Why Own Anything but Stocks Peak Prosperity Podcast
Summary
Bank of Japan: Discussion of Japan’s first rate hike in 17 years and end of yield curve control, yen weakness, and the potential for global ripple effects and heightened market volatility.
Gold: Bullish setup highlighted via gold’s breakout in yen terms (cup-and-handle), with expectations of a potential USD breakout as a hedge against policy mistakes and currency risks.
US Treasuries: Comparison of S&P forward earnings yield vs. 10-year Treasury yield suggests a thin/negative equity risk premium, with arguments that Treasuries could outperform equities over the next decade.
Market Concentration: Extreme concentration in mega-cap stocks surpassing past peaks (e.g., Nifty Fifty), signaling speculative excess and fragility beneath headline indexes.
Housing Affordability: Home prices far outpacing inflation and wages; policy distortions and institutional buying cited as drivers making the American dream harder for younger generations.
Federal Reserve: Markets rally on minimal Fed changes and dot-plot shifts; concern that the Fed is boxed in and may ultimately resort to larger balance sheet expansion, risking currency credibility.
Risk Management: Emphasis on planning, stress-testing for inflation and downturns, and maintaining prudent diversification amid the “everything bubble.”
Transcript
hello everybody Chris Martinson here and today we're going to be talking about finance and economics as part of Finance you remember anything that you see in this video and all resources available at our websites or Affiliated websites are not intended as or construed as Financial advice this is for educational purposes remember if you have a financial decision please consult a financial professional we are not attorneys we're not CPAs we are not Financial managers as well we do our best to be accurate and everything we represent is as accurate as we know it to be now let's turn to our program I think this is just simply herd psychology you know uh desperation and a lot of gambling on the parts of a lot of Market uh participants and an unknown gambling on the large majority of Market participants that have just been caught throw it in an unmanaged passive index and ride it hello everyone Chris Marson here of Peak Prosperity with another edition of Finance you and back with Paul ker hey Paul how are you today hi Chris I'm doing great good to see you I am I'm really excited for this talk because so much going on um but before we really get started with like the data and stuff like that Paul you want to know this is this is the most this is a very typical cont conversation I'm having now so in my business I get I talk to people all the time all different strata uh there's no real Rhyme or Reason to it everybody's sort of awake I guess so so maybe a little selection bias but here's a call very typical Chris I'm pretty sure something bad is coming and I don't know what it is or Chris I think something's coming but my wife who I really trust who's more intuitive than I am is yelling at me that we got to start getting more prepared so it's this Vibe I don't know what to do with it I'm just offering it out there I know you talk to a lot of people as well I just wanted to bounce that off you see if you're having conversations like that too no actually I'm having a lot of conversations that way not not only on a national level but even on a local level so you know one of the things that the the unbelievably intelligent followers that you have through Peak Prosperity like I mean I mean that seriously um I expect them to understand some of the issues that are taking place right because they' followed you you do a great job as an information Scout and notifying them on the local level and our footprint in the North Georgia Mountains that's more of a representation even down to Atlanta of kind of what the average American is facing because there's a lot of people that just don't want to know or don't know that they need to know yet but it's it's interesting you bring that up because Holly and I were talking just a couple of days ago my wife Holly about that there's a sense of unease that people are feeling they're feeling it in their budgets they're feeling in the grocery store they're feeling it across the board and it just does doesn't make sense to them and I'm actually getting a lot of phone calls from clients that I've tried to local clients that I've tried to open their eyes to what's taken place and they're like I'm ready to have that conversation now so this is something that that that I believe is common Across the Nation right now people the average person just doesn't know how to put their finger on and even those of us that are paying attention to things like myself I don't know how to put my finger on that that that anxiety or that Guillotine that it feels like lik you know making the hair on the back of your neck stand up but there's there's something there's something there yeah yeah and I guess it really doesn't help that we have so many weird things happening all at once it's almost too much to keep track of at this point in time uh you know I've been just this week I've had interviews with lawyers who are having these bizarre cases where the Judiciary seems to be off the the trails of of normal decency where where uh you know all the work that I did tracking the migrants working through the migrant issue not immigration migrants and still talking with those people crazy stuff happening there talking people who are inside some of the organizations and they're very unhappy with how things are and it just nobody feels like they have agency to do much about anything um so I guess we're all just sort of like preparing as best we can uh correct well and I think sorry go ahead no no I mean it's just I was going to say we're just getting ready for something but we don't know what it is and that makes it really hard to plan you know is the hard part it does well and I think also there's a recognition that it seems that we don't necessarily have a rule of law anymore okay and even and I was surprised because you know Dave Ramsey does phenomenal work in what he does as far as helping people budget and things of that nature but even he went on a ramp recently that basically this is upside down world you know what what has always been right is not necessarily considered right anymore so um you know and and it doesn't feel like that feels like there's a different set of Justice there's rules for the elite that don't apply to the average individual right so I've actually heard a couple of people say do we even have the rule of law anymore in their business world of some of the thing that they're seeing take place and some of the double standards that are taking place in the political process and it it's heartbreaking now I don't I mean I notice those things but that's not where I spend a whole lot of time where I can talk a lot about what they're what they're mentioning but that's things that people are comments people are making to me that that I don't know that I've heard in 26 years working with individuals before this that's fasinating yeah yeah it's um I don't know how we got here this quickly but but here we are and uh you know how so I'm curious and we I want to talk to you about Japan I want to talk about markets I want to get into some Financial stuff some economic stuff with you but before we do um I'm just curious how do you like do you have any um anonymize them I know you have to do that but but do you have any cases of of how you're helping people I me I don't know how you do it how do you how do you coach somebody in this environment with I know you always have to make decisions with imperfect information but this is upside down information you know right it's crazy I I'll tell you quite frankly the more our eyes are open to what's taking place and and the more you understand history the harder it is but the reality is one thing is Chris and this is the conversation I have with a lot of people just you know you may disagree with me no you may agree with me on this but in 20072 2008 my eyes were open to by God's grace we were running a risk-managed strategy so we were able to guide our clients through that well I didn't really understand the importance of it it just made sense to me because once you get into retirement and you're in a distribution phase right if you have a million-dollar portfolio and you take a 50% decline well now you got $500,000 portfolio and if you're taking 50,000 a year an income off of it you're never going to recover that so so that to me made sense and as being a fiduciary and helping people uh recognize the risks that's what drove me to a risk managed uh strategy I didn't want somebody getting wiped out on my watch after seeing what happened in ' 08 and and my eyes that were open kind of prior to that because you were already educating people and and warning you know I think what is it you put out yesterday about kind of your outlay in the future and you've been spot on as far as the things that are happening and um so so from that point forward you know I didn't think that we would be able to make it this far I didn't think that our leaders would be able to cross all of these boundaries you know and essentially do whatever it takes and to heck with the consequences from a long-term standpoint to be able to make it this far so I keep bringing people back look I know you see these things but we don't know if it's 5 months in the future 5 years in the future or 10 years right and you've got to be able to live so we need to do some planning let's get in there let's do that planning to find out how how much you need how much how many assets you need set aside dedicated to providing the income that you need in retirement based on the income that you need and then if you have excess right if there's x amount of dollars left over then we can really build in those safety nets because we've got to be able to help people be prudent with assets that they have so once I explain that to people come back to it so here's here's the results and it's it's so powerful because in our industry too many advisers are just asset gatherers right they want to get out there and say Hey I want to gather your assets you know hey you want to retire awesome how much money you got this is how much income that it can pay you they don't talk about inflation they they talk about their portfolio strategies hey let's go golfing together they build the relationships they asset gatherers and salese what our responsibility to do is help people develop a plan and show them the risks that they're going to face in retirement and stress test those situations so that they're able to make decisions quicker than the average person when they get there and I can't tell you how often I run into somebody that says hey you know I just want I'm coming to to get a second opinion from you I've got a couple of friends that work with you you've done a good job for them you know all these advisers told me that it's okay for me to retire and then when I run a plan for them based on the incom that uh that they need it's a completely different picture so a couple of things one one of the things I ask people before we get into the planning process is how much after tax income do you need on a monthly basis to live the lifestyle that you're living in retirement consistently Chris since 2007 that we've been using this particular program 2007 2009 somewhere around there people don't know that answer right they think here's how much asset I have how much income can you generate for me off of that that's the wrong way to go about it in retirement we need to know how much you need on an after tax basis so two scenarios one a couple answered that but because I was the first that had asked them that question even with the people that they're working with uh from the time I got the information ran the plan and we get together the these numbers aren't exact but their income needs had increased from let's say 100,000 a year to 130 so they said I got to thinking about it really hard and I need more income to live on than what I initially thought like I really didn't realize that how that's how much it is well the goal was to retire in two years essentially so the sad part of my my job from time to time but it's the crucial part of my job is my job is to tell people the truth of their situation and be able to demonstrate that right we have an unknowable future but we can take the assets that they have today they talk about the risk so we get done with the plan and essentially in all of the historical analysis that we looked at 7 and 10 times they would have failed they would have outlived their money okay now you can imagine the shock right because youve got this goal uh painted but I asked the question I said okay what would you rather do would you rather work longer or would you rather take less income and after some serious thought they said well we would rather work longer than the than to reduce our lifestyle dramatically so by the end of that first planning meeting I was able to to give the outline of a plan that says yeah you might have to work you know from instead of 6263 to 6768 but you know now you've got a 95% probability of success the only thing that would have taken you out would have been a major decline in the Great Depression and if you got a risk managed strategy that can reduce the probability of that causing some problems so that was one SC scenario they were so grateful messaged the next day and said hey you're the first person that we've talked to that's actually had this kind of conversation with this and we've talked to a lot of a lot of advisers in the industry and of course I'm thinking you know because our industry is designed to gather assets you know let's get it in the second scenario which is these are a whole lot more fun to begin with right so uh I ran into somebody here not too long ago they've done a good job saving they lived their life sacrificing they've made a lot of sacrifices and they've been very good stewards of the resources that they have so they have an income level let's just say at $60,000 a year that the budget that they're set on and they're enjoying their lifestyle there right because they're they're already retired but once I was able to stress test them against you know three and a half 5 and a half 7 and a half% inflation I'm like okay you can actually live on a lot more than that and and they were so relieved because you know their initial thought was like look um you know we thought that might be the case but I didn't have any way of demonstrating it and I didn't have any way of of having some evidence of that was the case and again on in our industry there there's an incentive to hold on to those assets because if they're not going out the door right you've got more assets under management more fees things of that nature so that's the weakness in our industry now there are a lot of really good advisors out there on the modern portfolio theory that compare okay not saying that there's bad advisors but there's a fault in our industry just like the flccc is able to to demonstrate clearly that there's a fault in the healthc care industry that that doesn't necessarily serve the client in the manner that they most need to be served because of that conflict of interest and of course I you know don't get me wrong I uh we're compensated of the fees of the asset that we manage or hourly depending upon the client circumstance mostly on the fees so you know yes there's an incentive there that's why you disclose those fees and you talk about it but the planning is able to demonstrate to a client where they need to be stress test for the future and say Hey you can stay this conservative allocation but if we get 5 a half% sustained or 7 and a half% inflation this is what you need to do in your portfolio allocation to combat against that so I I love it it it's kind of GE sitting down doing the plan with people from time to time and I have people that'll put push back and they'll be like well I just want you to manage assets and I'm like well we can do that but you don't go to a doctor and and ask them to treat you for something without looking at your blood work or your medical history so I need to see that so that I can get a situation of your situa get a snapshot of your situation and then you know show you the options that you have to be able to accomplish your goals or or manage the resources you have prudently oh that's why I love working with you Paul because you're doing you're what obviously the right thing to do so you are you know there's a difference between a job and a vocation right if you're a job somebody comes in you write a prescription for an SSRI and send them out in five minutes you know yes if it's your vocation you find out what the underlying thing is because you know they've got a set of symptoms you're going to figure it out right so I see you take this as a vocation and that's a great thing um I think people are hungry for that I know I am I'm I'm I'm ready to be able to trust people who are going to be doing the right things you know but it's just it's not it's not how things you know are uh these days unfortunately all too much no right so and unfortunately and everything in our society drives Us in that direction right like I I I get a I really enjoy X for example to keep up with information I don't but I don't engage a lot and I shop Facebook Marketplace to see what's for sale locally and I see what's going on but I don't engage a lot right yeah because the problem is you know and I think so much of our society it's like hey this is the lifestyle you should be living and no matter where you are you see somebody who's living a greater lifestyle billionaires always got somebody that's you know got more billions than they do you know and if you're the number one guy in the world then you know somebody's looking to knock you off of that position so unfortunately too much of our society incentive is driven by I want to make as much as I possibly can and they see people as a stepping Stone where there was a period of time in the past and what our profession should be is is what you do if I can make your life better if I can do a good job for you and help you choose the path of wisdom everything else will take care of itself and uh you know that's one of the things why now now we we do have some kind of minimums in there but basically we serve people not money and that's why we built the infrastructure in place to be able to serve less complicated situations to be able to help people uh whether it's a really complicated situation those are the ones I tend to work with the most but the less complicated situations we can serve them and know that they've got a good plan in place and they're going to get good service and you know because we want to control the things that we can control because I can't control what our government leaders do the only thing we can do is adapt our asset management style to whatever wrenches they try to throw in the system yep yep all right before I turn to Japan if anybody wants to set up a consult with Paul and his amazing team just go to Peak Financial investing.com a very simple form sends out an email and you will be contacted so that's the process so far it's been working pretty smoothly I'd say we got a a good thing going here so um let me turn to this uh I got to talk about we're gonna talk about Japan now is that okay oh absolutely big deal actually it it it is a big deal so um I said Japan is cooked but this is really about tracking the everything bubble I'm not the only person using that language now but this is a big deal the bank of Japan just the other day they hiked rates they hiked rates the first time in 17 years and did something called abolishing yield curve control sounds a little wonky but what they're trying to do or have been doing and I guess they've they're kill killing this as an idea yield curve the yield curve is the difference between what you're paying on 28 day paper one year paper twoe three year four year five year that that there's a curve of yields right and so they're they're controlling that whole curve you know thinking Masters of the Universe we can we can just dictate the price of money at any point in time you know good things happen um so this is crazy look this is let me get my my little my little uh laser pointer out I guess this was the last time they hiked here in 2007 right that was a quarter point you know just to get the scale here they went from 0.25 to 0.5 and that was it you know that's that's astonishing to be then down and then it's been negative for this whole time and now here it is the new Range zero to 0.1% this is on 10 years right uh so uh oh no this is their uh is this 10 is this 10 years this the this must be the short end which end of this is this I can't tell because they have their yield curve controls been so flat um you know when we talk about the FED they're always talking about the short-term rate you know the overnight rate but what are they setting here on this policy I'd have to look that up do you know offand you know I don't know offhand it's my understanding it's a short-term policy I don't think it's the tenure but I didn't I glanced over that when I was no it must be short term because the 10 year last I saw was already up at like 08 or 0.9 or something so yeah this is the overnight rate anyway it's been negative what does negative money mean well that means if you earn produce value save they're going to destroy that value for you I don't I don't even know what negative interest means it means your money has less than no value over time it's a bizarre concept but I think they're behind the curve Paul because this is we just had this report just the other day that Japan had a blowout wage result largest pay hike in 30 years this is a 5.3% year-over-year increase which you have to go back to like the 90s to see something like that so so if they're doing this because they they realize they have to start trying to control inflation they are way behind the curve on this I I'm sorry to tell them but 0. Z to 0.1% is not going to get the job done it's just not gonna happen so so the rest of the context is uh looking longer this is the last time they had in uh wage hikes way back up there in the 90s where they had interest rates if you can believe it of you know five six% you know um any rate I want to pay attention to this little this little Mesa right here that's just that's 07 that's 2007 where they took it from basically zero all the way up to 05% and then had to immediately Retreat you know and uh just remember that 07 we'll talk about that in a second um immediately this is the Japanese Yen this is it getting weaker the higher it goes this is in USD terms they've been holding it hard under the 150 Mark here notably here in November where we saw like stocks and everything going up like crazy this is when the Yen was also being driven down perhaps unrelated maybe not but we can see here it is now back at its all-time weakest and this is all-time weakest uh for uh gosh two three decades now this is what's called offshore Yen again getting weaker as it goes this way this is comparing it against the uan the Chinese Yan and now this is it hasn't been this week against ywan I don't know ever potentially but very long time and the 2007 matters because the last time the bank of Japan tightened in 2007 we also call that the great financial crisis just in case could be unrelated could be related um so here we are tightening again after this you know crazy look crazy run Titan crazy who knows um so against all of that this is uh gold in Japanese Yen terms and this is this beautiful very longterm cup handle and explosion um this is the the price of gold in Yen obviously it isn't this dramatic in dollars but it's kind of cap constrained in dollars as much as they can but not in other currencies so before we go any further that's what I'm seeing in the Yen and and um I actually think this is a big deal what what are you making of it I think it's a big deal too and of course Edward Dow uh tweeted that he believes that that this could potentially be the fuse that Lit the fuse to cause another Global financial crisis and the biggest reason you know he had his own reasons in there and I didn't retain them specifically to memory but you know being the first time in 17 years I mean Japanese investors have had to to send their Capital all over the world because negative interest rates means that I'm going to give it I'm going to put it in the bank and I'm going to pay you to hold my dollars right so I'm going to give you 100,000 let's say if just to keep Mass simple if it's a percent a year negative rate in 10 years you're going to pay me $90,000 back just to hold my capital okay but the bank's going to be able to go out and do what they want to do with it well theoretically I guess that's better than holding it home under the mattress because because somebody could break in the house or it could burn down but that's what they're doing so Japanese investors have looked around the world and said okay we need to send our dollars elsewhere because we can earn a greater rate of return somewhere else so for example somewhere in the neighborhood of Japanese investors you know as big-time capital exporters I don't know what it is for other countries but they've got north of a a trillion dollars in treasuries that are invested in the United States which is foreign money uh you know they have sent to the United States so as a Japanese investor you've bought foreign us treasuries okay so that's because they didn't have any other alternative well you can imagine loaning money you know if you go buy a cabota tractor they've always had interest rates that are far better than anybody else if you borrow something because they're better off to send those funds over here the question is if with that great a rise in earnings and wages increase if they're behind the curve and they have to play catchup what happens with all those dollars that have been sent in the foreign markets by Japanese investors when it becomes more attractive or just as attractive to come back home and remove that currency volatility risk so so I agree Edward's right I believe this is a big deal it surprised me that the win that the Yen weakened upon the news uh but you know there's times where we've seen the markets go up up initially on the Fed rate you know fed news and then they turn and go down following so you can't trust the initial reaction to begin with but this is this is a big deal that has a uh the potential to add a tremendous amount of volatility to a market that has unbelievable weakness under the surface everything looks good on the plastic face but underneath the surface of the market there's there's tons of Carnage taking place right now yeah and um uh we're still in the in the grips of this everything bubble you know everything everything so you and I have t discussed none of these are specific stock recommendations for against of course but you know we we've looked at those individual shares that are have the Tulip sort of bubly shapes right and I've read all the things where people try and explain to me why it's different this time I'm too smart and old to fall for that uh I know it's never different this time um and and I'm I'm watching this in in multiple different markets so I don't wonder if if this isn't you know the everything bubble you and I have discussed before but we've been trying to print our way to prosperity and as we've discussed I I really hammered uh Luke Roman on this in an interview you know both before and after the record button was hit and um like what's the plan that's the thing that's missing like what's the plan so if the if the Federal Reserve could say oh you know we're just going to create this everything bubble so that if we'll hit this level of prosperity Paul it's just one more can kicking Adventure you know it's just we just can't have stocks falling today you know it's like never a good time but I've I've searched everywhere it's like asking somebody like who's actually running the White House and nobody can give you a definitive answer like we ought to have we should know this like what's the plan and it frustrates me because I watched Rome pal chairman of the Federal Reserve get in front of like Congress or the Senate and nobody asks him like where are you going with this like like where does this what's what comes after this like how does this settle down and get us to prosperity there's no plan that's the problem I don't think there's one or they keep it real hidden I don't know well if there is one you know the question is are they backed into a corner and they're they're doing what they can do to survive right and today's society people unfortunately are typically unwilling to admit that they made an error unwilling to admit that they're wrong they think it's the end of the world but quite frankly the smartest people I know admit that they make mistakes all the time and and um so because nobody's perfect and you can't learn how to do it better unless you do make a mistake right so you know I don't I don't know Chris there's you know is it political I I'm not sure but I just don't see how this is sustainable because you take housing for example one of the a major Grumble that I that I'm hearing especially because my kids are all in the age of you know 23 to 27's where their friends are they're they're making good livings making really good income both both my CH children are doing well for where they are and they're like how in the world does anybody afford to buy a house and how does anybody afford to live right we we're at a breaking point where either houses house prices have to come down cuz still where we are today what 75% of the population cannot afford to buy the median home okay so so either house prices have to come down or incomes have to go up dramatically well if incomes grow up dramatically or a combination of both then corporate profits theoretically are going to have to come down to absorb that and if artificial intelligence is the answer for everything then where the job's going to come from to be able to to provide you know provide those higher incomes so something has to break and my concern is is that they're trying to kick the can down the road long enough until there's a trigger that something that happens on a global scale that they can point to and go see it's that fault not ours right that that's my biggest concern that that's what I'm concerned about more than more than anything because that makes it harder for us and a prudent in in managing assets prudently and managing our resources individually to to prepare correctly and in and in a timely manner so let's uh speaking of that house thing because I feel bad for people in your my kids your kids the whole generation right so so this is a a piece from Ben Hunt on X on Twitter CNBC wrote Oh weird home prices Rose 2.4 times that's 240% faster than inflation which is understated since the 60s the study finds so wow and um you know Ben writes you know what that means is that Washington and Wall Street systematically mischaracterize and intentionally under report the cost of living it is not a red blue thing it's a power thing um 2.4 times faster than inflation that's nuts that's nuts it's nuts and I wish I had the stats I don't have it on my desk here I'm looking real hard to see if I do but you take the inflation adjusted income since the 1980s I hate even I hate to give a number but this is just hypothetical because I can't remember exactly it's so 60% or something like that that but the median home price is up 280 something perc you know right in line with that so it was interesting what Ben Hunt said it's a power thing uh is why they're hiding it I you know maybe it is maybe it is but it's it's sad it's heartbreaking because the American dream for the large majority of the generation that's up there now is completely out of reach and the worst part is is for the baby boomer generation you know it's hard to understand somebody else's pain unless you've walked a mile in their shoes right so unless you've lost a child uh through an accident you can't really understand what somebody's going through so it's really hard for the baby boomer generation to understand what this generation's facing right now because the thought is is we just need to work harder you need to save a little bit more don't get me wrong you know that that can be the case but the reality is the asset the the everything bubble has price these kids out of the American dream at this point and unless you have family that has resources that can assist you in making down payments on a home and assist you in getting through college without a massive amount of debt and assist you in getting started you're falling further and further behind and furthermore if you make a mistake and you're in the middle class it's a heck of a climb to upper middle class and it's an even harder climb above that you got to sacrifice a lot but if you make a mistake and stumble you can go from middle class to Absolute lower class and homeless at the snap of a finger in today's society especially depending upon the city you live in and the cost of living there well you know the Boomers would say listen kids just shell out the $16 for the Grateful Dead ticket follow them around for a while you know it'll all sort itself out they're like dude it's 2000 to go to see Taylor Swift totally different environment right right just it's not it's not it's not where you grew up right so yeah but but the point I I think that you know that power thing this is something I really want to impress on people because this is really important and it doesn't get enough AirPlay this is not an accident this isn't like people shrug and go oh why our house prices up 2.4 times what a mystery it's a policy that's what angers me here's my Virgo coming out again you know from having the scales on horoscopes but it it really bothers me Paul because it's a it's somebody's made the decision an unelected person has made this decision because nobody elects the fomc and they've said you know on balance we'd rather have house prices going up than not because it has a wealth effect and we have all these papers from our internal phds saying this is a good thing all you'd have to do is not be a or get out of your little Ivory Tower Princeton bubble and walk out into the street you know it's it's like getting a lecture on inflation from Paul Krugman who last was shopping in 1943 I don't know right you know but they just like it's they are literally sacrificing the homeowner and the home building and and the home starting the household formation of an entire generation because they have a paper that says you know it's on balance it's better to have house prices going up than not and so they engineer low mortgage rates to make house prices go up and then convince you the way to get ahead is to borrow against that because it's an asset my friend Robert kosaki he disabused me of this he said Chris you know in his book Rich Dad Poor Dad too he says it very clearly he said Chris an asset puts money in your pocket a liability takes money out of your pocket your house quick asset or liability clearly it's a liability a big one yeah right if it's a rental house I own totally different story right if it's cash flowing positive but otherwise you know we've been sold this bill of goods that that you know that our house is an asset that we can tap for a line of credit you peel all that away it's just away from for you to get in deeper and deeper into debt while we're sacrificing the generation behind us because they can't even form a household so I'm against the whole thing I think it's I think it's shortsighted and greedy and kind of sinful greed a I agree completely and there's a few simple things that could be done from a legislative standpoint to stand up and make it easier for the average American to own a home first don't let institutions buy residential houses okay there you go I mean we we don't need to be competing our kids don't need to be competing with the black rocks of the world they just don't okay because because one they're they're somewhat price and sensitive okay people have given them money they go in they really don't care what they pay for it they just want the simplest thing so let me buy the whole neighborhood okay uh second thing is um you know foreign instit foreign entities coming in and buying residential homes like I mean surely there's ways that that can be done but you've got to have a higher standard to cross and then take some of the money that we're sending overseas and reinvest it back into our infrastructure you know and have you know I'm I'm for been able to AB uh give tax incentives for affordable housing I mean I had a aunt that ran the Housing Authority when I was younger and not as far as I know there's not housing authorities around but they were there to be able to provide affordable homes for people that were on the low income side so we need to be reinvesting back into our own country instead of sending all these funds overseas to try to you know put our woke agenda on the rest of the world not not mine and yours but you know what I mean I would go further I would remove almost all the building codes do this for a year and just see how it works out you know and and because because I was reading something that said that uh before you even put a shovel in the ground on a lot you're usually Out close to $100,000 MH right even before you do anything right because that might be you have to do the sewage hookup or you've got to actually have a you know a septic system in or you got to put a well in but there's the zoning there's a this there's those permits there's that you know you haven't even built the house yet um and I was talking with a local Builder and he said that you know it's somewhere between 250 and 400 a square foot now to put a house up right yeah okay a th000 squ foot house which is exceedingly modest would be somewhere so I can do the math in my head somewhere between $250 and $400,000 that's insane it is yeah and and and you're right the the regulations that are coming through the building codes some of them make sense right like I get it if you live in a neighborhood and you got a pool it is a prudent thing for yourself and for any young kid that runs around that neighborhood to have a fence around that pool there are people that don't like it especially live in the country but I think people understand that but some of these ridiculous codes that you have out there all those are is no different than what's happened in the halls of Power with the military industrial complex you've got lobbyists who have gone in and they've stated you need to you know uh push this regulation through in behind the scenes oh may I don't know that they give money I hate to even go that far I'm sure it does happen but it's all about leg legislation to drive sales of products that's what lobbyists are supposed to do you know and it still amazes me to this day I grew up in the lumber business right my my grandfather was in the uh in the lumber business my my dad and his brother owned a lumber supply at one point so I grew up you know in high school stacking Lumber delivering pressure treated wood well there's a family Pond that had a deck that was built in 1987 okay fours everything that's there with all that pressure treated wood that's there now I know nobody likes the pressure treated uh process that's out there now but we didn't know anybody who had any issues from that process now I don't know all the chemical you know all the other stuff behind it but what I can tell you is those that deck and those fours they're still there from 1987 to today and you can still walk on them now they're starting to rot a little bit but you know the new pressure treated products they're done and I mean they don't even last five to six years and you got to replace the whole back porch is that really about selling more Goods which is not good for that average citizen or homeowner or is it about protecting the environment somewhere there's got to be a fine balance in there MH yeah yeah well um you know there are a couple states that don't really do building codes and I've been to those States and everything seems to sort of stand it's fine because I you know I I trust that people will not build a house that's going to fall down on their own heads or if they do then it does and that's kind of on them or if they go to try and sell it and it's a structural disaster they won't be able to sell it so these things sort themselves out anyway you know so so in in my state of Massachusetts last building code upcycle there was this many new codes added in when I first started building you know CU I did this as carpentry and and framing during college the whole code book was this thick right you have to use this you know 12 penny nail for this 10 penny for that this many per sheet of sheetrock there weren't that many you could learn them pretty quick now it's that that's the addition so the whole stack is like this now you know and and you know they they said you know the roofs now have to be able to withstand like these killer loads like you should be able to put elephants on them now because lobbyist got in or something and it doesn't matter if you point it like these there's roofs from the 1700s here where you go up and you look inside the attic and there's like a literally a round they didn't even bother shaving it down like they maybe they took the bark off but there's like a round stick you know and they're four feet on Center and somehow it worked itself out over the last 280 years you know I'm thinking it was good enough to stand the test of time right yeah now you have to have 12 inch on Center you know number number one you know 8 inch 2 by8 whatever blah blah all that stuff so yeah but it makes it all stupid expensive obviously and so back to this point about how it's all sort of comeing to a head here I do feel like our our monetary fiscal train is just out of control right now yes and the question is what do you do about that um and how do you protect yourself and I know there's a lot of questions about that I don't have any good answers I I I've I'm starting to investig so you know you and I have talked about the the great taking a lot and we're still working through some things around that um I've investigated that to within in an inch of my life I think I'm going to do the sipc this this week um and I'll be covering that so we can see what is and is not really involved there uh in terms of coverage but beyond that um it really is pretty obvious to me that there's no plan that I've determined they're just going to keep trying to this whole thing together with spit and bailing wire and uh and we have to get ready for what happens if things break and um I think that gold price in yen is telling me what what they think about gold in Japan right so pull that some sometimes while you're pulling that up sometimes those that are searching for wisdom will have a typ in Shadow or something that is an indication that they can you know is a warning per se so I fully believe that that is a an educational chart that is a warning and showing an opportunity for a US investor but uh when the US when gold and US Dollars completes and breaks out of which you could argue it has already but it's not a clear break it's not a it's not an absolute clear breakout of the up and handle but I believe that's coming to the United States not a recommendation to go buy it you got to talk to an adviser I'm just speaking freely for educational purposes we don't know the future but I believe that's coming to us investors um that are patient I agree I agree and I do think there's a market correction coming because of charts like this this is a weird one for me this is the market cap of the largest St stock relative to the 75th percentile stock um and so it's just a ratio just sort of it's just telling you you know what's you know how concentrated is a stock market in a small share so we've heard about the fangs or the Magnificent 7 or whatever but this is kind of interesting because if we look at this um and get my little laser pointer here we're in all-time brand new like this is worse than than back in in the Great Depression right that's right you know this was a peak here 1932 another peak in 39 1973 um 2000 way worse than 2000 2009 this is interesting so it's just very heavily concentrated and when you get into these concentrations like if we see um like what happened back here in the 70s 1973 that's the nifty50 right there that's pretty equivalent you know there were 50 top stocks kind of like our our magnificent 7 the nifty50 um so that's interesting to me because when you look at this nifty50 Market top here where the Dow with the nifty50 combined had $1,050 combined share price and collapsed back to 600 so that's 40 40 plus% loss right there um is what happened after we hit that Peak so the question is what's this peak mean relative to that Peak is this more important or less important or things just different now is this is it is there a new aeropol where big companies are just the way it is well I is it different this time if if it is different this time than the past Century 100 Years of evidence you can throw out the window for everything else so so yeah yeah maybe it's bigger this time because of monetary stimulus it'll certainly be somewhat different because they don't follow the exact pattern maybe we set new records in all of those metrics before this is over I could argue that just because of the severe monetary expansion that occurred during the covid stimulus but the end result I do not believe that it's different this time and and and the reason is Chris these are human nature-driven events right so we still haven't we still haven't solved all of our weaknesses in our human nature you know we always we all know the older you get don't make major decisions when you're really emotional right at least count to 10 before you open your mouth the level of speculation in the market and and the lack of consequences is what occurs and leads to the Tulip bubble to the housing bubble in ' 07 and now the the everything bubble so I do not believe that it's different this time because I believe that although history doesn't repeat itself at Rhymes and our society doesn't value teaching history in our school system anymore and if they do they want to teach an alternative history but the reality is history is there so that we can learn from the mistakes of the past and press on to the greater achievements of the future and if we refuse to consider the mistakes of the past and and and all that does is indicate periods that were similar to this in the past I don't think it's different this time no I think the pain the longer this goes and because there's so much speculation out there I believe that the pain of this one is going to be enough to Mark future generations for quite some time well uh as we're recording this I'm I'm seeing that um here's this is just crazy to me so stop me if you've heard this one before fed opens mouth stocks go spiking in response to that yeah it's just it's one of these things that just has to happen so so fed opens their mouth and just it it's just automatic at this point that's the bubble behavior is just so ingrained there is no other response that makes sense you can trade this one as reliably as anything else and what did they say nothing stood patent rates that's it yeah and as a matter of fact that the only thing that that was noteworthy is we went from if I remember correctly eight uh fed Governors that were expecting so that they changed the dot plots before we had eight that saw 50 bips 50 uh uh bips cut 50 basis points or two quarter per Point Cuts in the year now we've got nine so right so it's it's technically a little bit more hawkish nine a little bit more hawkish so that takes us from three quartero Cuts I stumbled over myself basis points and cuts I was caught in between but three quarter point cuts to two so from 8 to nine no change for rates barely any change in statement and then the market blows out to new highs right like all they needed to do was say that they're going to give the market Cuts back at the end of October and that initiated the momentum that's feeding on itself at this point for the markets I mean that it's just um the level of speculation and cognitive dissonance is absolutely crazy now don't get me wrong the you know some things are holding up better than I expected but the markets don't justify this right now I I don't know that they do on a fundamental basis but uh Luke's point when I asked him about this Dynamic he said you know the if you rotate the cube and you and you look at it and you say what what is the market saying it might be saying the FED is trapped and we know they're going to print yeah that's it we we know they're going to have to print so the it doesn't matter whether stocks fall or climb or spike it doesn't matter they know what comes next the fed's going to have to print and print hard uh just to start this whole thing you know and he was talking a 10x Port uh balance sheet expansion like you know fed's balance sheet goes from 7.5 trillion to 75 trillion like you know most people excuse me would say oh that's insane more insane than going from four and a half to 9 trillion no it's not I mean and and the worst part is is they keep doing larger amounts of the same so so you know and Luke's very he's a great thinker as well and your interview with him was wonderful by the way and um so that that's one of the reasons Chris and this is my concern and my working theory has been or hypothesis that we're going to have an accident markets are going to drop 30 40 50% the response on the other side is going to be what cracks our currency and that's when the real pain comes okay now now one of the things I have to be careful is it's a working Theory and you have to pay attention to the data and the information as you're going along so you're always looking up and kind of looking at it and testing it and saying okay because it's my responsibility to help guide clients we've got our tools that'll point us in the right direction but I always want to ask questions cuz if you get your mind set on one thing that's probably not what's not going to happen but I keep asking myself when you make that comment if these markets are to the point that hey the fed's going to print anyway so bad news is good news good news is good news okay then why in the world would you want to own any other asset besides stocks why would you want to own treasuries why would you want to own money market why would you want to own anything else and that's why I don't believe that these are the leading edges of hyperinflation yet but I keep asking you know hindsight are we going to look back and go that was the turning point and you know it's foolish to bet on that right now because it's pure speculation and and it's foolish to speculate in an environment like this you have to diversify but I keep asking that question because why would you own anything else if these are markets that'll never go down again so on that front as stocks go up though they get more expensive relative to earnings and so then you get to this chart which I this one actually surprised me uh from the daily shot they they put out great charts there this is S&P 500 forward earnings yield so if a stock yields 3% Yi that's its yield compared to the 10year treasury yield which is yielding right around 4.12% today so you subtract that 10year yield from the S&P forward earnings yield and we're going to zero So eventually uh when it goes below zero you're in a really weird territory where you're saying I'd rather own stocks even though they're not yielding as much as something that has no the so-called risk-free asset which is the 10year treasury it's the riskiest of risk- freest of of assets right that's crazy to me you know you have to you have to be fully speculative to believe that it's worth you you're holding stocks when they're negative yielding compared to to bonds because you're thinking stocks have to go up in price or earnings have to really blow out one of these two things has to happen yeah something has to break and that's one of the thing that John husman does a a phenomenal job pointing out in a couple of his most recent letters says that basically you know there's a high probability treasury Ys are going to outperform the market over the next 10 years you know so so when your risk-free rate of return is greater than the earnings yield on the S&P 500 the question is is why would you carry that risk either one you know there's big institutions out there that really think that we are headed into currency crisis hyperinflationary event sooner rather than later which I don't think that's the case I think this is just simply Hur psychology you know desperation and a lot of gambling on the parts of a lot of Market uh participants and and unknown gambling on the large majority of Market participants that have just been caught throw it in an unmanaged passive index and write it that's a very dangerous thing to do right now it is it is and uh it it's uh it feels like being being in a risk-free people I I don't think have Something's Happened with our risk sense of risk in the markets not to individuals right it's like that scene in men and black no no persons are smart people are a dumb panicky animal and you know it right whatever Tommy Lee Jones says that right you know so I don't know what's going on with markets you know because it just it feels like the the the nobody like there's like there's like Risk is is zero we're back to that but I've been here before Paul I saw this in 2000 I participated in it I was dumb then but I learned tuition's expensive in the bubble school but then when I saw it come again in 2007 I knew exactly what I was looking at it was just a different asset class oh it's different this time Chris I'm not making more land houses are different I'm like no I'm pretty sure it's the same we're there again we're there again you know it's interesting so 9899 during that period of time just starting get getting started in the business I had one of the old-timers that that I'm grateful for and I try my best to be able to be a mentor for other people coming in the business too he made the comment he says you don't have a lot of responsibility as you're building your business right now he said I do I do want you to pay attention because look at the foolishness and the craziness that's taking place and and because you're going to see an unbelievable amount of pain on the other side of this and don't forget that because these are cycles that repeat throughout history and I will tell you this I've thought about it and thought about it and thought about it for whatever reason my mind keeps going back to that time and the behavior that people were undertaking the the arrogance in in the mainstream media investors out there you know that was back during a time where CNBC Jim Kramer uh was calling for the resignation of Warren Buffett right he you know the comment was he's too old he doesn't understand the new economy so you know that same thing is taking place right here but it's not just limited to tech stocks I'm seeing it in every asset class and that's the most concerning thing about it because I don't you know there are asset classes that are underpriced right now there are asset classes that look great okay but if we get a big downturn in the market people are going to be selling anything they can to cover the massive amount of debts that they have out there so all asset uh more than likely all asset asset classes will go down together some will do good during recessions there are those those are the ones that we want to look for but but there are a few out there right now that are long-term opport unities that are going to recover a lot quicker than everything else so you know for the investor that's looking and patient and looking for the path of prudence this is a once- in a-lifetime Opportunity uh for those that are ready willing and patient enough to make the changes that need to be made to take advantage of it well uh I think uh for a lot of people maybe the decision's easy because they would like to have somebody else managing their money and and because it's a full contact sport because I think people should be working on planting a garden buying some cows and chickens if they can put them in the space and figuring out how to sort of Batten the hatches a little and just become as self-reliant as possible those things all take time so where do you want to spend your time that's right hey speaking of planting so so Sunday is the first time ever that I've planted off the Farmers Almanac in the Lun lunar calendar so oh interesting yeah so I I started all my seeds for my Peppers my tomatoes and kind of like I do my chickens and my eggs I've I've seed enough to where I'm going to give them to all my friends and family that want to grow but uh I had some notes on years I've had in the past so I'm really curious because my grandfather planted off of the Farmers Almanac and the in the lunar calendar and he had massive Harvest so I'm curious to see if it makes a difference this year oh oh I'm I'm dying to know the the outcome of that yeah I've never done that before I plant when I have time you know hey it was funny because my my staff were like they came and looked at me and said are you okay I like yeah they were like you've never uh blocked off a day of the calendar so that you could go plant your garden what's up with that like are you really going gardening I said no no no seriously I'm doing it off the lunar calendar so I blocked it off to make sure I could go plant that day oh that's great I'm jealous we're we're not we're not quite at the planting cycle you're you're uh critical what 800 mil South me I guess probably so and I'm just seating so this is inside I haven't planned them out this is just getting started yeah well good stuff all right well Paul thanks so much for your time again today sir it's good talking with you as always always an honor Chris always an [Music] honor hello Chris Martinson I'm the CEO of Peak Prosperity and also Peak Financial investing and after watching that you're probably wondering well what do I do with my money look you both deserve and need somebody who can talk to you about what's really going on in this world understand the situation as it is not be steering you towards certain things that don't make sense for you or just keep you in a game that's already ended look if you want to talk to somebody about the Petra dollar declining or what is happening with gold or which sectors are actually the best ones to be and given what the Federal Reserve is up to or the federal government you deserve to talk to somebody who can answer those and has a few gray hairs and has been there through some of the economic Cycles because hey we're in another economic cycle so it's good to have that experience fortunately at Peak Financial investing what we do is we go out and we scour and we look for the very best firms out there who satisfy one thing above all else they've got great experience coupled to Great customer service so if you want to come by Peak Financial investing.com there's a very simple form you can fill out just a few Fields you hit send what happens is an email gets triggered out it goes to uh an endorsed firm of ours you will get an email back you can then set up a phone call for a 30 to 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Why Own Anything but Stocks Peak Prosperity Podcast
Summary
Transcript
hello everybody Chris Martinson here and today we're going to be talking about finance and economics as part of Finance you remember anything that you see in this video and all resources available at our websites or Affiliated websites are not intended as or construed as Financial advice this is for educational purposes remember if you have a financial decision please consult a financial professional we are not attorneys we're not CPAs we are not Financial managers as well we do our best to be accurate and everything we represent is as accurate as we know it to be now let's turn to our program I think this is just simply herd psychology you know uh desperation and a lot of gambling on the parts of a lot of Market uh participants and an unknown gambling on the large majority of Market participants that have just been caught throw it in an unmanaged passive index and ride it hello everyone Chris Marson here of Peak Prosperity with another edition of Finance you and back with Paul ker hey Paul how are you today hi Chris I'm doing great good to see you I am I'm really excited for this talk because so much going on um but before we really get started with like the data and stuff like that Paul you want to know this is this is the most this is a very typical cont conversation I'm having now so in my business I get I talk to people all the time all different strata uh there's no real Rhyme or Reason to it everybody's sort of awake I guess so so maybe a little selection bias but here's a call very typical Chris I'm pretty sure something bad is coming and I don't know what it is or Chris I think something's coming but my wife who I really trust who's more intuitive than I am is yelling at me that we got to start getting more prepared so it's this Vibe I don't know what to do with it I'm just offering it out there I know you talk to a lot of people as well I just wanted to bounce that off you see if you're having conversations like that too no actually I'm having a lot of conversations that way not not only on a national level but even on a local level so you know one of the things that the the unbelievably intelligent followers that you have through Peak Prosperity like I mean I mean that seriously um I expect them to understand some of the issues that are taking place right because they' followed you you do a great job as an information Scout and notifying them on the local level and our footprint in the North Georgia Mountains that's more of a representation even down to Atlanta of kind of what the average American is facing because there's a lot of people that just don't want to know or don't know that they need to know yet but it's it's interesting you bring that up because Holly and I were talking just a couple of days ago my wife Holly about that there's a sense of unease that people are feeling they're feeling it in their budgets they're feeling in the grocery store they're feeling it across the board and it just does doesn't make sense to them and I'm actually getting a lot of phone calls from clients that I've tried to local clients that I've tried to open their eyes to what's taken place and they're like I'm ready to have that conversation now so this is something that that that I believe is common Across the Nation right now people the average person just doesn't know how to put their finger on and even those of us that are paying attention to things like myself I don't know how to put my finger on that that that anxiety or that Guillotine that it feels like lik you know making the hair on the back of your neck stand up but there's there's something there's something there yeah yeah and I guess it really doesn't help that we have so many weird things happening all at once it's almost too much to keep track of at this point in time uh you know I've been just this week I've had interviews with lawyers who are having these bizarre cases where the Judiciary seems to be off the the trails of of normal decency where where uh you know all the work that I did tracking the migrants working through the migrant issue not immigration migrants and still talking with those people crazy stuff happening there talking people who are inside some of the organizations and they're very unhappy with how things are and it just nobody feels like they have agency to do much about anything um so I guess we're all just sort of like preparing as best we can uh correct well and I think sorry go ahead no no I mean it's just I was going to say we're just getting ready for something but we don't know what it is and that makes it really hard to plan you know is the hard part it does well and I think also there's a recognition that it seems that we don't necessarily have a rule of law anymore okay and even and I was surprised because you know Dave Ramsey does phenomenal work in what he does as far as helping people budget and things of that nature but even he went on a ramp recently that basically this is upside down world you know what what has always been right is not necessarily considered right anymore so um you know and and it doesn't feel like that feels like there's a different set of Justice there's rules for the elite that don't apply to the average individual right so I've actually heard a couple of people say do we even have the rule of law anymore in their business world of some of the thing that they're seeing take place and some of the double standards that are taking place in the political process and it it's heartbreaking now I don't I mean I notice those things but that's not where I spend a whole lot of time where I can talk a lot about what they're what they're mentioning but that's things that people are comments people are making to me that that I don't know that I've heard in 26 years working with individuals before this that's fasinating yeah yeah it's um I don't know how we got here this quickly but but here we are and uh you know how so I'm curious and we I want to talk to you about Japan I want to talk about markets I want to get into some Financial stuff some economic stuff with you but before we do um I'm just curious how do you like do you have any um anonymize them I know you have to do that but but do you have any cases of of how you're helping people I me I don't know how you do it how do you how do you coach somebody in this environment with I know you always have to make decisions with imperfect information but this is upside down information you know right it's crazy I I'll tell you quite frankly the more our eyes are open to what's taking place and and the more you understand history the harder it is but the reality is one thing is Chris and this is the conversation I have with a lot of people just you know you may disagree with me no you may agree with me on this but in 20072 2008 my eyes were open to by God's grace we were running a risk-managed strategy so we were able to guide our clients through that well I didn't really understand the importance of it it just made sense to me because once you get into retirement and you're in a distribution phase right if you have a million-dollar portfolio and you take a 50% decline well now you got $500,000 portfolio and if you're taking 50,000 a year an income off of it you're never going to recover that so so that to me made sense and as being a fiduciary and helping people uh recognize the risks that's what drove me to a risk managed uh strategy I didn't want somebody getting wiped out on my watch after seeing what happened in ' 08 and and my eyes that were open kind of prior to that because you were already educating people and and warning you know I think what is it you put out yesterday about kind of your outlay in the future and you've been spot on as far as the things that are happening and um so so from that point forward you know I didn't think that we would be able to make it this far I didn't think that our leaders would be able to cross all of these boundaries you know and essentially do whatever it takes and to heck with the consequences from a long-term standpoint to be able to make it this far so I keep bringing people back look I know you see these things but we don't know if it's 5 months in the future 5 years in the future or 10 years right and you've got to be able to live so we need to do some planning let's get in there let's do that planning to find out how how much you need how much how many assets you need set aside dedicated to providing the income that you need in retirement based on the income that you need and then if you have excess right if there's x amount of dollars left over then we can really build in those safety nets because we've got to be able to help people be prudent with assets that they have so once I explain that to people come back to it so here's here's the results and it's it's so powerful because in our industry too many advisers are just asset gatherers right they want to get out there and say Hey I want to gather your assets you know hey you want to retire awesome how much money you got this is how much income that it can pay you they don't talk about inflation they they talk about their portfolio strategies hey let's go golfing together they build the relationships they asset gatherers and salese what our responsibility to do is help people develop a plan and show them the risks that they're going to face in retirement and stress test those situations so that they're able to make decisions quicker than the average person when they get there and I can't tell you how often I run into somebody that says hey you know I just want I'm coming to to get a second opinion from you I've got a couple of friends that work with you you've done a good job for them you know all these advisers told me that it's okay for me to retire and then when I run a plan for them based on the incom that uh that they need it's a completely different picture so a couple of things one one of the things I ask people before we get into the planning process is how much after tax income do you need on a monthly basis to live the lifestyle that you're living in retirement consistently Chris since 2007 that we've been using this particular program 2007 2009 somewhere around there people don't know that answer right they think here's how much asset I have how much income can you generate for me off of that that's the wrong way to go about it in retirement we need to know how much you need on an after tax basis so two scenarios one a couple answered that but because I was the first that had asked them that question even with the people that they're working with uh from the time I got the information ran the plan and we get together the these numbers aren't exact but their income needs had increased from let's say 100,000 a year to 130 so they said I got to thinking about it really hard and I need more income to live on than what I initially thought like I really didn't realize that how that's how much it is well the goal was to retire in two years essentially so the sad part of my my job from time to time but it's the crucial part of my job is my job is to tell people the truth of their situation and be able to demonstrate that right we have an unknowable future but we can take the assets that they have today they talk about the risk so we get done with the plan and essentially in all of the historical analysis that we looked at 7 and 10 times they would have failed they would have outlived their money okay now you can imagine the shock right because youve got this goal uh painted but I asked the question I said okay what would you rather do would you rather work longer or would you rather take less income and after some serious thought they said well we would rather work longer than the than to reduce our lifestyle dramatically so by the end of that first planning meeting I was able to to give the outline of a plan that says yeah you might have to work you know from instead of 6263 to 6768 but you know now you've got a 95% probability of success the only thing that would have taken you out would have been a major decline in the Great Depression and if you got a risk managed strategy that can reduce the probability of that causing some problems so that was one SC scenario they were so grateful messaged the next day and said hey you're the first person that we've talked to that's actually had this kind of conversation with this and we've talked to a lot of a lot of advisers in the industry and of course I'm thinking you know because our industry is designed to gather assets you know let's get it in the second scenario which is these are a whole lot more fun to begin with right so uh I ran into somebody here not too long ago they've done a good job saving they lived their life sacrificing they've made a lot of sacrifices and they've been very good stewards of the resources that they have so they have an income level let's just say at $60,000 a year that the budget that they're set on and they're enjoying their lifestyle there right because they're they're already retired but once I was able to stress test them against you know three and a half 5 and a half 7 and a half% inflation I'm like okay you can actually live on a lot more than that and and they were so relieved because you know their initial thought was like look um you know we thought that might be the case but I didn't have any way of demonstrating it and I didn't have any way of of having some evidence of that was the case and again on in our industry there there's an incentive to hold on to those assets because if they're not going out the door right you've got more assets under management more fees things of that nature so that's the weakness in our industry now there are a lot of really good advisors out there on the modern portfolio theory that compare okay not saying that there's bad advisors but there's a fault in our industry just like the flccc is able to to demonstrate clearly that there's a fault in the healthc care industry that that doesn't necessarily serve the client in the manner that they most need to be served because of that conflict of interest and of course I you know don't get me wrong I uh we're compensated of the fees of the asset that we manage or hourly depending upon the client circumstance mostly on the fees so you know yes there's an incentive there that's why you disclose those fees and you talk about it but the planning is able to demonstrate to a client where they need to be stress test for the future and say Hey you can stay this conservative allocation but if we get 5 a half% sustained or 7 and a half% inflation this is what you need to do in your portfolio allocation to combat against that so I I love it it it's kind of GE sitting down doing the plan with people from time to time and I have people that'll put push back and they'll be like well I just want you to manage assets and I'm like well we can do that but you don't go to a doctor and and ask them to treat you for something without looking at your blood work or your medical history so I need to see that so that I can get a situation of your situa get a snapshot of your situation and then you know show you the options that you have to be able to accomplish your goals or or manage the resources you have prudently oh that's why I love working with you Paul because you're doing you're what obviously the right thing to do so you are you know there's a difference between a job and a vocation right if you're a job somebody comes in you write a prescription for an SSRI and send them out in five minutes you know yes if it's your vocation you find out what the underlying thing is because you know they've got a set of symptoms you're going to figure it out right so I see you take this as a vocation and that's a great thing um I think people are hungry for that I know I am I'm I'm I'm ready to be able to trust people who are going to be doing the right things you know but it's just it's not it's not how things you know are uh these days unfortunately all too much no right so and unfortunately and everything in our society drives Us in that direction right like I I I get a I really enjoy X for example to keep up with information I don't but I don't engage a lot and I shop Facebook Marketplace to see what's for sale locally and I see what's going on but I don't engage a lot right yeah because the problem is you know and I think so much of our society it's like hey this is the lifestyle you should be living and no matter where you are you see somebody who's living a greater lifestyle billionaires always got somebody that's you know got more billions than they do you know and if you're the number one guy in the world then you know somebody's looking to knock you off of that position so unfortunately too much of our society incentive is driven by I want to make as much as I possibly can and they see people as a stepping Stone where there was a period of time in the past and what our profession should be is is what you do if I can make your life better if I can do a good job for you and help you choose the path of wisdom everything else will take care of itself and uh you know that's one of the things why now now we we do have some kind of minimums in there but basically we serve people not money and that's why we built the infrastructure in place to be able to serve less complicated situations to be able to help people uh whether it's a really complicated situation those are the ones I tend to work with the most but the less complicated situations we can serve them and know that they've got a good plan in place and they're going to get good service and you know because we want to control the things that we can control because I can't control what our government leaders do the only thing we can do is adapt our asset management style to whatever wrenches they try to throw in the system yep yep all right before I turn to Japan if anybody wants to set up a consult with Paul and his amazing team just go to Peak Financial investing.com a very simple form sends out an email and you will be contacted so that's the process so far it's been working pretty smoothly I'd say we got a a good thing going here so um let me turn to this uh I got to talk about we're gonna talk about Japan now is that okay oh absolutely big deal actually it it it is a big deal so um I said Japan is cooked but this is really about tracking the everything bubble I'm not the only person using that language now but this is a big deal the bank of Japan just the other day they hiked rates they hiked rates the first time in 17 years and did something called abolishing yield curve control sounds a little wonky but what they're trying to do or have been doing and I guess they've they're kill killing this as an idea yield curve the yield curve is the difference between what you're paying on 28 day paper one year paper twoe three year four year five year that that there's a curve of yields right and so they're they're controlling that whole curve you know thinking Masters of the Universe we can we can just dictate the price of money at any point in time you know good things happen um so this is crazy look this is let me get my my little my little uh laser pointer out I guess this was the last time they hiked here in 2007 right that was a quarter point you know just to get the scale here they went from 0.25 to 0.5 and that was it you know that's that's astonishing to be then down and then it's been negative for this whole time and now here it is the new Range zero to 0.1% this is on 10 years right uh so uh oh no this is their uh is this 10 is this 10 years this the this must be the short end which end of this is this I can't tell because they have their yield curve controls been so flat um you know when we talk about the FED they're always talking about the short-term rate you know the overnight rate but what are they setting here on this policy I'd have to look that up do you know offand you know I don't know offhand it's my understanding it's a short-term policy I don't think it's the tenure but I didn't I glanced over that when I was no it must be short term because the 10 year last I saw was already up at like 08 or 0.9 or something so yeah this is the overnight rate anyway it's been negative what does negative money mean well that means if you earn produce value save they're going to destroy that value for you I don't I don't even know what negative interest means it means your money has less than no value over time it's a bizarre concept but I think they're behind the curve Paul because this is we just had this report just the other day that Japan had a blowout wage result largest pay hike in 30 years this is a 5.3% year-over-year increase which you have to go back to like the 90s to see something like that so so if they're doing this because they they realize they have to start trying to control inflation they are way behind the curve on this I I'm sorry to tell them but 0. Z to 0.1% is not going to get the job done it's just not gonna happen so so the rest of the context is uh looking longer this is the last time they had in uh wage hikes way back up there in the 90s where they had interest rates if you can believe it of you know five six% you know um any rate I want to pay attention to this little this little Mesa right here that's just that's 07 that's 2007 where they took it from basically zero all the way up to 05% and then had to immediately Retreat you know and uh just remember that 07 we'll talk about that in a second um immediately this is the Japanese Yen this is it getting weaker the higher it goes this is in USD terms they've been holding it hard under the 150 Mark here notably here in November where we saw like stocks and everything going up like crazy this is when the Yen was also being driven down perhaps unrelated maybe not but we can see here it is now back at its all-time weakest and this is all-time weakest uh for uh gosh two three decades now this is what's called offshore Yen again getting weaker as it goes this way this is comparing it against the uan the Chinese Yan and now this is it hasn't been this week against ywan I don't know ever potentially but very long time and the 2007 matters because the last time the bank of Japan tightened in 2007 we also call that the great financial crisis just in case could be unrelated could be related um so here we are tightening again after this you know crazy look crazy run Titan crazy who knows um so against all of that this is uh gold in Japanese Yen terms and this is this beautiful very longterm cup handle and explosion um this is the the price of gold in Yen obviously it isn't this dramatic in dollars but it's kind of cap constrained in dollars as much as they can but not in other currencies so before we go any further that's what I'm seeing in the Yen and and um I actually think this is a big deal what what are you making of it I think it's a big deal too and of course Edward Dow uh tweeted that he believes that that this could potentially be the fuse that Lit the fuse to cause another Global financial crisis and the biggest reason you know he had his own reasons in there and I didn't retain them specifically to memory but you know being the first time in 17 years I mean Japanese investors have had to to send their Capital all over the world because negative interest rates means that I'm going to give it I'm going to put it in the bank and I'm going to pay you to hold my dollars right so I'm going to give you 100,000 let's say if just to keep Mass simple if it's a percent a year negative rate in 10 years you're going to pay me $90,000 back just to hold my capital okay but the bank's going to be able to go out and do what they want to do with it well theoretically I guess that's better than holding it home under the mattress because because somebody could break in the house or it could burn down but that's what they're doing so Japanese investors have looked around the world and said okay we need to send our dollars elsewhere because we can earn a greater rate of return somewhere else so for example somewhere in the neighborhood of Japanese investors you know as big-time capital exporters I don't know what it is for other countries but they've got north of a a trillion dollars in treasuries that are invested in the United States which is foreign money uh you know they have sent to the United States so as a Japanese investor you've bought foreign us treasuries okay so that's because they didn't have any other alternative well you can imagine loaning money you know if you go buy a cabota tractor they've always had interest rates that are far better than anybody else if you borrow something because they're better off to send those funds over here the question is if with that great a rise in earnings and wages increase if they're behind the curve and they have to play catchup what happens with all those dollars that have been sent in the foreign markets by Japanese investors when it becomes more attractive or just as attractive to come back home and remove that currency volatility risk so so I agree Edward's right I believe this is a big deal it surprised me that the win that the Yen weakened upon the news uh but you know there's times where we've seen the markets go up up initially on the Fed rate you know fed news and then they turn and go down following so you can't trust the initial reaction to begin with but this is this is a big deal that has a uh the potential to add a tremendous amount of volatility to a market that has unbelievable weakness under the surface everything looks good on the plastic face but underneath the surface of the market there's there's tons of Carnage taking place right now yeah and um uh we're still in the in the grips of this everything bubble you know everything everything so you and I have t discussed none of these are specific stock recommendations for against of course but you know we we've looked at those individual shares that are have the Tulip sort of bubly shapes right and I've read all the things where people try and explain to me why it's different this time I'm too smart and old to fall for that uh I know it's never different this time um and and I'm I'm watching this in in multiple different markets so I don't wonder if if this isn't you know the everything bubble you and I have discussed before but we've been trying to print our way to prosperity and as we've discussed I I really hammered uh Luke Roman on this in an interview you know both before and after the record button was hit and um like what's the plan that's the thing that's missing like what's the plan so if the if the Federal Reserve could say oh you know we're just going to create this everything bubble so that if we'll hit this level of prosperity Paul it's just one more can kicking Adventure you know it's just we just can't have stocks falling today you know it's like never a good time but I've I've searched everywhere it's like asking somebody like who's actually running the White House and nobody can give you a definitive answer like we ought to have we should know this like what's the plan and it frustrates me because I watched Rome pal chairman of the Federal Reserve get in front of like Congress or the Senate and nobody asks him like where are you going with this like like where does this what's what comes after this like how does this settle down and get us to prosperity there's no plan that's the problem I don't think there's one or they keep it real hidden I don't know well if there is one you know the question is are they backed into a corner and they're they're doing what they can do to survive right and today's society people unfortunately are typically unwilling to admit that they made an error unwilling to admit that they're wrong they think it's the end of the world but quite frankly the smartest people I know admit that they make mistakes all the time and and um so because nobody's perfect and you can't learn how to do it better unless you do make a mistake right so you know I don't I don't know Chris there's you know is it political I I'm not sure but I just don't see how this is sustainable because you take housing for example one of the a major Grumble that I that I'm hearing especially because my kids are all in the age of you know 23 to 27's where their friends are they're they're making good livings making really good income both both my CH children are doing well for where they are and they're like how in the world does anybody afford to buy a house and how does anybody afford to live right we we're at a breaking point where either houses house prices have to come down cuz still where we are today what 75% of the population cannot afford to buy the median home okay so so either house prices have to come down or incomes have to go up dramatically well if incomes grow up dramatically or a combination of both then corporate profits theoretically are going to have to come down to absorb that and if artificial intelligence is the answer for everything then where the job's going to come from to be able to to provide you know provide those higher incomes so something has to break and my concern is is that they're trying to kick the can down the road long enough until there's a trigger that something that happens on a global scale that they can point to and go see it's that fault not ours right that that's my biggest concern that that's what I'm concerned about more than more than anything because that makes it harder for us and a prudent in in managing assets prudently and managing our resources individually to to prepare correctly and in and in a timely manner so let's uh speaking of that house thing because I feel bad for people in your my kids your kids the whole generation right so so this is a a piece from Ben Hunt on X on Twitter CNBC wrote Oh weird home prices Rose 2.4 times that's 240% faster than inflation which is understated since the 60s the study finds so wow and um you know Ben writes you know what that means is that Washington and Wall Street systematically mischaracterize and intentionally under report the cost of living it is not a red blue thing it's a power thing um 2.4 times faster than inflation that's nuts that's nuts it's nuts and I wish I had the stats I don't have it on my desk here I'm looking real hard to see if I do but you take the inflation adjusted income since the 1980s I hate even I hate to give a number but this is just hypothetical because I can't remember exactly it's so 60% or something like that that but the median home price is up 280 something perc you know right in line with that so it was interesting what Ben Hunt said it's a power thing uh is why they're hiding it I you know maybe it is maybe it is but it's it's sad it's heartbreaking because the American dream for the large majority of the generation that's up there now is completely out of reach and the worst part is is for the baby boomer generation you know it's hard to understand somebody else's pain unless you've walked a mile in their shoes right so unless you've lost a child uh through an accident you can't really understand what somebody's going through so it's really hard for the baby boomer generation to understand what this generation's facing right now because the thought is is we just need to work harder you need to save a little bit more don't get me wrong you know that that can be the case but the reality is the asset the the everything bubble has price these kids out of the American dream at this point and unless you have family that has resources that can assist you in making down payments on a home and assist you in getting through college without a massive amount of debt and assist you in getting started you're falling further and further behind and furthermore if you make a mistake and you're in the middle class it's a heck of a climb to upper middle class and it's an even harder climb above that you got to sacrifice a lot but if you make a mistake and stumble you can go from middle class to Absolute lower class and homeless at the snap of a finger in today's society especially depending upon the city you live in and the cost of living there well you know the Boomers would say listen kids just shell out the $16 for the Grateful Dead ticket follow them around for a while you know it'll all sort itself out they're like dude it's 2000 to go to see Taylor Swift totally different environment right right just it's not it's not it's not where you grew up right so yeah but but the point I I think that you know that power thing this is something I really want to impress on people because this is really important and it doesn't get enough AirPlay this is not an accident this isn't like people shrug and go oh why our house prices up 2.4 times what a mystery it's a policy that's what angers me here's my Virgo coming out again you know from having the scales on horoscopes but it it really bothers me Paul because it's a it's somebody's made the decision an unelected person has made this decision because nobody elects the fomc and they've said you know on balance we'd rather have house prices going up than not because it has a wealth effect and we have all these papers from our internal phds saying this is a good thing all you'd have to do is not be a or get out of your little Ivory Tower Princeton bubble and walk out into the street you know it's it's like getting a lecture on inflation from Paul Krugman who last was shopping in 1943 I don't know right you know but they just like it's they are literally sacrificing the homeowner and the home building and and the home starting the household formation of an entire generation because they have a paper that says you know it's on balance it's better to have house prices going up than not and so they engineer low mortgage rates to make house prices go up and then convince you the way to get ahead is to borrow against that because it's an asset my friend Robert kosaki he disabused me of this he said Chris you know in his book Rich Dad Poor Dad too he says it very clearly he said Chris an asset puts money in your pocket a liability takes money out of your pocket your house quick asset or liability clearly it's a liability a big one yeah right if it's a rental house I own totally different story right if it's cash flowing positive but otherwise you know we've been sold this bill of goods that that you know that our house is an asset that we can tap for a line of credit you peel all that away it's just away from for you to get in deeper and deeper into debt while we're sacrificing the generation behind us because they can't even form a household so I'm against the whole thing I think it's I think it's shortsighted and greedy and kind of sinful greed a I agree completely and there's a few simple things that could be done from a legislative standpoint to stand up and make it easier for the average American to own a home first don't let institutions buy residential houses okay there you go I mean we we don't need to be competing our kids don't need to be competing with the black rocks of the world they just don't okay because because one they're they're somewhat price and sensitive okay people have given them money they go in they really don't care what they pay for it they just want the simplest thing so let me buy the whole neighborhood okay uh second thing is um you know foreign instit foreign entities coming in and buying residential homes like I mean surely there's ways that that can be done but you've got to have a higher standard to cross and then take some of the money that we're sending overseas and reinvest it back into our infrastructure you know and have you know I'm I'm for been able to AB uh give tax incentives for affordable housing I mean I had a aunt that ran the Housing Authority when I was younger and not as far as I know there's not housing authorities around but they were there to be able to provide affordable homes for people that were on the low income side so we need to be reinvesting back into our own country instead of sending all these funds overseas to try to you know put our woke agenda on the rest of the world not not mine and yours but you know what I mean I would go further I would remove almost all the building codes do this for a year and just see how it works out you know and and because because I was reading something that said that uh before you even put a shovel in the ground on a lot you're usually Out close to $100,000 MH right even before you do anything right because that might be you have to do the sewage hookup or you've got to actually have a you know a septic system in or you got to put a well in but there's the zoning there's a this there's those permits there's that you know you haven't even built the house yet um and I was talking with a local Builder and he said that you know it's somewhere between 250 and 400 a square foot now to put a house up right yeah okay a th000 squ foot house which is exceedingly modest would be somewhere so I can do the math in my head somewhere between $250 and $400,000 that's insane it is yeah and and and you're right the the regulations that are coming through the building codes some of them make sense right like I get it if you live in a neighborhood and you got a pool it is a prudent thing for yourself and for any young kid that runs around that neighborhood to have a fence around that pool there are people that don't like it especially live in the country but I think people understand that but some of these ridiculous codes that you have out there all those are is no different than what's happened in the halls of Power with the military industrial complex you've got lobbyists who have gone in and they've stated you need to you know uh push this regulation through in behind the scenes oh may I don't know that they give money I hate to even go that far I'm sure it does happen but it's all about leg legislation to drive sales of products that's what lobbyists are supposed to do you know and it still amazes me to this day I grew up in the lumber business right my my grandfather was in the uh in the lumber business my my dad and his brother owned a lumber supply at one point so I grew up you know in high school stacking Lumber delivering pressure treated wood well there's a family Pond that had a deck that was built in 1987 okay fours everything that's there with all that pressure treated wood that's there now I know nobody likes the pressure treated uh process that's out there now but we didn't know anybody who had any issues from that process now I don't know all the chemical you know all the other stuff behind it but what I can tell you is those that deck and those fours they're still there from 1987 to today and you can still walk on them now they're starting to rot a little bit but you know the new pressure treated products they're done and I mean they don't even last five to six years and you got to replace the whole back porch is that really about selling more Goods which is not good for that average citizen or homeowner or is it about protecting the environment somewhere there's got to be a fine balance in there MH yeah yeah well um you know there are a couple states that don't really do building codes and I've been to those States and everything seems to sort of stand it's fine because I you know I I trust that people will not build a house that's going to fall down on their own heads or if they do then it does and that's kind of on them or if they go to try and sell it and it's a structural disaster they won't be able to sell it so these things sort themselves out anyway you know so so in in my state of Massachusetts last building code upcycle there was this many new codes added in when I first started building you know CU I did this as carpentry and and framing during college the whole code book was this thick right you have to use this you know 12 penny nail for this 10 penny for that this many per sheet of sheetrock there weren't that many you could learn them pretty quick now it's that that's the addition so the whole stack is like this now you know and and you know they they said you know the roofs now have to be able to withstand like these killer loads like you should be able to put elephants on them now because lobbyist got in or something and it doesn't matter if you point it like these there's roofs from the 1700s here where you go up and you look inside the attic and there's like a literally a round they didn't even bother shaving it down like they maybe they took the bark off but there's like a round stick you know and they're four feet on Center and somehow it worked itself out over the last 280 years you know I'm thinking it was good enough to stand the test of time right yeah now you have to have 12 inch on Center you know number number one you know 8 inch 2 by8 whatever blah blah all that stuff so yeah but it makes it all stupid expensive obviously and so back to this point about how it's all sort of comeing to a head here I do feel like our our monetary fiscal train is just out of control right now yes and the question is what do you do about that um and how do you protect yourself and I know there's a lot of questions about that I don't have any good answers I I I've I'm starting to investig so you know you and I have talked about the the great taking a lot and we're still working through some things around that um I've investigated that to within in an inch of my life I think I'm going to do the sipc this this week um and I'll be covering that so we can see what is and is not really involved there uh in terms of coverage but beyond that um it really is pretty obvious to me that there's no plan that I've determined they're just going to keep trying to this whole thing together with spit and bailing wire and uh and we have to get ready for what happens if things break and um I think that gold price in yen is telling me what what they think about gold in Japan right so pull that some sometimes while you're pulling that up sometimes those that are searching for wisdom will have a typ in Shadow or something that is an indication that they can you know is a warning per se so I fully believe that that is a an educational chart that is a warning and showing an opportunity for a US investor but uh when the US when gold and US Dollars completes and breaks out of which you could argue it has already but it's not a clear break it's not a it's not an absolute clear breakout of the up and handle but I believe that's coming to the United States not a recommendation to go buy it you got to talk to an adviser I'm just speaking freely for educational purposes we don't know the future but I believe that's coming to us investors um that are patient I agree I agree and I do think there's a market correction coming because of charts like this this is a weird one for me this is the market cap of the largest St stock relative to the 75th percentile stock um and so it's just a ratio just sort of it's just telling you you know what's you know how concentrated is a stock market in a small share so we've heard about the fangs or the Magnificent 7 or whatever but this is kind of interesting because if we look at this um and get my little laser pointer here we're in all-time brand new like this is worse than than back in in the Great Depression right that's right you know this was a peak here 1932 another peak in 39 1973 um 2000 way worse than 2000 2009 this is interesting so it's just very heavily concentrated and when you get into these concentrations like if we see um like what happened back here in the 70s 1973 that's the nifty50 right there that's pretty equivalent you know there were 50 top stocks kind of like our our magnificent 7 the nifty50 um so that's interesting to me because when you look at this nifty50 Market top here where the Dow with the nifty50 combined had $1,050 combined share price and collapsed back to 600 so that's 40 40 plus% loss right there um is what happened after we hit that Peak so the question is what's this peak mean relative to that Peak is this more important or less important or things just different now is this is it is there a new aeropol where big companies are just the way it is well I is it different this time if if it is different this time than the past Century 100 Years of evidence you can throw out the window for everything else so so yeah yeah maybe it's bigger this time because of monetary stimulus it'll certainly be somewhat different because they don't follow the exact pattern maybe we set new records in all of those metrics before this is over I could argue that just because of the severe monetary expansion that occurred during the covid stimulus but the end result I do not believe that it's different this time and and and the reason is Chris these are human nature-driven events right so we still haven't we still haven't solved all of our weaknesses in our human nature you know we always we all know the older you get don't make major decisions when you're really emotional right at least count to 10 before you open your mouth the level of speculation in the market and and the lack of consequences is what occurs and leads to the Tulip bubble to the housing bubble in ' 07 and now the the everything bubble so I do not believe that it's different this time because I believe that although history doesn't repeat itself at Rhymes and our society doesn't value teaching history in our school system anymore and if they do they want to teach an alternative history but the reality is history is there so that we can learn from the mistakes of the past and press on to the greater achievements of the future and if we refuse to consider the mistakes of the past and and and all that does is indicate periods that were similar to this in the past I don't think it's different this time no I think the pain the longer this goes and because there's so much speculation out there I believe that the pain of this one is going to be enough to Mark future generations for quite some time well uh as we're recording this I'm I'm seeing that um here's this is just crazy to me so stop me if you've heard this one before fed opens mouth stocks go spiking in response to that yeah it's just it's one of these things that just has to happen so so fed opens their mouth and just it it's just automatic at this point that's the bubble behavior is just so ingrained there is no other response that makes sense you can trade this one as reliably as anything else and what did they say nothing stood patent rates that's it yeah and as a matter of fact that the only thing that that was noteworthy is we went from if I remember correctly eight uh fed Governors that were expecting so that they changed the dot plots before we had eight that saw 50 bips 50 uh uh bips cut 50 basis points or two quarter per Point Cuts in the year now we've got nine so right so it's it's technically a little bit more hawkish nine a little bit more hawkish so that takes us from three quartero Cuts I stumbled over myself basis points and cuts I was caught in between but three quarter point cuts to two so from 8 to nine no change for rates barely any change in statement and then the market blows out to new highs right like all they needed to do was say that they're going to give the market Cuts back at the end of October and that initiated the momentum that's feeding on itself at this point for the markets I mean that it's just um the level of speculation and cognitive dissonance is absolutely crazy now don't get me wrong the you know some things are holding up better than I expected but the markets don't justify this right now I I don't know that they do on a fundamental basis but uh Luke's point when I asked him about this Dynamic he said you know the if you rotate the cube and you and you look at it and you say what what is the market saying it might be saying the FED is trapped and we know they're going to print yeah that's it we we know they're going to have to print so the it doesn't matter whether stocks fall or climb or spike it doesn't matter they know what comes next the fed's going to have to print and print hard uh just to start this whole thing you know and he was talking a 10x Port uh balance sheet expansion like you know fed's balance sheet goes from 7.5 trillion to 75 trillion like you know most people excuse me would say oh that's insane more insane than going from four and a half to 9 trillion no it's not I mean and and the worst part is is they keep doing larger amounts of the same so so you know and Luke's very he's a great thinker as well and your interview with him was wonderful by the way and um so that that's one of the reasons Chris and this is my concern and my working theory has been or hypothesis that we're going to have an accident markets are going to drop 30 40 50% the response on the other side is going to be what cracks our currency and that's when the real pain comes okay now now one of the things I have to be careful is it's a working Theory and you have to pay attention to the data and the information as you're going along so you're always looking up and kind of looking at it and testing it and saying okay because it's my responsibility to help guide clients we've got our tools that'll point us in the right direction but I always want to ask questions cuz if you get your mind set on one thing that's probably not what's not going to happen but I keep asking myself when you make that comment if these markets are to the point that hey the fed's going to print anyway so bad news is good news good news is good news okay then why in the world would you want to own any other asset besides stocks why would you want to own treasuries why would you want to own money market why would you want to own anything else and that's why I don't believe that these are the leading edges of hyperinflation yet but I keep asking you know hindsight are we going to look back and go that was the turning point and you know it's foolish to bet on that right now because it's pure speculation and and it's foolish to speculate in an environment like this you have to diversify but I keep asking that question because why would you own anything else if these are markets that'll never go down again so on that front as stocks go up though they get more expensive relative to earnings and so then you get to this chart which I this one actually surprised me uh from the daily shot they they put out great charts there this is S&P 500 forward earnings yield so if a stock yields 3% Yi that's its yield compared to the 10year treasury yield which is yielding right around 4.12% today so you subtract that 10year yield from the S&P forward earnings yield and we're going to zero So eventually uh when it goes below zero you're in a really weird territory where you're saying I'd rather own stocks even though they're not yielding as much as something that has no the so-called risk-free asset which is the 10year treasury it's the riskiest of risk- freest of of assets right that's crazy to me you know you have to you have to be fully speculative to believe that it's worth you you're holding stocks when they're negative yielding compared to to bonds because you're thinking stocks have to go up in price or earnings have to really blow out one of these two things has to happen yeah something has to break and that's one of the thing that John husman does a a phenomenal job pointing out in a couple of his most recent letters says that basically you know there's a high probability treasury Ys are going to outperform the market over the next 10 years you know so so when your risk-free rate of return is greater than the earnings yield on the S&P 500 the question is is why would you carry that risk either one you know there's big institutions out there that really think that we are headed into currency crisis hyperinflationary event sooner rather than later which I don't think that's the case I think this is just simply Hur psychology you know desperation and a lot of gambling on the parts of a lot of Market uh participants and and unknown gambling on the large majority of Market participants that have just been caught throw it in an unmanaged passive index and write it that's a very dangerous thing to do right now it is it is and uh it it's uh it feels like being being in a risk-free people I I don't think have Something's Happened with our risk sense of risk in the markets not to individuals right it's like that scene in men and black no no persons are smart people are a dumb panicky animal and you know it right whatever Tommy Lee Jones says that right you know so I don't know what's going on with markets you know because it just it feels like the the the nobody like there's like there's like Risk is is zero we're back to that but I've been here before Paul I saw this in 2000 I participated in it I was dumb then but I learned tuition's expensive in the bubble school but then when I saw it come again in 2007 I knew exactly what I was looking at it was just a different asset class oh it's different this time Chris I'm not making more land houses are different I'm like no I'm pretty sure it's the same we're there again we're there again you know it's interesting so 9899 during that period of time just starting get getting started in the business I had one of the old-timers that that I'm grateful for and I try my best to be able to be a mentor for other people coming in the business too he made the comment he says you don't have a lot of responsibility as you're building your business right now he said I do I do want you to pay attention because look at the foolishness and the craziness that's taking place and and because you're going to see an unbelievable amount of pain on the other side of this and don't forget that because these are cycles that repeat throughout history and I will tell you this I've thought about it and thought about it and thought about it for whatever reason my mind keeps going back to that time and the behavior that people were undertaking the the arrogance in in the mainstream media investors out there you know that was back during a time where CNBC Jim Kramer uh was calling for the resignation of Warren Buffett right he you know the comment was he's too old he doesn't understand the new economy so you know that same thing is taking place right here but it's not just limited to tech stocks I'm seeing it in every asset class and that's the most concerning thing about it because I don't you know there are asset classes that are underpriced right now there are asset classes that look great okay but if we get a big downturn in the market people are going to be selling anything they can to cover the massive amount of debts that they have out there so all asset uh more than likely all asset asset classes will go down together some will do good during recessions there are those those are the ones that we want to look for but but there are a few out there right now that are long-term opport unities that are going to recover a lot quicker than everything else so you know for the investor that's looking and patient and looking for the path of prudence this is a once- in a-lifetime Opportunity uh for those that are ready willing and patient enough to make the changes that need to be made to take advantage of it well uh I think uh for a lot of people maybe the decision's easy because they would like to have somebody else managing their money and and because it's a full contact sport because I think people should be working on planting a garden buying some cows and chickens if they can put them in the space and figuring out how to sort of Batten the hatches a little and just become as self-reliant as possible those things all take time so where do you want to spend your time that's right hey speaking of planting so so Sunday is the first time ever that I've planted off the Farmers Almanac in the Lun lunar calendar so oh interesting yeah so I I started all my seeds for my Peppers my tomatoes and kind of like I do my chickens and my eggs I've I've seed enough to where I'm going to give them to all my friends and family that want to grow but uh I had some notes on years I've had in the past so I'm really curious because my grandfather planted off of the Farmers Almanac and the in the lunar calendar and he had massive Harvest so I'm curious to see if it makes a difference this year oh oh I'm I'm dying to know the the outcome of that yeah I've never done that before I plant when I have time you know hey it was funny because my my staff were like they came and looked at me and said are you okay I like yeah they were like you've never uh blocked off a day of the calendar so that you could go plant your garden what's up with that like are you really going gardening I said no no no seriously I'm doing it off the lunar calendar so I blocked it off to make sure I could go plant that day oh that's great I'm jealous we're we're not we're not quite at the planting cycle you're you're uh critical what 800 mil South me I guess probably so and I'm just seating so this is inside I haven't planned them out this is just getting started yeah well good stuff all right well Paul thanks so much for your time again today sir it's good talking with you as always always an honor Chris always an [Music] honor hello Chris Martinson I'm the CEO of Peak Prosperity and also Peak Financial investing and after watching that you're probably wondering well what do I do with my money look you both deserve and need somebody who can talk to you about what's really going on in this world understand the situation as it is not be steering you towards certain things that don't make sense 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