can afford to spend less. Everybody starts getting worried when they see their neighbor loses their job. So they pull in their spending and then that, you know, reduces consumer spending even more and that puts more pressure on corporate profit. So they have to lay off more people, right? That's where we get there. So, I wanted to to um get to a piece that you recently wrote um where you said the job market just said game over. So, can you speak briefly to why you think the the signals coming out of there are now so definitive? Well, you know, the ugly jobs print last week to me seems to be the, you know, one of the first real like clarion calls that uh that the economy really is starting to grind slower because it's something it's digestible, right? Like some obscure thing happens in the CR market like yeah, okay, like some people pay attention to it, other people don't. The Fed comes in, they sweep it under the rugs, whatever. But to speak to what you're just saying, you made a great point about like how a deleveraging cycle works like psychologically and in and in practice, right? Everybody starts hitting the bid, prices get lower, companies have to do layoffs, like it all kind of like, you know, cascades at the same time. Cascade. Yeah. But the, you know, an an ugly jobs number and rising unemployment, you know, there's maybe like three or four major macroeconomic indicators that an average person sitting at the dinner table can talk about, can understand, and will be printed in media that isn't just financial media. And the unemployment rate is one, especially when the media hates our president and it's happening while he's in office. So they'll be happy to boast about, you know, how bad unemployment is in the country that CPI, you know, broad like housing price index moves, like those kinds of things. Like that's pretty much it. How how expensive are things cost? Uh you know, are my friends losing their jobs or not? And um you know u what was the other one? Housing prices. What's the cost of my house? It's those three things that the average person appreciates. Yeah. And in in this case, like it's both psychological, right? It's going to set off a psychological set of dominoes for people that think, okay, now I'm in a recession, right? Just like people think, okay, now people, it's the baseline now that people assume we're in a period of heightened inflation still, right? So that genie is out of the bottle. And that same thing will happen with recession. People will say, "Oh, jobs number bad. I'm in recession. Maybe I can spend less." you know, it's just natural behavioral economics, remedial behavioral economics, right? Very, very simple like, you know, caveman [ __ ] like grunt and point kind of like, you know, I see something, I do something, right? So, the jobs number can kind of set that in motion. But the the interesting thing now is what I was saying to you before, which is the the passive bid that is directly linked to the jobs market and directly linked to people's number one source of liquidity that they're going to need to tap into, which will be their brokerage accounts and their retirement accounts, etc. Um, that happens to be one of the two major legs that's underpinning the market, I think. And so when you listen to, you know, like Mike Green talk about $50 trillion in passive funds and he suggests that these funds don't even have cash to meet redemptions. You know, they have the assets, but instead of selling the assets, they are taking on some debt because they think, okay, like we'll manage these couple redemptions here with just some leverage just so we can keep the buying machine going. uh when they run out of space to take on leverage and they actually have to raise cash and they actually have to hit the bid and you start seeing outflows. Well, then you have like a giant titanic machine that has been going in one direction for 25 years or however long starting to go in reverse and then you have a big problem and that's tied directly to the jobs number. So I think that the jobs number psychologically but also in terms of market mechanics is extremely important. Um and so now we see this it's the first brick in that psychological um foundation where people are starting to discuss like hey like the economy really is slowing down and it's like all right what's the plan now? CPI is at 2.8. We'll get a new print this Saturday. We get PPI on Wednesday. PPI came in hot on its last uh reading. We got what was it like 0.9 versus 0.2 CPI whether it meets the estimates or not doesn't matter because it's still you know almost 3%. Um if you take the official number you know if you take your so you have inflation essentially running 50% above the Fed's target. still kind of a tinder box, right? That at any moment psychologically people could say, "All right, prices are out of control." And without more money printing could still raise prices. I mean, you look at this the stuff I buy, I mean, you know, it's it's 10, 20, 30% higher than it was a year ago. So, you know, take the 3% number however you'd like to, but like really the economy is experiencing much greater inflation than that than that already. And then now you're gonna have the economy grind to a halt and take the stock market with it. And so it's okay. Like what happens then? What happens when everybody hits the bid at the same time? Does the Fed print into hot inflation already? I don't know what they're going to do. Man, I'm curious. Do you think hot inflation will still be around by then or if if we get into this sort of, you know, recessionary area? I mean, we could have stackflation, but also it could just kill demand. I mean, we could see disinflation step in quickly, right? For sure. I think it'll it may like to the best of the way I can figure it in my head you know with my uh limited understanding of you know the uh the bowels of the financial system. What I think will happen is like I said we'll see a sharp deleveraging and I think obviously with that like you know we'll see like inflation come in a little bit. Um but the the deleveraging in financial assets was going to cause things to break and the Fed is going to have to print. Um and then we'll see inflation run rampant after that. You're saying whatever disinflation deflation there is, it's going to be short-lived because of the Fed's reaction. What I'm saying is we're doing 100 miles an hour right now. We're going to slam on the brakes down to 20 and then when we right after that we're going up to 300. That's what I think. So, um, well, sorry. Go ahead and I'll I'll build on this. Yeah, go ahead. It's okay. Go ahead. Okay. So, you you took it exactly where I wanted to take it. The reason why brought up the whole um unemployment thing is because not only could that really get the economy slowing down, but that is the thing that could turn the passive flows that could that it's got the the potential to reverse the passive slow or reverse the passive flows. And as your point, that's one of the primary pillars keeping up this pornographically overvalued market. So, um, huge potential there. So, another question is, okay, well, you know, what what could really get the unemployment rate moving up higher from here and it would be a slowdown in consumer spending? Well, what could drive a slowdown in consumer spending? And there's lots of things we could put out there, but one that that's been on my radar that I think is on yours, too, is the repayment, the forced repayment of student loans. Yeah, of course. where we're all of a sudden seeing delinquencies on on those shoot the moon because they had been at zero for a couple years as everybody was sort of promised they were never have to pay these back anyways because they were all going to get forgiven. As you know, student loans you have to pay back. Even if you decide not to pay it back, the government will garnish your wages. So, as you're forced to pay back your student loans, you have less money left over to pay for other things, including your other forms of consumer debt. And we're already seeing those start to really spike, right? So, I guess my question for you is you've just written a piece here uh called uh student loan uh something like Americans shocked to learn that loans must be paid back, but talking about this new student loan crisis. Are do you see it as as much of a potential trigger for decreasing consumer overall spending and therefore spiking infl unemployment as I do? I see student loan delinquencies coming back and I was looking at the uh maybe the St. Louis Fed or New York Feds, you know, they put out some uh whatever their like quarterly report is or monthly report is of all the charts in it showing, you know, credit card delinquencies. It's the New York Fed. I know the exact chart you're talking about. Yeah. Yeah. You know, and then everything kind of looks normal and then the student loan delinquency line just shoots straight up. And I always think about that meme like well well well if it isn't the consequences of my own actions you know like and so that was kind of like how I was feeling when I wrote that piece you know Americans shocked to learn that debt must be paid back which obviously is hyperbole or gross exaggeration for humorous effect. However Americans are actually shocked to learn this because you know I had listen I had had one friend years ago and I have one friend now that are like shining examples of this. I had one friend years ago who had significant student loans from pen and you know had asked me can I have your advice on what I should do. I just you know I got some money I'm trying to figure out this that and the other. Listen I I don't give advice you know like she's like I talked to this guy that our family knows. I said what did he say? And she said he said to wait paying back the student loans because they might just get discharged. And that was the mindset. The mindset was this is money I never have to pay back. And then all of a sudden it is money that you have to pay back. And now on the other hand, I have another wonderful friend of mine who is basically going through exactly what you're talking about who's now back on the hook for student loans. And you know, it has an impact on how she's budgeting herself on a monthly basis. So it needs to be considered. But like when these things go away for a while and then you reintroduce everybody with a new monthly bill that didn't theoretically exist for, you know, five years and you do that at a time when the economy is starting to crack, like yeah, that's just pushing the snowball down the hill a little bit faster. And so, you know, you said it perfectly, which is that is exactly how discretionary spending slows. If it's not a loss of a job with no, you know, economic stimulus check for no reason from the government like we had during COVID, [ __ ] just gets real and you have to make real choices. Like my friend now, you know, like I'm just I'm I'm helping her kind of make a budget because you got at some point you have to start to look at what your monthly expenses are and what you earn. And you know, once you budget yourself, you're in a good place. But when when a new expense comes out of nowhere, it kind of there's aftershocks with all of the discretionary spending that you were, you know, used to putting in place over a monthly uh basis or a yearly basis or whatever. Um, and so, and that's it. Like you said it, when discretionary spending slows, companies make layoffs. When companies make layoffs, people lose their jobs. Those people that lose their jobs spend less. companies make more layoffs and all of a sudden you have this big beautiful downward spiral in the economy also known as a recession. And so the difference now is we have blown this bubble so big both in debt and in people's insane expectations of what they are entitled to with the stock market and the economy. And you know, everybody expects that they're entitled to like, you know, unlimited comfort when it comes to markets in the economy. And guess what? You know, like [ __ ] might get real. And it sucks. And I'm sorry, but like it's not even by choice. Like our policy makers would micromanage things into oblivion if they thought that they could, you know, continue to have everything look utopian forever. I mean, but the natural laws of economics and mathematics, they just don't let it happen. And so, you know, introducing student loans here is just throwing kerosene on that tinder box that I was talking about and just saying like, uh, you know, because people had trouble paying their bills coming into that, right? Like we started to see credit card delinquencies rising months ago, auto loan delinquencies rising months ago, you know, average FICO scores on loans going down. like all those indicators that you look at that show that the economy is slowing that was happening before it and now it's just like all right you took that match and just threw it right on the tinder box like oh take this too and [ __ ] good luck figuring it out. So yeah I mean it's you know it's uh and nobody knows it's like what does he say in big short he's like everybody's walking around like they're in a goddamn end video and that's it. you know, you turn on the TV and you got the same guy on every day explaining why 40 times PE is cheap and you know, so no one is going to save you. I just aggressively try to not give financial advice, but give the life advice to think critically, think outside the box, like aggressively do your own research. Nobody is going to save you. Not the sell side, not Adam Tagert, not me. None of these people are going to save you. You have to kind of educate yourself and you have to have the fortitude to stand up against the whole system and say everything's wrong here and I'm doing the opposite of what you know my cousin is suggesting I do at Thanksgiving dinner because uh you know objective truths and reality are what you know what's going to uh uh determine where the market and where the economy goes And you know, there's some math that can't be faked and there's some natural laws of economics that can't be faked. And you know, eventually the truth wins the day. I was a professional short seller for 10 years. Um and one thing you learn as a professional short seller when you are identifying fraud or you're identifying you know uh business models that are broken or uh management teams that are nefarious or you know one thing you learn is the company always has a story. you know, that first press release from the company is always like, "Oh, the report is misleading and it's halftruths and and everything's fine and whatever." But then eventually everything gets to a breaking point where it just can't be denied any longer. You know, in the case of Nicola, it was the truck rolling down the hill. You know, people saw that and just said, "Oh, okay. Like, I can understand this. It's just fraud." You know, or like paid off. You know, you can keep it going for 30 years. You know, Barney 8% every year. We don't know how he does it. He's great. Couldn't be made off. He's so close to the SEC. Blah blah blah blah. And then one day you wake up and you got a Silicon Valley bank situation where you just can't make your redemptions. And the SEC was closing it anyways. And so it's just like, well, game's over. And so you can polish and polish and polish dog [ __ ] over and over and over again, but eventually the universe bends to the laws of economics and to the objective truth, whatever it happens to be. And that's what happened with my co analysis and that is what I think is going to happen here with the market. So I I very much appreciate that and I I very much appreciate the way in which you you look at the world. It's very similar to mine. I just recorded an interview with Bill Fleenstein like an hour before getting on with you here, Chris. And um you know there there is uh some worldw weariness in his response to some of my questions where he's like look he's like the fundamentals just don't matter right now because we we really deeping diving deep into the passive capital flows cuz he's like as long as that's in the driver's seat like none of this stuff that we think about all matters and you can get killed jumping in front of it. like, you know, god forbid you jump in and short the market, you know, you could get killed as long as these passive capital flows are in control. But, and you know, he he puts the same but you do where he says, "Hey, look, eventually the objective truths matter. You just have to figure out how to position yourself while you're waiting for that to actually manifest here." And um and and you know what, like right now with where things are and on the you know the uptrend that we're on where you know you get somebody like Bill Fleenstein who I think is you know incredible analysts. He's the reason I started a podcast. I'll talk about that in a second. I have immense amount of respect for his analysis. I listen to every single interview that he does. But people now, while we're in this uptrend, no one gives a [ __ ] about what the, you know, historical average S&P ratio has been over the last 50 years, no one cares that it's, you know, whatever 18x or 16x and that at one point during recessions it dipped to 8x or 6x or 10x and that that would basically mean a 60 to 75% correct draw down in in the market. No one cares about that. But what I can tell you is when those passive flows start to hit the bid, those are the charts that everyone's going to pull out and say, "Oh man, how low could we go? How the [ __ ] did we get up here at 38?" Like the historical mean is 16. Then everybody's going to go back to all those valuation charts and be like [ __ ] Yeah, we could go we could go a little bit lower or we could go a lot lower. So, you know, it's that one hearkens back to psychology. Oh, absolutely. Bill's 100% right that nobody wants to look at that now and you can get run over. But what I'll tell people is this. I started a podcast and Bill Fleenstein was my first guest because of how Bill Fleenstein was treated during a CNBC interview that he did in 2016 or 2015. I don't even remember. But when I started to figure out macro and it became clear to me that the whole thing, at least to me, appeared to be a Ponzi scheme, there was only a handful of people that ever were on financial media that sounded like they made sense to me. And he was one of them. And he did an interview on Fast Money in 2013 or 2014 where they asked him to come on and then Tim Seymour ridiculed him. Uh, you know, said that he sounded his words were pathetic. uh because you know Bill was basically saying hey like you know you could look at the market's really overvalued um and you know I'm in gold now um and to to Seymour's point you know the market has just gone straight up but he called him pathetic and Bill made two points during that interview one was one of the bond markets is going to crack up uh he said maybe Japan first um and that gold was going to go a lot higher and you know Tim Seymour kind of you know uh was jabbing at him and said you know gold was like 1300 at the time he's like well what do you think Bill like is gold going to $2,000 an ounce like give me a break you know and of course now gold's at [ __ ] $3500 an ounce and that was maybe 10 years ago if that you know so the point is like Bill knows what the [ __ ] he's talking about and like he's right and he you know he's going to be right about the bond market too. The question is just timing and when that does happen. Um and you know he's he's adapted I think like I have from really kind of like what I would see be be like permanently bearish on the market to kind of surrendering to the idea that in nominal terms the market may always just go higher but that doesn't mean that we're not in a recession and it doesn't mean that you know the market priced in gold isn't down 60%. Um, I think that I think he gets it. Um, and he's just kind of adapted a little bit in the same way that I have to to to hedge and to tell you like, hey, you know, the market could just keep going up. But I think his analysis is 100% on point and astute. It's just, you know, this isn't an, as Brent Johnson would say, this isn't like an exercise in like free market on paper, you know, theory in a vacuum. It's it's a world where governments intervene and everything is micromanaged. And so you have to kind of solve for X, but then you have to run that through like the assembly language to get to the answer of what happens after all of the central planners get involved too. So there's like a sick like psychological part to it too. It's like the market. Bad news isn't just bad news. Bad news is good news in the market because bad news is bad news until it meets that assembly language which tells you that the central planners will stimulate markets and then all of a sudden bad news is good news. So you have to do equity analysis followed by psychological analysis afterwards. Right. Exactly. What are what are a bunch of lying [ __ ] cowards going to do with this equity analysis? You have to take that and then and then say, "Okay, like here's what they're here's what these scared shitless people who run up from the desk at CNBC when when things go wrong or you know the the Scott Wapers who tweet during COVID to shut the whole stock market down and start over again in two weeks. You know, he posted something like that. What are those people going to do with this equity analysis that we have? And then that's your answer. So, I think Bill is just qualifying for that. I I love Bill. I respect the [ __ ] out of him and I think everybody should listen to everything he says. I listen to every single word that he says. Well, thanks. Um I do too and and I I did not realize that he was part of your origin story there and I that's such a great anecdote. I'm so glad you shared it with us. Um it ties to something that John Husman has said um in the past, which is bubble markets force you to make a choice. Look like an idiot now or look like an idiot later. And that's that's what makes the psychological part of this so hard is to Bill's point, it's not mattering right now. It hasn't mattered for a good while and it might still not matter for a good while from here. And it's really hard if you are educated in the the history of of economics enough to know to see the instabilities that you're talking about, but still see the market go up every day and see your idiot brother-in-law who's just basically throwing darts, you know, at Dogecoin call options, you know, more or less, and making money hand over fist, right? But but where where the rubber meets the road and this is why I appreciate Oh my god, I made I made $3 million yesterday. You know, like there's there's a scene in the in the movie uh Orange County, which is an obscure reference, but there's a scene in the movie Orange County where everybody in high school is getting their college entrance like letters and they get all they got get all mixed up and people get the wrong ones and some ditzy cheerleaders like, "Oh my god, I got into" and she's trying to read it. Yeah. You know, like it's the same deal. Like, oh my god, I I fell ass backwards into $3 million buying a crypto that should have a bit of zero at all times that produces no product or service. That's where we're at. Hust by the way. And it can be so The hard part though is is like, and again, this is this is why what I do what I do, and I think it's what you do what you do, which is, you know, the majority of people watching this video, Chris, are 45 years and older, right? And so if we do have this repricing event that you think is likely to happen at some point, we don't know when, right? But it's likely to happen at some point, a lot of those people don't have a lot of time to recover from from massive losses if they walk into that event just sort of blindly long the market, right? So you know it it it's a very difficult time for investors one to understand what's going on for all the reasons we talked about but to try to figure out okay how long do I be in this market uh and how do I be long right so you have definitely said well look I'm going to be long basically things that can't be inflated away right hard assets are a big part of your portfolio allocation right so I just want to acknowledge like it's a it's a it's a tough time for folks to figure out what to do but but the key thing to your earlier your u saliloquy there Chris was hey like e even though it looks like it's sunshine and roses forever you know remember that these these forces of nature will eventually reexpress themselves and they will matter. Last major question for you and then we'll start wrapping up. Um so you said at some point they're not going to be able to rescue the system and and we'll have this corrective repricing you talked about. One thing that sometimes gets probably that that that's more frequently getting thrown out is well this actually might you know come to the rescue in time is AI and I'm just curious on your your high level thoughts on AI. Do you see it more as something that can ride to the rescue by creating this, you know, renaissance in productivity or do you see it more as a danger in terms of maybe having created a bubble of a lot of phantom market value that could go away in a heartbeat here andor a massive jobs destroyer? Yeah, I think the tip of the speculative spear right now in markets is crypto first, but then I think the AI bubble kind of runs a close second. There's there's some similarities in the sense that crypto requires a significant amount of computing power. Well, Bitcoin specifically, you know, I happen to think Bitcoin could make it longer term, but you know, the crypto market's $4 trillion. Bitcoin is, let's say, two or$ two and a half trillion, which means there's a trillion and a half dollars of just pure detritus and crap in the crypto space. your FARC coins, your Sheba Enu, your Dogecoin, all this [ __ ] Uh that will all get wiped out eventually. Um similarly, you know, in the AI world, I think that the, you know, AI is here to stay. I think that, you know, eventually it's going to get to a point that is going to be [ __ ] scary when we reach AGI and this thing can just start building on itself. And thank God I'm 42 and I'll be dead, you know, at some point relatively soon because I'm not really interested in like living through the like humans versus machine war which inevitably feels like it will happen. I imagine feel kind of a weird like dystopian thing to say, but like I don't know. It really doesn't seem like too far-fetched of a uh too farfetched of a prediction for you know 100 years from now. If it's the year 20, you know, 2125 and you're watching this interview, then like just, you know, but if I got it right, you know, just glad we made it. Yeah. Stop by my corpse somewhere, you know, put a flower down or something. But, uh, you know, I think that here's what I think the biggest risk in AI is. As far as like black swans go, you know, I can't help but notice that Nvidia has some interesting relationships with companies that feel secirous. For example, Coreweave is the one that everyone has pointed out, which couldn't find a bid at its IPO at $40 per share. Nvidia had to come in and basically backs stop the IPO. They have like a pretty, you know, they're like Nvidia's key customer. There's, you know, chips being shipped back and forth and back and forth. You got one company with a 40 times earnings uh valuation that is basically single-handedly, you know, the predictor of the direction of the entire general market. You know, so goes Nvidia, so goes the NASDAQ. Um, and the other one is a speculative kind of black box that nobody really understands. and you know you I guess they're a reseller. I mean it's just I don't know it just doesn't feel right to me and that's just from Spider Senses of 10 years working on the short side generally being a skeptic in general. Um the whole Nvidia thing it just I don't know it doesn't it doesn't feel right to me that you know Core's got this big like customer concentration risk. Um you know it's fascinating like this is what I mean when I talk about market distortions. You have a company that IPOed at 40. Okay. Couldn't find a bid at 40. So, it's largest, you know, working relationship in the market, Nvidia, comes in and sets a floor at 40 and then it trades 250. Where's that big come from? How's that for a [ __ ] question? You know, like, did business really improve over the course of, you know, two months? No, of course not. Rampid speculation and who knows? convenient that that happened for Nvidia who backs stopped their IPO at 40, but um I don't know. I can't put my finger on it, but to me something just doesn't feel right. Um and so I would say that AI is in a bubble. Um I think there's a lot of like quantum computing names and there's a lot of just tech names in general. Um you know, we're seeing a return of Spaxs like non-cashgenerative crap. free revenue companies. I mean, look at what happened with like all the EV makers, you know, like Lordstown Motors, you know, when we had the EV boom came out and like, yeah, what did we find out? Well, we found out all the pre-orders were completely like did not exist. They were from one person LLC's that went back to some guy's bedroom in his apartment. Like, so when a trend catches on, there's always people that want to ride the coattails of, you know, the the the kings of that sector. At that point it was Tesla you know so everybody kind of wanted to follow Tesla's model now it's Nvidia and you have these other kind of you have super micro you have uh coreweave there's some kind of critical questions floating around there um and so I don't know to me the entire market feels like it's in a bubble I think you know the idea that the productivity gains from AI are going to justify today's valuation there's just when you factor in the amount job that will be lost as a result of AI and the fact that I can't even get my [ __ ] Siri to tell me what day it is. You know what I mean? Like five five times a day I'm trying to be a man of the future and I reach down and I ask my watch something stupid like how many days are in November because I'm writing out a calendar and it's like I don't know but you can log onto your iPhone if that thing can't just say to me 31 something that's [ __ ] you know like the [ __ ] doesn't work the way that it's supposed to yet. Right. So, between that, the fact that it's not necessarily going to be additive to um to the, you know, to the jobs market, uh, and the fact that there's a lot of companies that I think, you know, are riding the cattails of Nvidia that likely don't deserve their valuations or to even exist. Um, I think just in general we have a broad, you know, pretty wide overvalued market full of crap and we are so overdue for a real deleveraging that just, you know, this market needs to shed its skin so badly. Every third company is like a total fraud or not generating cash or just a story stock. So, I think everything's in a bubble to be honest with I just think that AI, you know what AI is? AI is the [ __ ] excuse that cowardly sellside analysts who make ridiculous projections about the stock market without admitting to clients and the greater public that the market is a rigged game fueled by the Fed. It's a way for them to justify the market overshooting their predictions. That's what I see. Get out a free card, right? That's what I see as notes. Morgan Stanley says, you know, look, okay, January 1st, S&P's at 4,000. Morgan Stanley says their their projection for the year is 5,000, which is like, you know, nobody should ever pay attention to these [ __ ] things because every time the market goes down, we always look back at those projections. It's like, oh, no, nobody saw COVID coming, you know, nobody saw this happening. Market's at 4,000, market goes to 5,000, you know, in six months and goes to 6,000 by the end of the year. Now, some analyst has got to get on TV and explain why the market overshot his target by, you know, 100%. So, he's got to say, "Well, this AI is really driving a lot of productivity. We're on the cusp of the future, whatever." Meanwhile, again, I can't get my [ __ ] thing to tell me how many days are in November, you know? like it's it's a way for people to backfitit an explanation, a [ __ ] explanation for a market that is just completely distorted, you know, by central planners, by insane market participants, by everything, by passive bids, by the options market. Um, so I don't know if AI per se is going to be the thing that pops the bubble, but what I would say is, man, it sure would be a huge problem if something happened to Nvidia, wouldn't it? Like, it sure would be a massive shock to the system if we woke up. And it doesn't have to be Nvidia. It could be Tesla. It could be Amazon. It could be Microsoft. But these seven companies that are driving the market, it sure would be something if all of a sudden somebody, you know, some auditor filed a letter at the end of the year one year and said, "Oh, we got to look at something." Or, you know, and these kind of things, they happen or, hey, you know, this there's something going on with this relationship. We don't know this. It's just human behavior. It happens. And it there's I'm not going to say fraud, but there's problems under the surface. Whether it's mismarked books at CRA companies or revenue recognition problems or cash balances that don't exist. These things are already there and people have been actively trying to cover them up for months if not years. I'm I'm certain of it. We just don't find out about them until we have that oh [ __ ] made off moment where it's like okay there's nowhere left to hide. So people will lie and lie and lie and cover up and cover up and cover up and swear that it's the Austrian economist's fault that it's the gold bug's fault that it's short speculators in the market that it's this that it's that. But at the end of the day there comes to a point where they can't run they can't hide anymore. And if if there's a moment like that in one of the mag seven stocks, I'm not saying there's going to be, but you know, if it does happen, that certainly would be a fuse that I think could set off uh, you know, major problems. As far as AI directly, can I point to something and say like, well, I really think that AI is, you know, honestly, like I said, I think that crypto is the tip of the speculation spear and where I think, you know, we'll probably see a major uh deleveraging first. Um, but then tech stocks are like right after that. So, the one good thing I I see from AI is it's moving people towards nuclear power, which I think is the future. Um, I think nuclear has gotten that it's done very well over the last year or two. My subscribers have known that I've been very bullish on nuclear for like three or four years now. Um, but uh, we're going to need a lot of power going forward. And so I think there will be jobs in the energy space for sure that are created. But like I said, I can't say AI is going to be the pin that pricks the bubble, but there will be a pin. All right. Well, look, we're going to have to end it there. Um, great points. Agree on a lot of what you said there. a lot of love to dig into, but we're going to have to save it for next time. Chris, there were some other recent posts of yours that were kind of more lifelated that I was hoping to get to, but we'll just have to get to them later. But you got a great piece. Which one? I'll give I'll give you I'll give you a twominut I'll give you a two-minute analysis. Which one? No, you know what? I I Let's Let's save it to do justice. And we're already well over time here, so I got to let you go. Um but but this was the one about every industry is an airport lounge now. And then you also had one about um the whole tipping culture. Uh, and I I was like standing up at my desk applauding after I read that one, which is, hey, it's just time to start saying no to, you know, the the crazy out of control tipping culture. I mean, yes, obviously tip the person who's provided actual service to you, but but beyond that, we're done. Um, all right. Look, in in wrapping things up, the most important question, uh, Chris, which is for folks that have really enjoyed this discussion, maybe this was their first introduction to you and they'd like to follow you and your work, where should they go? Um, my Substack is called QTRSF Fringe Finance. So, it's quotethe.substack.com. You can just put in QTR's Fringe Finance and it'll come up somewhere. And about half of what I write is free and half of what I write is paid. Um, so you can come over and check out all the free stuff. I also curate content. So, um, bore through a lot of like libertarian and, uh, you know, Austrian school think tanks. Some of my favorite analysts, some of my friends that are hedge fund managers, um, will give me their letters, will give me their analyses. Um, and I'll post a lot of those things as well. And I write, you know, I consider myself a columnist really, you know, like I I write my own kind of column. Today I wrote about the uh the tragic murder in Charlotte. Um about two or three times a week and about half of those are uh free to read. So you can come over and read whatever you'd like for free. All right, great. And you're on X as well, right? Yeah, at QTR research. All right, great. And Chris, when I edit this, I'll put up the URL and the handle, both your Substack and your X account on the screen there so folks know where to go. folks. The links will be in the description below this video as well. Um, Chris, just uh such a joy to meet you in person. Uh, you definitely did not disappoint in terms of being uh specific, bold, and colorful uh in your presentation um and in digestible and concise. So, I very much appreciate all that. Just because folks are going to um I think bring it up in the comments section 30 days in November. So, just know that uh jump on that. It's 30 days in November. Um that's why I was asking Yeah. Uh and and hey, that's a human beating AI apparently in in the story. Um and us humans need as many wins as we can still put up on the board. U but anyways, Chris, um so fun. Thanks so much for coming on the channel. Yeah, thanks so much, man. All right. Well, now's the time on the program. We bringing the lead partners from New Harbor Financial, one of the endorsed financial advisory firms by Thoughtful Money. I'm joined this week by John Lodra. Uh senior partner Mike Preston has the day off. Hey, John. How you doing? Hello, Adam. How are you? Great to be with you. And I I'm sure Mike's enjoying his vacation this week. Good. Um, so yeah. So, uh, Chris Arts, uh, colorful character, huh? Absolutely. I I stumbled upon Chris, uh, I don't know how actually, several years ago, and he's been in my Twitter or X feed, whatever you want to call it, uh, for years now. So, I was I was thrilled to see him come on your channel because, um, you know, uh, couple things we we really appreciate about. He's certainly uh clear spoken and outspoken and you know doesn't hold punches and we we really like just candid truthful talk that that's what we as advisers try to do. Maybe not in the same style but in the same spirit. Uh and uh look there there are things to call out and observe about financial markets that can't be danced around or sugarcoated. And we just really appreciate folks like him calling out some of the things that we as well see that um our takeaway is there's it's only inevitable we'll will matter at some point and we're probably getting closer to that that some point than than um than we have been. All right. Well, you know what what I really appreciate about him, especially his writing, but certainly getting a chance to talk to him live for the first time, um, is, you know, he he has come at this macro world from, um, an everyman's perspective. Um, he didn't, you know, rise up through, you know, getting an economics degree and then, you know, going to work for a hedge fund and, you know, going to get an MBA or whatever. Um, and those of us who do, uh, many of, you know, nothing wrong with that, and many of those folks I interview on this channel, we sometimes can can get ourselves wrapped around the the wonkiness, you know, of of the topic, and we use a lot of high flutin words and, you know, there's there's a lot of kind of um spiraling around, you know, what could happen or what might be going on. And Chris really just has a way of cutting through all that and just stating, you know, what the every every man would say if he were at the table. Hey, I don't like that. That doesn't look like it's gonna end well. So, um, you know, obviously folks just saw that in action, so don't need to dwell on it, but it is sort of a refreshing, uh, breath of fresh air. Um, all right. Well, look, um, uh, you know, he, uh, used a great turn of phrase to describe the overvaluate overvalued state of the market in his mind, which was pornographically overvalued. And I don't think you would disagree, John. Uh, but curious, what were some of your key takeaways from his his economic outlook? Yeah. So, um, so first of all, Chris does bring an everyday person's take this, but it's a very informed take. He he brings data, which is something that we always try to do ourselves. It's it's so easy as humans, whether you're a professional investor or not, to to succumb to your own psychology and biases and this and that. So, the ultimate arbiter is is data. And you can take data and you can rationalize and explain away, you know, why things maybe don't jive with the data, but you got to at least start with an informed perspective. And we think data, black and white data is the best way to do it. So, he brings uh a bunch of that and you know, not only your talk with him, but in the in the writings he puts out. So yeah, pornographic is a very apt term, obscene we've used. I mean, it's we we are categorically at the most overvalued point in the US stock market in history. And some of that may be partially justified in some sectors, you know, with, you know, kind of the the hyperscalers and and the huge margins, you know, um there's all kinds of rationalizations that you can but but history is replete with this time is different kind of mantra. And they're all always very seductive mantras and they don't matter until they matter. And you know I think the one you know unique thing if if I could even use that word uh in this latest syndrome and then and I I I would describe the last you know 15 plus years as being symptomatic of this is we've had absolutely massively distorted monetary and fiscal policies in succession and they have created a a a beast of a market that is in the numbers you look at valuations and and all this kind of And uh so we're absolutely on the same page with what what Chris talked about. That will matter at some point. Valuations don't matter in the short term, but they matter in all of history with the long term. And uh they are not immune from, you know, the laws of gravity. In fact, when you look at all the the rescues that the Fed and other policy institutions have have done, they've been in in the wake of major calamities. And it's ironic that you know like for example the Fed will get credit for you know u saving the world from the great financial cr crisis where you know a very studied opinion would be that the the Fed's policies low interest rate policies were in no small part uh a cause of of that bubble that and the and the um you know kind of legislative policies to to make home ownership accessible to everybody. Well, that sounds great on paper, but when it manifests itself by Wall Street, taking the the bit in his its teeth and, you know, doing no dock loans and loans for anybody that had a pulse, uh, and even folks that weren't even real, that's what you get. You get a bubble and it explodes and and, you know, the the rescue comes to the table in the form of the Fed and monetary policies. It's just a vicious cycle. We think we're uh, our takeaway is very similar to Chris's. You know, we think ultimately there'll be there'll be a a very massive reckoning in markets that will be once again met with monetary and fiscal response that will just, you know, uh have to make one bad choice uh higher than the other. You know, I I think his take and seen in his writings is that the they'll come to, you know, the recent uh job numbers do suggest that there's some real um kind of degradation in the state of the economy. The job market is is soft. it's getting softer and uh that will likely be the cover for the Fed to to cut rates like the market expects it to with near certainty or absolute certainty I should should say in next week's Fed meeting. Um but they'll the the policy makers we have no doubt will choose economic uh and job market uh health over for example worrying about inflation and that is a stew that I think can invite a very very tricky environment you know call it stagflationary like this the 70s whatever uh but it's a it's a nasty time to be you know kind of an investor it's a very tricky time and um you know we think you know passive buy and hold is likely not going to be the same kind of victor that has been in the last, you know, 15 years. So, um interesting that you use the the term tricky. Um that's the term that Bill Fleenstein used when I interviewed him earlier this week for many of the same reasons you just mentioned, John. And um when I brought that up in the discussion with Chris, um you know, he talked about sort of his origin story and that Bill Fleenstein was actually the first guy he ever interviewed uh for part of his business. Um so there's a bit of a full circle that that's going on there. Um, you mentioned the the jobs data that of late the drum beats been pretty darn negative um on jobs and we had the the huge surprise yesterday um with uh the uh payrolls coming in far lower u than was expected um or sorry no the the payrolls came in far lower than was expected last Friday but they had the the jobs revision uh for the year ending March 2025 and it was almost a million jobs uh that that were removed from the data, right? We overcounted by a million jobs. Um biggest revision in history. Uh the the last time we ever saw a job revisioned anywhere near that scope was right before heading into the um global financial crisis. Um and yet Wall Street didn't care. Uh stocks didn't do anything yesterday. They're up a little bit today. Um, so you know, right now it's uh, you know, it's it's kind of a bulletproof teflon market that just just doesn't seem to care about this stuff. And and not only that, but um, I talked about AI a little bit there at the end with um, with Chris and you know, he certainly seems to believe that it's in a bubble. Um, by the way folks, um, uh, you're probably aware of the macro pass service that we offer to Thoughtful Money's premium Substack subscribers, which is sort of a rotating series of research reports that a lot of the folks that I I interview here write. Um, Brent Johnson just wrote an excellent one on um, why AI looks like it's in a bubble. Um it was a a a a really deep comparative analysis of previous manas, previous price manas that we've seen and then you know basically looking at what what are the key factors of a mania and then looking at the AI space and saying are we meeting those criteria now and it really is a pretty uh it's excellent written piece but it's pretty condemning for AI. Uh and within an hour or two of Brent publishing that report um we then had Oracle uh at its earning give its earnings call and gave its forward it's actually missed um expectations for the quarter John but it gave its its forward guidance and the stock as we're talking right now up 40%. This is a This was what like a $650 billion company yesterday and is now what 900 something billion maybe maybe closing in on a trillion uh in less than 24 hours. You know, we've just added what whatever that is, right? 350 billion in uh in market value in less than 24 hours. Um hard not to see this as a bubble-like when you've got movements like that. But before that news came out, I had had published um a report on X uh of a a stock yesterday that announced it was going to start like a crypto treasury. So some Bitcoin, some Salana, some Ethereum. The stock went up uh at one point during the day by more than 2,000%. Uh crazy. They're not doing anything that's creating any value. They're just basically, you know, changing how they they invest the treasury aspect of the company. But it went ballistic and that's a sign of a bubble. But when you have a massive kind of blue chip company like Oracle that can go up by 40% in a matter of hours, I mean I've I've almost never seen anything like that before. John, have you? Uh very rarely. I mean, you're exactly right, Adam. It's one thing to see a small emerging company kind of, you know, cuz the analysts don't really have a full uh handle on the company model and the the business model and the growth rates, but this is, as you said, this is a as blue chip as you get in the tech space. Uh, and I honestly haven't digested that report fully enough yet. I do know that it was just blow blow away guidance relative to what the street was expecting and uh, you know, just it's just kind of headscratching frankly. But when we have seen this happen in in prior instances, maybe not the same degree, but these are the kinds of things you see at very speculative uh turnaround points and and blowoff top kind of environments. And that's kind of the environment we we think we're in. Uh with the backdrop valuations, the you know very uh almost unidirectional move of markets off the April lows. I mean this this is you can't you know look back in all of history really and find something as as dramatic as we've seen. And not just the move but like for example the relative move of you know speculative stocks versus like low volatility high quality stocks. It has been absolutely eyepopping right so this this is just emblematic of of investors in mass having this kind of speculative fervor and that's what you get. You get these unexplain unexplainable moves in a in a big stock like that. And um you know um we'll be interesting to see if this sticks. It would not be without precedent to see this be a you know kind of a you know we might see an island reversal as we call it where the stock is got a bar bar daily bar just up there all by itself and in a week or two we see it's completely come back to earth right from where it was but remains to be seen we're not that smart to to call that right now. Okay. I mean, as a capital manager, what does that do to you in terms of um what's your reaction function to that going to be? Just mild interest and we'll keep an eye on it or hey, I got to jump in on the AI trade now because it's still going gang busters or hey, this is sort of a classic late stage bubble sign. We might want to derisk further than we were planning on. Yeah. Well, we um we actually have exposure to the technology sector. So, we're not we're not out of the AI trade. We're not following it per se, but we have broad exposure to an equal weighted uh technology ETF. So, that that ETF, even though it's not Oracle, I'll just pull it up. And this is not an endorsement of that ETF, but I'll just show you what what that looks like and some of the things we look at. Um so, we've been in technology for quite a while as an overweight sector. Um in part because it's just been absolutely tearing on a relative strength. You know, we actually think, for example, energy is fundamentally more undervalued than technology by a long shot, but energy has been one of the laggered sectors uh for all of this year. And doesn't matter what valuations say if if the market's not um kind of taking things in the right direction on a relative basis. So, we we've been in in technology stocks. I'll just pull up a chart of the ETF that we own a piece of. It's um XNTTK is the tick the ticker symbol and it's essentially an equal weighted technology sector. But you look at this is a daily chart. Um you know it's been very strong. Here's today's bar, right? We have this gap open here. That's in large part due to things like Oracle. Even Nvidia is up big again today, right? On a on a relative basis. Um that is I mean we're just just the things we look are for for our extensions. These these various lines are moving averages. This green one's 50-day. This uh kind of bluish one is a 21 day. This red line is is what's called a an upper Ballinger band. It's two standard deviations move above this 50-day. You know, rarely do you see this ETF, for example, get above uh that 50-day upper Ballinger band uh not not only at all, but by this degree. So, would would it be highly likely to see this pull back or at least trade downward to sideways for a short period of time? Absolutely. It's rare that these kind of breakaway uh gap opens on a broad sector like this stick. And even that stock, if we look at Oracle, I'll just show you what that's doing uh while we have these charts up. This is this is the bar for for Oracle. I mean, that's crazy uh to see a stock of that magnitude uh move higher by that much. You know, how wrong could analysts have been on the business plan, right? But based upon one, you know, one reports kind of projection, you know, what's what happens next quarter, right? Are they are the same kind of blowway numbers going to be communicated? So, Wall Street analysts have a tendency to overreact in the in both directions. And I think we're seeing that market reaction right here today. I'd be surprised if we don't see this uh kind of consolidate uh from this this gap open here today. Yeah. Uh it's crazy because you know Oracle shared the the forecast last night and I think the stock was up like 30%. That momentum has continued uh so far here in the day but um I mean it's I think largely unvetted right I mean it takes time to go through company forecasts and find out what their underlying assumptions are and run your sensitivities and all that stuff. But right now they're just taking it as gospel. Which again to me that seems very consistent with previous mania where everybody just sort of relies on narrative, right? Oh, you're telling me? Okay, I'm going to take it as gospel. Yeah. In in these kinds of envir environments, higher prices beget higher prices. Uh, shoot first, ask questions later, right? That's that's kind of what happens in very latestage speculative advances. Okay. Well, look, the conversation with Chris went a bit long, so we'll we'll keep this one somewhat tight, John. But real quick, um, just back to my question there. Um, so, uh, I mean, last time we talked, uh, you guys had shared how you'd, um, you'd done some risk mitigation. And I think maybe you've actually done so on gold, which we'll talk about in just a second here. But but just overall, is what you're seeing in some of this bubble-like, you know, this this very recent bubble-like moves, is that influencing you to be any more leaning into risk mitigation yet or or are you you still assessing? We're actually kind of unchanged. We had our our weekly investment committee meeting today and we didn't make any incremental increases in in exposure by by by any means. And we kind of kept our current hedges in place. We haven't added more robust hedges. Uh but we are not we are seeing in our in our systematic indicators some erosion. So for example, we look at a whole battery of breath indicators that kind of give a pulse on not just what the top names are doing. What is the market in mass doing? So the S&P people forget the S&P 500 for example includes 500 companies, not just seven, not just one, but there are 500 companies. So we can kind of look across that whole universe and see what's happening. So, for example, if you look at the percentage of stocks u in that 500 un 500 stock universe that are trading above their 50-day moving averages, we are seeing a series of of uh higher higher low higher highs, lower lows and lower lower lows. Let me just pull a chart of that just to kind of give you a sense for what we're seeing. So, here we go. This is a chart uh shows the percentage of stocks in the S&P 500 that are trading above its 50-day uh moving average. Okay, we peaked out in July at about 78%. What we saw, so going back even to April, we saw a wash out in April that was on par with some of the worst declines in all of history, a capitulation, you might call it. Uh only about 4% of the stocks in the S&P 500 were trading above their 50-day moving average since that time. And and the markets bottomed, I think, on on April 8th, I want to say. Uh but we've had a very powerful move higher very broad rally in the stock markets not just the mag seven uh tons of stocks in in you know to the point where 78% of the stocks in the S&P 500 were trading above their 50 uh you know 50-day moving average uh that has systematically started to turn over here. So you see these lower highs and lower lows and and we are looking like we're going to put in some further degradation there. These are the early warning signs that the momentum is starting to wne. So we are looking very closely at at that and a whole battery of indicators that tell us that hey this this kind of speculative advances momentum is starting to wne. So we probably would greet that with um a reduction in equity. We have one holding uh in our equity portfolio right now that we're we're uh probably you know I would describe it as in the penalty box and that would probably be the first area we start to trim. And um we have some put options out of the money put options that expire next Friday. Um, if we don't see this turning around, we'll probably look at extending those out, maybe adjusting the strike prices higher. Uh, all to say is that, you know, we're probably closer to trimming equity andor broadening our our hedges, uh, given what we're seeing in the in the broad indicators here. Okay. All right. So, let's specifically now then get over into gold, which has continued uh, its epic run here. Um, gold futures uh ticked 3,700 uh dollars an ounce very briefly yesterday, the day before. I can't remember which day now. Um, but you know, a a number that I think almost none of us um thought was possible, you know, coming into this year. I mean, we all hoped eventually it would get there, but to get here as quickly as it's gotten here is really been a joy ride for those that have been invested in the precious metals. Um, one of the questions I've been asking of late, folks on this program, which I'll now ask you, John, is um, you know, precious metals investors are feeling very validated, um, rightly or wrongly um, especially a lot of the folks that have been holding them for a long time because they've been concerned about, you know, currency devaluation and things like that. And there's sort of a sense of, all right, this is it, right? And maybe it is. Um uh the question I have for you John is when things move this far this fast uh my understanding of sort of best practices of investing is is you want to rebalance your portfolio. You want to take some of those great gains off the table just to make sure that you don't lose them in case things reverse. You often times see pullbacks um after big runs like this and sometimes in and you see some of the biggest pullbacks in the biggest bull runs, right? Um so are you guys lightening your position or hedging your position uh anymore today than you were say a month ago? Yeah to answer the question bluntly yes we have uh taken some chips off the table both in a trimming of so we have we've had gold mining exposure and some silver exposure not gold bullion. Uh so mostly our exposure has been about 12 12% target allocation uh 10% of that in gold mining stocks uh and 2 and a half in silver silver bullion. both have had very impressive uh moves higher. Uh and I'll talk about in a moment, but we have trimmed our gold mining position. It got a a little bit overweight. We trimmed that back to model weight and actually have uh put some we now have some in the money calls on half the position. Effectively our gold mining position right now with the with the effect of those calls is about a 6 and a half% 6 and a quarter 6 and a half% allocation because those in the money call options provide uh nearly about 7 uh nearly about 10% downside protection if if the if the gold mining complex were to pull back 10% those in the money call options would protect roughly about the first 10% of that move. Okay. Um but let me pull up a couple charts here uh just to kind of give you that living. This is a chart uh let me just hit the share button here. This is a chart of GLD which is u the most widely traded ETF uh that tracks gold bullion and we've been talking about um and this is a weekly chart. Each one of these bars is a week. So for the last since about April uh midappril we've we've seen gold itself really consolidate you know kind of go nowhere so to speak and we've traced out this this kind of triangle uh just in the last couple weeks we see we've seen a massive breakout of of that triangle. So gold itself uh that's a weekly chart. I'm just going to move that to a daily chart. Uh you can see we busted way out way out above the Ballinger band. Yeah, we got extended here in a very short-term basis and the gold miners even more so. But that big picture, this is a very healthy breakout, but we would absolutely expect a high likelihood of a of a a pullback here in the near term. That's not a guarantee. It's just probabilistically speaking, it's become more more likely. Um, if we look at GDX here, which is a basket of gold mining stocks that we own, this has gotten even and I'm going to go to a a weekly chart on that. You can see we got, you know, we've had a very powerful move. broke out from this this consolidation pattern here in in about uh in early August. Very sharp move. It has extended up above this Ballinger band. The RSI got very extended. Fund flows were if there's one u you know saving grace here. The fund flows haven't been all that dramatic. So there hasn't been this massive piling in. So there is a there is a possibility that we're early on and climbing a wall worry here. But this is not a binary thing. So we've we've taken some chips off the table. We have call options written at 62 $63 a share. That gives us a called return up to 65. So on half the position we're a little bit, you know, we're we're we're in the money and our return is capped, but we have protection down to about here uh on that half. So we think it's pretty likely we'll see a pullback here in the short term. And that would give us an opportunity to roll out those calls, book profits on them, but we feel very confident or very comfortable in having not only sold down the position a bit. You know, if some clients got up to, you know, 14 15% allocation, we trimmed them back to 10% target allocation and then also sold these call options that brought in premium that still preserves some upside but provides very robust downside protection on half the position. Okay, I appreciate you walking through that. Um, I've been uh advising people who have big precious metals positions that have have grown, you know, as a percent of their portfolio over the year. Um, to consider what they might want to do here, uh, to to derisk um, and, uh, some people have said, hey, you know, the the logic is sound. I get it. It's just kind of the the brass tax of good wealth building to to do these things that you just walked through, John. Um, there have been others who have said, "What are you talking about?" Right? I'm I'm never going to sell any of this and and you know, this is this is because the dollar is dying and and this is it. This is the breakout moment. Why would you get off right when things are getting going? Um, so I appreciate you being transparent about what you guys are doing there. And um, you know, I don't get a sense that you are any less um, you know, kind of bullish on the longer term prospects of the precious metals. Um, again, you are doing what a good capital manager does, which is when things get look like they're richly valued, at least in the short term. You take a few cards off the table, you build a little bit of dry powder so that if there is a price correction, you can deploy back in at lower prices. Correct. Absolutely right. There there is no single asset that anybody uh if they're thinking objectively should have 100% of their their money in or even 50% in our our opinion. um you know you you might get it right in some scenarios but there are certain other scenarios that you just haven't allowed for that that uh that won't be the best solution. So yeah, the the hardest part in investing is not buying. It's it's no not having the fortitude and discipline to sell and and uh you know this this thing we call investing there there are if infinite opportunities for regret if one is humble and realizes that even with a very sound system you're not going to get it perfect every time. You are absolutely going to have opportunities for regret. You're always going to you know sell too early or buy too late or whatever and and that doesn't matter. The important thing is that you uh catch the trends and and capture most of the upside and mitigate most of the downside. That's that's really the imperfect game here that most people really should be shooting for. Not getting out at the very top or, you know, getting out at the very bottom. That that is impossible nor nor is it necessary. And and having some discipline to sell and book profits and protect some gains is absolutely part of the game. Okay. All right. Well, in the just remaining minute or two we have left, John, um we can go deeper into this next week, but um you mentioned energy earlier that's coming up more frequently in in the discussions I'm having as uh a sector that has really fallen out of favor right now is really underperforming um but that has a lot of potential promise ahead of it. um both if you just look at the cyclicality of the sector um but also if you look at some of the fundamentals uh that folks like you know natural resource investor Rick Rule talk about about how uh e even if um demand just stays stable from here for the next decade which of course it won't it'll go up but even if demand say for oil stayed stable he's predicting we're going to have um some pretty serious supply shortages just because of a lack of capex investment over the past decade or two. Um, but right now oil is is basically trading as if it's going to be cheap forever. So, um, what do you guys how you're looking at the energy sector right now? I know you mentioned you're you're you're getting interested in it, but but doesn't sound like you've made a commitment to to uh to start increasing your exposure to it. What what are you going to look for to say, okay, now it's time to actually put more of it in the portfolio? Yeah. So, um we have not been in energy uh in we have some um pipeline companies, master limit partnerships uh in in an ETF fund. Uh but the broad energy sector, no, we we haven't been really weighted in at all uh in a targeted way this year. And that's almost all all because they've been laggered on a relative strength basis. They they have uh absolutely not triggered any uh buy signals relative to even the broad market. So, that's kept us out of them. But what we're starting to see is some some uh very notable improvement there. Um let me just share share a chart. This is what's called a point and figure chart and uh 2025 starts here. You can see prices. This is and this is um an ETF that uh is the S&P oil and gas equipment and services company. These are drilling type companies, offshore rig companies. Uh and to your your point that Rick Rule made, yeah, there's been an absolute um slowdown in investment and and these kinds of things and that usually um breeds a supply and demand pinch that brings prices higher eventually. We're starting to see this this sector start to perk up. We've had a couple of breakouts here to the upside, a trend change, and we're starting to see some notable improvement on a relative strength basis. So the the early stages of of improvement here are are in place and that is right now amongst one of our top shopping list items to uh look to rotate into if we see some further follow through to that. You know, and what would cause that? We'd see um a slowdown and not necessarily decline or a collapse, but a slowdown in the pace of expansion of the broad market uh while this is starting to gain ground. And that that's enough to trigger what we we call a relative strength buy signal in this sector. And that's we've seen some notable early improvements there that you know pretty good chance they follow through and we'll be looking to rotate into there. All right. Well, let's let's keep our eye on that uh in the weeks going forward. And if you end up seeing that by indicator, you know, obviously let us know and let us know what you guys are doing so folks can follow along. Um all right. Well, look folks, um if you've enjoyed uh if you enjoyed the interview with Chris Irons, um please let him know that by hitting the like button and then clicking on the subscribe button below as well as that little bell icon right next to it. Um, if you would like some help in trying to figure out how to uh navigate a market that Chris believes is pornographically overvalued and sort of on a on a collision course um with a lot of the um the shoes that he talked about that he thought he he has high confidence are going to be dropping from here. um highly recommend that uh most people watching this video get that help from a good professional financial adviser, but importantly one who takes into account the uh macro concepts uh risks and issues that Chris and I talked about and John and I have talked about here. Um if you've got a good one who's doing that for you, great. Don't uh don't mess with success. But if you don't have one or you just like a second opinion from one who meets that criteria, uh then consider scheduling a consultation with one of the uh financial adviserss endorsed by Thoughtful Money. These are the firms you see with me on this channel week in and week out. 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Uh, if you can't watch live the date of the event, which is Saturday, October 18th, don't worry. replay videos of the whole experience, all the presentations, all the live Q&A will be uh emailed to everybody right after the conference ends. Um, and if you are a premium subscriber to the Fal Money Substack, um, hey, go read that report from Brent Johnson that I talked about on the AI bubble. Um, but uh, but very importantly too, look for the code I sent you that will let you get an additional $50 off of the that low early bird price discount for the conference. Um, all right, John. Look, my friend. Um, another great week. Uh, thanks so much for coming on and going solo this week and look forward to seeing you and Mike. Make sense for whatever happens between now and next week with Mike when we join up again. Thank you, Adam. Always a pleasure. We got our big Fed meeting next week. So, we'll we'll uh we'll get some kind of fireworks probably is the market market is so certain that there's going to be a cut, but uh out of certainty sometimes there are some s surprises. So, we'll watch very closely for that. Yeah, you know, things, John, are they're starting to get interesting. Um, you know, we can argue whether that's good or bad. Um, but, uh, it's not dull, and it seems with some of the the news we'll have next week, um, this, uh, this rocky road's going to keep on rolling. Absolutely. We'll keep watching, Adam, and we'll look forward to chatting next week. And until then, have a a great week. All right. Thanks you too, buddy. Everybody else, thanks so much for watching.