Peak Prosperity - Market Volatility is Sending a Signal

Episode Date: March 28, 2025

Market volatility isn’t just noise—it’s a signal, and in this episode, Paul Kiker and I break down what it’s really telling us about recession risks, the Fed’s role, and the hidden dangers lurking in the derivatives market.Click Here for Peak Financial Investing

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Hello everybody and welcome to this edition of finance you I am your host Chris Martinson of peak financial investing.com here back with Paul Kiker of Kiker wealth management. Paul always a pleasure. Always a pleasure Chris. Happy to see you on aftermarket tariff announcement day, apparently. Yes, but it's creating this volatility, and that's what I want to talk about. I want to start with this, Paul, is the stock volatility we're seeing. It's sending a message, and here we're looking at a whole bunch of stock indices up, down,

up, down. These are hourly charts, so this is only, let me get my little pointy thing out. That's March 24th, 25th, today's the 26th, and you can see, you know, big spike up, down, big spike up over here, S&P 500 up, up, down, so we're getting a lot of these volatility pieces. Note also, Paul, Euro stocks starting to flag a little bit here

and in particular the German DAX, they've been really defending that 23,000 line for reasons I don't understand of course volatility, the VIX is a measure of that volatility. That's hourly daily charts going back to 2025 at the beginning of the year. You can see I think we just bounced off of that for the Dow Jones the beginning value for the year so up down going so far nowhere first quarter S&P down a little bit on the year having started right about here now here euro stocks really start to look like maybe it's rolling over to me here Nikkei obviously well down on the year NASDAQ down on the year Russell 2000

same thing the German decks still up on the year strong NASDAQ down on the year. Russell 2000, same thing. The German DAX, still up on the year strong, but I don't know, starting to get some of those red candles mixed in there. And so that's it. That's the, I'm seeing more and more volatility. You track this stuff a lot closer than I do. How's it, how's it coming on your side of things? Now we're seeing the same thing.

And one thing that I'm surprised about is after a big correction like we've had, what 10%, 11% top to bottom, depending upon the S&P or the NASDAQ, I would expect more of a technical, I'm expecting a technical balance. Plus, we've got positive seasonality that's coming up here at the end of this month. But we haven't had very much breadth or participation,

like broad participation in the market, especially on the initial balance, which gives you an indication that the rally has some legs that may carry into April or May. Now, the big question is tariffs. You know, the market was down on the date. So today is Wednesday. The market was down coming into our conversation. And apparently White House press secretary Levitt came out and announced that Trump was going to clarify some auto tariffs at the end of the day. And that kind of caused the market to sell off. But technically, you know, we're holding some resistance levels and some moving averages, and we're just consolidating. It's like the market, all this volatility, we're going nowhere and waiting for some news.

So my question is, is Trump's April the 2nd, you know, day of tariffs being announced and more information rolled out, what's holding the market back right now? Or is the market just consolidating? Everybody's expecting this huge rally. Pension funds are rebalancing into the end of the quarter here, coming in the end of March, and that's creating some buying, but we're not seeing the market follow through with that. So my question is, are we consolidating before the next leg lower, or are we consolidating for more information to get a rally and maybe retest those prior highs again.

We just don't know right now. Just gotta sit and watch and see what the market's telling us and be nimble and ready. Well, for sure one thing we can tell is this bounce, if it's over, I can't say it's over, we just have one red candle here today, but this bounce we're seeing right here, obviously if it bounces here,

we'll be watching to see if it makes a new lower low on that next part, because then we're in the lower high, lower lows thing that you get during bear markets, during down cycles. So I don't know, it feels to me like it would be a real stretch for these things to attain their former glory highs here, all things considered. I got to confess, Paul, I've not been too taken with the tariff argument as a, it's used a lot, but nobody's really been able to, I haven not been too taken with the tariff argument as a, it's used a lot, but nobody's really been able to, I haven't seen anybody connect the dots.

Because tariff X goes up 25%, that's gonna hit the profits of company Y or whatever, right? Instead I'm seeing a lot of just what I call just standard late cycle recession indicators, those I understand at least. Agreed. Agreed. Well, and it looks like some of the reports, I don't have the charts in front of me right now, but the consumer, especially 70% of the population to the middle and low end seems

to be tapped out. Sorry. The credit card default rates go up, auto loan default rates go up. Most of them, I didn't get the chart in time for our podcast today, but most of them are higher than they'd been at any other time outside of the great recession back in 2008.

So all the indicators are telling us that the US consumer is struggling, tapped out. I think, and I agree with you on the terrorists to an extent, but I know at least for me, I'm careful. Some of the other individuals I'm talking to, it's like we need a little bit more information before we can deploy capital or sell before the terrorists, because one thing Trump seems to be good at is these terrorists are going to be this, then he backs off and the market rallies and the market doesn't know what to do with it in the short run.

At least for me, that's something that's a question of market in my mind is what's gonna happen, you know, this afternoon at four o'clock on the auto tariffs, what's gonna happen on April the second on, what does he call it, liberation day? His self-term liberation day. But these markets are, in my opinion, showing a lot of weakness right now.

I would expect a larger rally after the correction we've had just because investors have been trained that some news is gonna come out, and let's front run that a little bit right now. Yeah, absolutely. Well, I mean, you know, this is what we talk about all the time, so, you know, this is where, this is where you earn your keep, right? Helping to navigate these sort of volatile markets.

Look, the thing I'm concerned about, Paul, is that downturns happen. It's normal. It was just part of life, right? And then the Fed got interventiony and they decided that downturns were terrible. They called it volatility. Volatility to the Fed means stocks going down, not up, right? Although anybody who's honest knows that volatility goes both ways. Otherwise, you can't have volatility.

It needs both ways. So anyway, so they've done everything in their power to prevent that, anything from going down. We saw at the last Fed decision we discussed last week that the Fed got a little more hawkish on rates, but then totally dialed back their quantitative tightening, meaning they are no longer allowing their balance sheet to roll off to the tune of 25 billion per month. I think it's they dialed that way back to five.

Right. That was dramatic. That's pretty dramatic. Right. So, so they're doing their part. Um, but we'll, we'll see. Uh, I don't know what we have to keep watching this. Not enough information to know where this bounce is going. So they're doing their part, but we'll see. I don't know, we have to keep watching this.

Not enough information on where this bounce is going. But layoffs are on the rise again here. And when you look at it, this is Challenger and Gray and Christmas, and so when you look at this, we got a pretty steep layoff rise going here, and this isn't all government. These are in hundreds of thousands, you know, over here on this left axis, 100, 200, 300,000. So I think you can see that anytime we've had these

gray bars, which are recessions in the past, you know, you kind of spiked into this territory that we're in right now. Yes, and for the listeners out there that may not necessarily know the data, it's easy to look at that and say, oh, well, that's when the recession started. But that's, they don't give you that information until the worst part of the data is behind you. So yeah, they won't announce that we're in a recession if we are until well after the fact. Yeah.

Well, I mean, to that point exactly, E.J. Antoni on X said, this is still hilarious, quote, that so many indicators point to a recession, having started in 22, but the government wouldn't acknowledge it. It never before has standards of living declined so much without a recession. And so here we're looking at the leading economic indicators and warning signal, recession signal should be anywhere you cross over this red line. And we've been, we've been there since 22. I think there's some people out there who would agree with that.

You know, not everybody, maybe a tale of two worlds, but I know life has been hard for a lot of folks with inflation being higher than advertised, which of course subtracts from GDP. You saw Peter St. Augustine, this whole thing, where they took a more honest look at what inflation would have been and said, oh, we've been in recession since 2021, right? All right. If you honestly discount, yeah?

That would not surprise me at all. It wouldn't. Yeah. But you know, the fact that the market was strong and all of the cap, you know, fiscal foolishness that the Biden administration undertook holding the markets up with the liquidity and apparently, however, Treasury Secretary Yellen provided liquidity through shortening up the Treasury offerings on the short end of the curve, which is a big problem that we're seeing out there right now for this administration to deal with.

All of that seemed to provide fuel for the market. And there was a complete detachment from what Main Street was experiencing and Wall Street was experiencing. And another way to phrase that, David Sachs did in a recent interview, is what labor was experiencing versus capital. So all of that was really good for capital.

You know, your larger companies at the expense of labor, your average individual, 85% of the population and less. Yep. Now we did get some information that was a little surprising to me today. So, you know, the question is, are we headed to a recession? Is the economy still growing? Some of the data looks good. Most of the data doesn't, especially when it comes to the consumer and the average individual, which would be considered labor. So the durable goods orders came out this month and they were supposed to slide about negative 1% because we had a strong January, which was up about 3.2% month over month, and orders rose 0.9% month over month coming out in February.

Now there's an analyst missed that across the board. So a lot of them were arguing that, oh, this is all front running the Trump tariffs. But if that was the case, why did they not, why did these analysts not take that into consideration? So durable goods orders actually look good after being in a contraction period for quite some time. Is it tariff related? Is it not? I don't know, but that's the one thing that's like, okay, you know, if that sector starts to pick up, maybe we have a little bit more strength than what we were expecting. Yeah, now durable goods, you got to peel it back usually

because defense gets wrapped up in there. So So and defense is really lumpy, right? If the military suddenly decides it needs five new KC-130 planes, you get a surprise bounce. So usually that gets reported to ex-defense. Did you happen to notice that? No, I didn't break it down. Because it came out just about 20 minutes ago and I went over. Okay. Yeah. I just looked at the headline data real quick because it did catch my eye, but I did not get a chance to dig into it

All right But I got a couple other I mean, so that's a surprise. So that says no recession stronger Professor plum Michael Green said not being amplified enough was the recession in the room with us. Yes, it was it is But when it really mattered they lied to us as they always do and he's looking here And so, not being amplified enough was the recession in the room with us. Yes, it was, it is. But when it really mattered, they lied to us as they always do. And he's looking here at student loan balances, you know, past due.

So here we see the forbearance period began here in 2020 because COVID. And so the, you know, and then you have your fresh start all the way down here. Look at this percent of forbearance, just real low. But then the payments resume and uh-oh, right shot right back up. And then there's these dotted lines. And so right now the on-ramp is over and these, that's a 16% um,

past due rate right now. So he says that's consistent with recession. That's substantial. Well, and if you, it is, if you add in auto loan delinquencies and credit card delinquencies, that's in line with past recessions as well. We've surpassed the percentage and the increased percentages that have historically coincided with the beginning of recessions. Well, you know, maybe students, past students are like, you know what, I'm not paying anymore. And why should they, you know, after they find out everything that their government wasted and everything? Like I could understand people saying, let's not do this. In fact, I heard rumors that Treasury is experiencing a shortfall because a lot of people are not

paying their withholding taxes right now for reasons, right? So I can't blame them. I know. I know. Maybe we should just see where this is going before I chip in, you know. Right. Yeah, that that could be a lot of gyrations there. And then we've talked about the commercial mortgage backed situation.

So office buildings, particularly office space buildings, maybe that's recovering a bit, but this is multifamily housing. So, Freddie Mac's serious delinquency rates for multifamily housing. And yeah, we're back at the depths of the great financial crisis in terms of delinquency rates. It's pretty big. That's amazing. That's amazing that if the rental market is so strong that multifamily housing is going to have that much of a delinquency rate. That's amazing that if the rental market is so strong that multifamily housing is going to have that much of a delinquency rate.

That is actually very surprising. Yeah. And notice it started rising in 2022. So we can't just say this is because people who are formerly renters have been deported or something like that. I don't think we can just say this is Trump. It's just rising. Yes.

All on its own. It sure is. Well, there's a lot of information and a lot of argument that we're overbuilt on housing and multifamily housing right now. And that brought that data to mind as you were sharing that information. I do know that at least with Will, he's moving apartments in Atlanta around Georgia Tech and they are much more Flexible to work with and much more generous and trying to get new individuals in because this is a new apartment complex This has come on on board close to campus much different situation than what we were dealing with three years ago

And then our neighbors to the north Canadian small business sentiment it's worse than at any point in the history since 2000. Small businesses up there just not feeling it, feeling really pretty gloomy. They're signing that to trump tariffs. But again, I'm pretty sure they started to nosedive before the tariffs came. They have a lot of their own issues, a lot of self-inflicted wounds up there, but I'm sure the tariffs are not helping. They're a small business confidence index.

Is that soft data, Chris? Or is that hard data? Is that soft data like opinions and subjective data? I think it is. I don't know this one for sure, but most confidence indexes are questionnaires and they ask you questions. Yes. You know, what's amazing to me is you look at the bipartisan difference between University

of Michigan inflation expectations, which are completely divided down political lines. Like the Democratic side thinks inflation is going to be an absolute holocaust and the Republican side thinks that it's not going to be as bad as it has been before. So that's pretty amazing data right there. Hello, everyone. I just wanted to take a quick break to tell you about peak financial investing. Look, my whole goal in life is to help you be prepared, to help you be resilient, to have you have the freedom you need in order to live your life in the way you want to live

it. And top of that list is financial freedom. Making sure that the money you have saved accumulates appropriately and isn't lost to some random process of market downturn or something like that. Peak Financial Investing is a place where we will connect you with our endorsed financial advisors who understand the world the way we do. You deserve to talk to somebody who is not going to look at you like a dog listening to white noise when you say, hey, should I invest in gold?

Hey, is the dollar going to be okay? Hey, is the dollar gonna be okay? Hey, are there any big risks here? Are there any bubbles we need to be aware of at this time? Great questions. So when you ask those, you deserve to speak with somebody who's got good answers, thoughtful answers, and knows, most importantly, how they're gonna respond nimbly

as the world around them changes. Now, this is one of the periods of the most extraordinary changes we're going to see in market structure. China is coming up and rising. Geopolitical tensions are afoot. We have all sorts of realignments happening. The federal government is deficit spending

like nobody's business. You know the Federal Reserve wants to get back to printing like crazy. We understand that gold is popping to all time new highs. The story has changed. Your investment philosophy needs to be nimble and responsive to that. So at Peak Financial Investing,

we'll connect you with people who see the world that way, who understand how to run what's called a risk managed portfolio to account for all the changes that are coming. Because if the Hippocratic Oath is first do no harm, our oath is first take no punishing, irrecoverable losses. It's time to manage risk, it's time to understand how the world has changed,

and it's time to make sure your portfolio of savings and wealth are there for you and can meet your needs all the way through your retirement. Now, back to our program. Putting it all together together because you're a chart reader, here's the question. Are you buying or selling this stock? So let's pretend this is a stock. It's not. It's the S&P upside down, right? But I mean you can see here's this thing that's been falling for a long time, but here we see

the 50-day is turned, has come positive. We see it's this thing that's been falling for a long time, but here we see the 50 days is turned as come Positive we see it's above its 200 day in this inverse world I Would watch for it to kiss this 200 day and keep going that way if it was a stock What would you do? I sure would increase you're doing something that I love to do on a regular basis as I'll have Brittany or somebody on the team print out a charge, especially of stocks, if I like them and, and mix them up, change them, invert them, maneuver them around and I'll look at them and I'll come up with an opinion that just helps you be, be better in the data.

So I'll tell you what I would do with that as stock. I was like, well, first off, I would have bought the, the breakout of the 50 day moving average with a half position. I would have taken another on the breakout of the 50 day moving average with a half position, I would have taken another on the breakout of the 200 day. And then I would take a full position on a retest of the 200 day because that, that, that, that's a chart that I would buy, especially, uh, with that downtrend and those breakouts of the moving averages at this point, I like what since it's upside down.

Right. Right, right. So I will not recommend that somebody would short the market, and especially my concern about the great taking risk. Because if this does get out of control, the derivatives market is a monster of a behemoth if it comes apart. Yeah. But classic inverse, that's the point where, we're on that back test, you invert that.

If we can't break through that resistance, then that's where you're gonna sell some positions that are, if you still own them, you've got to sell into those rallies the opposite of that. Keep going, I'm gonna try and find something here since we brought up derivatives. I'd like to go down that path a little bit, because there's been a lot of movement in gold and silver and there's a number of things we could decode about that for people. Full disclosure, I've been a long-term buy-in holder of physical gold and silver. I don't know if I really have to disclose that because nothing happens to my position if somebody else takes a position.

Right. Well, I guess I... that because nothing happens to my position if somebody else takes a position. Well, I guess it's not a security in that regard, right? And I have to disclose that in our portfolios, we do have exposure to gold through ETFs and I've been a long-term buyer and accumulator of physical gold and silver as well. So take that for what it's worth. I'm not, you know, in no way would I ever talk our book, but you have to assume that people would do that. So take that for what it's worth. I'm not, you know, in no way would I ever talk our book, but you have to assume that people would do that. So you gotta give those disclosures. So I do like to track the derivatives and take it for what it's worth,

but the Office of the Comptroller of the Currency under the Treasury actually puts together a report on what's happening out there in the world of bank derivatives. And let's open this up. So yeah, here we go. There's a lot of fun here. We're going to have fun now.

So this is that report, fourth quarter 2024, and it's just a monster of a report. There's just like page after page of this thing. But the part I love to do is to come all the way down here and look at a couple of things. The first is looking at table 14, which is the notional amounts of derivative contracts. Now this is notional amount, right?

So notional just means, Paul, you and I could write a pair of offsetting derivatives for a billion dollars for each of us, you know, if we were allowed to. And now there's ostensibly $2 billion of things out there, but we might say in the contract, you know, we've tied it to a billion dollars worth of, I don't know, treasury notes, you know, and if they're above 4.6 on the 10-year you owe me a dollar and if it's below I owe you a dollar Okay, so the actual value at risk is a dollar So the notional amounts have to be viewed with a lot of people throw them around Paul like it's this thing like oh my god Five quadrillion or whatever right but still it's really important to note a couple of things in this, so let me zoom this

up a tiny bit. So A, when people ask me who do I like to bank with, I routinely say, in terms of thinking about the great taking, not the people named on this report. Just me, personal preference, banking standpoint, but notice at the top is JP Morgan Chase They have total assets of about four trillion. They have total derivatives of 47 trillion They got futures on the exchange of 1.2 trillion again total assets just four trillion, right? and when you look at all this stuff, their credit derivatives, SpotFX,

they have just trillions and trillions and trillions of dollars worth of derivatives on their books. So it's one of the first things I look at. And what's really cool is when you go all the way down here further, they'll tell you about what some of these really are. And so they've got interest rate derivatives. That's what we're looking at in table 20.

And what kind are they? We've got Forex, interest rates, da da da da da. Keep going. And let's see if we can get to this part down here. This one. Yeah, so this is always fun. Total derivatives across the banks right now is a couple hundred trillion. And as you can see here, most of it, most of it is this, these swaps.

They're interest rate swaps mostly, mostly. But still there's trillions and trillions and trillions. Okay, keep going. And here blue is interest rate swaps, an exchange. So this breaks down the swaps a little bit further. And then let's see, not that one. Those just swaps again. There's a whole lot to talk about swaps. They maneuver them around from time to time to make them harder to find. Ah, found it. Table 17ous metals. This is their precious metals stuff here. Now what happened here in between this year back here in late 2022 coming into the first

quarter of 2023, they had to suddenly start accounting for gold. Their gold derivatives, which is when they're selling gold short, Paul on ComEx and doing all of that stuff. What's interesting here is that beginning January 1, 2022, the largest banks are required to calculate their derivative exposure amount for regulatory capital purposes. We're getting ready for that Basel III thing.

Using standardized approach for counter-party credit risk, okay, the standard approach, right? And it used to be gold derivatives are considered precious metal derivative contracts rather than an exchange rate derivative contract. So they've been hiding them for years, Paul. They've been calling them an exchange rate derivative under the argument that gold's just sort of the anti-dollar,

right? But as you and I have talked about, gold is no longer really tracking the dollar all that closely anymore. It's doing other things, right? And so now they have to start accounting for it. So before they were reporting, oh, you know, we got 50 billion of gold derivatives on our books.

Oh, we met 500 billion more like, right. And as you can see here, they've just been piling them up. These are almost all short contracts as far as I understand it. So they are really, really, really, and all of this is short term. This orange is precious metals under one year. And then there are some precious metals contracts that are one to five years and then very few. I can't see any on here of precious metals contracts over five years. This is all short term. What do we do with gold? We hammer on it. We do all of that. years, and then very few, I can't see any on here, of precious metals contracts over five years.

This is all short term. What do we do with gold? We hammer on it, we do all of that, but Paul, in the scheme of things, $500 billion is a lot of gold. It is a lot. That much does not exist in the universe of available gold right now, but yet they're carrying derivatives to that amount. And again, notional amounts.

But just to say that these banks are really, really, really up to their eyeballs in gold. And also, they don't report silver here, unfortunately. And if they did, I think we'd see something equally interesting. I'm sure we would. It would be nice if they would report silver in there as well. That'd be more information than I'm sure they would be kicking and screaming not to report. So that was a change in reporting requirements, which is that surge. You explained that well, but that was shocking to me because when I first saw the chart,

I was thinking, okay, what changed? What changed for them? Oh, did we call those exchange rate contracts? We meant gold. So there's law now that we have to tell you the whole truth, not partial truth. We know it. And looking at that, all that came to mind for me is those banks are responsible. You know, they're, they're the guarantors of the derivatives that they're underwriting. So you take indexed annuities, not a recommendation, but I don't like those products because of

anything that individuals have come to me that they have been the most frustrated with are the indexed annuities that have 10, 12, and 15 years worth of penalty schedules. And they're sold saying, oh, you're guaranteed not to lose any money because they have derivative contracts behind them. They can say they're guaranteed because they're an insurance product. And they lead investors to believe that, well, you're going to do 80% of what the S&P 500 does. And most people are not making more than what they would on CDs or otherwise from a long

term standpoint, the way those contracts are designed. But they happen to pay 10 plus percent commissions to the individuals that are selling those products and the individuals who buy them are locked up for 10 to 15 years. But what concerns me is their fully derivatives. In addition to that, you have the structured products that have derivatives exposure over the top of them. So when clients are going to their advisors and saying, hey, I'm concerned about the market, you know, what's going to happen if things come apart? Well, they're like, hey, we got this

structured ETF that can remove 20% downside or 10% downside, 30% downside. You can structure them just about any way, but they're completely built by the derivatives that are behind them. And you don't technically own the stocks that are associated with it, you own derivatives on indexes. And those concern me, especially when Buffett years ago made his famous quote that derivatives were weapons of mass financial destruction. So when you've got these banks that have that many derivatives on their on their books, it doesn't take much to cause all of that to unwind and cause this massive market calamity. So that's that's one of the reasons

I'm concerned about those are they. It's true. So you know, I mentioned that the notional risk versus the value at risk, you know, the actual amount. So derivatives, they often say, oh, no, no, that's just the notional amount. Right. Right. But those tend to work as, they're great insurance, Paul, they really work really well, unless you actually need to use them. So in the example you said, if you have a structured ETF product that says, oh, we protect against 30% downside, there's a darn good chance if you get to 30% too quickly, the

counterparty on the other side of that, that wasn't in their models. Their eggheads, the guys with the glasses, with the calculators, like trying to, you know, who assured you that's a one in a billion event, you don't even have to plan for it, was never gonna happen, but now that it has, it's called long-term capital management,

remember something happened that really wasn't supposed to happen. It was too many standard deviations away from their math models, but it happened. And so that's why I say not only derivatives weapons of mass financial destruction, they're basically, Paul, perfect insurance policies that work except when you need them to.

That's my concern. Most. That's my concern. Yeah. They'll work great if we have normal volatility, but it, you know, my concern is if we were to have that 40, 50% decline or even worse, something that occurred during the Great Depression, what happens on the other side of that? Because just like you said, these models don't take into, because they don't want to learn from entire history.

They want to learn from the most recent history, because if they're paying attention to all of the data that we have going back They're handicapped because they're not gonna be as aggressive. They're not gonna buy with the markets as expensive as they are because Every other period of time throughout history that valuations have been this high coincides with 1929 2000 most people realize the market was not as expensive in 2007 as it was in the year 2000. And at the 2021 top, now they kick the can down the road a little bit longer.

But historically, you've gone sideways for a decade, or you've had massive declines and gone sideways for a decade. Yeah, as we keep pointing out, these aren't just sort of expensive markets. These are the most expensive markets in anybody's lifetime. In fact, going back in this case, if we look at this one, which we looked at last time, this is the concentration problem. Top 10% of stocks by size versus the entirety of the US stock market, the top 10% of stocks are like 75% of the market Which we only ever achieved one other time and that would have been in 1929 Right so and what was that is that 2000 layer the second highest yeah, okay? Yep, and we've exceeded that but you know, it's different this time. It's normal. It you don't understand Paul AI, right?

There's always a story, you know There's always some reason you've hit a permanently high plateau of protect prosperity. It's just it's just how it is Well, I happen to chart I happen to have a chart from 1926 to 1955 if you'd want to show investors show your listeners out there what that looked like and what it can be, because it is quite the fascinating chart. So what I'm going to show you here, and I have some percentage bars in here just to put it in perspective.

So this starts around 1925, we finish up in 1955. So look, notice how the market here was just straight up, right? Roeing 20, different this time, nobody was paying attention, you get a sell-off. This is weekly, so you get this sell-off and then you get this big decline. It bounces and that's what does a lot of damage to people. That's your warning that this is over. It bounces in the other direction. Smart investors would have sold into that rally and then it collapses. 86% from top to bottom. Well, of course, removed from the gold standard. Gold's repurchased or outlawed ownership comes back into the government coffers. They reset the price of gold. You get this nice rally in 1937. Most people don't realize you had another 52% decline coming in 1938 from top to bottom in

the 1942, which that was actually the day Pearl Harbor was bombed or the market opened after Pearl Harbor right there. 59% decline. I think I've got that right because it was the market did bottom after the market opened and took off in the war, but that was 25 years later for investors to get back to even. Now in the 1970s, and this is 19- Hold up, hold up, hold up, back up. That's important. So look at all that actual volatility before Pearl Harbor.

And then after that, volatility's really clamped down. I wanna point out that on my inflation charts, Paul, prior to that moment of 1942 We actually had inflation deflation. It was a it was a two-way street. Sometimes things went up. Sometimes they went down our permanent Exposure to inflation as a thing that you always have it started at that exact same time So I'm gonna submit to you that the reason the market looks calm and starts going up into the right is Because we just started printing now. That's a good point. That's a very Fed just said Oh, it'll just print so things always go up and when things go up people feel better

That's where we are it did and the rebuilding that goes along with it Well, well what I enjoy following into is course this scarred a whole generation of investors I can't tell you how many baby boomers are like, you know, my father did well, but they could have done a lot better if they hadn't been so scared of debt, but it scarred a whole generation. So I don't have valuation charts here. I could come back and look at it, but this goes into the 1960 to 1984 range. And you, you know, as the market gets expensive, you have a little bit of a tremor, you have a 33% decline, and then you've got all the inflation

that came from the 70s to new highs. Now, this is what's interesting to me. Notice you had a correction off that high, you've waffled around a little bit, and then you collapse down into the ultimate bottom. I'm not saying that's what the market will do, something similar to that now, but that is the kind of action that I'm not saying that's what the market will do something similar to that now, but that

is the kind of action that I'm concerned about seeing in the markets at this point right now. But to put that in perspective, you're talking about investors were sideways from 1968. Yeah, they got an ultimate high all the way out to about 1983 before they had sustained gains going forward. So just an interesting little bit of historical data to go along with those expensive markets. So we don't really have, we only have two analogs for how expensive these markets are. And one of those is 1929 and the second is 2000.

And on some measures we exceed both of those and some measures were just under those or very close to them. But let's just say we're at one of the three all time most expensive markets in history. The returns you should expect going forward off of that period if you're holding those stocks today. And Paul, I'm agnostic leaving aside taxes for a minute because that is a consideration. Whether you're in the market or out of the market

should have nothing to do with what just happened. It should be entirely based on what you think is going to happen, right? And that could include some things that have just happened. But your expectation going forward, the decision to invest is always, should this be in this stock today, now, going forward? And we should look at it that way. it should this be in this stock today now going forward you know and we should look at it that way it's never it's never been a good time to invest it

those other those prior two peaks you had to wait decades to get back to even I have a chart with value way a long time just a reference here because it is good because this is the S&P 500 going all the way back to 1924 and this is a long chart looks busy but the black line is the S&P 500 going all the way back to 1924. And this is a long chart, looks busy, but the black line is the S&P 500 on a monthly closing basis going back to 1925. The red dotted line is a gap price earnings ratio of 20, which is considered an expensive market.

Blue is fair value, green is an undervalued market. So in that case, if you find yourself as an investor in a period of time where the market is undervalued, if we get to that green level at this point, you're talking about 2000 on the S&P, we're 5,000, a little over 5,700. That's gonna be the time where people are the most terrified. That's gonna be the time that you wanna be

the most aggressive based upon your parameters from a long-term standpoint. But notice, we cycle through, you know, the discarded generation, you're down here in 1942, well below an undervalued market, and then it creeps up in the late 1960s and starts getting a little expensive and then whack, it gets hit. You know, and those investors were sideways for about 14 years, 10 years, depending upon what your entry point was. Then we set the previous all-time record in the year 2000. So that was way above what we had been historically. 47% decline, 57%

decline market sideways for 14 years, and taking the consideration. Remember, all of this, the efforts that the government put in, interest rates slammed to zero in the year 2000 to 2003, trying to keep this thing going that led to the housing bubble. Interest rates slammed to zero, held to zero for quite some time, plus quantitative, well, what was it, Operation Twist and Twist, quantitative easing, all of the debt that they have accumulated for our future generation is just trying to keep this thing going. And now we are on this measure at a record. So earnings have basically been flat overall from that standpoint going back in the general

S&P 500 going back to 2021 from that standpoint, going back in the general S&P 500, going back to 2021 from that period here. So this is by all historical measures, and that's the hard part. By all historical measures, it tells us we're in a very dangerous time. But investors tend to have a hindsight bias, and instead of looking at the data, they look at the news or they'll look at past returns. And what happens is they end up being in a situation where, you know, market update, I love this, the great martyrs put this out if you can see it. Here's his market update. You've had a sell off, pile in because it's going to be great.

But this is a period of time where it's ridiculously important to know your strategy and to understand the strengths and weaknesses of it. So if you're a passive investor, then you need to be a passive investor, okay? Because the strength of a passive investment is you're not going to be paying attention to fundamentals, and you're going to ride this market to this high that a fundamental investor is going to be a little bit more cautious. If you're Warren Buffett, he's not passive. If you're passive, you're not going to have 40% of your investable dollars sitting in cash. Warren Buffett does because he's not passive

and he pays attention to fundamentals. So you better still yourself and be ready that if it's not different this time and this market does go down 50% or if or if God forbid I'd hate to see it go all the way. I mean I would love to be an investor that have capital available to buy at 2000 if the S&P went there but I'm just talking about historical. If it goes down that far you have to be willing to ride through that. Because the worst thing that you can do is sell when emotions get to you and you hit the bottom because if your emotions are making the decisions, you're going to sell at the worst time.

If you've got a strategy, you got to follow that strategy, understand the strengths and weaknesses. If your strategy is going to help you to sidestep one of those markets, because it's paying attention, you know, you might be able, you might underperform a little bit at that last extreme, but missed opportunity is a lot easier to make up for than lost capital. So the rules of your strategy are important. Understand the strengths and weaknesses. I know the strengths and weaknesses of our strategy inside and out and can

compute, can communicate them clearly. But they're put in place and those weaknesses are acceptable because it's designed to help protect your capital when economic events come along. Very well said. So, I mean, the thing that you and I sort of live in fear of, though, is this idea that there could be some sort of a flash event, right? Like something just breaks, right?

All of a sudden. Because, you know, the markets are a little bit complex. You know, they're kind of spaghetti, tangled spaghetti. Nobody knows. Here's my hypothesis, Paul. Nobody knows what all those derivative contracts actually mean. But collectively, they've made the assumption that together those derivatives have shot risk into outer space.

But again, going back to the insurance analogy, fire insurance works great if every so often a toaster overheats and somebody's kitchen burns. It doesn't work if the whole town of Paradise California burns down. It's not insurance anymore, right? It only works if it's like handling the exceptions, but if that risk event becomes the rule, right, it can't work. It's just not possible, right? I don't know, I don't think we're ready. I mean, that's what concerns me is we have a system that's like, it better keep working, dude. Right? And that's it. And I can see lots of ways that things could maybe interfere with that potentially.

I can too. Well, and that's one of the things I tell clients. One of the reasons, especially when our indicators shift defensive, and we are at the end of the month, if everything continues, we'll be officially on defense. But we're certainly already defensive in the portfolios. But the one nightmare that I have is some flash goes off over Europe on a Sunday or some major earthquake goes off when the market's already kind of weak, because you can't prepare for those types of events. That's the reason why when I go back, historically historically I show without any risk overlay what worst case scenario would be for clients

because I wanna be able to look at them and say, hey, we prepared for this already. We built your plan to be resilient enough to where you could survive this, at least be close enough to where the minimum level of success is the only check that bounces is to the funeral home. If you're not prepared for that, you don't even know what a type of event like that is

going to do to your portfolio. But that's the one thing that I will, I don't have nightmares that often. I'm just very fortunate from that standpoint, but those are nightmares that, you know, it's a Sunday afternoon and some event happens and markets close for three weeks before you can react to it. But we'll have to watch. I mean, listen, you know, the Fed has been fighting what I consider to be a normal and ordinary downturn so hard, so vigorously. I think they've forgotten that they just, they're part of life. I think they're necessary, Paul. So let me get my old guy shoes on.

I'm like, I like recessions. I like them when they clear out deadwood companies, when they remind people of what's important again, when, you know, because you get all this fluff. You know, remember we had pets.com, and today it's anything with AI in the name, you know? And you can tell you're at the top of those bubbles when companies rename themselves to put AI in the name, and they have nothing to do with it, you know? Casella, waste management, and AI, you know, it's just like what you know

Right and and we're there in some respects but you know Recessions are needed like it's okay. And I fault the Fed for being so interventionist and saying oh we got to got to stop that. We got to stop that. We got to stop that. Right? No, you don't. It's not your job. Your job is to make sure that the system is well lubricated for what it needs. But every so often the system needs to burn down and start over again. It's just part of it. And recessions are in the event. So I have a lot of clients that I work with that came to me after the 2008 event. Let's say out of 10 people, eight of them upended their entire life. They lost their jobs, they lost their businesses, they lost their houses or whatever it was. And many of them, if that event freed them up, that nasty recession freed them up to be in a position to go pursue something that they were unbelievably successful at in the future.

It released the chains of people that were stuck in businesses that they felt like was ridiculous for them to walk away from. So the creative destruction that a recession brings about, if it happens on a normal schedule, does free up innovation for the betterment of our economy. It also provides better service from businesses to their customers because instead of having to keep your prices low to compete against all these people that are just hanging in there, that creative destruction, the strong survive out the other side and they're able to capture the best employees, they're able to pull, you know, get rid of. So those are good things. My concern is, and what worries me if we actually do end up in a recession, is they have spoiled the child for so long that if you actually deliver some consequences,

you're going to get a royal third grade temper tantrum, you know, a three-year-old temper tantrum from the economy that should be behaving like an adult at this point. And that's my biggest concern is, is if it does get into a recession, we just don't know, you know, how, how much tender there is and how severe the fire could be, but it needs to be done. And, and I don't know if the Trump administration is going to follow through with it. I'm worried if, but they, they need to allow it to happen now so that the people that are prudent can prepare the prudent for sea danger. They hide themselves.

They're going to emerge. They'll have resources to be able to take advantage of it. And we'll shift the control of the economy from the foolish to the prudent, which is going to give us a much better future in the, in the years ahead. Well, speaking of, um, sort of maybe bubbly signs and tops and all that, I don't know if you saw this. I just saw this today.

Uh, Michael Saylor, who I have some opinions about, said, confirms that he's going to, and I don't know how he has the right to do this, he's going to burn the keys to over 17,000 Bitcoin worth 1.5 billion. That's my legacy, he says. That will just make everybody else who still owns these things, because he's going to burn them, meaning lose the keys. They don't exist anymore. I can't get those Bitcoin back.

They're lost forever. That's his legacy. It makes everybody else in the system stronger. And I'm thinking, why wouldn't you give that 1.5 billion to a really worthy charity? Yeah. Like, why burn it? I don't know. Like, how do you interpret this?

Is that his personal or is that his investor's money? I hope it better be his personal because you can't burn investor money But I honestly don't know the answer to that question Well, I was gonna say if you lock up investor money in there if things go wrong, that's how many billion? I can't see the it's one point five one point five billion dollars worth of investors that won't be able to You'll never get access to I don't know that doesn't make sense. I mean I Have my own

Feelings about that individual as well. Yeah, that just that that just doesn't make sense to me I Imagine the good that could be done with the people that are hurting out there right now And I'm and the people that actually really need it. I mean, there, there are large parts of the economy that are of our populace that, that, that could use some, I mean, imagine how much free childcare you could provide for mothers that are single and trying to work and keep their jobs and take care of their kids too. I mean, that, that, that's pretty arrogant in my opinion.

Private comes before. Well it's kind of a principled stand on one level I guess, but on another level we could say that an interpretation of this is he's worried that if he tries to sell those 17,000 Bitcoin it'll drive the value of all the rest of them down. So he's actually not all that confident in the Bitcoin market. That's a very good point. It depends how you want to interpret the signals, but I don't know how to interpret that. And one more thing I wanted to discuss with you, sort

of a grab bag here, but I followed just Dario CPX over on Twitter. And he said, hey, if the GME GameStop, that is, squeezes to 50 bucks, will they turn off the buy button again after the central bank of Switzerland reminds the Fed how much it's gonna cost to bail out UBS, the big bank, because if the bank implodes, the consequences for the global financial system will be catastrophic. Oh no, must save the banks at all costs. Heads they win, tails you lose.

But there's still something going on with the GameStop story, and I've dug into it enough, Paul, to know that they did some super bad shenanigans, like kind of stuff should land somebody in like career ending, entity ending SEC hot water for manufacturing shorts out of thin air in order to help cover the shorts that were already outstanding, probably out of thin air. So at any rate, pretty standard practice in the in the in the dark pool, darky world of hedge funds and their big enablers. They routinely short things they don't have.

That was supposed to get all tightened up, but I don't think it has. So I don't know if you saw, if you're keeping an eye on this, but this UBS's stock price has not been looking happy. Of course, they're absorbing the Credit Suisse merger, shotgun wedding merger, courtesy of the Swiss Central Bank. You will, you will take this company. Yeah. It's looking ugly. I'll tell you when Credit Suisse, I was watching and watching and watching. And of course, they were a major player in the derivatives market. And for the longest time, I mean, I'm tracking that stock and I'm terrified that as soon as they go under, it's going to unzip the derivatives market. And, and, you know, just, just have this fire breakout across the whole markets. And then they ended up absorbing them into, and the government essentially

papered that over it looks like. But I haven't kept up with GameStop here recently, but, but it does pop up on my radar every now and then. Yeah. So, well, I mean, it's at 30 bucks right now, but hey, one thing that I wanted to share that I thought of, and this is a concern that I have about Bitcoin, and look, this is GBTC, and I use GBTC, the Grayscale Bitcoin Trust, just because it was one of the first to the market, so it's easier to track a little bit longer. GBTC is in the red and the NASDAQ is in green.

It seems to be tracking risk. It sells off with the market. It's bouncing with the market. Market is selling off a little bit today. It's got a little bit more volatility. But that does concern me because, look, I like the blockchain and what it can do from a long-term standpoint. I understand the story, but my concern is it's not acting like gold is where gold's

now going up while the dollar's going up. Gold's holding up well when the market's selling off. Now there's a point where the market will sell off, that liquidity, people are going to sell anything that they can, so I wouldn't be surprised to see gold go down if we had a big flush in the market's selling off. Now there's a point where the market will sell off, that liquidity, people are gonna sell anything that they can, so I wouldn't be surprised to see gold go down if we had a big flush in the market. But it acts differently. It gives some diversification and negative correlation.

So if you have negative correlation, you know, dollar goes down, gold goes up. But what I'm seeing is, at least here recently, Bitcoin in general tends to be following risk assets and specifically the NASDAQ. So my question is, how well is it going to hold up if we have a recession and the NASDAQ is down 30% or 40%? Is it going to be the savior that most investors expect it to be?

Okay. Gold went down in 08 when the market went down, but it also recovered much quicker and went to new highs. So my concern is, is Bitcoin has not been tested in a major recession with as many investors that own it now, especially with the access after 2020 being with all the ETFs that are out there. Yeah. You know, we do. So it's a tale of several worlds,

so let me pull this chart back up. So, couple things. When we say a risk asset, like Bitcoin is, it's a risk on asset, stocks are risk on. We've known this for a long time, Paul, that the correlation between risk assets and central bank money printing and also bank credit creation, which also creates money, they combine into

something called M2. And so here we see in the blue global M2 broad measure of money, not the broadest. They don't track those anymore for reasons. I have opinions about that too. Lots of opinions today. And in the green, we have the S&P 500 and you see a very tight correlation between the amount of central bank printing and the rise in the S&P 500. You will see the same correlation with Bitcoin, you'll

see the same correlation with NASDAQ. Makes sense. The more money the banks are thrown out there, and it's not just the central banks, it's both of them again, right? So banking system, a lot of people don't know this, but when you take out a mortgage, Paul, there is, it's not like they had $500,000 in a vault in the back. They ask you some questions, you fill out some paperwork, they do this on their computer, you get a check for $500,000, right, if that's how much the mortgage is for. And that's cash. You go give it to the person you're buying

the house from, right, it's cash. Offsetting that is the debt on the back end of that. So implicit in this chart of rising M2 is a rising environment where banks can make more and more loans. So that's why we have to track credit, credit creation, super important, longer conversation for another day,

but we're entering a recessionary environment where there's lots of reasons why, like we saw Canada, small businesses, probably not taking out a lot of loans right there. We see that the loan value of the student loans, where they're in delinquency, if those get actually written off, that actually is a money destroying event, because you have to write off the debt in that moment and shoot that comes straight out of money too. So at any rate, breathe in, breathe out, debt creation creates lots of money. I've been tracking this for a while.

Global M2 rolled over. It's actually rolled back up a tiny bit, but I'm struggling, Paul, at this moment seeing what's going on in Europe, in Canada, in the US, to find a strong bullish case for lots of new credit creation. Is it because the government's going to borrow more? Maybe, but they're trying not to, so we'll see how that story turns out. But the government can't make up entirely for the private sector. You know, you still need businesses borrowing, people borrowing,

that's how the system works. Yes, and willing to borrow. And higher interest rates with a tapped out consumer makes it harder for them to go out and borrow right now. And I will tell you this, the one thing that I would like to see change is Wall Street has a lot easier access to capital than what Main Street and small businesses do.

It's just a lot harder to raise capital for a small business than it is for Wall Street. I understand the structures that are there, but the banking system is completely different as far as their lending at this point than what it used to be prior to 2008. And that is not good for your small businesses. It has been at the expense of the small business

and middle class and labor at their expense for the benefit of capital, which is your big wall street firms. The liquidity matters. Hey, one other thing that came to mind too, this surprised me the past couple of days. I mean, it is what it is because interest rates are going to fluctuate around, but interest rates have been trying to creep up again here over the past, uh, a week or so, which is, I saw that. Yeah. We're sneaking a few basis points on here in there

Yeah, so we started that sell off that trend. What is this going back to around? 1st of January and so these are right here. That's your 20 year and the gray So it starts working its way down and that's your 30 year it starts working its way down, and that's your 30 year, reaches its bottom around March the 10th, they bounce and then trying to break up again, even in the, so this is the 10 year here, trying to break out again. That's gonna really grow a wrench into the market

if they start to break out and resume that upward trend again. Have you been watching this in the UK at all? They got funding problems, their tax receipts are coming in light, they got bigger deficits than they thought. It's kind of a hot mess for a variety of reasons, but this is the 10-year guilt, the UK 10-year bond. It's going the wrong way.

It sure has. In their 30 year it was at 5.7 I think last I checked. So at any rate this is speaking to some real stress in the UK system right here. That's anything but sort of like a gentle reversal. Yeah. When it comes to these things. That's a quick reversal of a sustained down Cran. What's the start reversal of a sustained downtrend. What's the starting year of that chart on the left axis? That would be 1990. 1990, wow, that's a big change.

That is a huge change. Yep, but again, rates in the US right about here started to go this way for a bit. They didn't, they just kept going off the other direction. Now, you know, there's a level at which this really breaks for the UK, right? High borrowing costs make it very difficult for governments to sustain deficits because they have to put more and more into interest payments. Economic activity slows down because, you know, borrowing can't, you know, slows down,

all that. So, but I didn't know if this was maybe a global rate thing like you're seeing us an upturn here in us is this more of a this a surprise well you know Japanese rates are trying to to creep oh yeah well and I mean you may have access to that relatively quickly but their interest rate seemed to be a pressure higher I may have it in here somewhere. Oh, that's it right there Oh look at that move recently Yeah Yeah, these are these are fatty green candles here as it pushes. This is interest rates going up, right?

Let me pull this out make this just a tiny bit bigger Let me pull this out, make this just a tiny bit bigger. Again, nothing by world standards, right? We're still at what, 1.576% or something like that. But a couple things to note, this is the highest it's been in many a year, right? What do we got to go back to here, 2010-ish? 2000, maybe 9 even. But also the shape of this, like this is really peeling off to the upside. And I've heard, Paul, that at around 2% now this is that's across the entire term structure

of all the bonds outstanding. So this is just the 10 year. But at around 2% total cost, the Japanese government will be spending 100% of its tax revenues on interest payments. Oh my goodness. Game over. Which is, it's mathematical, game over. But if the Bank of Japan owns most of those, they pay the Bank of Japan who gives the money back. So it has a little longer to run because they've done such monetization. But this, I don't think, I think this is unauthorized.

I do not believe that nobody, no central banker wants to see their rates rise that fast that much And it's on percentage terms again. I know it's only 1.57 percent, but understand it started in from negative point three Whatever that means And Now it's at 1.57 on percentage basis. What is that? That's a div zero error and you know, Excel terms. I don't know. Well, yeah, my concern when I look at those charts and you see all of these interest rate charts around the world, inflation, wasn't it Mark Twain that said, how do you go bankrupt slowly and then all at once?

I think that was Hemingway. Okay, maybe it was Hemingway that said, how do you go bankrupt slowly and then all at once? Yeah. That can be applied in so many different ways. How many times do relationships break up, right? You know, friendships, you know, slowly and then all at once, there's a triggering event that snaps something.

And we've got a lot of things around the markets that have been trends in place that have provided fuel for these markets, especially pulling all these assets in the U.S. that could reverse pretty quickly. But we're starting to see slowly and reaching that all at once phase. And that's the importance of having some adaptability and flexibility within an investment strategy that can help you navigate, am I overweight US equities or am I overweight treasuries? Do I reduce my exposure? Developing a plan in place and recognizing what environments would cause you to be unsuccessful

in retirement or on your way to retirement, and then have a strategy that can help mitigate those and some adaptations. Because if you've just got that cookie cutter approach, modern portfolio theory, that you're gonna have to have three to four or five years before they're gonna make adaptations because they're going off of what has happened in the past.

And we can learn from history. they're going off of what has happened in the past and we can learn from history. And it tends to, you know, different environments tend to rhyme. But one thing that we have seen is rebalancing occurs. You know, everybody focuses on one strategy or one trend until it quits work and they wring everything out of it. And then all of a sudden there's opportunity elsewhere. And that's one of the things that I'm starting to see in our tools

is some major indications, not a recommendation, but a major indication that commodities are a space that could provide some above average returns and even emerging market equities over the next five to seven years. I think this is gonna be a multi-year trend once it breaks to where the US is garnering everything, and especially if interest rates start going up around the world. That's going to be the surprise. And now, how are the governments going to be able to continue to just spend and borrow

to juice these economies and to bail out these banks? Because what are the governments going to do if it's a question between they go bankrupt or they allow these banks to go bankrupt and backstop them with FDIC, at least in the United States? Well, I think what we're seeing here, and I'll just full screen this again at FinViz, just sort of looking at their overall market tracker. Red is down, green is up. This is year to date performance, Paul. Squinting at it, the big seven are sneaking out the back door and we're seeing that what you just talked about, that rotation, consumer

defensive is up, industrials are holding okay, real estate, healthcare, utilities, energy, oil gas, all holding up pretty good. So that's kind of like, you know, sliding out of the NASDAQ, sliding back over to, you know, standard consumer defensives, right? Got to be somewhere. So you might as well be in things like telecom services, industrials, utilities, energy, stuff like that. Does that make sense? Yes, it does.

Well, and a lot of it makes sense to me because your mutual funds have to operate by prospectus. So if that prospectus says that they have to be 93% invested at all times Then a good mutual fund money manager that has some experience that understands, you know If a recession's come and their job is to try to mitigate that downside loss Well, the market goes down 50 and they go down 40 they've they've added some value to their participants. So they'll rotate out of those more speculative names into your consumer staples, utilities, dividend payers to try to mitigate that downside.

That makes sense. You know, Mike Green does a good job of explaining and his theories were very good. It's been proven correct, at least from the passive investing and just indexing nature of employment being high, investors are just going into the S&P 500. And I can't tell you how often when somebody has me look at their 401k, they're 100% S&P 500. They don't have any other diversification and there are new clients that are prospects that will come in, individuals that I'm

talking to. And what they're doing is in, individuals that I'm talking to. And what they're doing is, hey, that's had great performance. They've been told that the S&P 500 indexing passive is the way to go. Well, those are price insensitive buyers. I mean, it comes in at the first of the month. But if unemployment goes up, that's less money that's coming in. And if you reach a point where people are having to sell those to start covering their expenses because they're laid off, then that could be much more severe in the reverse direction

to where you have markets that are going down to the surprise of people, to surprise people how severely they can go down the other side. Breathe in, breathe out. It just happens all the time. I was gonna see if I could find it here quickly. You know, I'll have to do this for next time. It's time for me to start tracking one of my favorite indicators,

because you know, Paul, I don't like government statistics because they're not believable, frankly. Incredible and I mean that in the actual sense of the word, not credible. So but the one that I do trust is the monthly and also the daily treasury statement. It's just cash doesn't get a tonically adjusted. It's not this has no seasonal applications like how much cash came in the door. That can be a pretty good way if you keep your eye on it to note when tax receipts really start to fall

That'll actually lead by a month or more What you know the Bureau of Labor Statistics sort of grudgingly tells you after the fact you know? Yeah, that employment's down so anyway cash show me the money. Sometimes it gives you some information That's closer to a real time indicator that that yeah, that's a good tool All right. Well anything else in your mind today? No, that's it one thing that I do kind of want to show because it's interesting since you showed showed those charts there is This is year-to-date performance. If you can see this here, I should make that a little bit larger. Oh yeah.

So this in the red is the NASDAQ. So as of today, it's down 5.21% for the year. The S&P 500 in black, which is down 2.88%. You got the aggregate bond index right now, which is up two for the year. And look at this, this is surprising. With the market selling off, commodities have held up well, they're still up up two for the year. And look at this, this is surprising. With the market selling off, commodities have held up well, they're still up 2% for the year.

You have that. You have EFA, which is your developed markets, which is up about 9.8. We did see a lot of rotation out of US in the international and the sell off. You've got emerging markets up six, but look at that. Gold's up 14.9 for the year as represented by OU and Z So yep, you know if you're if you're on in the ASAC and the S&P

You don't have any exposure to any of those other categories You're performing much worse so far a year to date than what you would if you had some exposure to those other categories Yeah, I got a knock on wood I mean obviously I have an interest in where gold goes But I don't like to crow about these things when when it's up strong, you know, and I'm worried that a really strong Move up in gold is not a world anybody actually wants to live in myself included Because it means something else has gone really wrong gold's my fire my fire insurance I don't want to use my fire insurance to be honest

But I got it in case I need it so well I mean if if we're too heavy in it this is the last thing we want to have happen but I tell clients on a regular basis especially if it's appropriate to take a certain percentage of their portfolio to buy that long-term fire insurance we hope ten years from now that it's the same value that it is today right because that mean all the bad things that we're worried about and all of the warnings that we have have not come to fruition. No different than buying fire insurance on your home and you're not upset 10 years from now that the home didn't burn down, right? You understand that that was an insurance, that you needed the

insurance to cover that risk of loss. But you're right, I don't wanna be in a world, I mean, I'll be glad that I own gold if that's the case, but I do not want for my children and my grandchildren, if I'm fortunate enough to have any, that gold's $50,000 an ounce, because that means we've had a currency crisis and severe inflation, which is an equal opportunity bringer of misery for the populace.

Yeah. This created quite a surprise for a lot of folks when I showed this to them, which is the performance of gold compared to the S&P 500 starting in the year 2000. Now, a little bit of a cherry pick, because stocks were maybe at an all-time high at 2000, and gold was at a kind of a low. But, and I'd love to see you do the spaghetti chart, Paul,

where you ask the question each of those years from 2000 to current, which, you know, what did better? If you were in gold or the S&P 500, you know, and every year it'll trace it. Some years it'll, gold will beat, some years S&P will beat. But, since 2000, you could have been in gold and done a lot better than being in the S and P 500, including this includes dividend reinvestment. Um, that's,

that's surprising. That is, that is, I mean, I know that data cause I paid attention to it, but it is, it's still shocking when I look at it to see, because you never hear anybody on CNBC talking about indexing in the gold or having it as a part of your portfolio, you just don't. And, and that's been a substantial outperformer versus the SPY over that period of time, and we only know that we're going to fit a hindsight, but here's the thing I'll tell you, Chris, that I've learned in working with individual investors from a long-term standpoint, those sideways movements and

goal where it's going sideways compared to what the S and P is, it is, it is really hard for the average investor to stay patient long enough to benefit from those big trends. And I think that's the reason why, because they, they're, they're, they're chasing performance all the time, because that's what the marketing firms do. If a firm's got really good performance, they're going to spend as much money as they can to advertise that.

And that's why it's important to know why you own what you own, understand the strengths and weaknesses, and then there's always an element of faith associated with that. You do the research to make the best prudent decision you can, and then you let time bring the results, and you have to be patient. Every good thing in our life takes discipline to have a positive outcome. Investing is no different, but investors have been trained through the financial media to chase returns. They're always talking about, oh, this is the best thing, this is the best thing, and people feel left out.

That fear of missing out causes them to throw discipline out. That's why I enjoy running a strategy that we understand the strengths and weaknesses of because it helps you stay patient in there for the long term and that patience and discipline is what brings more success than anything. Indeed. Well, thanks for that. Thanks for those final words. Gold, surprising. So for anybody who's interested in talking to Paul and his amazing team, please go to peakfinancialinvesting.com. Very simple form to fill out. An email gets kicked out, somebody from Paul's team and or Paul himself will contact you within 48 hours to schedule a meeting and go through a planning review process and it's a great process Paul. People still just tell me it's amazing so they ought to take

advantage of that all on its own as far as I'm concerned. Just to know and you tell it to them straight which I know people also appreciate. They do. And for what it's worth, even if it's not appropriate to work with someone, I always ask, did they benefit from the planning process that we took them through? Because I have to know that before I can give them a recommendation. I've not had one person say that it was a waste of their time. So not one. Amazing. We haven't. At least so far. Now somebody might call me out and tell me that just to give me a hard time But so far we've not had anybody that said it was a waste of their time

They've gotten something out of it whether we were it was appropriate to work together or not that benefited their planning Before we close one last thing Paul. I'm gonna be seeing you at the IMA conference here coming up soon April 4th to 6th, so if you're watching this after April 4th to 6th, you missed it. But for people watching this, you can get $100 off your tickets following a link, peak.fan slash IMA 2025. You can come and meet a lot of really amazing people at this. I'll be emceeing it, but a lot of your so-called dissident doctors will be there. Robert Malone will be there. Scott Atlas is going to be there. But this is fellowship,

Paul. This is come and recharge, meet the people that think the way you do. Everybody here values truth and fellowship. And so that's what this is all about. So if anybody's interested, you get to meet me. And Paul, you're going to be there too, right? I'm going to be there as well. I sure am. I'm coming at you Friday morning. So I'm looking forward to it. So again, peak.fans forward slash IMA 2025,

you get a hundred bucks off until the 30th. And then it's just regular ticket pricing. So if you want to come, we'd love to see you there. With that Paul, I actually, I'll see you there. I'll see you there. Looking forward to it, Chris. Me too. All right.

Bye, everyone. See you next time.