Market Valuations: The hosts argue U.S. equities are historically overvalued with record margin debt, implying poor long-term returns and a likely regime shift.
Commodities: They highlight a prospective rotation toward commodities as underinvested assets poised to benefit from money printing, inflation pressures, and changing leadership.
Emerging Markets: Citing prior cycles (2000–2007), they see emerging markets as likely beneficiaries of a leadership change and improving momentum.
Precious Metals/Gold: Gold is emphasized as a long-term monetary anchor and potential protector of purchasing power if currency debasement accelerates.
Energy Shock: They stress the current energy shock cannot be solved by monetary printing, underscoring energy’s role as the economy’s lifeblood and a key driver of price pressures.
Policy & Liquidity: Persistent fiscal deficits and the expectation of central bank support may push capital toward real assets, with risks of a currency crisis if printing continues unchecked.
Companies Mentioned: Government stakes in firms like Intel and Nvidia are noted, but no individual stock recommendations are made; focus remains on asset classes and themes.
AI & Labor Risks: Rapid AI and data center buildout is flagged as socially disruptive, intensifying job competition and creating broader economic uncertainty.
Transcript
Nothing in this program should be considered investment advice. It is for educational purposes only. Please hit pause and read this disclaimer in full. If it is truly different this time, it it's just going to last longer, I believe, because at some point the pain of changing is going to be easier than the pain of staying the same. And I believe that that changing mechanism is going to be inflation. Welcome everyone to this episode of Finance. I am your host Chris Martinson. Back here again with Paul Ker of Kiker Wealth Management. Paul, good to see you back this week. >> Good to see you again as well, Chris. >> All right, Paul, see that that history of bubbles over your head? >> Oh, yeah. >> It's time to talk about our favorite subject, um, expensive stocks. Uh and the Cosby, which is the Korean stock exchange. Remember we put this one up like what? Um that was then this is now uh it it's fallen about 10% from its all-time high. Um so so that happens and and again this is a very condensed little chart here. It's only 5 days old, 5 days long or six days or whatever. Um so it's really just a little a little bump at the top here, you know. >> Mhm. >> But that's how these things tend to go. they tend to just absolutely verticalize and then come right back down again. So, um, not saying it's all the way over, but this is the kind of rumblings you see at the ends of these big blowoffs. So, maybe keep an eye on on on the Cosby, South Korea, sort of a leading indicator maybe as to how bubbles end. But this is the S&P 500 versus M2. So, dividing it by M2, the broad money, most overvalued since the 2000.com bubble. Um yikes. Yeah. Most overvalued. And and and this comes at a time when people have the highest level of margin debt. So margin debt is when people are borrowing typically to go long the stock market. I suppose you could borrow to go short too, but um for the most part um margin debt is for going long. So they're really levered up in global markets investor rights. Holy cow. Spiked $83 billion in April, Paul. 83 billion dollars of new borrowing in one month to throw into the stock market. 1.3 trillion in there. >> Leverage borrowing >> assets. >> Yeah. Leverage. Leverage borrowing has soared 453 billion or 53% over the past year. Margin debt now 5.2% of US GDP. Also an all-time record. What could go wrong? >> Yeah, we're in record territory. I mean, just records are being broken all over the place. And I've got a couple other, you know, valuation measures. Let me see if I can uh get to the right ones here. That's just absolutely mind-boggling as to where where we are. Um, you know, it's and this is just warnings, right? This is not a prediction of where we are. So, the thing we have to take into consideration is the 2000 bubble, the technology bubble. We we say 2000 happened before that. That shattered the record records of the Great Depression. Okay. So the question is are we going to are we going to shatter even those records before this is over? There's no way of knowing. But you take William Middle uh put this together. So this is good because I like looking at the average of the four valuation indicators. So you look at this and you know we peaked 181% we're 172. Look in the context of history going all the way back to 1900. 74% led to the Great Depression. Okay, we shattered it really at 124% in the year 2000 and we have since shattered it here. Okay, so I mean that's that's just massive from that standpoint. And I've shown this before, so you guys just bear with me because this is hard to to to you know, the right side when I highlight it goes over to the left side, but this is the aggregate uh market value index by companies that's just put this together. So they put an aggregation of them together. >> Look at that. Like their gas gauge up there or whatever. >> Yeah, it's like this is this is pegged, right? I grew up I grew up riding dirt bikes and you know, cars back then. They didn't have uh throttle regulators and all that. So, you know, you had tons of friends that were were revving their motors to max RPMs and would blow the engine up. I mean, that we're in that type territory. So, we broken the 2000 top. Now, this one only goes back to 1968. But if you go back to the 2000 top, if I can hit it here, that's June 30th of 2000, the uh uh AMVI model score was 1.69. Two standard deviations of strongly overvalued on the left. And if I move my mouse here, then I'm going to lose that spot. >> The actual following subsequent 10-year return for the S&P 500 was a negative 29% loss. >> Even with all of the money printing and slamming interest rates to zero. So you go back to 2008, we were only one standard deviation. So if I can hit that, that's August 31st of 2007. With all the money printing, you actually had a 68% return, which is 6.8% 8% a year over 10 years. Go back to the 1960s leading into the high inflation of the late 1970s, you had a negative following 10-year return from November 30th, 1968 of a negative 13. So the question is, is it different this time? We might go a lot higher before it's over, but but you know, this is just mathematics. the likelihood of the S&P generating the 10 uh the returns over the next 10 years that it has over the past 10 years is highly unlikely because look if you go back to 2010 you were actually undervalued on the S&P and the following 10ear return on the left was 179%. So I mean we're we're in uh the type territory where bad things really really happen. Um I mean we're there. The question is, and what's so hard for investors is the discipline to keep your emotions in check while this market's forcing people off the sidelines, right? There's going to be people unfortunately out there that have been sitting in cash for 10 years and they can't take it anymore and they're going to pile in. And will it be at the worst time? I mean, a legendary investor, Stan Ducken Miller, shares the mistake that he made back in the year 2000 when he finally couldn't take it anymore and he kind of went all in and happened to top tick the market and and the interviewer asked him said, "What what was the lesson you learned?" He's like, "I did learn a lesson. I knew I shouldn't have done it anyway. I just couldn't keep my emotions in check." >> That's one thing I like about him. He's honest about that. So, you know, if a legend in the industry like Stan Ducken Miller can get sucked off the sidelines at this point, then any of us can. And that's that's where we have to be disciplined. We have to follow our strategy and keep our emotions in check. You have to feel the fear and do the right thing anyway because those emotions are going to be there. But you can't let them control your decisions because if we give into this fear of missing out, we're going to justify through confirmation bias that we're going to be right. And hey, I can share some charts here in a minute or whenever it's appropriate. You might feel really good for a year, but there's no way to get out of this without emotional pain. Because if you're prudent in a in a foolish environment, you're going to feel emotional pain. You might feel the joy on the front side if you're participating, but you're going to have the emotional pain on the other side when we revert back to the mean. And >> yes, >> what if this time is different? >> Well, it could be. Well, let me make let me make the devil's advocate case. Okay. We all know and we've all been conditioned and habituated the Fed's going to print. >> Yes. >> Right. They're going to print. So printing seems to cure all else. Now on the other side of this, this is an energy shock and some central bankers are starting to notice you can't print your way through an energy shock. It's different beast. But we'll try anyway, right? So that could be a case for why prices might go up. Full speed ahead. Damn the torpedoes. But the other thing that's really different this time, we've never had a president who's day trading the stock market. And we've never had a a the government waiting communist style into taking ownership pieces in our public companies. The US government has interest stakes now in Intel. It has an interest stake in Nvidia. Who knows what else they've done because a fab 56 national security got to hide the account and stuff. We don't know. I'm going to guess it's not zero. So, so, so how do we how do we I mean I love using the past as a guide, but um you know in that the 63 and the even the 2000 things, the Fed didn't print like now they just print. Like ever since 2008, we watched them print and it wasn't just this big blob with the TARP and the Tal and all those acronyms to get us out of '09 up into 010. They printed all through 2011, 12, 13, 14, 15. >> Absolutely. >> 16. Held a little steady for a while. tried to back it off in 2019. Oops. Repo crisis printed co. Whoa. I don't know. You know, I I I can I can I'm sympathetic to the idea that people could look at that and say, "Well, that's what's going to happen again." >> No. And I am sympathetic to that, too. But still, if if they continue to do that, history shows us that that you're going to end up in a currency crisis, right? Because because the world is becoming smaller. We've seen the east has prepared themselves a lot better. They've talked about the unit. They've got their own alternative to um uh to the swift banking system. So there are positioning that's taken a place. So maybe it's absolutely different, right? So you go back to Germany leading up to the end of the war. They made it what it you you couldn't sell anytime the market was going down and the market went up. It was artificially controlled. And then as soon as the the war was over and they finished and they went back to to honest market, it dropped 90%. And the people that were in couldn't get out. So, you know, yeah, it may be absolutely different this time, you can't rule that out because we printed, but the consequences are going to rebalance somewhere. It's either a currency crisis, but if it is different this time and you start to see commodities take off and you start to see emerging markets, we're seeing some of that. Now what will be different is how to maintain your purchasing power through right we may not have a 50 or 60 or 70% stock market decline but you may see that leadership change and I believe that a lot of times if you're seeking wisdom you're let me see if I can find it here because I want to pull this up because it's a really good chart. Um if you're seeking wisdom you see types and shadows and warnings. So you're going to see some adaptation that allows you to make that move that is prudent and wise. So where I think even if the markets don't go down, what will still be different is what are the assets leading in the next, you know, 10 years that are going to protect your purchasing power better than anything else. So this is where we are, right? So what I'm sharing here is a chart of the major indexes going back to January 1st, 2008. So, you've got the S&P 500 index here in black. That's been really the only game in town since about 2014. It wasn't till maybe 21 that you started seeing developed and emerging markets take off. That's really been recently since about 20 uh 2023. But you can see commodities, I mean, they've just up 21%. The Goldman Sachs commodity index is only up 21% since 2008. So what are we 16 18 years now? Okay. >> So if they do print us into oblivion, what have we seen? We've seen a birth pain, a breakout. Wheat's up, cattle's up, you know, sulfur's up, all of this. Yes, it's an energy shock, but the inflationary pressures are there. Now, the chart doesn't go the full period of time, but if you go back to 1990 to 2000, what happened? That bubble sucked all of the money into the US. So this data, it cost me a bunch of money to go back to 1990. So I haven't spent the money to do it, but it does represent the point, but US equities outperformed everything else. I mean, if you look at just commodities from 1995 to the year 2000, December 31st, 1999, they were only up 5%. What happened on the other side of that? Okay, on the other side of that, government slamming rates to zero, markets came off. Where did the opportunity shift to? So from 2000, so this is a chart of those same major indexes from 2000 December 31st, 2007. Emerging markets were up around 213, Goldman uh commodity index was up about 213 well 210 and 213 and even international developed markets were up 109 versus US going flat. So I I you know my argument is that mathematics still matter and financialization matters and it reaches the point to where something breaks. Okay? And that may not be a 50 or 60% decline in the US equity market. That's what's happened historically in these places, but let's say they print. Well, the bond market's going to have to have some issues unless they artificially control it. Well, if it's in the bond market and then they're artificially continuing to prop the stock market, they're gonna have to buy commodities and we're underinvested and that's just more money that's rolling through the system that's going to find the most undervalued, most efficient place to be when that regime changes. And I mean, even going back here, you know, we were in a weaker dollar environment really till about 2010. And so if you go back through the crisis in '08, the S&P 500 from 2000 to year end 2010 was down 14%. Commodities in spite of that massive decline that occurred in the in the credit crisis in 2008, we're up 227 and 212. So, you know, yeah, it it could be different this time, but from my standpoint, I I'm not so worried if it's different because we're going to make the adaptation to the most efficient place that has the the most amount of money flow and momentum and trend that's with it to try to protect that purchasing power going forward. 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 adviserss tailor their guidance accordingly. Visit peakfinaniinvesting.com today to schedule your free consultation and explore how proactive management can support your financial goals. I'm 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. They say every bubble's in search of a pin, you know. Um, the thing that that's caught my attention, of course, is the behavior of bonds. So, so big moving pieces. A, we have a regime change. Interest rates all on their own before the war even was thinking about getting started. Decided to start going the other direction after 40 years of going down. They've broke that trend. Off they go. So, that that's big big moment number one. Pay attention. Two, um, we have this war that kicked off. This is the largest energy shock in history. It's not yet priced in the markets for reasons. Who knows why? Um, but maybe markets have just here's the here's the most generous explanation I can come up with. Markets have been so trained on liquidity being the one and only measure of truth and value and and reality that they they just literally are incapable of properly pricing this energy shock until it's going to be forced to, which will be kind of a a terrible moment. Um three, we also have a US government that's now completely committed, independent of administration, but completely committed to um deficit spending. It's structural, right? The CBO, Congressional Budget Office says, uh based on laws that are already on the books, we're going to be running around two to two to three trillion dollars of deficit every year for the next 10 years, right? Another 20 30 trillion of debt is going to be piling on. Uh guess what? The war is expensive. It's going to be a little hotter than that this year, maybe next year. Who knows how much longer, right? And then against all of that, the United States is is seemingly not adding up the macro numbers on energy is the lifeblood of your economy. That's where all prosperity comes from. Cheap abundant energy in particular. Okay, we're busy just selling that to anybody for and I don't understand this, Paul. I don't understand. So, so I don't have any grandkids, but eventually I hope I will. And when they get, you know, to be adults, they're going to go, "What? What? What' you guys do with all that natural gas?" We would love to have some natural gas to do things with. >> You did what with it? Oh, well, see, we we turned it into liquid natural gas and we put it in a tanker and we sold it to Europe. Like, they're like, "Yeah, but Europeans, they hate us. So, we sold Okay, we sold What? What was so important? Why did we sell it to them?" Well, because we got money back. Wait, you mean that stuff you just printed out of thin air? You mean >> not actual money, you mean currency, ones and zeros on hard discs that represented? So, let me get this straight. You took our our once in a species bequeathment of this most amazing molecule that you can do almost anything with and you liquefied it and sold it to some people who don't even like you for money. It's just it's such a nonsense story. It really is. >> Yeah. >> You know, it's unfortunately short-term instant gratification thinking. no long-term strategic planning. And that's just what happens when you get into a society where things have been so good. People forget that it takes discipline and sacrifice and and and planning and a little bit of pain for the future, right? Like our economy is operating like we're eating cake every day. Like I mean h how do we think of a parent that you know as soon as a child starts to eat solid food feeds them cake for breakfast, lunch, and M&M's for dinner, right? I mean we know that's not good long term, but boy that kid really likes you, right? Because you're giving them all these great things instead of, hey, you got to eat your carrots and you got to eat. Discipline still matters from a long-term standpoint. And there are periods of time, I mean that right there just illustrates it. you know, yeah, the bubbles are getting a little bit bigger because of all the money that's been printed in from a fiat standpoint, but there's a reason why that that, you know, gold has been the one thing that's been the standard throughout history from monetary because there are limits, right? You get these manas. If you don't have enough gold, then you get the inflation, then you get the deflation on the other side. So, it's a counterbalancing mechanism. And we can detach. We've detached from the counterbalancing mechanism in the 1970s, but there's other countries that see value in that at this point. So it may be different for longer than we could possibly imagine. But but at least at this point, we don't control the whole world, right? I mean, if there was a viable alternative, if the government continues to print and there's a currency that, you know, let's say China comes out and says, "Hey, you can buy a 20-year Treasury from us. is going to be backed by gold and you can take your dividends and you can swap it out for gold 20 years from now. Hey, that's something I'm interested in because if we get printed into oblivion, there's a good chance that gold's going to continue to maintain its purchasing power. So, um that that's kind of my standpoint. There's too many forces that they might can control things here, but there are other countries that are going to say we're not participating in that anymore. And the pain of changing and walking away from that system will be easier than the pain of staying the same. And and if it is truly different this time, it it's just going to last longer, I believe, because at some point the pain of changing is going to be easier than the pain of staying the same. And I believe that that changing mechanism is going to be inflation. >> Yeah. And while that inflation's on the way, um then there's that pig is already in the python. It could get worse. We could do things to to make it worse, but um and I believe our energy policies are are are trying hard. We'll we'll see. But, you know, if we diplomatically ruin things with our main trading partner for whatever reason, that could make it worse. Um if we print more money, you know, so the thing that bothers me about this sort of from a moral standpoint, right? So, so again, I care about my kids a lot. I care about your kids. I care about I I care about the next generation. I've reached that level of my life in wisdom and I don't need more trinkets and bobbles, you I I've I've I've achieved everything I I meant to achieve from from a material standpoint. And so I look at this and I know the Fed is just desperate to always make stocks go up into the right, you know, but they keep them at these historically highly elevated levels and they have reasons for that. Paul, like, oh, think of the bad things would happen if the market had to correct and find a natural price, right? Well, what would happen is my kids and your kids and other kids would be able to buy into the stock market at a fair price and get the same shot at at life that I had. >> Right. >> Right. But they're not. And they want just the the the old guard. You know, the average age of somebody in Congress now is like 70 plus. They're all boomers. And they just want they don't want it. They just want it to be how it's good for them. >> And I'm starting to get a real bad taste in my mouth about people who are just narcissistic. It's all about them. They want they just want the markets to do what's good for them and they don't care about anybody else, including their own offspring. Which tells me you have a damaged human being on your hands, >> right? Like if you can't even care about your own offspring at that level, you're broken person. Sorry. >> Yeah. >> Right. Yeah. >> So I I just think, you know, we we should let nature take its course. If things are overextended, need to fall back like what's over your head there. Then that's what happens. It's painful. Guess what? We'll pick ourselves up and keep going. But with a better life for the people who are in the best position at the start of their life to make the most out of it. Yeah. >> Right. making this all sort of hold together so people's retirement dreams aren't sullied a bit is just I don't know >> you know you look at the statistics okay you see how many of these these um you know professional athletes these high income earners the the actors that had massive amounts of wealth you know the drug addiction everything that goes in there right now some of them built their career but especially when you get into what we would classify as kind of trust fund babies right? They're they're not as happy as the average individual. Now, the person who gives it to them, they're happy because look, you don't ever have to work because I've paid the sacrifice for you. You'll thank me for the next couple of generations. But you're essentially robbing them of the journey. The the the money that comes from making an impact in society and blessing other people is a byproduct of doing something with your life, right? And there's real joy that comes along with that is the journey and the sacrifice and learning and coming through and then you can be a blessing to others. So, you know, we get into that position to where where for whatever reason it's there's such a focus on us of the the leaders that are there and that narcissism that you're talking about. It's like, hey, we're just going to fix things for you and it'll be easy. But you're actually robbing that next generation of building resiliency and confidence that you know look if if we have an economic calamity and I lose everything. I've done everything right but I still lose everything. You know what? You can drop me and I can rebuild it again because I have the skill set and the discipline and the fortitude and the work ethic and the grit to fight through the other side. And those individuals are far more secure than the group of individuals that needs the government to bail them out because they're living a lifestyle that they really can't afford to live and and they're living right by that edge and they're going to vote please bail me out because uh if you don't I have to give up my life as it is and the things that I have are are who I am instead of a byproduct of who I am. Well, and on that front, probably half my conversations uh this these past few months, every I you know, I did a big renaissance report on AI, you know, what is it and all this probably already hopelessly out of date, right? Because every day I wake up and I'm like, this is changing too fast. Like look at this new thing. It does like now we're having honest conversations like is this sentient? Like how would I know? Um, but the point is is that, you know, I was just talking with my youngest child and she's having trouble finding a job because the area she wants to go into, wouldn't you know it, there's a lot of people with decades of experience above her who just got booted from their jobs. And so she now she's in competition in a hyper hypertight job market because AI has already taken that. We're not even having the conversation which is if we define our meaning and purpose by how we apply ourselves in the world. But then we take our opportunities to apply ourselves in the world away and we're not going to talk about that and we're not going to offer anything other than I don't know buck up and work hard like I did different environment 40 years of tailwind on you know there was no AI. So again we're doing something to our next generation here that I just I can't I can't brook it. I can't I can't I It's just It's unconscionable, right? Oh, we're just going to build all these data centers as fast as we can because we need AI and you know, some people are going to lose jobs. Like, whoa. It's existential. If they're not going to have jobs, what are they going to do? And that's weak men bringing about hard times. And I mean unfortunately it seems that we're heading in that direction because the focus is on I want to be the richest person in the world or I want to join this x amount of club and I want to accomplish this and I want to bring about a sentient AI or whatever it is. It's I I I instead of what is best for everybody. And that goes back to that scripture. You know the Bible says something along the lines of a good man leaves an inheritance to his children's children. When I first got in the industry, I thought that was money. >> And money is a byproduct of that. But I believe now that it's character, discipline, a good reputation, a good name, the individual that stands up for what is right regardless of the consequences. Because think about what the forefathers of us in our country did. I mean, they put all of their wealth on the line and their lives on the line for this idea that was America so that their children can have something better than what they left. And and and we're in we're just not in that mentality now. It's like we want to do what's best for me and the rest of the generations can fend for themselves. And that's going to leave behind a generation that is not going to want to stack the pain on top of their children is what was left to them. And so, you know, um I don't think the history books are going to going to judge the mentality and the the selfishness that we've have during this period of time very good. It's going to be an example of what not to do in the future. >> Yeah, I agree. I I read a a piece h probably over a decade ago where Warren Buffett wrote penned a a little essay and the title of it was squanderville and he just said wow we are just squandering our opportunities here and that was a key conclusion I came to in the crash course independently which was look we have some tough decisions we have to make today but if we don't make them kick the can they become much harder decisions downstream. So, right now it'll be tough if we let our oil markets adjust to real pricing, it'll it'll be a little bit painful. But if we wait until we crash into the wall and we don't have any oil left to do anything with realistically, your your option set gets a lot smaller and a lot more painful. And that's just the nature of it. You can ignore some things, but not forever. And that's what I feel like we've been doing. That's the squandering of opportunity cost of of time. We're just squandering. We're just squandering it. You did what? You built data centers. You know, you can just hear it coming and for the future looking back like, "Yeah, we're going to file that next to uh facing large stone heads east with, you know, after cutting down your the last of your trees." Okay. You know, just we'll file it under that part of human behavior, >> you know. >> Yeah. Well said. Very well said. >> Good. All right. Well, with that, Paul, we are uh done for today. So, if anybody out there listening wants to talk to Paul or his amazing team, please go to peakfinancialinvesting.com, fill out a simple form, few questions in there and some disclosures and uh click send or submit and then somebody from Paul's office will be in touch with you within 48 business hours to schedule what will be the first of three calls. You get a hey, an introductory call, then a planning call, and then finally, if you get there, a recommendations call. And if all of that sort of sorts itself out and it makes sense to work together, then you could go down that part of the road with Paul. Everybody who's gone down that process though, independent of whether or not they end up working with Paul and his team, says it's been a highly valuable process. So, I would encourage you to take advantage of that today while you can. >> You know, no obligation. Hope you guys can tell we're not high pressure. If if we can help you and all that is is the plan, then everything else will take care of itself. >> Well, thank you for doing that, Paul, and thanks for your time again today. >> You're welcome. Good to see you, Chris. All right. Bye, everybody. We'll be back next week with another episode of Finance You.
Cheap Money Ends Where Real Pain Begins
Summary
Transcript
Nothing in this program should be considered investment advice. It is for educational purposes only. Please hit pause and read this disclaimer in full. If it is truly different this time, it it's just going to last longer, I believe, because at some point the pain of changing is going to be easier than the pain of staying the same. And I believe that that changing mechanism is going to be inflation. Welcome everyone to this episode of Finance. I am your host Chris Martinson. Back here again with Paul Ker of Kiker Wealth Management. Paul, good to see you back this week. >> Good to see you again as well, Chris. >> All right, Paul, see that that history of bubbles over your head? >> Oh, yeah. >> It's time to talk about our favorite subject, um, expensive stocks. Uh and the Cosby, which is the Korean stock exchange. Remember we put this one up like what? Um that was then this is now uh it it's fallen about 10% from its all-time high. Um so so that happens and and again this is a very condensed little chart here. It's only 5 days old, 5 days long or six days or whatever. Um so it's really just a little a little bump at the top here, you know. >> Mhm. >> But that's how these things tend to go. they tend to just absolutely verticalize and then come right back down again. So, um, not saying it's all the way over, but this is the kind of rumblings you see at the ends of these big blowoffs. So, maybe keep an eye on on on the Cosby, South Korea, sort of a leading indicator maybe as to how bubbles end. But this is the S&P 500 versus M2. So, dividing it by M2, the broad money, most overvalued since the 2000.com bubble. Um yikes. Yeah. Most overvalued. And and and this comes at a time when people have the highest level of margin debt. So margin debt is when people are borrowing typically to go long the stock market. I suppose you could borrow to go short too, but um for the most part um margin debt is for going long. So they're really levered up in global markets investor rights. Holy cow. Spiked $83 billion in April, Paul. 83 billion dollars of new borrowing in one month to throw into the stock market. 1.3 trillion in there. >> Leverage borrowing >> assets. >> Yeah. Leverage. Leverage borrowing has soared 453 billion or 53% over the past year. Margin debt now 5.2% of US GDP. Also an all-time record. What could go wrong? >> Yeah, we're in record territory. I mean, just records are being broken all over the place. And I've got a couple other, you know, valuation measures. Let me see if I can uh get to the right ones here. That's just absolutely mind-boggling as to where where we are. Um, you know, it's and this is just warnings, right? This is not a prediction of where we are. So, the thing we have to take into consideration is the 2000 bubble, the technology bubble. We we say 2000 happened before that. That shattered the record records of the Great Depression. Okay. So the question is are we going to are we going to shatter even those records before this is over? There's no way of knowing. But you take William Middle uh put this together. So this is good because I like looking at the average of the four valuation indicators. So you look at this and you know we peaked 181% we're 172. Look in the context of history going all the way back to 1900. 74% led to the Great Depression. Okay, we shattered it really at 124% in the year 2000 and we have since shattered it here. Okay, so I mean that's that's just massive from that standpoint. And I've shown this before, so you guys just bear with me because this is hard to to to you know, the right side when I highlight it goes over to the left side, but this is the aggregate uh market value index by companies that's just put this together. So they put an aggregation of them together. >> Look at that. Like their gas gauge up there or whatever. >> Yeah, it's like this is this is pegged, right? I grew up I grew up riding dirt bikes and you know, cars back then. They didn't have uh throttle regulators and all that. So, you know, you had tons of friends that were were revving their motors to max RPMs and would blow the engine up. I mean, that we're in that type territory. So, we broken the 2000 top. Now, this one only goes back to 1968. But if you go back to the 2000 top, if I can hit it here, that's June 30th of 2000, the uh uh AMVI model score was 1.69. Two standard deviations of strongly overvalued on the left. And if I move my mouse here, then I'm going to lose that spot. >> The actual following subsequent 10-year return for the S&P 500 was a negative 29% loss. >> Even with all of the money printing and slamming interest rates to zero. So you go back to 2008, we were only one standard deviation. So if I can hit that, that's August 31st of 2007. With all the money printing, you actually had a 68% return, which is 6.8% 8% a year over 10 years. Go back to the 1960s leading into the high inflation of the late 1970s, you had a negative following 10-year return from November 30th, 1968 of a negative 13. So the question is, is it different this time? We might go a lot higher before it's over, but but you know, this is just mathematics. the likelihood of the S&P generating the 10 uh the returns over the next 10 years that it has over the past 10 years is highly unlikely because look if you go back to 2010 you were actually undervalued on the S&P and the following 10ear return on the left was 179%. So I mean we're we're in uh the type territory where bad things really really happen. Um I mean we're there. The question is, and what's so hard for investors is the discipline to keep your emotions in check while this market's forcing people off the sidelines, right? There's going to be people unfortunately out there that have been sitting in cash for 10 years and they can't take it anymore and they're going to pile in. And will it be at the worst time? I mean, a legendary investor, Stan Ducken Miller, shares the mistake that he made back in the year 2000 when he finally couldn't take it anymore and he kind of went all in and happened to top tick the market and and the interviewer asked him said, "What what was the lesson you learned?" He's like, "I did learn a lesson. I knew I shouldn't have done it anyway. I just couldn't keep my emotions in check." >> That's one thing I like about him. He's honest about that. So, you know, if a legend in the industry like Stan Ducken Miller can get sucked off the sidelines at this point, then any of us can. And that's that's where we have to be disciplined. We have to follow our strategy and keep our emotions in check. You have to feel the fear and do the right thing anyway because those emotions are going to be there. But you can't let them control your decisions because if we give into this fear of missing out, we're going to justify through confirmation bias that we're going to be right. And hey, I can share some charts here in a minute or whenever it's appropriate. You might feel really good for a year, but there's no way to get out of this without emotional pain. Because if you're prudent in a in a foolish environment, you're going to feel emotional pain. You might feel the joy on the front side if you're participating, but you're going to have the emotional pain on the other side when we revert back to the mean. And >> yes, >> what if this time is different? >> Well, it could be. Well, let me make let me make the devil's advocate case. Okay. We all know and we've all been conditioned and habituated the Fed's going to print. >> Yes. >> Right. They're going to print. So printing seems to cure all else. Now on the other side of this, this is an energy shock and some central bankers are starting to notice you can't print your way through an energy shock. It's different beast. But we'll try anyway, right? So that could be a case for why prices might go up. Full speed ahead. Damn the torpedoes. But the other thing that's really different this time, we've never had a president who's day trading the stock market. And we've never had a a the government waiting communist style into taking ownership pieces in our public companies. The US government has interest stakes now in Intel. It has an interest stake in Nvidia. Who knows what else they've done because a fab 56 national security got to hide the account and stuff. We don't know. I'm going to guess it's not zero. So, so, so how do we how do we I mean I love using the past as a guide, but um you know in that the 63 and the even the 2000 things, the Fed didn't print like now they just print. Like ever since 2008, we watched them print and it wasn't just this big blob with the TARP and the Tal and all those acronyms to get us out of '09 up into 010. They printed all through 2011, 12, 13, 14, 15. >> Absolutely. >> 16. Held a little steady for a while. tried to back it off in 2019. Oops. Repo crisis printed co. Whoa. I don't know. You know, I I I can I can I'm sympathetic to the idea that people could look at that and say, "Well, that's what's going to happen again." >> No. And I am sympathetic to that, too. But still, if if they continue to do that, history shows us that that you're going to end up in a currency crisis, right? Because because the world is becoming smaller. We've seen the east has prepared themselves a lot better. They've talked about the unit. They've got their own alternative to um uh to the swift banking system. So there are positioning that's taken a place. So maybe it's absolutely different, right? So you go back to Germany leading up to the end of the war. They made it what it you you couldn't sell anytime the market was going down and the market went up. It was artificially controlled. And then as soon as the the war was over and they finished and they went back to to honest market, it dropped 90%. And the people that were in couldn't get out. So, you know, yeah, it may be absolutely different this time, you can't rule that out because we printed, but the consequences are going to rebalance somewhere. It's either a currency crisis, but if it is different this time and you start to see commodities take off and you start to see emerging markets, we're seeing some of that. Now what will be different is how to maintain your purchasing power through right we may not have a 50 or 60 or 70% stock market decline but you may see that leadership change and I believe that a lot of times if you're seeking wisdom you're let me see if I can find it here because I want to pull this up because it's a really good chart. Um if you're seeking wisdom you see types and shadows and warnings. So you're going to see some adaptation that allows you to make that move that is prudent and wise. So where I think even if the markets don't go down, what will still be different is what are the assets leading in the next, you know, 10 years that are going to protect your purchasing power better than anything else. So this is where we are, right? So what I'm sharing here is a chart of the major indexes going back to January 1st, 2008. So, you've got the S&P 500 index here in black. That's been really the only game in town since about 2014. It wasn't till maybe 21 that you started seeing developed and emerging markets take off. That's really been recently since about 20 uh 2023. But you can see commodities, I mean, they've just up 21%. The Goldman Sachs commodity index is only up 21% since 2008. So what are we 16 18 years now? Okay. >> So if they do print us into oblivion, what have we seen? We've seen a birth pain, a breakout. Wheat's up, cattle's up, you know, sulfur's up, all of this. Yes, it's an energy shock, but the inflationary pressures are there. Now, the chart doesn't go the full period of time, but if you go back to 1990 to 2000, what happened? That bubble sucked all of the money into the US. So this data, it cost me a bunch of money to go back to 1990. So I haven't spent the money to do it, but it does represent the point, but US equities outperformed everything else. I mean, if you look at just commodities from 1995 to the year 2000, December 31st, 1999, they were only up 5%. What happened on the other side of that? Okay, on the other side of that, government slamming rates to zero, markets came off. Where did the opportunity shift to? So from 2000, so this is a chart of those same major indexes from 2000 December 31st, 2007. Emerging markets were up around 213, Goldman uh commodity index was up about 213 well 210 and 213 and even international developed markets were up 109 versus US going flat. So I I you know my argument is that mathematics still matter and financialization matters and it reaches the point to where something breaks. Okay? And that may not be a 50 or 60% decline in the US equity market. That's what's happened historically in these places, but let's say they print. Well, the bond market's going to have to have some issues unless they artificially control it. Well, if it's in the bond market and then they're artificially continuing to prop the stock market, they're gonna have to buy commodities and we're underinvested and that's just more money that's rolling through the system that's going to find the most undervalued, most efficient place to be when that regime changes. And I mean, even going back here, you know, we were in a weaker dollar environment really till about 2010. And so if you go back through the crisis in '08, the S&P 500 from 2000 to year end 2010 was down 14%. Commodities in spite of that massive decline that occurred in the in the credit crisis in 2008, we're up 227 and 212. So, you know, yeah, it it could be different this time, but from my standpoint, I I'm not so worried if it's different because we're going to make the adaptation to the most efficient place that has the the most amount of money flow and momentum and trend that's with it to try to protect that purchasing power going forward. 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I'm 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. They say every bubble's in search of a pin, you know. Um, the thing that that's caught my attention, of course, is the behavior of bonds. So, so big moving pieces. A, we have a regime change. Interest rates all on their own before the war even was thinking about getting started. Decided to start going the other direction after 40 years of going down. They've broke that trend. Off they go. So, that that's big big moment number one. Pay attention. Two, um, we have this war that kicked off. This is the largest energy shock in history. It's not yet priced in the markets for reasons. Who knows why? Um, but maybe markets have just here's the here's the most generous explanation I can come up with. Markets have been so trained on liquidity being the one and only measure of truth and value and and reality that they they just literally are incapable of properly pricing this energy shock until it's going to be forced to, which will be kind of a a terrible moment. Um three, we also have a US government that's now completely committed, independent of administration, but completely committed to um deficit spending. It's structural, right? The CBO, Congressional Budget Office says, uh based on laws that are already on the books, we're going to be running around two to two to three trillion dollars of deficit every year for the next 10 years, right? Another 20 30 trillion of debt is going to be piling on. Uh guess what? The war is expensive. It's going to be a little hotter than that this year, maybe next year. Who knows how much longer, right? And then against all of that, the United States is is seemingly not adding up the macro numbers on energy is the lifeblood of your economy. That's where all prosperity comes from. Cheap abundant energy in particular. Okay, we're busy just selling that to anybody for and I don't understand this, Paul. I don't understand. So, so I don't have any grandkids, but eventually I hope I will. And when they get, you know, to be adults, they're going to go, "What? What? What' you guys do with all that natural gas?" We would love to have some natural gas to do things with. >> You did what with it? Oh, well, see, we we turned it into liquid natural gas and we put it in a tanker and we sold it to Europe. Like, they're like, "Yeah, but Europeans, they hate us. So, we sold Okay, we sold What? What was so important? Why did we sell it to them?" Well, because we got money back. Wait, you mean that stuff you just printed out of thin air? You mean >> not actual money, you mean currency, ones and zeros on hard discs that represented? So, let me get this straight. You took our our once in a species bequeathment of this most amazing molecule that you can do almost anything with and you liquefied it and sold it to some people who don't even like you for money. It's just it's such a nonsense story. It really is. >> Yeah. >> You know, it's unfortunately short-term instant gratification thinking. no long-term strategic planning. And that's just what happens when you get into a society where things have been so good. People forget that it takes discipline and sacrifice and and and planning and a little bit of pain for the future, right? Like our economy is operating like we're eating cake every day. Like I mean h how do we think of a parent that you know as soon as a child starts to eat solid food feeds them cake for breakfast, lunch, and M&M's for dinner, right? I mean we know that's not good long term, but boy that kid really likes you, right? Because you're giving them all these great things instead of, hey, you got to eat your carrots and you got to eat. Discipline still matters from a long-term standpoint. And there are periods of time, I mean that right there just illustrates it. you know, yeah, the bubbles are getting a little bit bigger because of all the money that's been printed in from a fiat standpoint, but there's a reason why that that, you know, gold has been the one thing that's been the standard throughout history from monetary because there are limits, right? You get these manas. If you don't have enough gold, then you get the inflation, then you get the deflation on the other side. So, it's a counterbalancing mechanism. And we can detach. We've detached from the counterbalancing mechanism in the 1970s, but there's other countries that see value in that at this point. So it may be different for longer than we could possibly imagine. But but at least at this point, we don't control the whole world, right? I mean, if there was a viable alternative, if the government continues to print and there's a currency that, you know, let's say China comes out and says, "Hey, you can buy a 20-year Treasury from us. is going to be backed by gold and you can take your dividends and you can swap it out for gold 20 years from now. Hey, that's something I'm interested in because if we get printed into oblivion, there's a good chance that gold's going to continue to maintain its purchasing power. So, um that that's kind of my standpoint. There's too many forces that they might can control things here, but there are other countries that are going to say we're not participating in that anymore. And the pain of changing and walking away from that system will be easier than the pain of staying the same. And and if it is truly different this time, it it's just going to last longer, I believe, because at some point the pain of changing is going to be easier than the pain of staying the same. And I believe that that changing mechanism is going to be inflation. >> Yeah. And while that inflation's on the way, um then there's that pig is already in the python. It could get worse. We could do things to to make it worse, but um and I believe our energy policies are are are trying hard. We'll we'll see. But, you know, if we diplomatically ruin things with our main trading partner for whatever reason, that could make it worse. Um if we print more money, you know, so the thing that bothers me about this sort of from a moral standpoint, right? So, so again, I care about my kids a lot. I care about your kids. I care about I I care about the next generation. I've reached that level of my life in wisdom and I don't need more trinkets and bobbles, you I I've I've I've achieved everything I I meant to achieve from from a material standpoint. And so I look at this and I know the Fed is just desperate to always make stocks go up into the right, you know, but they keep them at these historically highly elevated levels and they have reasons for that. Paul, like, oh, think of the bad things would happen if the market had to correct and find a natural price, right? Well, what would happen is my kids and your kids and other kids would be able to buy into the stock market at a fair price and get the same shot at at life that I had. >> Right. >> Right. But they're not. And they want just the the the old guard. You know, the average age of somebody in Congress now is like 70 plus. They're all boomers. And they just want they don't want it. They just want it to be how it's good for them. >> And I'm starting to get a real bad taste in my mouth about people who are just narcissistic. It's all about them. They want they just want the markets to do what's good for them and they don't care about anybody else, including their own offspring. Which tells me you have a damaged human being on your hands, >> right? Like if you can't even care about your own offspring at that level, you're broken person. Sorry. >> Yeah. >> Right. Yeah. >> So I I just think, you know, we we should let nature take its course. If things are overextended, need to fall back like what's over your head there. Then that's what happens. It's painful. Guess what? We'll pick ourselves up and keep going. But with a better life for the people who are in the best position at the start of their life to make the most out of it. Yeah. >> Right. making this all sort of hold together so people's retirement dreams aren't sullied a bit is just I don't know >> you know you look at the statistics okay you see how many of these these um you know professional athletes these high income earners the the actors that had massive amounts of wealth you know the drug addiction everything that goes in there right now some of them built their career but especially when you get into what we would classify as kind of trust fund babies right? They're they're not as happy as the average individual. Now, the person who gives it to them, they're happy because look, you don't ever have to work because I've paid the sacrifice for you. You'll thank me for the next couple of generations. But you're essentially robbing them of the journey. The the the money that comes from making an impact in society and blessing other people is a byproduct of doing something with your life, right? And there's real joy that comes along with that is the journey and the sacrifice and learning and coming through and then you can be a blessing to others. So, you know, we get into that position to where where for whatever reason it's there's such a focus on us of the the leaders that are there and that narcissism that you're talking about. It's like, hey, we're just going to fix things for you and it'll be easy. But you're actually robbing that next generation of building resiliency and confidence that you know look if if we have an economic calamity and I lose everything. I've done everything right but I still lose everything. You know what? You can drop me and I can rebuild it again because I have the skill set and the discipline and the fortitude and the work ethic and the grit to fight through the other side. And those individuals are far more secure than the group of individuals that needs the government to bail them out because they're living a lifestyle that they really can't afford to live and and they're living right by that edge and they're going to vote please bail me out because uh if you don't I have to give up my life as it is and the things that I have are are who I am instead of a byproduct of who I am. Well, and on that front, probably half my conversations uh this these past few months, every I you know, I did a big renaissance report on AI, you know, what is it and all this probably already hopelessly out of date, right? Because every day I wake up and I'm like, this is changing too fast. Like look at this new thing. It does like now we're having honest conversations like is this sentient? Like how would I know? Um, but the point is is that, you know, I was just talking with my youngest child and she's having trouble finding a job because the area she wants to go into, wouldn't you know it, there's a lot of people with decades of experience above her who just got booted from their jobs. And so she now she's in competition in a hyper hypertight job market because AI has already taken that. We're not even having the conversation which is if we define our meaning and purpose by how we apply ourselves in the world. But then we take our opportunities to apply ourselves in the world away and we're not going to talk about that and we're not going to offer anything other than I don't know buck up and work hard like I did different environment 40 years of tailwind on you know there was no AI. So again we're doing something to our next generation here that I just I can't I can't brook it. I can't I can't I It's just It's unconscionable, right? Oh, we're just going to build all these data centers as fast as we can because we need AI and you know, some people are going to lose jobs. Like, whoa. It's existential. If they're not going to have jobs, what are they going to do? And that's weak men bringing about hard times. And I mean unfortunately it seems that we're heading in that direction because the focus is on I want to be the richest person in the world or I want to join this x amount of club and I want to accomplish this and I want to bring about a sentient AI or whatever it is. It's I I I instead of what is best for everybody. And that goes back to that scripture. You know the Bible says something along the lines of a good man leaves an inheritance to his children's children. When I first got in the industry, I thought that was money. >> And money is a byproduct of that. But I believe now that it's character, discipline, a good reputation, a good name, the individual that stands up for what is right regardless of the consequences. Because think about what the forefathers of us in our country did. I mean, they put all of their wealth on the line and their lives on the line for this idea that was America so that their children can have something better than what they left. And and and we're in we're just not in that mentality now. It's like we want to do what's best for me and the rest of the generations can fend for themselves. And that's going to leave behind a generation that is not going to want to stack the pain on top of their children is what was left to them. And so, you know, um I don't think the history books are going to going to judge the mentality and the the selfishness that we've have during this period of time very good. It's going to be an example of what not to do in the future. >> Yeah, I agree. I I read a a piece h probably over a decade ago where Warren Buffett wrote penned a a little essay and the title of it was squanderville and he just said wow we are just squandering our opportunities here and that was a key conclusion I came to in the crash course independently which was look we have some tough decisions we have to make today but if we don't make them kick the can they become much harder decisions downstream. So, right now it'll be tough if we let our oil markets adjust to real pricing, it'll it'll be a little bit painful. But if we wait until we crash into the wall and we don't have any oil left to do anything with realistically, your your option set gets a lot smaller and a lot more painful. And that's just the nature of it. You can ignore some things, but not forever. And that's what I feel like we've been doing. That's the squandering of opportunity cost of of time. We're just squandering. We're just squandering it. You did what? You built data centers. You know, you can just hear it coming and for the future looking back like, "Yeah, we're going to file that next to uh facing large stone heads east with, you know, after cutting down your the last of your trees." Okay. You know, just we'll file it under that part of human behavior, >> you know. >> Yeah. Well said. Very well said. >> Good. All right. Well, with that, Paul, we are uh done for today. So, if anybody out there listening wants to talk to Paul or his amazing team, please go to peakfinancialinvesting.com, fill out a simple form, few questions in there and some disclosures and uh click send or submit and then somebody from Paul's office will be in touch with you within 48 business hours to schedule what will be the first of three calls. You get a hey, an introductory call, then a planning call, and then finally, if you get there, a recommendations call. And if all of that sort of sorts itself out and it makes sense to work together, then you could go down that part of the road with Paul. Everybody who's gone down that process though, independent of whether or not they end up working with Paul and his team, says it's been a highly valuable process. So, I would encourage you to take advantage of that today while you can. >> You know, no obligation. Hope you guys can tell we're not high pressure. If if we can help you and all that is is the plan, then everything else will take care of itself. >> Well, thank you for doing that, Paul, and thanks for your time again today. >> You're welcome. Good to see you, Chris. All right. Bye, everybody. We'll be back next week with another episode of Finance You.