When the AI Bubble Pops: The Fallout Few Expect

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Nothing in this program should be considered investment advice. It is for educational purposes only. Please hit pause and read this disclaimer in full. You know, there's always the new generation that without realizing it or not is consumed with pride because they believe that they were born on third base. They think they hit a triple without understanding. They happen to be at the right place at the right time. and their arrogance causes them to not pay attention to the wisdom and the lessons of the past. [Music] Hello everyone, welcome very sincerely to this episode of FinanceU. I'm your host Chris Martinson. I'm back with Paul Ker of Ker Wealth Management. How you doing Paul? >> I'm good Chris. Good to see you today. Well, I'm I'm glad that you have that particular poster over the back of your head because I want to talk about um the AI bubble, this bubble thing that we've gotten and it's a comprehensive bubble. I don't want to just pin it all on the AI. Also, uh remember we talked about the jobless recovery. Now, we have to talk about the freightless recovery. >> Oh, good. >> As well, >> so there's some some other data I I want to get to on that. But, um but I've really been struggling watching watching this. I So, I'm an analyst at heart, Paul. I I like to understand things. So, it was just announced the other day that, you know, there was another deal. Amazon was going to has a $ 38 billion deal with OpenAI. I couldn't find any who's paying who for what over what terms. Like, like 38 billion for I couldn't find out any of the details, right? It's kind of vague. So, >> kind of vague. >> Yeah. >> So, I dug into it more and more and it turns out I'm not the only person struggling with trying to understand what the heck's going on. Um, it turns out everybody is. So, I thought we could unpack that for people here today because I if it's if it's true that this is all a big giant circular funding bubble, then people need to know about that because we've seen this before when you know the so-called internet bubble burst in 2000. So, kind of has some similar flavors to that. >> It does. And what's interesting to me is I love the analyst community because because they're not yes people. They will argue, they will debate, they'll get into the math. And this is the one thing that I've not seen anybody challenge on this circular financing issue yet. Everybody's like, "How in the world are they, you know, is nobody paying attention to this right now?" I haven't had one single explanation outside of circle, you know, this circular finance to to protect everybody's stock price and keep this narrative going in the short run. >> All right. I you know me, I like to frame this. Let's frame the conversation real quick. First, definition time. Uh this is the best definition of a bubble I've ever come across and it's in the crash course and it is that a bubble exists when asset prices rise beyond what incomes can sustain. >> That's a good definition. >> So on your history of bubbles back there, tulip bulbs, right? The tulip bulbs that the the prices of tulip bulbs shot way up. So the asset price, the asset being the tulip bulb went pretty high. Unfortunately, there was only so much you could actually sell the offspring of that that bulb for, and that was the income part of the story. So, we've seen this with railroads. We've seen this with the South Sea Company. We've seen this over and over again. It's a it's an entrenched human thing. Now, so there a bubble exists when asset prices rise beyond what incomes can sustain. Now, we need to understand, well, you need two conditions for a bubble. So, what are those? Condition one, you need a story. It's a story. They're not making any more land, you know. Um, these are extremely rare bulbs. Everybody wants them. Um, eyeballs. You need a story. And the story doesn't even have to be sensible. And you need ample credit because you can't fuel a bubble off of cash. Can't be done. You need somebody out there lending credit um into this whole story. So, so there. So the question is you know do we have that situation going on? Well, you know, to their b to their credit pol this is way more complicated than say lucent vendor financing in the year 2000 in 1999, right? This is what these are the kind of charts they have to make. This is Bloomberg. It's like Nvidia is a $4.5 trillion company at the center of this. You got all these different lines running around and and red is um hardware or software and blue is investment money. You see the investment money is flowing within and around and amongst each other. It's going every which way. You got services, venture capital. So this is all like like it's that complicated. But in this case, you might have open AI nominally valued at 500 billion, but who knows, right? It's not a public company and they've lost money every every day that they've been been open. So value it how you will. Um and and so how do you begin to make sense of this? You know who's paying whom? Where is all this money coming from? I can't figure it out. I I've tried. It's tricky. Too tricky. Right. >> It's bad when you have to take it's so complicated you have to try to put a mind map together because usually that visual will help explain where it's coming from and you still can't figure it out. >> Yeah. Yeah. So, uh, I think the Wall Street Journal, um, they did a pretty good job last week on this. And this is the chart they came up with. It's a little bit cleaner. >> Mhm. >> But those are your big those are your big companies, right? OpenAI, Microsoft, Nvidia, Corewave, AMD, and Oracle. And so then you have chip purchases. So this is the blue light blue line. So chip purchases are being made all over the place. And by the way, AMD did this big old deal with Open AAI where they said, "Hey, Open AAI, we'll allow you to buy our stock warrants for up to 10% of of AMD for a penny a share." >> Oh my. And you know what? The stock didn't tank or crater on that news when they just diluted existing shareholders by this massive amount. And so basically, OpenAI can exercise those warrants, sell the stock, and then use that money to buy chips from AMD because AMD is that desperate to get business with OpenAI. >> Wow. Wow. >> Right. But they're doing revenue sharing, equity investments, it just goes every which way. So, um, even the Wall Street Journal, I said, is struggling to describe and explain this. And so again, they got very good reporters and they they got, you know, they're able to dig through it. So this is from that Wall Street Journal article. They said here, quote, "Circularity has become a buzzword in AI deals. Some investors have drawn comparisons between the mega deals of today and some excesses of the original dot bubble. But today, the dollars are at stake are exponentially bigger. The deal is way more complex and the money trail harder to follow." Absolutely true. Broadly speaking, circular financing often goes something like this. One company pays money to another as part of a transaction. Then the other company turns around buys the first company's products or services without the initial transaction, the other company might not be able to make the purchase. The funding mechanism could take the form of investment, a loan, a lease, something else. And during the 90s and 2000s, such dependency loops mainly consisted of telecom equipment makers lending money or extending credit. There's the credit. You need the credit for a bubble to customers so the customers could afford to buy their gear. In those days, this was widely referred to as vendor financing. But today, Paul, it's just way more complicated. Like, I can't make sense of this, which is always a problem for me. >> No, it's certainly organized. Um I mean, it's certainly organized between them and collusion between each other, and that that just doesn't make sense. Where does it where does it go? Then you've got the destruction like at this point, what these these chips are going to be viable for three years. Is that what it is? So, you're going to have to keep this going along and then that, you know, supporting each other's uh stock prices helps continue their ability to add further leverage on top of it. Well, at the heart of this it is this company OpenAI. So, I don't know what it means when they signed What does that mean? They've signed a $500 billion Stargate deal, 100 billion with Nvidia, 100 billion with AMD. You start adding it up, it turns out um that they're actually up to about 1.4 four trillion by another measure that I was looking at and they signed all these deals. Paul, this company loses money. Their revenue is estimated to be 13 billion right now. How do you sign $1.4 trillion of deals on 13 Well, let's call it 14 billion so I can do the math in my head. >> Yeah, >> you have 1,000th of the revenue revenue which you're burning like crazy to support $1.4 4 trillion dollars of deals. >> The math doesn't math. >> You've seen this before, right? >> Smaller versions. Yeah. This is my 27th year. So, I've I've I've seen this in cycles before. >> Internet bubble, late 1990s, housing bubble, you know, circular financing, selfdeing. >> Um, you know, this is new, but it's broad in this circumstance. So, was it last time we talked? But anyway, the the the number of companies in the S&P 500 that are actually down year-over-year is pretty extensive. In fact, we've talked about how the whole thing is really being held up by by just a by just a few companies, right? >> So, right now, the top 10 companies are 42% of the S&P 500. And it turns out that just the top five of those are 32% of the S&P 500 and 53% of the NASDAQ, right? Just Nvidia, Microsoft, Apple, Alphabet, which is Google, and Amazon. >> So just that just those five, that's it. And each one of those is is pretty heavily sort of implicated in this in this AI bubble that we're dealing with right now. Mhm. >> And um that's an extraordinary concentration. So it turns out this whole thing is really just driven just by these by these companies. Top 10 for sure. Top five really even more specifically. >> Yeah. The highest concentration that we've ever seen in history. Correct. >> Correct. >> Yeah. And and I've got another good chart here to go along with that or or opposed by Michael Arawed which is which is appropriate because if you look at this and this goes along with different strategies that you have. So Michael Aroette postes why is it even called the S&P 500 >> right? So, so here's your magnificent 7 since 2015. And here's the other S&P 493, >> right? So, you got I it it if you're properly diversified, you're struggling. If you have value strategies, dividend strategies, anything else at this point, you're struggling. And of course, none of it makes sense because this is just, you know, this bubble just continues to feed itself over here. And the narrative gets even more complex and less understandable in every day that goes by. It's just it it's completely unsustainable at this point. Are we just going to have seven companies that own it all before this is over? I mean, that that's the ultimate endgame at this point. Well, isn't that remember who was it? Um I remember he was on um uh uh Joe Rogan and he was talking about how the Biden administration wanted to just pick two or three top companies and work with them. >> And Dre, that's exactly who it was. >> Yeah. Yeah. Yeah. >> Well, it looks like it's happening anyway. I remember all these people were offended like, "Oh my gosh, you know, the the Biden administration use the censorship industrial complex and pick a few winners and and it sounded awful and now it's happening anyway." >> Yeah. So, and and then yesterday you have Treasury Secretary Basant comes out and states, "Oh, this is going to be great. It's going to be great for Wall Street and Main Street." Well, you know, what are you going to do? just protect the gap uh that that Wall Street has over Main Street and and they all go higher, but it doesn't solve any of the problems out there. The large majority of the companies are not participating. And this is an unusual circumstance, too, with your consumer staple companies. >> A large majority of them are down 20 to 50% from their highs right now. I mean, that's the foundational part of the economy, and they're just being taken out to the woodshed and beaten. One, is that just investors that are selling those assets to Chase, which that's further going to exacerbate this bubble, or have we reached a point to where the middle class has just been absolutely wiped out and the consumer economy is over? [Music] Markets are facing heightened uncertainty and thoughtful portfolio management has never been more important. If your current strategy relies solely on passive investing or diversification without active oversight, it may be time to consider a different approach. At Peak Financial Investing, we connect you with experienced wealth managers who actively manage portfolios using disciplined, research-driven strategies designed to adapt to evolving market conditions. Our focus is on helping clients navigate volatility with clarity and confidence. While no investment strategy can guarantee results or eliminate risk, we believe that preparation and active management can make a meaningful difference over time. Visit peakfinancialinvesting.com to schedule a complimentary consultation and explore whether our approach aligns with your goals. I'm Dr. Chris Martinson and I am proud to support Peak Financial Investing. This is not a guarantee of future performance, but a call to take your financial planning seriously. Again, that's peakfinaniallinvesting.com. Investing, of course, involves risk, including the potential loss of principle. Past performance is not indicative of future results. Please consult with a qualified adviser before making investment decisions. So, you know, we've I've asked this question many times. You you're going to have to show me the money, right? For any new technology. I understand the story is AI is going to transform everything. It's going to disrupt things. It's going to transform everything. It's going to be embedded in everything. So, it's an everything story. I'm like, great. What's the use case? How how does that make more money for the companies involved? Right? >> And when you net it out, it turns out some companies are going to do well because they'll be able to really streamline, >> be far more efficient. That's true. But they're going to need fewer people working for them. >> Mhm. >> So, you have a this kind of an offset to the overall larger economy, right? So unless we're all just going to be in the business of making and selling information to each other, >> right? >> Where's I don't get the business case yet, right? And and so I I Paul, I ran into this for for years, you know, when when Ethereum first came out, right? One of the cryptocurrencies. And people like, "Oh, look at all these use cases. It's going to completely take over smart contracting and transform ABCDE." And I was like, "Well, that sounds very cool." Well, here we are 15 years later and I I don't have a single use case, you know, to to look at. >> Well, nobody's implemented it. When you look at those smart contracts, if you were to take real estate titling, for example, and put it on the Ethereum platform, then one, you could never have there's no need for your your title insurance because once you've done the research, you've got it in place. You've got the blockchain transactions where you can see it. So, the fraud's going to pop up if it's there and nobody can go steal your your title. And and I was like, "Oh my gosh, you know, there's so many areas that this can be implemented in." None. Nobody's implementing it for whatever re for what reason, right? It was a great story, >> but and I know that now from what I understand, oil tankers, those contracts are put on the Ethereum platform from a smart contract standpoint, but it hasn't worked its way into the rest of society for whatever reason. If it was that good, it would be there. Or you've got these legacy businesses that have enough um influence at the political level where they're keeping it from happening for now. I I I don't understand why it has not been implemented. >> All right. Well, I I don't if they if it's when technologies are really good, they get implemented, right? Usually, right? That's that's kind of the nature of it. Almost impossible to stop them from being implemented. So, here's what we we I yesterday, Paul, when I left, I was going to call you and because this really bothered me when when Amazon surged 6% after announcing this mysterious $ 38 billion deal with OpenAI. Um, and remember, so this is a this is a $2.4 trillion company worth, you know, market cap. So that's the the surge is larger than the deal, >> right? >> Larger. >> So that's why I say it's not rational. It's just not rational if if um so 10% would be 240 billion. So this would be 120 billion plus a little more. I'll say just off the top of my head 13 $140 billion of market cap tacked on because of a $ 38 billion deal. It it's not it doesn't make any sense whatsoever. Besides, nobody even knows what the deal is. Nobody actually knows what the deal is. Right. So just yesterday, Sam Alman, CEO of OpenAI, famously kind of thin skinned kind of a guy, maybe not the not not the smoothest on his feet, but apparently he was in um the the Big G2 podcast. Um you big BG2 bod and uh this Gersonner asked him, "Hey, how can a company with 13 billion in revenues make 1.4 trillion of spend commitments?" You know, you've heard the criticism, Sam, right? And then Alman just got prickly and he said, 'If you want to sell your shares, I'll find you a buyer. Enough. That's it. It's a simple question of a CEO. Hey, how does this pencil out, dude? What's your plan? And he should have a good story. He had no story. He said, if you want to get out of your shares, good. I'm done. Enough. Like he couldn't handle handle the question, right? >> That that response. I mean, >> the CEO and how can you invest into a company as a major investor if your CEO cannot articulate the business model to a simple question like that that that everybody's going to be asking from a mathematical standpoint and the only response is to deflect it, try to gaslight the individual and belittle them in that manner that you know any of us if we had we're asking a question of somebody that we were doing business with and they can't answer it and they responded back trying to attack you would say, "Something's going on uh under the surface here. We're not getting the whole truth." I mean, that's that's a horrific response for somebody that that has to be able to communicate their vision at the level of CEO. >> Totally agree. This is sketchy. Totally sketchy. So, um if I could, I want to review one of my favorite bubbles, the South Sea bubble. um ruined a lot of people's fortunes uh including Newton. Yeah, that one >> South Sea right there in the 1720s. >> Yeah. So, one of my favorite things is um so they said here, quote, as the South Sea stock soared, numerous other joint stock companies emerged, joint stock companies. Hey, we're we're in we're in with this like that circular bubble thing to capitalize on the investor mania. Many were fraudulent ventures designed to attract capital. So, say it ain't so. A few notorious examples include that it was going to supply the town of deal with fresh water. It was for trading in hair. It was for assuring seaman's wages. It was for importing pitch and tar from North Britain in America. It was for ensuring horses. It was for improving the art of making soap. For improving gardens, all these stories, Paul, all these stories, ample credit, right? For the importing of walnut trees from Virginia. But my favorite my favorite and I think this is what Sam Alman just told us. The most famous of all is that the scheme was quote for carrying on an undertaking of great advantage but nobody to know what it is. >> I love that quote. >> I love that too. And that's just a classic quote and example that for all the knowledge and the information that we have access to to today, we think we're so much smarter than all of humanity throughout history. But the one thing that hasn't changed is our emotional and cognitive biases. And even though that we know more about them today than we've ever known in the past, just like Roth Debelly's book, The Art of Thinking Clearly, >> Mhm. >> that's something that doesn't change. That's why we continue to have these cycles throughout time and these fourth turnings. You know, there's always the new generation that without realizing it or not, it is is consumed with pride because they believe that the fact that they were born on third base, they think they hit a triple without understanding, they happen to be at the right place at the right time, and their their arrogance causes them to not pay attention to to the wisdom of in the lessons of the past. >> Enough, says Sam. Enough. >> Enough. He should have just said it is an extraordinary undertaking, but nobody to know what it is, right? You know, it's it's No, we're there. I I am Paul. This is this is I've never seen a bubble quite as magnificent as this, quite as large. Uh this is of course belongs like all bubbles to the Federal Reserve because they were the ones supplying the ample credit and just shoving liquidity into the markets at all points in time. Right? This is to all the keepers of the system who are just making asset prices float up and to the right regardless of underlying fundamentals, expanding PE multiples, buying stock futures in the overnight as we've discussed before so that all the gains actually occur before the markets even open on and on and on. It's just it's you could but it's starting you feel the crescendo. I don't know what I would do if I was the Federal Reserve now because when this bubble gets pricricked, this is going to be the most destructive bubble. It's going to make the great financial crisis look like a walk in the park. >> Yeah, >> I truly believe that it could get bad enough to trigger the great taking machinery, which you and I have discussed a lot in the past. And if people don't know what I'm talking about, >> we'll link some of the episodes, but everybody should be familiar with that, right? >> Absolutely. >> And and against that backdrop, you have these mysterious things where uh our Treasury Secretary is like waxing on about how Bitcoin is is like awesome. And I'm just like, this is this is starting to I'm I can't quite get the pieces to resolve, but I don't know what you do at this point. This is so big. >> Yeah. And and and we're at the point I mean and the timing is the hard part, right? But there's no easy way out of this. Let's just assume, of course, we're hearing about the debasement trade and that's kind of, you know, tongue and cheek on Wall Street investors that that retail is even talking about uh the debasement trade at this point. But yet the dollar seems to be holding up. So, you know, rates don't need to be cut because it's going to continue to fuel this bubble. But at the same time, you know, you've got all kinds of defaults that are coming up to the surface right now, frauds that are being discovered more so than at any other time I've seen outside of 2007. But that was limited in the real in the real estate space. In the late 1990s, it was limited to the to the internet space. But right now, you've got it in in um uh property, you've got it in markets, you've got it pretty much everywhere, crypto specifically across the board with all of this excess leverage. So, there's I just don't see how we get out of this without pain. We either get into a hyperinflationary event at some point, which which I believe is a is much worse for the overall masses than what it is if you have deflation. And if we don't get the hyperinflation, we have deflation and all this house of cards, you know, this jingga pile comes apart, then then it's going to wipe out an entire generation of baby boomers that have the largest exposure to equities that they've ever had in the past, if I'm I may be off on that, but from what I understand, it is the largest exposure. I've just not gone to verify it or at the highs that we've seen. So you've got a lot of people who have everything to lose that don't understand the risk that they're carrying under the surface because they're constantly marketed to from all these people that's trying to get into their pocket. And then you've got another subset of the population who doesn't have anything to lose. So why take you know what's wrong with taking five times leverage if you can put 10 $10,000 you're able to save and you're young. That might give you a chance if you hit it right to be able to buy a house because you're priced out at this point. And and all the while, you know, I mean, I've been hearing stories about, you know, one of the major uh uh investment companies, Black Rockck, I believe it was, in Blackstone. One of the things they do is they go in and they they buy these whole subdivisions or they buy these houses up, right? So then they sell it to one of their other entities for way above market value, which sets appraisals up across the board, and then they leverage across that area to go do it again across the board. That is fraud. That's fraud. And we don't have regulators that are doing anything about it. I mean, they want to they want to bust people in the financial services industry because clients text them, you know, on their cell phone, but yet you're you're ignoring all this other fraud that's taking place out there. I mean, that's one of the reasons clients that have text me is like, I can't text you on my cell phone. I got to go somewhere else cuz I don't want to be low hanging fruit. >> But they're they're we don't have anybody watching out for us. They're watching out for the people that are greasing their pockets and guaranteeing them and their families, you know, these great pay packages on the other side. And if this comes apart, they're not going to have the opportunity that they thought they had either. I just hope that the truth comes out, they're laid bare and have justice for what they've done. >> Well, I think we've all been hoping for consequences for people who deserve it, right? you know, as we've learned now, Anthony Fouchy was up to his eyeballs in creating and then hiding his role in helping to create in the US's role in creating the co virus, right? So, >> um, you'd think that would come with some kind of consequences, you know, but, um, none so far. And and it just seems to be we have that two-tier thing as you mentioned like you know down here in the trenches the rules there's a lot of rules and they do apply you know but you go above a certain you pop through some membrane and you know and all of a sudden anything goes you know and that's there seems to be zero consequences for that you know so steal 10 bucks you're going to get in a lot of trouble. Steal the retirement funds of a million people oops you know guess they should have been more careful. Yeah, it's terrible, you know, and and and the worst part is it's all targeting in excess at the middle class. Like there is a war against the middle class right now. We're at a point, especially with where the markets are. And this is what's so dangerous and people don't want to see it. And unfortunately, you have to embrace courage to to see reality for the truth that it is. like I have on my my screen. Focus on reality. Not, you know, be hopeful because I'm I'm a very hopeful person. Uh very optimistic person, but I also want to pay attention to reality because because the simple pass on, you know, the prudent foresee danger and the simple pass on the prudent foresee danger and hide themselves while the simple pass on and are judged for it. We all have to embrace prudence at this point because this is a long-term game, right? If you're 65, there's a high probability you're going to live the life expectancy of 86, 87 or longer. We never know when the Lord is going to call us back. But but you know, just this emotion that you're dealing with in the past 12 to 24 months, you've got to pay attention on the big picture and the risks that if this isn't, you know, this narrative has any deception to it at all that it could dramatically alter the vision that you have in the future. So I I believe that we have to be prudent right now. We have to have the courage to face the truth and look at mathematics and compare that to history because history has a lot of lessons in it. And and I don't believe that the education system would would overlook history um if if they really wanted a wise populace, right? I mean, they don't spend a lot of time teaching the the history lessons of the past to better arm our citizenry with wisdom for the days ahead. History doesn't repeat, but it does often rhyme, which if you look at it from the big picture, it's pretty dang close to repeating. And that's why I keep that up there. I mean, these are lessons that we learned from in the past. >> And and and you go back, who was it? The tulip mania, a brilliant scientist. I can't come to mind, but he got sucked up into it and he and and he knew he shouldn't, but he got caught into it and and got wiped out in his wealth. It'll come to me here in a minute. But, you know, brilliant people in the past have learned the l same lessons that we're getting ready to learn at some point here in the future. And it's only those of us that are being prudent. >> Look at that chart, though. If you look at this the spaces, there's at least a generation between those peaks, right? >> Oh, yeah. it because people had to forget the painful lessons, right? So, there's a little cadence to it, right? Because you wouldn't go straight from one bubble into another unless you were particularly stupid, right? >> No, >> this is my third bubble. I'm in my third bubble. This should not happen to somebody in a lifetime, right? So, I don't even know what's going on. Now, you talk about the the prudent versus the the simpleton or the fool, right? Um this is foolish >> to get sucked up into a third bubble in a row. Just is. >> It is. And I think the reason why that we've had so many of them in our period of time is that's 1637 with the tulip mania, 1720 with the South Sea, 1929, you know, the great uh depression, gold in the 1980s, and then you had the 2000.com bubble, but the difference is prior to we were on an honest money system. So you had the gold standard that would would would anchor that reality down just a little bit. But now since 1971 we left that gold standard you got you know 2000 2000.com 2006 2017 with the initial Bitcoin bubble 2021 uh Bitcoin again then Tesla in 2021 and now you've got the everything bubble and all of that comes from all of these just the marketing power the propaganda. I don't I don't think it's a coincidence that in what was it 2013 Obama >> uh repealed the ability of the somewhere >> in Smith Act. Yeah. >> Smith Month Act to where the government could use propaganda on the American people without so you know if the government's going to do it they're going to allow corporations to do it for their own benefit too because they're going to just turn, you know, look the other way. >> Well, you make a great point because you know all that sound money. It takes time to clean up the the wreckage from a a bubble in a sound money system. But ever since 1971, we've had ample credit. There's been no tether on how much how much can you print, right? And remember, it was only 2014 when the banks themselves, the Bank of England finally looked into it and said, "Turns out money's created in the banking system." Like, "Oh, you just figured that out, right?" >> Yeah. >> Right. But they did, you know, they just sort of figured it out. They wrote that paper and and very surprising. Um, but yeah. So, so when banks create money out of thin air, of course, when they make a loan, like when I get a mortgage from a bank, they don't have 500,000 sitting in a vault somewhere that they dedicate to me. They go clickity click. Here's your five. That's it. Money got created. That's credit. So, we've lived in a very ample credit environment. It's allowed us to skip kind of from one to the next. And that's what the Federal Reserve did in 2008 and N is they papered over a massive problem that was caused by their responses and policies to the prior massive problem that was created by their policies and responses to the prior massive problem. They we've just been in this like everinccreasing amplitude and frequency of crises created by too much credit. >> Because when you have too much credit, Paul, people do stupid things with it. >> Right. They do. And so was a John Stewart bill said, "Panics do not destroy capital. They only reveal the extent to which it has already been hopelessly betrayed." >> Oh, that's a good quote. That is a great quote. >> So, it's already been hopelessly betrayed. Like all those trillions that the Fed printed, it's already been dedicated into some really dumb projects that are never going to pencil out. They're never going to pay back. They have no They're not what you would call a self-liquidating loan, right? You have a successful restaurant, you expand the seating by 50%, you take out a loan to do that. That has a means of paying itself back. It's selfquidating. Most of this stuff is non-selfquidating debt that we've taken on. >> Mhm. >> We just spent it. We just spent it. Threw it into bubbles. We did. And I think I think the greater mistake or the greater error in 2008 wasn't necessarily the printing because I have issues with that. Okay, I do. But the fact that nobody went to jail for the fraud that was taking place in in the halls of Wall Street because basically what you did was you incentivized you basically changed the rules of the game and said look one if you can get too big to fail we're going to force the taxpayers to bail you out. And then the other thing is why not play the game? If you don't care about the customers that you're dealing with and the only thing that you're serving money is why not leverage yourself to the hill and hope that you can pull the golden parachute before it comes off comes apart on somebody else's watch. And and hey, one thing that brings to mind too, speaking of pulling that golden parachute, let me see if I can find it here. Samantha Lug, which you know, I I I like the work that she does and her research as a trader, um, you know, points out something from one of her followers, the accountant. 100% of the last top 200 insider trades were sales. And, and I love her statement, market, show me you care. And of course, this breaks it down, but a 100% of the last top 200 insider trades were sales. And then there's another going back, and I did not know this. You know, I think we've talked about before that Buffett has uh let's see here. Let me find it, that Buffett has um the largest amount of cash on hand that he's ever had. Right? >> So, I want to highlight this, too, because this is pretty important. So Chris Irons quote the Raven came out with the Buffett indicator just hitting an all-time high again. Of course it's hit alltime high alltime high. Alltime high, right? >> This is what I didn't know. So stock market news puts this out. Bergkshire Hathaway has been unloading stocks for 12 straight quarters. The longest selling streak in his history. >> Whoa. >> The long I did not know that until this came out. So >> three years. >> Yeah. Yeah. 12 straight consecutive quarters he brings this up quarter on net app purchase and sales of publicly traded stocks for Berkshire Hathaway that's a big deal I mean he he's inside he's connected you and he said if you know this is selling with conviction if Buffett uh was waffling this is Q infinity um you know 100 uh 100% he's saying Buffett is right and the market's wrong if Buffett was waffling I'd say 5050 it's clear he wants to dramatically reduce exposure to equities Now, as I've shared that information with people, they're like, "Well, is it because he's retiring? Is it because he's doing you, you know, when you've been in the game as long as he is with the with the knowledge that he's learned and in the fact that he he navigated?" I remember Jim Kramer uh calling for his resignation because he was too old to understand the new economy in the late 1990s, right? because Buffett was down. Bergkshire Hathaway was down approximately 20% in 1999 when the S&P was up 20, but he positioned himself to be up over the next 3 years approximately 38%. This is off memory, so don't hold me exactly to it, but I'm pretty sure it was 38%. When the S&P was down 47% over that period of time, we've shown the charts at some podcast in the past, but these are people who are looking at the big picture. They have the courage to to to to stay out of the emotions. One thing about Buffett, he's he he sticks to his strategy. He has a strategy and he understands that underperforming in the short run is necessary to be where you need to be in the long run for maximum opportunity. But but few investors have the ability to do that because they're just constantly marketed to with information. Because the reality is these big investors have to have a market to sell to. And in my entire 27 years, as much euphoria as I've seen, I've never seen an environment where retail is so willing to gobble up the things that these insiders and and and the most connected are selling right now. >> Well, as we said, not my first rodeo, certainly not Buffett's. um he's been through tons of market cycles and and you know Paul there are always signs there are always signs if you know where to look. So you mentioned like the depreciation schedule on these chips right and so you know open AAI is going to um has five years says Yahoo Finance has five years to turn 13 billion of revenue into a trillion. Well there's a problem because they don't have five years it turns out this is from um uh princeton.edu edu. It's a This is a blog that that goes into accounting issues. And in the center of this article, they said, quote, "Here's the puzzle. The chips at the heart of the infrastructure buildout have a useful lifespan of 1 to 3 years due to rapid technological obsolescence and physical wear, but companies depreciate them over five to six years. In other words, they spread out the cost of their massive capital investments over a longer period than the facts warrant. Um, and the economist has called it the $4 trillion accounting puzzle at the heart of the AI cloud. It's not a puzzle, Paul. I I I this is so so for people who may not get, you know, depreciation, accounting, all this. Let's say you spend a hundred billion on chips. Okay? Not an unthinkable number in this day and age. Now, I'm going to expense that. I'm going to depreciate that over say, I'll make this easy on myself, five years. So, I'm going to take a 20 billion hit off of those things. And in five years, they're gone. Oops. In three years, I'm going to have to buy those 100 billion in chips all over again. So now, in three years, I've only taken 20, 40, 60 off. I still have 40 left on the books. Now I got another hundred I tack on top of that. And I start counting that down. And you just find that you have these expense things that you spent the money today, but you don't have to recognize the hits till later, you know, kind of a thing. And they just pile up. >> Yeah. This is this is easy to see. That's accounting fraud as far as I'm concerned. Right. Right there. And it masks the true nature of of all that. So that's the kind of stuff somebody like Warren Buffett would just take one look at and go, "Yeah, when you have companies that are fundamentally fiddling the depreciation schedules to make things look better than they are >> from an a revenue standpoint, that never pencils out. That always bro that always just blows up at some point. Whether you recognize that now or later, you don't have to wait. You can look at this and go, "Oh, they're playing accounting games. This is BS." >> Yeah. Yeah. >> That's all. >> And two points that I want to make. One, I want to go back to Buffett. Buffett's in a different situation compared to the average money manager that's out there or even the average asset manager or or adviser, right? So, Buffett's at a point where he's reached escape velocity. He has, excuse my um language here, but but it it expresses he has FU money, right? Like, so what if his investor is firing? He's fine. Okay. So, he has the wherewithal because there's nobody above him telling that you got to chase the bottom line for the next quarter to make these long-term decisions. If you're a money manager of a mutual fund, anything active at this point, your seauite is breathing down your neck like crazy because they're going to fire you and replace you with somebody that that hasn't learned the mistakes of the past cycle because they're worried about retail moving and going somewhere else. So, he's in a position to make these decisions. And then the second thing that I want to talk about, you talk about the depreciation schedule. I actually built an Ethereum mining rig and I cannot remember what year it was. as I was thinking about this, but I called this firm out of I can't remember, guys. So, I don't know if it was 2014 or 16. It was early, but when I was trying to figure out Bitcoin and crypto and learn everything about it, I got to thinking. I was like, you know, the best thing I could do is build one of these mining rigs. Bitcoin was too expensive at the time. Firm out of Atlanta wanted to charge me like 25,000 to build a 16 GPU thing. So, me being me, I started calling local high schools and I found a kid that was just he's brilliant. And I said, 'Look, I'll teach you business if you'll teach me how to build this rig. So, we built this thing for like $1,800. Put 220 outlet in. My power at the office goes up by $250 a month. But for the first year, it was great. Like, I mean, it paid for itself 30 times over. Then the second year, it was slower cuz new chips had come out. By the third year, it was completely obsolete. So, I looked at reinvesting back into those chips. Well, uh, these GPUs, not chips, but GPUs. At this point, it was like $25,000 to rebuild this thing to get it going again. So, the riskreward was out. >> Now, if that's any indication of what they're having to do with these these chips that Nvidia is putting out there, you know, the newer and, you know, the cost may continue to go up, I don't know. But I mean, I' i've had that experience. You've got a short window of time where it's extremely productive. And if you don't reinvest, another company's going to emerge. They're going to invest into the new technology with with capital. And it's this never- ending treadmill at this point. It's not like the internet bubble where they laid all this fiber across the world that can still be used today. It doesn't have that 25, 30 year life cycle based on anything that I've looked at at this point, what the analysts have have stated. Well, that's a great story and it and it's let's splash it out a tiny bit. Now, that story worked for you because you could cash flow that investment so that by the time it was out of its depreciatable life, right, its useful lifespan was over, right, it had returned the funds. This is what the problem is that right now OpenAI is that like going to make is going to put all this money into these chips that are have no chance I'm going to put this out there, Paul. They have no chance of returning that money. >> Mhm. >> In that before before they're before they have to be replaced. >> Not that anybody can see. And let's let's let's say that it does what they say it's going to do. None of us have a job anymore, right? >> Y >> then who the heck's going to pay the subscription to be able to pay for their services at this point? Like the the the Don't get me wrong, I fully believe that it's that it's economically changing. There's a major impact throughout time. But but the narrative that we have today, is that the correct narrative that I don't know is it like the car replaces the horse, right? The the the adoption curve was huge. Internet completely changed. iPhone completely changed, you know, our interactive life, the apps across there, the business opportunities that came up. But this seems like it's one ring to rule them all is what it is. And if that's what comes out, then what are we all going to be on UBI at this point in the future? And then we we've seen all, you know, depending upon anything. Just look at what's happening with SNAP and the government shutdown right now. There's a lot of people just don't know what to do, right? Because they they they've become reliant upon a handout. Some need, some don't. And and now they don't know what to do. I mean, is is that the position they want to put us all in? I know there's a lot of individuals like me that will do whatever I can possibly do if the Lord grants me the wisdom to stay out of being, >> you know, reliant upon somebody, you know, the government to to to cover our needs. >> Oh, exactly. So, uh, since you touched on it, this is now officially the longest running government shutdown in US history. And it's starting to I'm starting to see crevices here and there where and I don't totally understand it yet cuz I I need to see all the moving pieces, but apparently we're starting to see liquidity issues showing up here and there. Just for example, if the snap shut down, that's $ 38 billion a year. Um so what is that? $3 billion a month of liquidity that's flowing into the system and flowing through the entire food chain system. But you've got government salaries that are like frozen at this point in time. You've got um lots of different moving pieces that are just clogged up at this stage. And by the way, I don't see anything on the political front. I'm no giant political like shark sharpie, but um I don't see anything. I I don't see it looks like a stalemate. I don't see any budge on this at this point in time. So, >> it sure does. And you know, and look, the the the uh Trump administration is not facing a debt sealing, you know, deadline like we have during most of those in the past. So theoretically they could carry this for a while and and you know both sides think that they have have to absolutely make a stand. I like Thomas Massiey's argument. Hey, let's let's just break this down to one bill at a time and let's vote on this thing. >> There we go. >> Obviously we've got some people that are getting snapped that shouldn't be and and there's people that need it. So let's just address that. Let's fix the program, right? And then let's move to the next thing. But nobody seems to be willing to to sit down at the table and negotiate for the American people. And again, I know this is I I try to use analogies that everybody can understand. I grew up in a household that that suffered a nasty divorce, okay? And and the bitterness between father against mother was so severe that that I was fortunate because I had athletics. There was damage that was laid down to the family. So, I can talk about this in experience and I've seen it time and time again take place and and and no parent actually chooses to get this this full of bitterness and and hate towards the expouse that they choose to hurt their kids in that. But that's unfortunately what happens, especially if we don't have people that are willing to speak into our lives and call us out for our misbehavior in the midst of emotion. And that's what these politicians look like, right? Who's calling them out for it? Because they're certainly not listening to the people. And I think these big corporations are sliding money here and there for their own benefit and and this animosity is, you know, pitted against u Democrats versus Republicans and it's delivering all kinds of damage to to the people who need those benefits when they should be focusing on getting those people off that shouldn't be on there and focused on helping those people that need that help. >> Well, and and that's just just one area of government. So, I do agree also with Thomas Massie saying, "Hey, as long as we're at it, why don't we just keep the Department of Education shut down?" You know, >> they've spent $4 trillion. Arguably, we're in worse shape than we've ever been from a education standpoint on a peer adjusted basis. Um, so when when somebody when you have an entity that spends lots and lots of money and you're going the wrong direction as a consequence of that, spending more money does not make sense, right? Might as well shut that down and try again. >> No. You know, and it's it it's funny because one with Holly being an educator and Holly gives me a hard time. She's like, "Don't say on the podcast all the things I'm complaining about, but I'm just the type that I don't want to put her head on the chopping block." But with my staff, with kids in in the school system, the comment was made not too long ago. It's like, we've had two weeks worth of, you know, spirit day every day. At what point is enough, right? It seems that they're more interested in programs and and entertainment within the school system than they are in actually preparing these children for the future that they're going to face. And I'm a big believer, my daughter's having a child and and somebody gave me this advice. The most important thing that we can do to our kids right now in the future generation is build them to be mentally strong. mentally strong and develop problem solving skills because the economy is changing fast over the past 20 years and it's going to change even faster in the future. And by all historical measures, they've got a lot of challenges they're going to face in the future. So our school system doesn't need to be making it all about entertainment. It needs to be preparing mentally strong problem-solving kids that can adapt to whatever change. It's not learn this and you're set for life. is learning problem solving skills so that they can adapt to what comes in the future and having the mental strength to accept the reality and fight instead of rolling over and and giving into despair. >> Well, that that lays a lot at the feet of the school. So, I'm a big, you know, we homeschooled our kids, so I'm a big big fan that that most of those life lessons begin at home. I just don't want the schools undoing them, >> right? teaching them the opposite of those things, which they are, right? Inarguably failing in in in large measure. Um, switching gears slightly, um, uh, we did get a reader comment from from last time where Dar Sims said, "Hey, I enjoy your podcast. Just listen to your interview of Larry Leard. You both talked about food inflation as if food commodities are high priced. I'm a fruit farmer in Idaho and we are selling apples for the same price as we did 30 years ago. Priced in dollars, not gold. Onions, potatoes, grains, and beans are all priced in today's dollars, close to what they were 30 to 50 years ago. Only beef is high priced. To the extent there's food inflation, it's all related to cost and profit after it leaves the farm. I think you should point this out when you discuss food inflation. Thanks, Dar Sims. Thanks for that, Dar. Um, I have pointed this out uh at several points. You probably missed them, but Paul, I'm I'm offended when I see these charts of like corn where it's the same price per bushel in nominal dollars, the same price per bushel that it was in 2008. I can't think of any other industry that had besides commodities that has to somehow because of how the game is played put up with not having not being a in control of their pricing and b having to put up with pricing that's set by somebody else. It levels where it was 20 years ago. Think of another industry, right? Can you imagine if Ford trucks had a futures market and the futures market insisted that Ford trucks were only worth the same dollars they were in 2008 and Ford had to just eat that? >> They'd be out of business in no time. >> They were terrible. >> And the exact same thing that would happen in the in the farming industry. Well, I think it's nefarious from a lot of the policies because what it does is it keeps the family farmer from being able to sustain from a long-term standpoint. It takes the profits out to where the next generation wants to go somewhere else. And it opens the door for these major corporations and and and institutions that want to control us to get in there and capitalize upon that and then give them all the ability to charge whatever they want once they've monopolized the industry. But you're right. I mean, it it it redirects investment. The the only benefit if it happened to Ford would be good for all of us that are that are consumers is prices wouldn't be five times what they should be. >> Yep. >> But again, you know, there profits are good. Okay. But because that means you've got a sustainable business and you can offer services to the people because we all have to have these different services in our life. But but the greed that goes up upon that and you're you're putting your boot on that family farmer for the expense of Wall Street is is something that this administration said that they were going to change. But now it's like, hey, we're going to keep Wall Street where they are and we're going to try to pull you all up together, but keep that gap. That's what I heard with Bent's uh uh uh tweet. And I'm careful what I responded, but I did, you know, have some smart illic comment to it. But >> today's markets are more volatile than ever with ongoing economic and geopolitical uncertainty. Navigating such environments requires thoughtful, adaptive strategies, not a one-sizefits-all approach. At Peak Financial Investing, our registered investment advisory firm connects clients with experienced wealth managers who focus on active portfolio management. These professionals use evidence-based strategies designed to respond to changing conditions, not outdated formulas, but customized approaches grounded in research, discipline, and risk awareness. We believe in open, informed conversations, including discussing tools like precious metals and diversification as part of a broader financial strategy. Every investor's situation is unique, and our advisers tailor their guidance accordingly. Visit peakfinancialinvesting.com today to schedule your free consultation and explore how proactive management can support your financial goals. I'm Dr. Dr. Chris Martinson, proud to work with Peak Financial Investing and my support reflects my professional views. I encourage you to take control of your financial future by making informed decisions. Uh, you know, guess what? Markets are up again, Paul. Yay. The stock market's up. But you and I both know that's really just the big seven dragging everybody up at this point in time. But I wanted to talk about now how the real economy is actually doing. So, the real economy is real people buying real things. I didn't pull it up here, but um Chirl on Twitter had pointed out that the corrugated cardboard companies, because if you're going to sell something, you put it in a box and then you ship it. Um there that corrugated cardboard is usually a pretty good indicator of what's happening. And those companies are just tanking right now. And then you got uh the trucking side of that. This is from uh the Freight Waves CEO. And let me just sorry I'm gonna have to do one adjustment here to this. So I actually have audio with this. Bring this up. Let's go. >> Well, we should be worried. The goods economy uh certain portions of the goods economy are collapsing right now. So year-over-year trucking volumes, this is really predominance of freight that moves across the United States is down 17%. It's important to unpack exactly what we're talking about is re the retail uh freight, the re freight tied to the trucking market, which is really local distribution, is actually flat. So it's not seeing deterioration. It's probably why the Federal Reserve isn't overly concerned because the consumer staying pretty persistent. You see it in a lot of the retail earnings. But when you look at the industrial sectors, the folks are the the freight that moves over the long haul. This is energy, automotive, housing, and manufacturing, we're down 30% year-over-year, which is very great financial crisis uh levels of concern. >> 30% year-over-year for the industrial sectors. Uh, and also Paul, uh, inventories are building up big time, and this could be related to tariff tantrums and things like that. But, um, again, that's that's pretty significant. Year-over-year trucking volumes down 17%. We haven't seen a hit like that outside of the great financial crisis. So, just how do how does stocks well, how do just seven stocks manage to power all of this up and and uh and get us into this situation? I I don't it's just it's starting to we're getting that departure between Wall Street and Main Street, right? That that just everything's separating. Uh this is pretty shocking data right here as far as I'm concerned. >> Yeah. Well, and and Rich Richard Russell, we talked about that before. I really miss that he's passed and and the work that he put out, but you know, he paid attention to the transports versus the industrials because the argument is if the economy is weakening, you're going to see it in the transports first. And we're seeing that across the board and we're seeing it in the consumer staples space. And we're starting to see these these popping creaking sounds, right? Because you mentioned, you know, there's like these scams and frauds and and bankruptcies that are going on mostly mostly again from the outside in. We're seeing a lot of that happening in the subprime space. But this isn't subprime. And I I have to ask it again, Paul. Who's who's sitting on all these losses? Somebody's holding the bag here. This is commercial mortgage back securities delinquency rate is now higher than it was at the height of the great financial crisis. Higher than the oil bust, which caused a lot of CNBS paper to go down, particularly in Houston area and things like that. You have the recession way back there in 2000 to 2003 or four. >> We've never seen anything like this. No, >> somebody's eating like where are these losses? >> I don't know. And I want I want to know who's allowing them not to mark them to market because you're seeing weakness in, you know, I've heard it's regional banks >> and you're seeing weakness in the regional banks, but not to reflect the level of crisis that's taking place right there. You you hear that it's in some of the insurers potentially. Maybe they're not having to mark them to market and that's one of the reasons why our premiums are going up across the board. But where are the regulators that are allowing them to get a bailout at the taxpayers's expense if that is the case? None of that makes sense to me right now. None of that makes sense. >> Massive losses sitting in this though. This this just massive. And >> there's massive losses. Massive losses. >> All of this is to say that, you know, um what do they say? Printer is coming. Uh you know, hearkening on the the Game of Thrones thing, but I I do think that we're in a situation where it's clearly obvious that the Fed's going to have to start printing again. and they'll make up some excuse. Um, and uh, with that, we're going to start we're going to see the resumption of inflation. And by the way, I think we're going to see inflation come back. Well, to the extent it's rising prices, but we we put this thesis out, I don't know, a month ago, right? Which was that, hey, if we get that double hump 70 style inflation where you had that 73 to 76 inflation, it calmed down for a bit, then you had the 79 to 80 whatever inflation, right? That double hump. Um but that was driven in no small measure by two things right bad monetary policy but also energy costs. I think we're going to see the energy costs um do particularly for natural gas here in the US for variety of reasons. Um we're not getting more out of the ground for some reason this year compared to last year or the year before. So, it's kind of static, but LG terminals are coming online. Data centers are coming online, and we're starting to see that reflected in people's electricity costs, right? Nationally, 35% over the past 3 years, but locally up as much as 200% over the past couple of years. Places like New Jersey, Northern Virginia, stuff like that. If you happen to be unfortunately near a data center, which as we just described may be in a bubble. >> That's right. And we're seeing continued frauds that are popping up across the board. That's that's one thing I think I'd mention to you. I've not seen this many frauds pop up across the board and just money just disappearing from a fraudulent standpoint, which means less leverage that's in the uh in the um uh market. I've seen them from time to time, but not this many that are coming out. And the market doesn't seem to care right now. I think the market does matter in certain other areas, but this AI narrative is continuing this euphoria, the willingness to take on leverage. Um, but that leverage can be uh can be a curse. Just ask the overleveraged Bitcoin individuals when we had that, you know, 10 or 12% decline that couple happened a couple of weeks ago that just absolutely wiped people's entire accumulated paper balances out overnight. But that that's, you know, there's a um there's a passage I'll have to dig it up. It's going to take me a while to find, but Will Durant wrote this big long series of history books, you know, great stuff. And I remember reading this passage uh that was back in Athens 2,000 years ago, and they were going through a monetary debasement cycle. And the passage, it just read like today, Paul. It's like, well, you know, with with with the debasement of the currency, it turned out that speculating was an easier way to, you know, make money or try and advance yourself than than doing hard stuff like actually working or opening a business or anything like that. So, when they talked about all the different effects it had on the society and how whole generation decided they didn't want to work, they'd rather like, you know, speculate on on the inflation trades, the debasement trades. Well, they were right. Humans behave according to incentives. When you have a money printing regime, your best and your brightest go and chase that because it's it's so so much easier than growing a sack of potatoes and marketing it, you know, so you get a lot more bang for your buck. The problem is if you do that long enough that becomes your economy. And so of course the the cautionary tale is Athens after that declined and you know no was not a power a reasonable power after that. So when you go through and you ruin your system of money, it has very longlasting impacts on the greatness of your culture. >> It does. Hey, and and I tell clients like our dividend strategy, one of the requirements that we have in our dividend strategy is the company hold back at least 30% of the revenue. I don't want them to be paying out 100% of that revenue >> because you need them to reinvest into the future ability to grow that company. And when you're in the speculation phase, the reason it's going to take so much longer to rebalance and get back to that foundation again is because that lack of investment when you get into financial uh financialization over time is not easy to rebuild, right? It's great that we can be bring manufacturing back into our country. That's awesome. But you got to get the infrastructure. You got to train the individuals. You got whole manufacturing sectors where we don't have anybody here who's experienced in it anymore because it's been gone for, you know, the individuals that had knowledge of it are out. It takes time to learn those things and especially when you're in a competitive environment. Is China going to send people over here to train us? No. They're focused on taking care of their citizens. So, you know, I'm really concerned about what I see because, you know, we're seeing you've been talking about creaking and popping. I mean, there's just snapping and explosions taking place under the surface in all areas right now. It's much louder and much more violent than what it was before. But I'm reading articles the other day. It's like, you know, you've got the reverse repo issues that's taking place right now. And and look, I don't understand enough about all the dynamics behind that to to actually teach people or do it in in understandable analogies. I understand it enough after I read these, you know, five or six times to to grasp it a little bit. But here's the argument. There are people there there are institutions and investors and analysts that are giddy over the fact that we're starting to see issues in liquidity out there because they're saying, "Hey, not only did they stop quantitative tightening, but they're going to have to reinstitute quantitative easing and slam rates to zero and the market's going to sore." Well, it may be a reflective action to begin with because you've got this I think the algorithms have fear of missing out built into them at this point. Otherwise, you know, that chart that you showed a minute ago on on a a reinvestment you can't explain wouldn't have taken place, you know, and and that if it does give us a surge that's last for another 6 months, per se, when that happens, but you still have this deterioration under the surface, it's just going to suck more people in. uh into this narrative and cause more damage on the other side because we're at a point right now that is just not sustainable. And and look, we're we're exposed, okay, to the market because it makes sense right now. But each and every day, I'm my head's on a swivel looking at everything like is today that the information changes? Do we get a sell signal today on this position? And if it happens, you know, there's times where you can wait a week or two to let it let it see. But this is not a time. Sell signals mean they have to be acted upon immediately because those decision points have to be considered because the consequences at this point and the downside risk built into this market is is going to happen quickly whenever it starts unraveling. >> Well, indeed it will. And I I would just like to um direct people to this. Um, this is the Peak Prosperity website and um, here you see I I write things like the Fatpipe and uh, Dave Fairex writes a really amazing once a week Sunday article. Um, and this one was the Fed. It's it's great. People love this thing. But this is our last one, Paul. Um, which I titled Snap Crackle Pop and um, cucumbers versus grapes. So you see we got a you know people are over here. So, if anybody wants to comment on these and catch my attention or Paul's attention, you should come to the Peak Prosperity website and and comment on it there. I don't often always see them on YouTube necessarily. Um, but um in there, have you ever have you ever seen this? Have I showed this to you before? The the famous cucumbers versus grape monkey experiment? >> No. I've heard about it, but I've not seen that. So, if you got time to play it, let's let's watch it. It's only it's it's the best three minutes on the net. >> So a final experiment that I want to mention to you is our fairness study. Uh and so this this became a very famous study and there's now many more because after we did this about 10 years ago uh it became very well known and we did that originally with capuchin monkeys and I'm going to show you the first experiment that we did. It has now been done with dogs and with birds and with chimpanzees. Um, but with Sarah Brson, we started out with capuchin monkeys. So, what we did is we put two capuchin monkeys side by side. Again, these animals, they live in a group. They know each other. We take them out of the group, put them in a test chamber, and there's a very simple task that they need to do. And if you give both of them cucumber for the task, the two monkeys side by side, they're perfectly willing to do this 25 times in a row. So cucumber, even though it's really only water in my opinion, but cucumber is perfectly fine for them. Now, if you give the partner grapes, the food preferences of my capuchin monkeys correspond exactly with the prices in the supermarket. And so if you give them grapes, that's a far better food. Uh then you create inequity between them. So that's the experiment we did. Recently we videotaped it with new monkeys who never done the task thinking that maybe they would have a stronger reaction and that turned out to be right. The one on the left is a monkey who gets cucumber. The one on the right is the one who gets grapes. The one who gets cucumber note that the first piece of cucumber is perfectly fine. The first piece she eats then she sees the other one getting grape. And you will see what happens. So she gives a rock to us. That's the task. And we give her a piece of cucumber and she eats it. The other one needs to give a rock to us. And that's what she does. And she gets a grape and she eats it. The other one sees that. She gives a rock to us. Now gets again cucumber. [Laughter] [Applause] She tests a rock now against the wall. She needs to give it to us. And she gets cucumber again. [Music] So this is basically the Wall Street protest that you see here. That's good, Chris. That's information everybody should know. >> I agree. I agree. Because because fundamentally what the Fed does when they print money and hand it out to the 0.1% or the 1% or wherever you draw the line, they're handing grapes and the rest of us are getting cucumbers, right? And this creates things. I think we just saw in our election cycle, people are are willing, they get desperate. They start shaking the cage. They'll vote anybody anything in as long as it looks like, hey, can how do I get some of those grapes? Right? So if you have a deeply unfair system of money, you're it's very hard to have a fair outcome in your society, right? I'm not saying sound money fixes everything, but it would go a long way. It has its own issues you got to deal with. But but the system of money we have today, Paul, is fundamentally unfair and it's been run in a deeply unfair way by a succession of Fed chairman. and with Washington's complete abstinence from overseeing it or doing anything fair about that, right? Maybe shipping our jobs off for NAFTA or something. So, that's the system we're in right now. And I think people need to be aware of that because when bubbles break, they have social consequences. And that's when that anger that we saw there sort of pops up. But hey, for the love of money is the root of all evil. But we happen to love a system of money that is fundamentally corrupt at its core. It it's it's grapes for them, cucumbers for everybody else. Yes, that's right. And that's how you get mandamis. It is >> how you get Yep. >> And the thing that's so sad to me is we're not seeing any changes in this administration. We were pro promised changes, but we're not seeing it at this point. And that's that's even more infuriating. But, you know, all I could think as a side note was I'm watching value investors throw good highquality stocks out from a long-term standpoint because it's not, you know, generating the returns that the uh the AI are for people. >> And it's hard, right? It's it's it's so hard. >> And that that's why I spend so much time on research, so much time on trying to to question the narrative and look is because because the average person just doesn't know. They're caught up in in in in life. They're trying to get by. Expenses are going up. They're trying to help take care of their families. They're trying to make sure they get their jobs. They're trying to learn. I mean, society is moving so fast now that those of us that have a role to help provide a service for individuals have to do everything that we can do to pursue it with excellence and be the best, understanding you're going to make mistakes, but don't make the same mistake twice. And I I wish if everybody had the the the uh understood the scripture, you know, do everything as if you would do it before the Lord, right? That means that it's not for us. If we provide a a a service and we do the research that can benefit people in the long term, everything else will take care of itself. The problem is we're in a society right now where where those politicians are not working for the people. They're working for the people that can line their pockets the most. I mean, the corruption is absolutely clear out there. You know, they they've been able to stack the judicial system to protect themselves and and the average person just doesn't know what to do. So, so they look and they see other people getting grapes. They don't realize the risk of what they're doing and they and and they, well, I'm going to try that for a while. And and when it comes to an end, it's going to bring a lot of misery to a lot of people. >> Well, it's intolerable to see the other people getting grapes. So, so you will do what you need to to see if you can maybe get your hands on some grapes. But of course, that means you're going to take excessive risks or maybe you don't understand the actual game that's unfolding because it's it's opaque, right? By the time the Wall Street Journal can't even like spend a couple weeks researching and tell us where the money flows are in the AI without resorting to some fancy loopy charts and like we don't know, right? Um, you know, by the time we're seeing like advanced accounting tricks to sort of hide the the actual expenses and stretch them out longer than the the lifespan of the underlying assets that they're buying that like these are just this is we've been here before. That's why you have that chart over your head. >> Yeah, we've this is a very ordinary usual normal thing. And here's the other I I said there were two characteristics of bubbles. There's actually another one, which is that by definition, it is impossible for the majority of people to get their money back out of one. >> Oh, that's good. That's right. That's true. >> A few can, right? There's always a few cases of somebody who sold the Seer Augustus bulb or backed up the the South Sea stock and and took uh Libras out of the gold coinage out of the the Bank of France, etc. There are a few people who did that and they actually did quite well for themselves, generationally well in some cases for their families. Um, but most people that's not the story. >> No. No. And people need to remember in a bull market it's easy to make money. I mean, you know, there's people that are going to challenge that statement. I challenged it when somebody told me that when I was 20 years old and trying to or 22 when I entered the workforce and started trying to make it. But one thing that I have discovered in working with families and individuals that have been very successful over the past 27 years, it's easy to make it, it's hard to keep it. And especially in an environment like this, it may feel good making it. But when you're this detached from historical fundamentals and the math doesn't add up, the market's an escalator up and an elevator down. Actually, at this point, I'm concerned it's a freef falling elevator down to when we get back to reality. So, be careful. I'm not saying you have to sell. There's no way I would short this market right now. I was amazed. Michael Bur's got some he's got some backbone cuz he's what shorted Nvidia and uh somebody else here recently. >> Palunteer I think. >> Palunteer. Yeah. What was it? I saw a report 650 PE. So if their earnings stay the same for 650 years, it would take, you know, I mean that's classic signs of a bubble. and and um you know, maybe his gift is being able to see these things unfold, but he's putting his money where his mouth is. Now, I'm not doing that for clients. If I did it for me individually, that's one thing, but I'm I'm not willing to short a market with this much euphoria and fear of missing out right now. You're better off, especially with my concern about the great taking and whether the derivatives market is going to actually hold up or not. you know, you're better off to to follow the decisions and and and take the most conservative path right now when it does come time to sell. >> Absolutely. Well, I think that's all the time we have for today, Paul. So, I'll remind people that if you want to talk with Paul andor his amazing team, just go to peakfinancialinvesting.com, fill out a simple form, and somebody from Paul's office will be in touch with you within 48 business hours to set up the first of what should be three calls. an introductory call, a a review of your situation call, and then a recommendations call. Um, and and every one of those would be well worth your time. It's no obligation. So, I would also recommend that if you are thinking of doing that, you should try and do that before one of these elevator shaft moments happens because then Paul will be very, very busy with people who've all decided that now would be a good time to finally make that call. >> Yeah, that's right. And just to tell everybody that's out there, you know, our industry unfortunately spends more time focusing on potential new clients than they do their clients. So, it takes a while to get in. Just know that takes a while because we put a lot of effort into that planning process because I want to make sure that I keep capacity in my schedule. So, if I have a client that I'm serving needs something, then I'm available for them. And uh so it's not that we're not interested, but we're setting up because our first responsibility is to the people that that we're engaged with and we're serving. And then once you you know, once somebody does become a client, if it's appropriate, they get the same treatment. They're first. So, so that's the reason why it takes uh some time to get on my schedule from time to time. >> Excellent. All right. Well, with that, everyone, thanks very much for listening. It's been wonderful being here with you. Again, leave comments and uh we'd love to engage with those. And uh we'll see you next week. [Music]