The 60/40 Portfolio Is Dead Because Bonds No Longer Work | Louis Gave

Summary

WORRIED ABOUT THE MARKET? SCHEDULE YOUR FREE PORTFOLIO REVIEW with Thoughtful Money’s endorsed financial …

Transcript

In the old days, you know, the the ultimate portfolio was 60 equity, 40 bonds, you know, you rebalanced every quarter and you go to the beach and that delivered tremendous returns. That portfolio died with COVID. That the 6040 died with COVID and and it remains dead because the policy settings have now shifted structurally towards far more inflationary um far more inflationary policy settings. And in and you know in that world I think you move from 6040 bonds to equities to something to perhaps you know 60 equity 20% precious metals 20% energy. I tend to believe energy stocks are the new bonds in a world in which bonds no longer work. Welcome to thoughtful money. I'm its founder and your host Adam Tagger. While much of Wall Street's focus over the past recent years has been on the AI hyperscalers, there are an increasing number of seismic developments happening internationally that investors need to be aware of. For example, as a basket, emerging market stocks have outperformed the S&P this year. And to name just a few others, Japanese bond yields have surged to the highest levels in 20 years, threatening to put an end to the carry trade. A US-driven regime change in Venezuela looks imminent. China continues to fire its monetary and fiscal bazookas with gusto in an attempt to pull itself out of its deep balance sheet recession. And in the wake of negotiating a tenuous peace between Israel and Palestine, renewed efforts are underway to bring an end to the Russia Ukraine war. Which international trends are the most important for investors to be tracking right now? What are the biggest risks and where lie the biggest opportunities? to better understand the situation from a non US perspective. We're fortunate to welcome back to the program Louie Goff, founding partner and CEO at Goff Call. Louie, it's a pleasure to have you on. Thanks so much for taking the time to join us today. >> Thanks for having me on, Adam. I'm glad to be here. >> Thanks. Well, it's a pleasure to have you on and um as I just said there in the intro, there is a lot going on internationally. Um, I I don't ask this question that much anymore, but given it's been a while since you've been on and your purview really is international world, I'm going to ask you this general question. What's your current assessment of the global economy in financial markets right now? >> So, um, look, I think if you start off just on a where policy lies, right? I think everywhere you care to look, you have very easy fiscal policies. um you know China this year will probably be running a budget deficit of 10% of GDP. This is the second biggest economy in the world running a budget deficits such as you know you usually don't see in peace time. Uh the US I think this year will be running budget deficits of around 6% of GDP. Uh you know you look all across Europe all the European economies are somewhere between two and four and a half. um Japan, you know, you have a new prime minister in Japan that's promising to really step on the fiscal gas. So where almost every major economy is doing fiscal stimulus at this stage then on the flip on the other side of that you have monetary policies that are being you know very accommodative. um you know today the US you have twin deficits you know so budget deficit and and current account deficits that's probably together going to be in the double digit territory you have unemployment rate below four and a half% and the whole debate is how much the Fed should cut how much the Fed should raise and you've got the ECB that's cutting interest rates you've got the Bank of Japan that's sitting on its hands the the PBOC that's uh got its lowest interest rates uh in history. So everywhere you care to look, you have very easy fiscal, very easy monetary policy. And the end result of this is reflationary trades everywhere are working. You highlighted in your intro that emerging market equities are doing better than developed market equities. Well, emerging market bonds are also doing better than developed market bonds. You have most metals, obviously gold and silver and platinum have been capturing a lot of headlines, but copper as well uh breaking out to the upside. Um pretty much you know financials are outperforming in most major markets. Uh everywhere you care to look reflationary trades are working. Um except perhaps for one reflationary trade which has sort of languished uh which is energy. Uh that's the one reflationary trade that has not ripped higher and and perhaps fortunately so because as energy prices stay low this creates a further boon to global growth. uh you know I you you've heard me say this many times and you and I have discussed this in the past but economic activity is energy transformed. So when you have a cheap cost of energy that's that really supports growth especially in emerging markets where growth tends to be more energy intensive. You know when you're building roads when you're building buildings when you're building stuff it consumes a lot of energy. So when you think of Southeast Asia when you think of China when you think of India when you think of Latin America the the low price of energy is is a boon to to most economies. Of course not the guys who do produce energy. So if you're Saudi Arabia, it's not great news. But everybody else, it's it's it's pretty great. So today, you have low energy prices, super reflationary policies. Perhaps we shouldn't be surprised that things like copper prices are ripping ripping it higher. >> All right. And do [clears throat] you see this trend as a trend that will maintain build steam or decline as we head through 2026? >> So I think that's obviously that's the single most important question. You know, in investing, usually the trend is your friend. So, what what is what is what could potentially turn this around? Right now, that's the trend. What could interrupt this trend? Um, it seems unlikely that you're going to get a tightening in monetary policy pretty much anywhere, just as it seems quite unlikely that you're going to get a tightening of fiscal policy anywhere. So, you know what? What could disrupt this trend? Um, I think of two things. Two, well, actually three potential things that could disrupt this trend. The one I'm the most worried about is energy prices join the party. Uh you've seen in the past few weeks, so we're, you know, we're taping this in mid December. If you go back to a month ago, natural gas prices in the US were what, three bucks, a little bit under three bucks. They're now above five bucks. Now, when you go, when you look at the past few uh few years, really, the past 15 years, natural gas prices in the US have broken above five bucks on three different occasions. uh they broke above five bucks in the polar vortex of 2013. They broke above five bucks in 2021 when the Texas grid broke down and they brought broke above five bucks when Russia invaded Ukraine in the winter of 2022. And you know today, you know, it feels like energy prices might be grinding higher. Energy stocks are definitely in stop behaving all sickly and weak and they they seem to be joining the party. So that's that perhaps is your first big threat to the to the environment for 2026 is that energy prices start to grind higher. So So that's your first big threat. I think your second big threat to to the environment that we've uh enjoyed is that uh the excitement seems to be coming out uh of all things AI. >> Mhm. and you're starting to see a rollover there uh in a lot of the AI plays and let's face it, you've had a lot of excess liquidity poured into this uh and you know it seems like a lot of these this capital is going to be destroyed written off like you know the the investments that were made will not deliver the hope for returns. So that could be a bit of a deflationary shock to the system coming into 2026. Um and then I think your your third big risk to this very pre you know benign environment is that Asian currencies start to rally. You know when when I look around the world at prices that absolutely make no sense. You know if you take a step back and you say you know what what's completely out of whack today the thing that's the most out of whack for me is Asian currencies. Uh starting with the remmanb which is just ridiculously ridiculously cheap. And you see this to be honest in China's trade surplus. China's trade surplus today is a hundred billion US dollars a month. You know, no country's ever run a trade surplus this big. That's 1.2 trillion a year. It's it's gargantuan. And uh and it reflects the fact that, you know, China is so dirt cheap today. I I tell everyone I meet, if they don't know what to do for holidays, go to China. You get to stay at Ritz Cotton hotels in Beijing or Shanghai for 100 US a night. You know, it's it is like China is so dirt cheap. It's absolutely ridiculous. Now, China's cheap, Korea, the Korean one is cheap, the Japanese yen is cheap. And because the currencies are so cheap, I think, and have continued to go down against the US dollar. And because in all those countries, interest rates are essentially zero, I think it's encouraged local savers to pour capital outside. Uh, so you're a rich Japanese, you're a rich Korean, your currency keeps going down, you're getting no interest rates at home. So what do you do? You go outside and maybe you buy aggressive growth stocks in the US that keep going up. Maybe you buy gold. I mean, if you're earning 0% interest at home, [clears throat] >> might as well buy gold. And so if you look at who's been buying the precious metals in this massive bull market, interestingly, it's not been US investors. It's not been European investors. that the buyers of gold in this bull market of the past three years have been central banks and have been retail in China, Japan, and Korea. >> And again, as long as the currencies go down, that makes sense. You look at the gold price and yen, it's gone parabolic. But if the currencies start to go up, all of a sudden, a lot of the trades that made sense when the currencies were weakening all of a sudden no longer makes sense. So for for now, you know, we are in this reflationary environment. three three threats to it. Asian currency revaluation, rise in energy prices, and uh the AI bubble imploding. Now, incidentally, those three things could easily be linked because what's going to happen is let's imagine energy prices start going up. Then one way Asian countries could uh you know stomach the higher energy prices is through higher exchange rates. you know, they let their currencies go up and like this for them, you know, in local currencies, higher energy prices don't take as much of a bite. And as that happens, as energy prices go up, all of a sudden, the whole, you know, the whole business model of AI also comes into question. So, these things could easily feed into each other in 2026. Again, I'm not saying this is going to happen. I'm trying to answer your question. What could threaten the reflationary scenario we're in? >> Okay. All right. So, yeah, you're not predicting this necessarily, but you're saying um there's potential >> that's true. It should be on your radar. >> Yeah. Yeah. And there's potential that any one of these could could manifest, but because they're interlin, you could actually almost have a contagion that spreads across all three. >> Um let me just ask you a couple questions about about each of these. Um >> and you know, you know, that's how Murphy law is, right? It works, right? It's like if like one thing goes bad, then it takes it triggers another thing and another thing. Yeah, it's exactly what you don't want to have happen next is what happens next. >> That's Murphy's law. >> Um, so on uh on energy prices, um you mentioned that uh that that you know oil and gas stocks which have been >> you know they haven't really participated in the party of the past couple years. Um they they seem to be maybe slowly starting to pick themselves off the floor here. Um, as an investor, are you allocating capital there, thinking, hey, this might be a secular turn, or are you not? Are you waiting to see more confirmation before as an investor you start committing capital to this? So I have a lot of capital committed to the oil and gas sector but not because I think it's made a turn. uh but for the reasons to be honest I've made the same argument for the past 5 years and that is that in an inflationary environment bonds no longer diversify your equity risk and since 2020 we've been in an inflationary environment and all the policy settings as we were just discussing remain inflationary big budget deficits [clears throat] easy monetary policies and it doesn't mean inflation appears right now but the risk is that inflation appears and more often than not when inflation appears as we saw in 2022 2, it's through an energy shock. You know, in 22, Russia invades Ukraine, price of oil goes through the roof, equities and bonds fall together. The only diversification for for your portfolio in 2022 was energy. And I I still believe this to be the case. So, in the old days, you know, the the ultimate portfolio was 60 equity, 40 bonds, you know, you rebalanced every quarter and you go to the beach and that delivered tremendous returns. That portfolio died with CO. that that the 6040 died with COVID and and it remains dead because the policy settings have now shifted structurally towards far more inflationary um far more inflationary policy settings and in you know in that world I think you move from 6040 u uh 6040 uh bonds to equities to something to perhaps you know 60 equity 20% precious metals 20% energy And and today I would say that you know your ratio precious metals to energy has gotten so skewed to precious metals uh you know for the first time in in well I was going to say in my lifetime but it's not exactly true because in the late 70s but for the first time in my adult lifetime one ounce of silver buys a barrel of oil. You know it's >> today actually. Yeah, it's, you know, it's it's fairly aside from the the Hunt brother squeeze, you know, this is completely completely unprecedented. Usually it takes three or 4 ounces of silver to buy one one barrel of oil. So today, I'm inclined to still have my my 60 into equities, uh, to have 25% into energy and 15% in precious metals. And it's and and to to keep going with zero in bonds. >> Okay. So, so I look at energy to to it's not that I think, oh my god, we're going to make so much money into energy. It's energy is the hedge in your portfolio. It's what is going to reduce the volatility when inflation spikes. >> Got it. And I was just about to ask that. So, it's really energy as a hedge. Um although it is a hedge that pays you, right? I mean, these the old days, >> pardon me, >> in in the old days, bonds paid you. You know, if you go back to the 80s and 90s, you'd make 5% 6% 7% on bonds. Today, that's not on offer. But yes, to your point, energy stocks today, I mean, depending what you pick, but you can get some MLPS and you like energy is a pretty broad field. You can get some refiners that pay very high dividends. Um, you know, today you look at refiners, crack spreads are, you know, very high. They're very sticky. Nobody's building new refineries. These guys pay out high dividends. So yeah, I I I tend to believe energy stocks are the new bonds in a world in which bonds no longer work. >> All right. Energy stocks are the new bonds. Um I'm writing that down here. >> They have been they have been for the past 5 years and and when you needed them to kick in in 22, they did their jobs, >> right? So we have some some recent uh validation of this. Um and and again just contrasting to precious metals which is an inflationary hedge but it doesn't pay you. You're you're you're only benefiting there from the the you know nominal appreciation. >> So I'm not even sure. Yes. So you know precious metals don't pay you. And I'm not even sure to be honest. We've debated this internally a lot whether gold silver whether it's a genuine inflation hedge or not. I I actually believe that gold is a hedge against too low an interest rate uh rather than um uh inflation because you've had periods, you know, in the early 80s inflation was running high and gold was getting crushed and it was getting crushed because interest rates were moving up, >> right? >> And and so it's and look at what's look at what's happened in the past few years. You know who's been buying gold? It's been the Chinese, the Korean, and the Japanese. Why? Because interest rates are zero over there and inflation is accelerating. And so if you're a rich Japanese, you're like, "Well, I'm earning zero at the bank. Inflation is 3%. You know what? I'm going to buy gold." Uh it's the zero it's the zero interest rates that that is that is driving that decision. >> I probably should have used the term debasement, which some might say is a function of inflation, but it's a little bit different. Um and and so yeah, it's when you're concerned that hey the purchasing power of my currency I'm I'm >> and when I'm earning and when I'm and when I'm earning nothing at the bank because look a lot of people are pessimistic on the US dollar right it's like everybody's worried about fiscal dominance everybody's worried uh you can read everything you want on you know it's it's comes at you every day on social media that the dollar debasement etc etc however Americans are still not buying gold like you look at the flows look at the the shares outstanding in the GLD, you know, the biggest gold ETF. Um, it's actually been going down. Like, it's come back up in the past 3 months, but three years before that, it was going down every day. Like, Americans kept selling into the gold rally. Their shares outstanding in the GDX, which is, you know, it's doubled this year, the GDX. So, the GDX is the the gold mining ETF. Um, that's at the 10-year low, their shares outstanding. So, Americans, Europeans, by the way, same story in Europe. The SGLD, which is the biggest uh gold mining ETF in Europe, etc. That's like had a shrinking shares outstanding for the past five years. So, the I I genuinely believe that, you know, in Europe, everybody was buying gold when interest rates were were at zero. As soon as interest rates started going up, people stopped buying gold. And, you know, when people earn an interest rate, it doesn't even need to be that high a real interest rate. just there's something psychological about it. When they earn an interest rate at the bank, they keep money at the bank. As soon as they stop earning an interest rate at the bank, they're like, "Oh, well, I'll just, you know what? I'm going to buy myself some gold coins." >> So, so let me let me ask you this. um because I I agree with pretty much everything you're saying, but we had a pretty long period here um in the US of 0% interest rates and the retail buyer was not rushing out to buy gold then and you you probably remember you know Grant Williams, right? And what is it 10 years ago? >> Yeah. And what was it 10 12 years ago he wrote the piece about gold called nobody cares. Um he said you as a gold bug you know you you may be interested in gold for all these things but it doesn't matter because the rest of the world doesn't care. And then to your point central bank started caring and then the Asian speculator started caring. Um the western speculator hasn't really arrived to the table yet. I think I' I've interviewed some people in the past recent months who've said well they're starting to. You might challenge that. I I guess my question to you is is do you think we're going to see that third leg of the western speculator, the western investor come into this market? Um or are they going to pass it by? >> I think they will. I think when interest rates come down in Europe and come down in the US, you'll see what you traditionally see, which is money flow back into gold. Um and >> okay, but let me just ask this. Why why didn't it during the ZERP era >> in the West? So it's it's a good question. You know, you know, no rule in finance is a one for one. Yeah. >> You could say, well, you know, people put money in cryptos. And by the way, uh you look at the shares outstanding in GLD when interest rates were at zero, the shares outstanding were moving up. Um and it's like since 2020 when basically interest rates are through 21 when interest rates start to go up that the shares outstanding have been coming back down. But it's um so I think that was part of it. Um look, equities were ripping. There was a lot of exciting stories in equities. Uh so that probably drew in some of the flows. >> Could it also be too that maybe this time like you know whatever it was seven years ago, five, seven years ago, the Fed was telling we had too little inflation and we just it had been so long since we had dealt with inflation. We kind of didn't worry about it. But now maybe we do after living through CO. Yeah, it could be. Look, I explaining you know broad uh you know the flows of retail investors etc. It's it's always challenging right? Anticipating them is challenging. All you can do is say okay this is happening and the trend is going to continue unless something else happens. But um you know why didn't it happen more? Uh I'm I'm I'm not quite sure. I actually think that during that time in Europe you I mean in Europe in the United States you actually did see some gold buying. What you weren't seeing is emerging market gold buying because back then emerging markets were really struggling. You know India didn't have much growth and China didn't have much growth and you know we still live in a world where twothirds of of physical gold demand essentially comes out of both China and India and as those countries you know hit the skids you know you had a big real estate bust in China etc. So, you know, again, perhaps I wish I could call it up now, but you look at the shares outstanding in the in the GLD uh in the US and and that pretty much tells you what I think the retail has been doing visav gold since that's the easiest way for retail to buy gold uh is the GLD ETF. Um and you know, it was expanding in in the first phases of ZER, of QE, etc. It it was expanding. Um meanwhile you know over that period China was selling India wasn't buying etc and now this has shifted so the problem becomes what happens if you start slashing interest rates in the US and retail investors in US want to start buying again and at the same time Asian currencies are kept down because you know PBOC doesn't want the remn to go up >> and and so they print a lot of money >> uh and that money ends up going into gold because that's what they've been doing over the past few years. And then you're then you're stuck and like all of a sudden everybody's buying gold. Um, and it's not obvious who the seller is. Now, I'm not like arguing, oh my god, gold's about to be go parabolic, etc. Because I actually think that in 26, China will revalue the remn because it's gotten too ridiculous. Um, otherwise it's going to start creating political problems for China internationally. There'll be too much of a backlash. Uh and I also tend to believe that other Asian currencies will follow the REM and be higher. So I think that will actually be a headwind for growth coming into next year. So I'm not I I don't want a headwind for gold next for gold coming into next year because you're going to lose the you I think the Chinese buyer once uh the rem starts to go up etc. We'll say okay what do I buy? I probably buy anything with a yield. Uh either corporate debt, REITs, um you know, anything with a high dividend yield will get bit up. So, it's so I'm not arguing, oh my god, just put all your money into gold. It's it's it's about to go parabolic, etc. I think there's a scenario where it absolutely doesn't in 26. Um but the the scenario where it does go parabolic is essentially the scenario where Asian central banks refuse for their currencies to go up and the Fed cuts interest rates aggressively. Then I think gold goes goes bananas. >> Okay. All right. Um [clears throat] and let me just ask this before we move on to the next one. Um you talked about the silver to oil ratio right now where where now an ounce of silver buys more than a a a >> barrel of oil. barrel of oil and that's happened very rarely. When you just look at that from a from a high level, do you think more that silver may be overvalued or do you think more that oil may be undervalued? Look, I think you can look at it in one of three ways. Uh the first way is to say, you know what, this is signaling to me that fiat currencies people are losing faith with fiat currencies and therefore >> everybody should be in precious metals etc. So, that's one possible scenario. The other possible scenario could say, "No, no, no, forget that. It's just that oil, uh, we're moving into a world where we're going to need a lot less oil. You know, the energy of the future is electricity. There's many different ways to produce electricity and, you know, oil is going to become obsolete." So, that's your >> We've got all these nuclear reactors coming online and all this, >> nuclear, solar, and we can produce we can actually produce >> lots of cheap electricity with natural gas. We can produce cheap electricity with coal. Coal is no no longer as polluting as it used to be. You can cut that that many different ways but essentially it's you make the point of okay oil oil might be getting obsolete. So that's the second way to interpret this. Uh essentially you know the first two arguments whether it's like fiat currencies are getting crushed and or oil is becoming obsolete is to say it's different this time. So looking at the silver oil ratio, you're looking at a time that no longer exists. Or the third is the one third possibility is the one that you hint at and you say, "Okay, actually it is not different this time. The world hasn't changed all that much." And the the gold silver the gold um sorry the silver to oil ratio is is out of whack. Um and yes, I think energy in that ratio oil is probably too cheap. Um, and so I lean I lean towards that to be very clear. Um, my my inclination is is towards that, but I'm not like saying people who argue the first and second argument are idiots because they might very well be right and it's what makes a market after all. Lots of different opinions. Um, I tend to believe that today and and that's why I said, you know, if if the portfolio you wanted it 10 years ago was 60 equity, 40 bonds, and if five years ago you needed to shift to 60 equities, 20 uh energy and and 20 precious metals, personally, I've now shifted to 25 energy and 15 precious metals, and I'm probably on my way to 30 energy and 10 precious metals because I I do think people are too negative on on on energy today. >> Okay, great. And what I love about this conversation is corroborating some of the most recent conversations I've had on this channel around oil. So, thank you. Uh I love it when different analysts sort of come to similar conclusions, but they're using their own independent processes to do so. So, that's great. Um All right. So, that was the first thing you talked about where you said, okay, what could put a fly in the reflationary trade next year would be an increase in energy prices, which you think is a could happen, right? Not not it's going to, but it's a could. The second was the AI bubble burst and you you referenced, you know, some of the recent I I'll say cracks um that we're seeing in the in the AI euphoria. Um I don't think that that thing has broken yet. Um although >> Oh, I do. >> Okay. Well, great. I'd love to hear your I'd love to hear your reasons why, but but just price-wise, I mean, the S&P is >> still within a 1% of its all-time highs, right? you know, we're we're when we in my opinion, when we see the crack, we're going to see those hyperscalers really start to drag the uh the market down. But I'd love to hear you you comment on it. Let me ask this short question, then I'll let you run. Um those hyperscalers represent so much market cap. Um not just in an absolute value, but in a in a percentage value of the major indices. Um I I want to say it's like 40% of the S&P and I don't know what it is of the NASDAQ but but above 50 right just in like 10 stocks. um if we if they were to go through a substantial let's say dotcom like correction right where the the world wakes up I think you were making a similar argument where you're saying hey you know what we just we we were overexuberant here we we we we priced this all like all the benefits were going to come in tomorrow the benefits will probably still come but they might take years a decade plus to to really flush out and so we got a discount for that I I I don't see how a that doesn't you know whack asset prices by an awful lot um because these are so widely owned. Uh and then secondly, I don't see how that doesn't create a strong disinflationary if not deflationary uh impact in the economy u because it has become so dependent on the capex spending from the hyperscalers. So um I [clears throat] guess react to all of that. >> Yeah, there's a lot to unpack. Um so look I'll start off um you mentioned you start off with the hyperscaler so I'll start off there as well and I will say that you know the bull market the initial bull market in the hyperscalers the this you know the 2008 2009 bull market to to roughly 2023 was a highly unusual bull market in that it required very little capital spending you know the the the Googles the Facebooks the Microsofts the Apples They essentially piggybacked off of the infrastructure that was put into place in the previous bull market and then the previous tech bull markets of the late 90s you know the fiber that was put in the ground in the >> Yeah. You had all this dark fiber that was just laying that Yeah. >> Exactly. So like Netflix could come in and piggy back off that etc. So for shareholders this was absolutely amazing. you know, you had a few companies that essentially captured monopoly situations, which is, you know, awesome enough when you when you get to do that, but also had very little capex to do. So, this thing just generated massive amounts of cash. And so, you know, in our mind, that's what that's what we got used to, and that was the big first phase of the bull market. And as it was starting to look like it was, you know, starting to run out of gas a little bit, uh, in comes Chad GPT. And, you know, everybody gets super excited. It's like, oh my god, we get to have another round of this. By by miracle, it's essentially the same companies that are going to be making all the money. Uh, this is this is amazing. Except of course that this time around uh it's it's a different kettle of fish because you have uh a this time around you need to do massive capital spending and and and absolutely gargantuan levels of capital spending. Um and so it's it's the bull market has now shifted now bold markets that depend on capital spending you and I and you know we look like we're from the same generation. we've seen time and again um you get them, the market gets excited and there's the phase of the market where the companies that get rewarded the most are the ones that spend the most money because they're going to be the ones delivering the fastest growth. So in China, you know, I spent a lot of time in China. I live in Hong Kong and spend a lot of time in our Beijing office. In China, we had a massive bull market on real estate. And a company like China Everrand, you know, that became the biggest property developer and before it flamed out in in all of its glory. Uh, you know, for 10 years, the more borrowing it took on to buy more land, the more the share price went up. You had the same thing in the US during the the shell boom. You know, companies like Chesapeake, you know, the more the more debt they took on to buy to buy more land, you know, the more the market rewarded it. And same same story in the the 90s boom of Lucent etc. It's it's a constant of most bull markets that bull markets are actually very capital intensive and in the way up you reward the guys who blow the most cash and then for some reason at some point for whatever reason the market stops rewarding the guys who burn through cash. Uh and you saw this uh uh you saw this uh very clearly in the past few weeks I think with Oracle with SoftBank you know >> yeah or Oracle Oracle comes out and says hey we're going to spend 300 billion building data centers and the initial market reaction was champagne all around you know >> gargantuan >> yeah it's like the share price the the market cap of on this 300 billion capex spending plan the market cap app of Oracle shot up $350 billion. It was, you know, all all gravy, happiness, etc. But then the market said, "Hold on, 300 billion, that's actually a fair amount of cash." Like, where are you going to find it? How you going to fund it? And immediately the CDS on Oracle went up from 40 basis point to 110 basis point in like a matter of days. >> And then and then the share price of Oracle started to plummet and went down back below where the announcement was made. And really, it's been going down every day. It's been going down. just did the calculations this morning. It's down, I think, almost 45% since it hit the height there. >> Y and by the way, exact same story with SoftBank. You know, SoftBank comes out and says, "Hey, we're going to give another 20 billion to OpenAI." And since then, the share the share price of SoftBank has gone down 45%. And so, I think this is super important because most of these guys used to get rewarded for spending money and now they don't. Um, and now the the whole business model of OpenAI of Enthropic is to raise money and then to spend it. But if now as an investor, I'm no longer going to be rewarded for giving these guys money and for them to spend it, why would I keep giving them money? Now you look at an OpenAI, they burn 125 billion dollars every quarter. Uh, they have a year's worth of cash in the bank. They need to do their IPO in the coming year. Who's going to be the anchor in the IPO? who's going to want to to to you know put in money in this thing that is valued you know to come out at 78 900 billion US uh and you know at best will burn through a trillion dollars uh before it makes any profits if it ever does. Mhm. >> So u so the the whole narrative around AI has completely shifted in in front of our eyes. Um and so uh so yeah I think I actually think it is over. I think Oracle rang the bell. Um and um and you know this might slowly unwind etc. But you know the the big question so you've got this on you know that now you could say well who cares about open AI who cares about entropic what matters is the pick and shovels what really matters is Nvidia etc. Then you get to the second part of the equation which is that you know the the Nvidia had a very inviable monopoly situation where they provided the very high-end chips to people and it seemed like it was infinite demand. Well, the infinite demand may no longer be there and the monopoly situation may also no longer be there as we saw with the Alphabet chips. Alibaba's also coming out with solutions in the first quarter. So I think the landscape is shifting very very rapidly in front of our eyes. Uh and you know things that went up in value tremendously. Nvidia went from 300 billion in market cap in this time in 2022 to three years later a 5 a half trillion market cap. These things can unravel really pretty rapidly. Uh and so yeah I I I do think we've we've seen the top. Now that brings us to to your next question. Okay, let let's assume that you and I agree that this is now running out of juice, that the marginal dollar uh may no longer be going to fund uh more capex and AI whose whose future return is extremely extremely dubious. Let's assume that you and I agree on all of this. U does that leave you with a deflationary or inflationary environment? Now the deflationary argument is look there's going to be massive destruction of capital. You know, the US stock market went from 40 trillion in market cap to 70 trillion in market cap uh in three years. Most of that driven by the excitement around AI. Uh a lot of that drove high-end consumption. It probably drove the the K-shaped economy that everybody talks about. If if you're dependent on a paycheck, you're not doing well. If you're dependent on asset prices, you you've done fine and you keep having a good time. So you can totally see how the you know the upper leg of the K-shaped if you get a bare market in equity that that that suffers and that is true for the United States. But then you think okay what's going to be the policy response to this? The policy response will be interest rates at zero because by then that Trump will be controlling the Fed. Uh it will be um it will be a much easier fiscal policy in the US because yeah it's not like Trump is a fiscal hawk by any stretch. you'll go out and spend a lot of money and and so you'll end up the end result of all of this will be a weaker dollar. So you know within you know because of the easier monetary the easier fiscal etc. So you'll end up with your weaker dollar and you know while you know you could say okay this is going to be deflationary for the US a weaker dollar lower interest rates etc will be very reflationary for the rest of the world. Um and so you you could have essentially the mirror uh of what you've had in in the past few years where you know for the past years everybody's like oh US is exceptional and and everywhere else in the world is either uninvestable like China or boring like Europe and Japan etc. um in a world in which the US dollar starts to go down more structurally then that that whole perception starts to shift and uh so the bottom line is uh this could actually turn out to be quite reflationary for for the whole world. >> Okay, let me dig into that for just a minute. Um, so presumably there's going to be some time between the wheels really coming off the AI trade in the markets and the policy response, right? I mean, I think the policy response gets faster and faster every cycle. But we're probably going to have to experience a certain amount of pain for the policy makers to really let the flood loads the floodgates of stimulus or the rescue floodgates turn them on. Do you agree with that or not? I don't I don't actually I I don't think Trump has any interest in taking any kind of pain ever. Um and I think he's look he's already putting all sorts of pressure on the Fed to cut interest rates. Um the the writing is on the wall in terms of of uh cutting interest rates. Uh that's that's where we're heading. Um and you know if if the stock market starts to go down that will happen very very very quickly. Um, >> and so and so will so so will this the spending of the money. >> Look, he's already talking again, you have a but a twin deficits of anywhere from 10 and a half to 11 and a half% of GDP right now. And Trump is talking about sending $2,000 checks to everyone. >> Yeah. I mean it's it's the so if if you get a h a hint hint of a recession you like once you accept the principle of we send $2,000 check we'll make it three we'll make it four we'll make it five just checks all around. >> Okay. Um at some point I want to get somebody from the administration to come on here and be able to answer some of these uh responses. >> Do you think what I'm saying is stupid? I don't think you're No, I don't think what you're saying is stupid at all. And and and try trying to channel um part of me can say absolutely, Louie. Like you're Yes. And then part of me can say, well, the administration would say a couple things. Um one, I think they would say, hey, look, we're bringing down the deficit. And they I I believe I just saw some stats. I can't remember exactly, but I believe the deficit is shrinking a little bit, right? Uh and then you know that we've got the tariff revenues coming in and we're going to get the the um tailwinds of the deregulation and the tax relief. Uh you know Besson has said that we're going to have um probably record tax uh rebates this year. >> Adam, I'm sorry to interrupt, but you're five years into an economic expansion. You're five years into an economic expansion with a with a an unemployment rate of roughly 4%. You shouldn't have a deficit. I I'm I'm right there with you. Look, I'm not trying to to portray either the current administration or even just the current American political scene um as as fiscally uh responsible in any way. [laughter] Um yeah. No, no. I mean, look, I have been railing forever about this, but but I think they would be saying two things which you could agree or or disagree with, which is that, hey, we've got, you know, relief coming that that we want that we're we're going to depend on to help out here before we go back to just, you know, stimulating like crazy. Um, and then secondly too, and this is this is going to get me in trouble. um you know, this administration campaign-wise and even still to a certain extent does some lip service of like, you know, look, it's it's Main Street's time. It's not Wall Street's time. And I I I personally I think the the main thing that they care about and why they're pushing the Fed so hard for um lower interest rates is less to prop up um the stock market even though Trump loves to point to it and that's a scorecard he uses and it's more to make the refinancing of the debt more manageable. And I know they would love to refinance it at longer durations, but at a minimum, they'll happily refinance at the short end of the curve if they can get those uh those interest rates down. Right. So, to me, I I just I just I can totally see what you're saying happening. I just am not 100% confident that they would leap right to the same crazy playbook that we've had before. I think they'll I think they'll pull it out absolutely if the pain gets big enough. I just don't know if they're going to pull it out on day one. Now, probably more than half the viewers here might disagree with me. We'll see. >> Yeah. Look, uh we'll see. >> Let me let me let me get to the question I was getting to and then you can answer in any way you like. >> You said that you're now 60 2020, right? 60% stocks or 25, sorry, 25% energy, 15% precious metals. Given your what seems to me level of of relatively high confidence that the AI bubble is is bursting right now, does that make you worried about your 60%. In other words, are you planning on reducing equity exposure because you expect some of these, you know, knock-on effects in the in the markets as we talked about, or are you just pushing that 60% further into the rest of the world because you think that reflation trade is going to benefit from the the the um cascade of steps we've just been talking about. >> I own very little in the US. Pretty much the only thing I own in the US is in my within my 25 of energy. >> Okay. I think the opportunity set else is elsewhere. Look, I look at markets through a pretty simple grid of of fundamentals, then valuations, momentum, and um and investor positioning. And today, when I look at the US, uh you know, you could say the fundamentals are terrific. It's uh you know, the US has pocket aces. It's a great uh it's a great story. You got some of the best entrepreneurs in the world, some of uh definitely the deepest capital markets, etc., etc., etc. So on a fundamentals basis um now we of course we can debate fiscal policy we just have we can debate debate but you know fiscal policy is a mess everywhere. I'm French like ours is probably even worse than yours. >> Um so >> it's u you know it's it really is the the question in terms of fiscal policy of the you know the one man the oneeyed man being king. So it's >> right right and and >> there's nobody doing it right. We'll put it that way. there's no there's there's no stones to be thrown in glass houses and all that. But so so fundamentals, you know, it's that's not too much of a concern actually for the US. The concern comes further down the road is the the m the the valuations by any measure the US is much much more stretched than anybody else. >> Yeah. >> And so that's your first problem. Your second problem is the momentum. You know, from from 2018 to 2024, the US outperformed everyone. Absolutely crushed it. But that relative outperformance is now gone. The US is no longer outperforming everyone. >> As I said, the emerging market ETF has done better than the S&P this year. >> Y um and then you get to the investor positioning and you know the US today is 70% of the world MCI. Everybody's massively overweight the US etc. So it doesn't take all it would take is a little bit of bad news to all of a sudden people thinking do I really want to be 70% in the US? Right? uh or for that matter good news elsewhere to say okay you know what China is doing better how come I don't have any um you know Japan is outperforming how come I don't have any you know all these all these kinds of things so today um I I just think I look at a market like China I actually think the fundamentals on China are much better than what you read in the western press what you've seen in the past few years is China leaprogged the west in industry after industry you've got an economy today that has the cheapest cost of capital cheapest cost of labor, cheapest cost of electricity and uh where the government is actively trying to promote uh stock ownership and trying to punch up uh stock prices. So like fundamentals looks great, valuations are still attractive, the momentum, you know, China's been the best performing market since the government started to intervene in January 2024. And the invested positioning is non-existent because everybody decided a few years back that China was uninvestable. So, you know, to me that seems like a much better riskreward proposition uh than than the US does today. Um, by the same token, um, you know, I think there's there's another of number of markets where the riskreward proposition looks much more attractive. I I've written a lot in the past year and I' I'm like super bullish on on most Latin American countries. Um, you know, each one has their specificities and, you know, particular particular sensitivities. Brazil and Colombia are more more sub, you know, more impacted what happens with oil. Chile with copper and Peru with copper and silver. So everybody's got different stories and obviously Mexico as a as a key provider to the US is is very tied to the US economy, etc. So each has their own stories, but each one of these stories is actually a pretty good story. Uh so the the bottom line is I think there's today there's there's great opportunities in lots of markets that you don't need to stay confined to the United States. So >> so to your to your question, I think there's there's uncertainty indeed uh you know once the AI bubble goes pop how much will that impact other sectors other sectors that are doing well today you know American banks are like doing great and um other parts of the you like healthc care stocks in the US in the past three months have started to come back alive etc. So there's parts of the market that are that are doing well and that don't depend on the AI story. Uh but indeed the problem is it's uh it's the old story, right? When uh when when they raid when they raid the brothel, they take everybody away, including the piano player. Um >> yeah, >> and and the doorman. And so, you know, if it's I I do think that with the AI bubble, the US is a more dangerous market uh than than other markets. >> Okay. So, that makes total sense to me. Um and I think you know you could even make a compelling case even even separate from the collapse of the hyperscaling bubble of just hey the whole world is crowded into the US trade at some point you're going to have some reversion of the mean right now. The catalyst for that could be this implosion potential implosion of the the AI bubble. Um, I guess my question for you, Louie, was um, you know, there's the old saying that when, um, the US catches the sniffles, the rest of the world, you know, gets a bad cold, right? In other words, would would you would you expect that a bursting of the AI bubble here would take everybody and the piano player down for some period of time and then you would think, okay, then then the capital rotates into ser places like these countries you're talking about. um or do you think the rotation happens without the rest of the world catching a bad cold this time? >> So look, that didn't happen in 2001. It depends how bad the cold is in the US. But if you go back to the tech bus of 2020, 2001, 2002, 2001, you know, while the US was delivering pretty poor results for investors, you had doubledigit returns on market and in 20 in 2002, double digit returns on markets like Korea, like Taiwan, like India, like Indonesia. Um so you know a lot a lot depends on on your starting valuation point as well and and so you know I think that the whole saying oh when you know US catches a cold the world goes bad etc goes back to a day when you know the US was was half of global GDP today the US is a fifth of global GDP or like 22 23%. Um and you have a lot of businesses today around the world for whom for which China is a bigger market now than the United States. >> Uh so I yeah I I you know I would say it's different this time but it's actually not. We've already seen something like this uh following the US tech bust. Now if now what happened if you go back to the US tech bus you know you had the corporate scandals you had MCI you had MCI WorldCom you had uh Enron this the US stock market did very badly but US banks kept functioning fine global trade got funded capital spending kept getting funded and things were fine and US exports hummed along um in 2008 if you go back to the crisis of 2008 there the whole world caught the US cold because in 2008 um the US banking system but US banks went under and US banks stopped lending and so all of a sudden you know you're you're a Korean manufacturer and you're importing stuff you're importing I don't know nickel from Indonesia and you couldn't get that funded because American banks weren't lending dollars internationally anymore uh and so the the whole system just completely completely shut down massive supply chain dislocation is as pretty basic trade could no longer get funded for a period of roughly four, five, six months. Um and so you know if that happens then yes it's a disaster but having said that you know lessons were drawn in 2008 and emerging markets are now funding a lot of their trade outside of the US dollar. uh you know, China, which is obviously the big example of this, now has more than half of its trade no longer denominating US dollars. That, you know, 2008 happened and China's like, well, we're not doing that again. We're not leaving ourselves dependent on on US dollar funding. And so, you know, the world evolves all the time. So, again, it depends what kind of crisis there is in the US. But if the crisis is look there's going to be um uh you know Nvidia is going to go from a five and a half trillion valuation to a two trillion valuation and as such uh people aren't going to pay 20 grand to go watch the Formula 1 in Miami. Uh or people aren't going to be spending you know millions of dollars at Art Basle. Um and you know that top leg of the K economy is going to re really take it in the shorts and that means that you know there'll be less spraying of champagne and Sanrope and in St. Barts. Uh you know what does that mean to your Chinese manufacturer? I'm not sure it means very much. >> Okay. So the spirit of the question was um given your your um optimism for these these rest of the world markets um should people be who who are um inspired by your your outlook here uh Louie should they be taking positions now or should they potentially wait for the shock wave of the bursting of the AI bubble that you believe is underway I hear so what I'm taken from you is no, this is a time to start building your positions. >> Yeah, I think so. Uh to be honest, um look, it's how how will the market how will the policy respond to the AI bubble and I think the policy response will be even more reflationary. >> I I don't think there'll be any option but to sit on your hands etc. So >> more reflationary in the US and the rest of the world is less exposed to the US than it was. The the Yeah, but I think you know once you get the reflationary policies in the US then the US dollar starts to go down and you know the main constraint if you're a policy maker in Chile, in South Korea, in Indonesia is always your exchange rates with the dollar. You never want your exchange rate to collapse. So if the dollar starts to go down naturally, >> you know, you as a policy maker, you have a lot more options. Uh so I think you get more reflationary policies out of the US and that allows everybody to follow suit. So I I I don't know. I'm I'm the again I look at the signal from the markets today. The outperformance of financials, the outperformance of copper, the outperformance of all the precious metals. Uh I I I want to ride that trend. I want to ride that trend. I I don't want to fade it. >> Okay. All right. So Lou, I'm looking we're coming up on the hour. Um this has been a great discussion. Uh it's always super enlightening to talk to you. if you don't mind, can we do a quick lightning round uh before we wrap things up? >> Okay. So, um >> the problem with me, I'm always long-winded, so I don't know if I can do a lightning round. >> No, no, I would call it I would call it informationrich and I would call it signal rich versus noise. Um so, it's all great. Um so, I mentioned in the intro that Japanese bond yields have been surging. Um, how concerned are you, if at all, that this could put an end to the carry trade >> or at least severely impair it? >> No, not so much. Like I think for the for the Japanese to start repatrating their money, you need short rates to go up. I think they've lost faith in their bond market. And so it's uh you know, people have lost fortunes in JGBs uh as bond yields have gone from zero up to three and a half. It's been an absolute bloodbath. Um, and there's absolutely, you know, look, uh, inflation in Japan's above three. So, are you going to get that fired up for very longdated bonds at three and a half? Maybe if very long dated bonds get to five, you start getting excited and start bringing capital back. But we're not there yet. So, um, you know, for capital to come back to Japan for the end of the yen carry trade to really happen, I think you either need long long yields at five or short short yields at two. Uh, so we're not there yet. Okay. Not not there yet. And it sounds like you're not losing sleep that we're going to get over get there anytime real soon. >> Uh I guess it depend I think we'll get there one day. Uh but I don't think we're there in the next six months. >> Okay. All right. Um now from the cheap seats um it seems like um uh in the US uh President Trump is taking a Monroe Doctrine 2.0 view of the world and specifically as it relates to the southern hemisphere um the southern western hemisphere um you know he's he's looking to try to help regimes that he thinks are well aligned with us so like let's let's let's help Argentina right um and also let's get rid of some regimes that are kind of thorns in our sides and may may unlock some of the ability to really tap the full prosperity of the continent and as I mentioned in the intro, you know, it it looks like some sort of regime change is trying to be engineered right now in Venezuela. Um, what are your general thoughts on that? Is is is is this a long-term good thing to try to, you know, get some of the more problematic players off the chessboard in South America so that we can really bring to light uh or bring to bear the full uh potential of that continent and especially, you know, working in closer connection with the North American countries or do you have a different opinion? >> Look, I'm not much of a regime change guy, but I think what's happening in Latin America is actually super bullish uh for Latin America. Um and uh and especially for the other countries like if if you do get regime change and again I'm not a big regime change guy but if you do get regime change in Venezuela this is great news for Colombia it's great news for Peru you know all these countries these Indian countries that have suffered from these far less terrorist group that have been funded by Venezuela for years like if these guys stop getting their funding you know that's that's a huge boon it's it's a huge advantage it's great news um meanwhile Well, you know, I I think that the US refocusing on Latin America, which which has been obvious since Rubio became uh Secretary of State, you know, his very first visit, I wrote about it at the time, his very first visit at a time when you had obviously the Israel Gaz Gaza war going on. At a time when obviously you had Russia, Ukraine, his first visit as Secretary of State was to Latin America. I think that was a very strong signal. He was actually the first secretary, US Secretary of State to have his first visit in Latin Americas for like a hundred years or something. Um, >> so I think that was a super super strong signal. Uh, and and it's something that, you know, came out again in the the White House National Strategy Review that just came out and into the Pentagon spending review. Essentially, what the increasingly what Washington DC is saying is look, >> we have everything we need in Latin America. There's the commodities we need. If we need cheap labor, we can find it there, >> right? Maybe maybe we don't need, you know, as part of Make America Great Again, we don't need to have like ships all over the world. In fact, we can't really have ships all over the world anymore because in an age of drone and hypersonic missiles, these ships are more liabilities than assets. Like they're they're they're too easy to take down now. >> Um and so you you've you know Trump keeps talking about folding back onto the Americas protected by the two beautiful oceans, >> and the Golden Dome, you know, >> and the Golden Dome. I think to be honest and I think he's he's broadly right and it's but for Latin America it's it's great news because we saw it with Argentina. >> If the US comes in and essentially backs stops you um that means that interest rates can collapse all across the region. Now I that started this year you've seen Brazilian interest rates go from 15% down to 13. I think we're on our way to 10. Um, and as interest rates, and you can make the same arguments for Colombia, for Chile, for Peru, for lots of places, for Mexico, and as interest rates go down 150, 250, 350 basis points, that's a huge tailwind to consumption, to real estate, to asset prices, >> to development, >> to development, to everything. So, the, you know, the simplest way to play it, if you're if you're not into taking too much risk, you just buy local currency, government debts. And by the way, if you owned Brazilian bonds this year in real, you're up 40%. Um, you know, if you own Mexican debt, you're up 35. If you own Colombia debt, you're you're up 30. >> And that's a total return, right? It's it's your yield plus currency appreciation >> plus Yeah. plus bond appreciation. Um, so and but I think we're at the beginning of such a massive bull market. So, um, I've I have been I remain a super bull on on Latin American debt. Um, and again like when interest rates fall, good good things happen all around. It's like it's such a tailwind for asset prices. So it's uh I think that that policy shift in the United States is one, it's for real. Two, it's going to last and and three, it's super bullish latam. >> Okay, two last uh rapid fire questions and this first one you can make real short. Um so clear you're you're still a China bull. Um, of your 60%, most of which is is or it sounds like almost all of it is in the rest of the world versus the US. How much is in China? Roughly? >> Half of it. I've got a third in China. >> Okay. All right. So, you're putting your money where your mouth is. Okay. And then last, um, uh, let's all cross our fingers and hope that 2026 sees at least a ceasefire, if not an actual durable peace, uh, hammered out between Russia and Ukraine. What global investment impacts, if any, do you think would come out of that? [clears throat] >> So, look, I obviously want uh want a piece like everybody else. You know, you want the dying to stop, but I actually think a peace uh could potentially tear Europe apart uh in that uh the view of Europe is that, you know, we would fund this this this war until there was regime change in uh until there'd be regime change in in Moscow. Um it looks like this war is going to end without regime change in Moscow. And then from there the question is how will European countries react to that? And I think within Europe there's a growing split between countries who are saying look we want to do business with Russia again. So you think Hungary, Slovakia, Germany, Austria, you know they're kind of like oh we want to buy the cheap energy and sell goods to Russia. Thank you very much. And then you have other countries, the Polands, the Baltic countries, the Scandinavian countries, the European Commission itself, and frankly France, my own country, that are that are essentially saying absolutely not. You know, these guys are war criminals and we can't do business with them. And I'm I'm not quite sure how you compromise on this. Like, you know, if if if you really don't want something and I really want something and it's it's sort of black and white. Um it's I I don't know how we compromise. And so I really worry that this is going to essentially tear Europe apart. >> Um I'm going to ask you an unfair question which because I'm not going to give you any time to really get into it. Um but but I promise if you want to we can spend a lot of time with it next time. Um perhaps in addition to what you just mentioned with what happens with Russia post uh ceasefire h how much faith do you have or what probability do you give the EU of remaining intact from here? >> I I look I >> 10 years from now what what odds do you give it from existing in the same format it's in right now? I think that when you have military defeats like the milit the the World War I saw the end of the Ottoman Empire, the Austrian Hungarian Empire, the German Empire, and the Russian Empire. Um, when you have military defeats, very often there's deep political consequences. So, I don't know. I I don't think NATO or the EU I think there's decent odds, maybe 5050, that neither NATO nor the EU survived this war. And it was a sort of merry and haste repent at leisure type of thing. We we we went all in on this war. And I think the the political consequences of it will be deeply deeply felt across Europe. You will have the rise to power of anti-EU parties who say, you know what, we get dragged into stupid wars. We get dragged into wars that cost us our fortunes, etc. That this this EU has served no purpose. Let's get rid of it. So, I think the odds are higher than 50/50. To and to answer your question, in the next 10 years, I I I don't I'm not sure. I don't think the EU survives. >> Okay. Um I have so many questions for you based on that. >> It's it's it's too pol at this stage the EU has become too politically toxic. It's become no nobody likes it anymore. Whether you're from the left, whether you're from the right, it's u European countries are now split. France, my own is is a pretty good example of this between a far left, a far right, and an extreme center. Uh, the extreme center is still very proou, but the far left and the far right are increasingly anti anti. >> So, all all it takes is at some point for those guys to unite and and increasingly both the far left and the far right are starting to hate the extreme center more than they hate each other. >> So, uh, so yeah, I do worry. I think it's I think there's the odds are not zero. Okay, I appreciate you answering a tough question without me giving you a ton of time to really elaborate. Like I said, if you want to go deeper into this next time, uh, I'd love to because there's a ton of questions I have for you coming out of this. Uh, and and your, you know, situation is as as a European who spends most of his time looking at the world from a non- US lens. Uh, I think your your insight will be super valuable on this, but but we'll we'll follow that next time. Uh, last question for you, Louie. For folks that have really enjoyed this conversation and would like to follow you and your work, um, uh, perhaps maybe even consider becoming an investor in Gavall, um, where should they go? >> Yeah, look, the best place is our website. So, gaffcal.com. You can find everything there. That's g-vek.com. I'm on Twitter. Um, and you know, with my name. Um, it's, uh, I I'll tweet the occasional piece on there. I'll put up, you know, the occasional joke that I find funny, even if others don't. And uh uh so yeah, you can follow me on Twitter, but the best thing really is to go to our website. >> All right. Well, Lou, as usual, when I edit this, I'll put up the URL to your website and your axe handle there on the screen so folks know go know where to go. Folks will have the links in the description below this video as well. Um Louie, it's just always such a pleasure. Um and you always leave it all in the field. Thanks so much for doing that again today. >> My pleasure. Great to catch up. Thank you very much for having me. Really appreciate it. >> All right. Well, now is the time on the program we bring in the lead partners from New Harbor Financial, one of the endorsed financial advisory firms by Thoughtful Money. I'm joined this week by lead senior partner there, Mike Preston. Uh John Loer is not here today because I think he's dealing with some frozen pipes. You guys are getting some pretty cold weather there in New England. Uh Mike, how you doing? >> I'm doing great, Adam. Yeah, and it's getting really cold in the Northeast, but that's nothing that we're not used to up in up in New England. up in New England. Okay. And uh I know you spend time in Columbia. I think you may actually be there now. So maybe you you've done the smart thing and get away from the cold. >> Sometimes I snowbird a little bit here and there. Yeah. So [laughter] and right right now I'm doing the smart thing. But uh born and raised in central Massachusetts. Certainly know how cold it can get and there's another couple months more of it, but uh nothing that New Englanders aren't used to. >> Yeah. Yeah. Well, we'll we'll wish John well in in fixing his pipes and uh we'll go from there. But um Mike, thanks so much for joining us today and um uh great discussion there with Louie. And again, I'm thinking maybe you you appreciate it even more so given the fact that you uh you now increasingly have uh a perspective from from being outside of the US. Um real quick, what were some of your key the things that caught your attention the most and then we'll start talking about what the markets have done over the past week. >> Well, thanks Adam. I really enjoyed the talk with Louie. Um he's always he always has great insights. you mentioned there um something he said at the end which is Latin America. He's he's very bullish on Latin America and since you mentioned it I'll go right there. He thinks it's a great opportunity. He mentioned something that I didn't realize to be honest that debt issued by some Latin American countries are up 25 to 30% this year. I didn't even know. >> I think you said in the case of Brazil like 40. >> That's crazy. That's that's crazy. And obviously it's most countries in in in Latin America are investable. Um, you could argue that some like Venezuela still are not investable, but anything and everything can change. I mean, imagine if Venezuela was investable again. Imagine if uh that regime was safe and companies went there and built hotels and that type of thing. It could be a massive boom for for not just Venezuela, but all all of Latin America. Latin America isn't a pos it is a position in our portfolio about 5%. We have an ETF that's focused on Latin America and that includes all of Latin America, you know, from Mexico all the way down to to Argentina, Chile. >> Which one is that? Is that EWZ? >> ILF ILF. India, Lima, Frank, Fox, I guess. Uh EWZ is Brazil only, but Brazil is a big part of IWF. So is Mexico, Colombia, Chile, Argentina to a lesser extent. We we have a 5% position there and it's done really well. We're very happy with it and we're long-term bulls. You've got other guests on the program uh most notably probably Tavi Costa that has been a long long-term bull as well and we agree with him and and their viewpoint there at Crescat. We have a lot in common as well. So, but it's still not being talked about much. Emerging markets in general were bullish on and Louie talked a lot about that. We have emerging market positions, but in addition to that, we have a another position in Latin America. So, couldn't agree with him more on that point. I guess I'd like to take it from the top though and talk about a few other things that I thought were interesting. >> Go for it. >> Lou talked said that monetary policy around the world is very accommodative. That is not going to be a big surprise to anyone watching this program. It's been accommodative. It's been accommodated forever, but it is still the elephant in the room. China's uh budget China's basic budget deficit is 10% of GDP. Uh US is 6% and I guess Europe is 2 to 4%. I'll take his word for it cuz I don't know those numbers exactly, but I agree that all everyone is in the same boat. Everyone's in the same doing the same thing. How long is it going to go on? Your guess is as good as mine, but everywhere you look, it's just completely, you know, stimulus, stimulus, stimulus. That's been the name of the game for nearly 20 years. It'll end when it ends, and it will end. And uh this this fourth turning that we talk about all the time is going to end probably badly in tears because always there's a crisis and a climax of the fourth turning and that generally is not conducive with you know uh peaches and cream. It generally is is a difficult thing. So that's probably how this is going to end and these countries around the world are probably going to do even more stimulus. My opinion is we'll find out that ultimately it doesn't work. We will see. Um he does say that the reflation trade right now is working and uh we're seeing big moves in gold, silver, and copper. It's true. Copper, we talk a lot about gold and silver on this program, but copper and copper miners are also doing great. We actually added a a diversified more base metals position. Um that ETF happens to be PIC. We added that in the last couple weeks. That's doing well. Just bear in mind that when we talk about individual tickers or things, they're not recommendations and talk to your adviser or talk to us if you want to understand your own situation. He did he talked about energy lagging. That's interesting because we too saw that energy was lagging but recently it broke out and started to um based on our system exhibit positive trend and we added a position in oil service companies ticker symbol XES a few weeks ago as well. It's a relatively small position, only 2 and a.5%, but we'll certainly um uh you know, potentially add to that over time. Um a correction, that's it's actually a little higher than that. So, don't quote me. It's it's it's closer to four or 5%. Some of our other positions are a little bit smaller. So, what are the risks to the current reflation trade? First one, really, energy prices increase would be a big problem. You can't build things if energy prices increase. But however, he said that's actually a uh a little bit of a benefit. As long as energy prices stay down, that benefits growth. We'll see. Second would be AI trade deflates, and he thinks it's happening now. There's a real risk to the AI trade deflating. We're seeing that. I don't know if that's going to persist, but that's what we're seeing uh a little bit of. And then also Asian currencies, if they rally, could be a negative. So his current I'm getting down to the end of my notes here, but his his current allocation is uh 60% equities basically all non US, 25% energy mostly in the US or that's where his US exposure is, 15% precious metals and 0% bonds. He doesn't see much reason to be in bonds. We disagree a little bit there. We think that bonds are going to get a bounce here, particularly as the market tops and maybe crashes. We think the long-term highquality bonds will rally. That's why we have a small position in TLT, which is long-term US bonds. It's about 7 12% in our model right now. It's interesting. He talked about the fact that even though gold mining shares have taken off, we really haven't seen complete retail participation. He pointed out that GDX shares outstanding are at 10-year lows. That was a surprise to me, too. I'll take his word for that. But I think that what we're we're not seeing everyone all in the miners yet. And we are we're big bulls in the miners. we have been for quite a while. We still have a 10% position there. And um he talked a little bit about the carry trade. You asked him about the carry trade unwinding. I think that we agree with him. We're not too worried about that. Sometimes people ask us that question. He he put out a couple good points there saying it's not like all that money is going to come back in at 3%. you know, which is where the Japanese bond is with interest rates, you know, still low on the short side of things there with inflation at 3% or higher, maybe 5 6% if bonds get there. He'd start to worry and I've got to agree with him. It's really not something that we worry too too much about either. [snorts] So, I'll stop there and pause. I've got some other comments in general about the market, but those are the high points that that I that I took enough notice to write down. >> Okay. Um, so I I agree. He he said, "Hey, I don't think I'm not losing sleep right now that the carry trade is going to end real soon." It it I did think it was notable though that he said, "I do think it will end." Right? And so it's a matter of time on that one. Um, and uh, one of the questions that I I wished I had time to ask him, I'll do it next time, is just kind of a deep dive on what does a post carry trade world look like given that's that's been such a dominant uh, trend uh, for the past couple of decades. Um, but yes, to your point, he's he's not calling for it to end anytime imminently. Um, yeah. So, let me let me just he made so many great points. Um, but I'd love to get your deeper thoughts on this one, Mike, where he said energy shares are the new bonds, right? Where he's basically like, um, look, I could I could be riding a bond in the US that I think is basically going to be delivering, you know, kind of a a negative real return, right? Um, so instead, why don't I take something that kind of acts like a bond, right? at a high dividend paying energy stock. Um that als you know that that that should do quite well if my reflation thesis uh comes into play. Um and uh so I get I get paid along the way but I also have this optionality value uh where the actual price of of the security could could do quite well for all the reasons that he talked about. Um what what are your thoughts on that? Because he he basically has a bondless portfolio now. >> Yeah. I know it sounded like he was pretty negative on bonds and I think we disagree at least over the short term. I I wouldn't buy bonds, >> but your thesis isn't cuz you love bonds for the next 10 plus years. Your thesis is that things are going to get bad in the the like him, you expect the central authorities to come in and just drive rates down, you know, stimulate like crazy and and in that compressed time frame that'll push bond prices up. Correct. >> Absolutely. I mean, I can buy TLT just taking a look at the uh the yield. that's in the low fours. TLT is the uh iShares 20 plus year treasury bond. That yield is 4.4. You can also buy if you want to if you're adventurous. TLTW, which is the same thing, but they sell one month out short calls against it over and over. And that yield is pushing 10% annually. Again, none of these are without risk. Bonds have risk, stocks have risk. Louie talked about energy stocks being bondike. I guess I can buy that argument, but it's hard for me to think about any equities at all like bonds. So, but uh I mentioned earlier that we have a position in XES, which is the uh I think it's State Street uh spiders oil service stocks. That yield is about 1.71. So, just just under 2% right now. So, I love the idea that we're getting paid almost 2%. But I also really love the idea that to us the chart pattern looks very strong. Recently flipped into a relative strength positive versus the broad market S&P and we're buying that really for capital appreciation. But I can totally understand the bond argument and dividends are very useful and they're a key part of return but uh we're really buying based on chart patterns and capital appreciation. So we're just looking at it a little bit different and absolutely path is very important. I think that TLT and long bonds will go up as yields come down. We were flirting with 4% on the 10-year a couple weeks ago, and here we are right now at 4.18. So, we'll see. I mean, I I think I think that we're probably topping out pretty soon in yields and that TLT will turn higher, but it's something that we're watching very closely. We haven't bet the farm. It's a relatively small uh position, 7 and a half%. >> Okay. um to to that point um you know we've now had what three uh rate cuts uh in the past three Fed meetings and and now whatever the Fed wants to call it I think markets are calling it QE light maybe even full QE now um and yet the tenure hasn't budged it's still stuck in that range hasn't come below four uh below yeah hasn't dropped below 4% um so I I'm just curious from from your guys's there at at New Harbor, do do you feel it'll start marching down or do you think it's going to be stuck until something breaks and then it's going to be the rush to safety as the the rescue stimulus plan kicks in. >> Well, let me share a chart and bear in mind that nobody knows the future, me included, us included. Yeah, I'm just curious kind of what your guys' default, you know, yes, there are many probabilities, but we think this one is more likely. >> Here's what I think is likely. And this is a chart that goes back, I guess, to uh to to to December of 24. It's a one-year chart. I can I can show you a longer chart, but let's start here. This is the 10-year yield with the decimal point moved. I don't know why it expresses like this, but it always shows it like this. It's 41.82. That means 4.182% on the 10-year. And over the last month, we saw three attempts at 4% right here in September, right here in October, and right here at the end of November. So, nobody really knows as I said, but a lot of people are probably looking at this and thinking this is an inverse head and shoulders, >> right? Yep. >> And it might be. I mean, I might be. Let me put let me put some lines on here. If you were to draw the neckline, it would be right around there at 418, 417. So, right now, it looks like we've broken an inverse head and shoulders and we're going to go higher. We're watching this closely. I would say that if we go above 43 or so, then I'll probably call myself wrong, you know, and that this was an inverse head and shoulders breakout. But to me, we've just been riding in a downtrend, a very soft downtrend, really not breaking the 200 day moving average. And I see a triple I see a triple bottom here. 1 2 3. And I'm just a big believer that triple touches don't normally hold. I was talking a lot a lot about the silver triple top not too long ago and maybe a year or two before then talking about the gold triple top and you might remember I said they don't usually hold you particularly in commodities. This is an interest rate so it's a little bit different. >> Yeah. So, we have here like about a week outside of this range where it looks like, you know what, we're going up and we might, but to me, I believe that this is probably a fake out. I won't know if I'm right or wrong until we cross, let's say, 41. We cross back down through 41 on the downside, I'm going to start believing I'm right. And if we cross above 43 on the upside, I'm going to start believing I'm wrong. So, that's the best way I can say it short term is I we might be wrong. Absolutely wrong. That's an honest answer. And hey, that's why we have you on the channel every week, right? So we can track this stuff in real time and as you get more confidence, whichever direction it's going in, you can call in audible for folks. Um, all right. So let let's switch to um another really big statement that Louis made, which was that he believes that the AI bubble has burst. Um, and I kind of gave my reasons why I'm not willing to call that just yet. Um, I I I'm seeing the same things that he does and I definitely have concerns about them, but it's just really hard for me to call a burst when we're still within 1% of an all-time high on the S&P. Um, so, uh, not asking you to agree or disagree with him, but if you have strong thoughts, you know, feel free to share them. My question for you, Mike, is is all right, let's assume he's right. What impact do you expect that to have on this the markets in 2026? if he's right and the II bubble is has burst and will even more importantly will continue to burst because [snorts] first of all I don't think we can totally say it burst um you know there's some names in that sector that are down pretty hard but the NASDAQ in general is right near a high so it's hard to say it it has burst but if it continues to burst and stays b stays there then that's going to be very bad for the stock market in my opinion I I don't see a stock market I don't see a positive market environment if if AI/Tech has burst. >> Okay, let me just The reason why I asked this question is because >> I don't just see a not positive stock market environment. Like if if this truly bursts and say 40% half of the market valuation that's currently in the hyperscalers vaporizes because that's what happens during bubble burstings. I don't see how that could be almost anything short of catastrophic for these markets given how much they make up of the major indices and how much these stocks, these, you know, used to be MAG 7, we'll call them the MAG 10 hyperscalers now, are owned in in so many different ETFs out there. I mean, there there's so many people who own these companies that don't realize it because they're in some boring name ETF that's in some sector that they wouldn't naturally expect to be invested in these stocks, but these are so overdistributed that I I I have a hard time not seeing the carnage as being very widespread. That's my personal opinion, but but I'm curious what yours is. >> Well, I agree. If there's a real meltdown, the market is not only not going to go up, it's going to go down hard. But um you know I have a hard time deciding exactly which proxy to show you here for AI. But you know here's an ETF. This is not in our model but this is a pretty prominent Global X Robotics AI ETF. You know we're down from 38 to 36. What is that down 8% maybe? It's hard for me to say that the AI trade has has you know is over or that the AI bubble has burst. There's some individual names that are down more but I mean we're still trading above the 50-day moving average here. If I show you the NASDAQ QQQ, I mean, we're just riding the 50-day moving average. We're down a little bit, but and predicting short term is very, very dangerous. But here we are recording this on December 15th, and um and you know me, I'm not a long-term bull, but I think that this market ends with some kind of fireworks show, some kind of blowoff. That's the only thing that makes sense to me after 25 years of experience, watching every little dip being bought along the way. and in in pairing that where where I think we are in the fourth turning the final five years the fourth turning I think we need a blowoff all-in moment and then a lot of pain so I wouldn't call this market rally over yet I wouldn't say that the AI trade has burst if it had if it burst further no the market's coming down and I'm wrong that we've already seen the top but if I show you an S&P chart you know it's the same thing we got a couple down days but take a look at like the weekly chart it's been straight up off the April low. And if I go to the the monthly chart, man, it's crazy. Here we are from the beginning of the year. We had that April low. Look at that uphammer on the monthly. I've never I don't think I've ever seen anything like that on a monthly chart and it's been up every month. These are monthly bars. And even look at last month, November, it was an uphammer and here we are stalling two% off the top. But I wouldn't say we're done yet. I mean, I wouldn't bet big on it like we said over and over again, but I would I'd be looking for something like 500 points up plus 500 points like in a couple weeks time. >> You know, get up here 7,7500, we just go pure vertical, that's going to be the best signal you could ever get that we're close. I I don't know that we're going to get that, but if we do get it, that'll be kind of lucky because it's going to say, you know what, we're we're entering the endgame. >> Yeah. Okay. And I should note too, right before we hopped on to record this, Mike, uh I saw that the fear greed index was back on fear. And >> how can that be? >> We are literally 1% below alltime highs. I mean, how how bananas is there, right? We we we have this super bipolar market now that it's either everything is awesome and we're going to the moon or, you know, this is the end, right? Uh- which is a sign of a very fragile market. to to steal a a phrase from Lance Roberts. That was the title of this past weekend's um market recap video. Um do me a favor, Mike. Just pull that that S&P chart back up real fast. Um I I just want to put you on the spot and ask you a question about it. Um >> Okay. Just bringing it back up because I've got one or two others to to mention quickly. >> Okay. >> Here's here's the S&P on a weekly basis. >> Okay. Um do me a favor. Go back to the monthly because it just it broadens out a little bit more. >> Okay. Okay, if if the AI bubble pops and let's assume Louis is right and it's just popped right now, right? And so the question is how low what's a number that wouldn't shock you for the S&P to get down to >> in the next year to two below this line here 3200. >> Okay. So below >> down into the twos I think that we could test the co lows. Yeah, absolutely. I think we could lose 2/3 from the top. twothirds down right now would be somewhere in the twos. >> Okay. So, I think a ton of people can't even imagine that right now. Um, but that is obviously a very big decline. Not again, not unprecedented. You know, certainly we've seen market declines of that amount and and certainly we've seen declines of that or more following, you know, big bubble bursts. Mike, what would that world look like? >> It's a world where reinflation doesn't work anymore. all this stuff that the central banks are doing, they try to do it some more and it continues to fail. I think that we would probably capitulate and and and and a whole bunch of bad things could happen. I mean, a wars could break out. There could be excuses for doing that type of thing. Or we're going to have to just realize that the standard of living, particularly in the United States, is going down. We're going to finally have to succumb and adjust our standard of living. That's going to cause a lot of hatred and anger in the US where the super rich are still going to be super rich if they lose half their wealth, which they probably won't lose half their wealth if the stock market goes down by half, but they they will they'll do well even with the with the S&P down here. The average person will see their 401ks implode because they're not going to trade out on the way down. They've been taught that to buy the dip and only buy the dip, never sell. And that's if and that's if they have a 401k and then you know they may see their job vaporize, right? I mean you you you would have to see a lot of layoffs with with this. >> Oh, absolutely. So the standard of living goes down by 30% across the board >> if I just had to guess for the rest of our lives, you know. And is that a bad thing? Not necessarily. I mean maybe maybe there will be some good that comes out of that. We'll be more grateful, etc. But the problem is it's a recipe for conflict and surprises. And those surprises are generally bad. And if there's a conflict, it's usually a maximum effort type conflict in a for a forth turning. So it's tough. Standard of living goes down relatively permanently. And u we have to live with that. That's not the end of the world. You know, like we said earlier, maybe maybe other places like emerging Asia or South America, maybe it's their turn to have, you know, 50 years of of a better standard of living. But it's not going to be we can keep kicking the can. It's the end of kick the can. bottom line. And so wherever this S&P tops out, and my guess is it's up above here, above 7500 or something, we lose 2/3. And and big bare markets in history go through three three major phases. You lose a third, you go sideways, you lose another third, you go sideways, you lose a third. Three one-/irds get you down 66%. That's how the math works. And it's probably going to look something like that with each pause. And after those thirds probably is that pause is going to be caused by central bank intervention that type of thing. So but ultimately there'll be opportunities. There'll be opportunities to to trade options to sell premium to buy support zones etc. But I don't think it's going to be an L-shaped move that that bounces right back like a V. It's going to be down and then sideways for years. So that's what I think. And so what has me convinced that a top is not in yet? I just I'd like to just get this out there quick. If you take a look at the Russell 2000 on I don't know a weekly chart. Boom. We just hit new all-time highs on the Russell 2000 last week. We're on a little bit of a pullback. Take a look at the S&P 500 equal weight RSP. Finally new highs. Little pullback. >> So we're seeing a broad >> The market's starting to broaden out. >> Exactly. So, we can cry, well, geez, the AI trades collapsed, which it really hasn't. If you look at the evidence, or or the market's collapsing, which it isn't. It's down two 3%. And the fear index is up there, like you said, has me believing that maybe the energy is building for one final push, and we're starting to see a broadening of the market. That doesn't mean go crazy. We're still at 45% equities. We're not trading from that viewpoint that we have to get every bit of that. But if it happens, I think it's going to be a gift because we will actually be able to reduce equity into that ramp. And we won't be perfect and we'll be too early, but we'll be saying it here on this program if that happens that, you know, it's this is probably a really good signal that we're close. >> Okay. I really appreciate you sharing that. All right. um [clears throat] just to Mike's, you know, I mean, dark uh projections about what what could happen if indeed this this is the height of the market and and the AI bubble burst and all that stuff. Um [clears throat] you know, hard for me to disagree with a lot of you said there, but I just want to underscore in addition to the concerns and the risks, you know, there is opportunity here as Mike said and of course the difference is is you know, are you paying attention or aren't you? And one of the things that a lot of the advisers uh on on this channel, the analysts and advisers who have appeared on this channel recently have said, hey, you know, the the playbook that has worked so well past 20 years of passive investing, just buy and hold and write everything, probably not going to likely work in the future or work well in the future. um especially if we're going into a market correction of the type that that Mike sees um or just sort of this lost decade that folks like Jam Carson see ahead of here and um even though the trend may be down you know to get from the heights now to to whatever the bare market low is there will be vicious rallies you know there will be big down years but probably big up years the whole point is is an active portfolio management strategy very well may the the the um the way to to not just survive what's coming through here, but prosper through it. Um but you got to be paying attention and you're probably going to have to go back to a lot of old-fashioned uh investing practices like fundamental analysis and things like that. You know, you can't just buy the sector. You're going to have to try to find the good players in the sector, all that type of stuff. Uh and obviously, if you don't want to do all that work yourself, then find an adviser who has that expertise and mindset as well. Um, all right. So, Mike, just in in wrapping up here because we're getting late on the time. Um, an asset that is continuing to do quite well, uh, or asset class is the precious metals and silver itself. And, uh, I can't remember if I was talking with you last week, but but last week on one of these live recordings I was doing, silverber futures cracked above 65 bucks an ounce, which honestly, Mike, I know you thought silverber was going to have a good year this year. I don't think you had 65 uh bucks an ounce silver on your on your bingo card as optimistic as you were. Uh silver then got whacked uh had a pretty pretty violent correction uh down to 61 something I think. But now we're back up uh near we're 64 something at the moment we're recording here. So um what are your thoughts on on silver's resilience here? >> It's been pretty breathtaking, Adam. And you're right. It's this has surpassed even what I thought. I mean, I'll share with you my thoughts right now. Let me first bring up a chart of the ETF SLV. So, this is a little bit less than the spot price cuz the spot price is up in the 64, something like that, 65. But here's a daily chart. And you probably remember this this line back here that we were talking about week after week. If I go to the weekly chart, I was saying triple top, triple top, triple top. And you know, silver 35 right there. That's when we added it to our portfolio. Man, I never thought we would go like this, Adam. Look at all the triangles that we've traced out. Triangle vertical. This is like what was that? 14 weeks straight up and then this that was up to about that was the first time we touched 50. Then we came down to 40 and we came out of this triangle and just shot straight up. It's been breathtaking, you know. And now go back to the daily chart. We had a big day. Look at that. That day on Friday, a big red bar. A lot of people, I think, thought, well, geez, that that's it. It's over. And here we have a little inside bar day just just basically biting time, building energy for the next move. I don't know what's going to happen next. I I can tell you we're way above the 21day, which is this, and the 50-day, which is this. But really, the sky could be the limit here. And I don't want to get people thinking that, hey, it's easy. Just buy in. We've been telling people cautiously, buy five or 10%. Yeah. And let it go. If you have too much, like a lot of our clients do, uh, if you have 50% or more in your portfolio, which believe it or not, some people do, now is the time to be selling a little on the way up, you're never going to call the top, but sell a little bit on the way up. So, we're here we are at 64, and now I'm thinking we're going to go to 7075 in the next few months. I don't know, maybe the next six months. The truth is this is a different regime. And you can now buy a barrel of oil with a with 1 ounce of silver. Louis just said I didn't even think of that. Either you said it or Lou said it or you're both talking about it. >> Yeah, Louis said it and I just clarified by saying that actually an ounce of silver is worth more than a barrel now. So, yeah, >> it's pretty amazing. So, how far can that go? Um, I think it can go a lot farther. I'd still be very careful. Let's take a look at a monthly chart here. U, I guess I'm still sharing. Here's a monthly chart. You know, look at this. 2011. Back in 2011, we hit a high and then came down and did not go back. Here we have 1 2 3 4 5 6 7 months straight up. This is different than 2011, you know. So, I know you have to inflation adjust. So, I'm not sure if we're at a new high inflation adjusted, but we're getting close. This is the biggest triple top I've ever seen really in the silver market. The Hunt Brothers 1980, this 2011 top, and now in nominal terms, it's huge. And so, you know, what are the miners doing? the miners. If I just go to, I don't know, GDX, uh, let's go to this SIL ETF. Take a look at what the miners are doing even on a short-term basis. We had this downtrend and we broke out. And here we built another cup and handle. I think we talked about this in the previous week. Here's here's the handle. Boom. We're out of the handle. And here we are going sideways. And uh, you know, I think a lot of people are probably expecting this to fail. You know, the hardest thing to do, Adam, is to hold on to a bullish asset. I mean, I've learned that in my career. It'll try to kick you out over and over and over again. That's not a reason to never sell. Always look at your own risk tolerance and your own exposure. But SILJ, nice little cup and handle breakout. Same thing with GDXJ. >> One thing I just want to note as you're doing that is um you know folks, you can see here that the silver miners um they they have yet to have or they have not had that that super you know, shoot the moon, uh, recent history that that so the silver price has had. Um, they've certainly done well this year. You know, the miners are up above on average about 100% this year. Mike, I mean, just the general GDX uh major. >> Let's go to GDX here. >> GDX started the year at uh 33 and here it is at 84. So, it's two and a halfx. It's going to be 3x soon, >> just year to date. >> Just just unbelievable. Yeah. But um but but but you know re recent performance has not been as strong as silvers. Um and uh a number of people including Jesse Columbbo um have been saying that the torch is likely now getting passed from the metals to the miners meaning that the the metals have been outperforming in the near term. Now the miners are going to start outperforming again. And if you want to read a detailed analysis as to why that's likely to happen, you can go to thoughtful money's substack and the latest macro pass was from Jesse Columbbo on exactly that. So just >> Okay, I've got a couple charts here that I could show quickly, too. Just switching to slideshow mode. You know, this is gold to silver. Just two charts that I pulled together. He might remember talking in the last year or two, Adam. There was a time that we were saying on here, you know what? The the the gold silver ratio is back to 100. Look at that. Back in um I guess May of May, April, we're at 100204. We're now at 69. The long-term average is 50-ish. I'd say that, you know, some people might disagree with me on that. I don't This is only one year, but the long-term average is around 50-ish. So, this could easily keep going, but you know, we're down to 69, so probably the easy money has been made, but I believe there's more room. And the next chart basically just shows XAU to gold. This chart does go all the way back to 1985. XAU is the Philadelphia, I guess it is. I think it's the Philly uh index for the gold miners. The the point is that it's a gold miners index to gold. And you can see that right around the GFC, they just fell out of bed and stayed there. And we were bull and we probably bought too soon. I'm sure we bought too soon, you know, watching this erode. There was a lot of bad decisions made by management in the gold mining space back then. We had all this underperformance, but it's bottomed. The real key is it's bottomed right here at around, you know, 20 to one or if you flip it 0.05 to one. And we've we we bottom there at 0.05 and we're up at around 008. 009. We've almost doubled, but it could double again from there and still not be excessive. And I know I've said this before and I guess I'll say it again. If you take a look at some of these things over the the long term, just take a look at, I don't know, silver miners, SIL. Let's look at it for a long term. Big bull markets will often double off of a base and then double again. So, here's SIL on a monthly chart. Big bull breakout. Let's call that breakout right around oh, I don't know, 40. So, we broke out and went from 40 to 80. There's your first double. Don't be surprised if this consolidates and then doubles again to 160. sometime in the next year or two, but it's really hard to hold on to because of all the reasons we just talked about. It's lagging metal or pulled back or, you know, it's a piece of bad news or whatever. But if you've got your position and it's not too big, try to hold on. That's my message. >> All right. Well, we got to start wrapping up here. Mike, real quick though, just on silver again. Um, folks, I I I think definitely listen hard to Mike's advice that if you have a silver position that's done really well and now it's really grown as a percentage of your portfolio, probably wise to think about trimming that back. You know, your your traditional position resizing, uh, don't don't sell out of your core position. Um, but, you know, take some of these paper gains and make them actual gains just in case this turns out to be the top, right? At least you captured some of the the gain you had. Um, but if you are continuing to be really bullish silver, um, andor you're watching this and say, "Gosh, I I I wish I had built a silver position. I don't have any." Um, and you'd like to at least start building, you know, a foundational position. I just want to remind everybody in case you haven't already heard it. Um Andy Sheckchman who runs Miles Franklin which is the precious metals uh endorsed solutions provider for Thoughtful Money. Uh he while supplies last uh he is offering a a special exclusive promotional deal just to the thoughtful money audience uh which is the ability to buy junk silver uh from him for a dollar under spot price. Um so this is a relatively rare deal. Um, and if you want to look into that and take advantage of it, um, or just talk to Andy and his team about any of your other precious metals questions or needs, uh, just go to thoughtfulmoney.com/bygold, fill out the short form there. Only takes you a couple seconds and then Andy and his team will be in touch with you right away. Um, all right, Mike. Well, look, um, uh, thanks so much. You know, things are continuing to get interesting, I think, as we head into 2026. could be a very interesting year especially if if uh Louis correct and we we we witness the true bursting of the AI bubble and all the repercussions that that potentially will come along with that as we talked about here that could be a very interesting perhaps very scary year for a lot of people. Um but anyways folks uh we're going to have Mike and his partner John on this channel week after week uh as usual for us in 2026 just you know keeping us a breast as how things are unfolding. So hopefully there won't be any major surprises because we'll be keeping you updated all along the way. In terms of Louis interview, if you enjoyed having him on here, would like to have him back on again early in 2026 to provide an update, please let us know that by hitting the like button, then clicking on the subscribe button below as well as that little bell icon right next to it. Obviously, if you'd like to get some uh professional help or help from a professional financial adviser for how to position your wealth in your portfolio uh for the coming year, especially if things unfold the way that Louiesie and Mike, you know, think they will, uh then highly recommend if you don't already have a good financial adviser advising you, uh consider talking to one of the ones that Thoughtful Money endorses. These are the firms you see with me on this channel week in and week out. Perhaps you'd even like to talk to Mike and his team there at New Harbor Financial. So to set up one of those consultations, just fill out the very short form at thoughtfulmoney.com. Only takes you a couple seconds to fill out the form. These consultations are totally free. There's no commitments involved. It's just a service these firms offer to be as helpful to as many people as they can. Mike, my friend, as usual, another great week. Thanks so much for uh being here. Thanks for going solo. And again, uh please tell John we hope uh his problems with the pipes clear up soon. >> I'm sure they will. And thanks for having me here. I really enjoyed it, Adam. like like every week I do and I really enjoyed listening to Louis as well and until next week u take take it easy. >> All right, great job Mike and everybody else. Thanks so much for watching.