Peak Prosperity - Why Passive Investing Is Dead: Navigating the New Financial Chaos

Episode Date: April 17, 2025

What a time to be alive. If we’re right, the dollar regime is now on its last legs, which makes pre-positioning your portfolio for this shift is a must-do activity. Further, we’re going to have to be both nimble and humble, because much of what will happen next cannot be predicted. It will emerge.Resources:Peak Financial InvestingProtecting Your Wealth from the Great Taking

Nothing in this program should be considered investment advice. It is for educational purposes only Please hit pause and read this disclaimer in full Look I'm the type of person I would rather get the pain over with now Let's deal with it now before it festers into something greater, but our politicians are too weak to do that The following is the audio version of a video released at peakprosperity.com. Visit peakprosperity.com to watch the video and to find other insightful content such as articles, discussion forums, and exclusive subscriber-only content. Hello, everyone, and welcome to this edition of Finance University.

Finance U with Paul Kiker of Kiker Wealth Management back with us today. Paul, welcome, and we have some stuff to talk about. Oh, we do have a lot to talk about. It's amazing what's going on under the surface, around the surface, all over the place. Well, so the first thing I want to talk about though, just to set the stage for this is I don't know what's happening, Paul, and neither do they. I spend a lot of time in my life listening to lots of different people and I gather lots of great viewpoints, but I have to say for the first time I've started to, well not

for the first time, you know what? I stopped following people who were giving me gold technical charts. Once I determined that it wasn't really following technicals, it was doing something else that felt like it had some undercurrents of manipulation. So a technical chart is, is an assessment of what all the humans are doing. Yeah. If you can trust that the humans have normal human motivations, right? If you don't, it breaks down and people be like, oh, it's going to do a fib or tracen.

I'm like, why? Why would it? Somebody's setting the price for this stuff. But now I get the sense that the whole world system is so complex that it's almost impossible for any one person to really grasp everything, right? You'd have to be a derivatives expert and an OTC plumbing expert. You'd have to understand exactly how collateral settlement systems worked. And you'd also like there's just so many subsystems in this.

I don't so a I'm not sure anybody knows what's up. B I think it's happening and I think the rules are getting rewritten. I think that what used to work may not work as well. And so that means we're gonna have to be just very observant, humble, and open to the idea that this is a complex system and they have emergent behaviors and they're gonna do things we don't expect. So we should do what we can to understand how they're changing when they change and just see it for what it is. And we've got some of those signals to talk about today. Yes, absolutely.

And it's interesting you bring that up because one of the things that I've noticed is we're a community, right? We've got a community. There's individuals that I'm subscribed to and have paid for their research for a long time, specialists in this area. And rarely are they all pretty much saying the same thing. And what I've noticed across the thing, because I've been trying to pull myself out of the weeds

and just stand back and look at the view from 30,000 feet, so that you can really see what's kind of moving around the surface. But what's fascinating to me is the only conversation that I've seen by most of your lead analysts, even within your big firms, all they're focusing on right now is, hey, we've had this huge sell-off in the market. We've been the biggest sell-off.

Now there's low liquidity, and they're going back, okay, since the great crisis in 2008, this is what the market has done over the next six to 12 months following that. So you need to err towards piling in the market, which is what retail investors are doing for the most part. While institutions and professional investors, the few that are continuing to be active that are out there that are trying to see the big picture are lowering risk, batting down the hatches,

because they see this danger coming. They're prudent and they see the danger coming and they're standing back and observing and moving on the opportunities as they reveal themselves like gold where the average individual is still not interested in buying gold right now because it's it's moved so far so fast. Well this is actually worrying to Paul, because I would everybody listening to this is probably, I would say as a retail investor, not an institutional investor, we might have a few institutional people watching this, you know, but what's disappointing to me is the level of programming that's out there on Yahoo Finance, MSC, NBC, all that, that

basically is some version of by the dip, right? And so the reason this is disappointing to me is because I have data that suggests and I know you too Maybe you could show that in just a second after this that that the big money the institutions and the insiders they're selling Yes but Retail isn't just sort of buy-in They are piling all in right now. This is going back to 2014,

retail investors speculative appetite, looking at the NASDAQ 3X leveraged ETF. Now by the way, you know this, I'll tell this to anybody else who doesn't know this, that 3X leveraged ETFs are a great way to lose money. Even if you're on the right side of the trade, if you let them sit too long, you burn, you burn value. They, they, they always lose money. They're not a, they're not a buy and hold vehicle, but look at that.

People are like, this is a great time to go three hex long with billions of dollars into the NASDAQ triple, triple leverage thing. So to me, Paul, that doesn't happen organically. This is people wanting to buy the dip, not wanting to miss out fear of missing out as FOMO FOMO. This is, but this is off the charts FOMO. How do you, how do you experience that? Because you deal directly with, with people in the finance base some yes, so

it's a good indicator to me as to what I've seen over the past 26 years because and When you share that all I could think of So around 2013 there were a couple of traders that came out with a song that they made and it says just by the Blank and dip is what you need to do. Buy the blank and dip. So this was on the professional institutional side and they're like, hey, the feds back there, they're behind the scenes, they're gonna print money, inflation's low, US is gonna take over,

just buy the dip, blindly buy the dip. So that was on the institutional professional side. And now we're starting to see on this other side, but retail back then was scared to death, right? They had been wiped out by 2008. Some of them had made some bad decisions and sold at the bottom. So I really didn't see this investor optimism on the retail side until 2020. After 2020, that's the COVID bottom and the market turns with the government printing. That's when it shifted on the retail side. So one of the things that I've been talking on the investment committee and talking to clients about

is I don't think that the bottom is in. Like, I don't know, right? Trump could do something crazy, the Fed could do something crazy. They could just print massive amounts of money. But without that, I don't believe that the bottom is in and the minimum we're gonna retest it. And I think we're gonna go to lower lows over the next six months just because

of what retail is doing. We finally have an environment right now where professionals have a backdrop of retail investors that are panic buying these sell-offs because they're looking in the past, regretting the fact that they made different decisions over the past 10 or 15 years, and they're taking the most recent past, convincing themselves they're not gonna let it go down. The Fed's not gonna let it get that bad. Trump's not gonna let it go down.

And it may completely be outside of their control as well, and they're panic buying, and this is providing the opportunity in a low liquidity environment for institutions to sell big positions off to the average retail person. And unfortunately, we're gonna have a generation of investors that have been convinced

that things are gonna continue the same, at least as far as the US economy leading, that's gonna cause them a lot of damage because they're not looking at the big picture. I mean, we have dramatic changes that are taking place right now. I mean, you were telling me about the scoring for the reasoning of GROK coming out.

I mean, that's a game changer. Technology is deflationary. It's moving at a pace that people are having a hard time keeping up with. I'm adapting it as quickly as I possibly can, and it's amazing how much extra efficiency it's given me. And then you've got the tariffs. I saw one headline that this is the highest tariffs that we've seen since 1903.

Now, I've not been able to go back and verify that, but it's certainly in line with what we've seen in the 1930s. And retail is focusing on what's happened in the past 10 years without the benefit of all of history as a student of history in the markets to understand, things change. And when they change, if you're on the wrong side of that and you're not anticipating it, you

can wipe out a lifetime of wealth by being on the wrong side and not being prudent. Well, change is hard, right? It just always is. And this is absolutely unbelievable change. And so if the old pattern was buy the F-dip, right? And then the circumstances change, well, then you're in trouble.

I do wanna get back to that Grok AI. It's an artificial intelligence Grok for people that don't know is Elon Musk's ex or Twitter AI. Big story there. We'll get there in just a second. But I wanted to follow up on this thing because because here's where we are today. Oops, Paul.

NASDAQ is down 652 points, 3.88 percent. Right. And so this would be a great time for the Fed to come in and say soothing words, right? Instead, remember, we've talked about this that maybe the Fed won't for a variety of reasons. Maybe they don't want to support Trump because they don't like him or maybe something but something's different, objectively different for me. Whereas now that we read headlines, stock market today Dow and S&P NASDAQ smoked as Powell

warns of challenging tariff impact. And so instead of saying, saying calming things, he walked, when Powell comes out and says, you know what, today'd be a great day to warn about the challenging impacts to come from uncertainty around his trade policy. And you know, they talk about how stocks get hit. And he said here, stocks hit sessions low because he said that the central bank will wait for greater clarity before considering any interest rate adjustments, by which they mean cuts.

So they basically said, this uncertainty, we're standing back. Not only are we standing back, we're going to tell you that the cuts that we were going to signal, the cuts that we had in mind mind before taking those off the table for now. And that's talking the market down, not up. That's new behavior. So again, remember we said it's time to adjust. You have to understand when something's different, you might not like it. But it's this is objectively not what Powell would have said a year ago.

Yes, no, not at all. Well, I mean, just go right prior to the election. You know, you have a little bit of a pullback and all of a sudden they're cutting rates with inflation running hot. And, and the only reason that I could come up with them for cutting rates and fueling the market had to do with trying to keep the markets up for political purposes. And now we're in an environment where the only... Yeah, remember that we had that emergency cut 75 basis points in September right before the election it's an emergency what's the emergency i guess the polls weren't looking good

for biden right they are and i actually had this i had this on the chart here an interest rate somewhere uh if i can find it yes there we go so just to share this to put it in perspective, so so the listeners can can see, if we go back to interest rates, so this is a chart of the three months, one year, two year, three year, five year, 10 year, 20 and 30. So that was what September somewhere around September 15, the Fed cut rates. And then rates go higher, and they cut them again. And then they go higher. And then now all of a sudden, we haven't had any rate cuts, have we? Nope. So, I think. Yeah. It just does.

And markets were just rocking in that new repraise. So, you know, look, if I was gonna give them the benefit of the doubt, Chris, if I was gonna give them the benefit of the doubt, let's try to do that because I'm going to look at both sides. The only benefit of the doubt that I could give them is we have this huge treasury rollover that has to take place between now and what September and October. I don't know the number left, but we know it's nine trillion this year. So if they are on board, then they're going to talk the markets down and not intervene so that there's enough of a sell-off in the equity markets to create extra demand for those treasuries.

Because you've got China that's been selling some treasuries. You've got rumors out of the banks in Japan, not rumors. I just don't have the data right now, but some of the Japanese banks were selling treasuries. And on the other hand, you've got the Japanese government, Chinese government, that's coming out and basically making it very clear, by limiting stock sales on their exchange to create this artificial backdrop that their markets are much more resilient to these to this tariff war than what they are. So, you know, the only the only benefited doubt that I can give the Fed is that they're playing along with this game to try to drive money into treasuries to kick that can down the road,

because we have seen that the bond market is important to Trump and Basant. So this is old data. I don't have more current data than this. It's it's lagged badly. So I'm still waiting for fourth quarter 2024 data. But the last data we had Paul on this is third quarter 2024 Japan on the left China on the right both of them heavy kind of heavy net sellers you can see that the uptick since about 2022 been relative almost none for China a lot of down ticks and Same thing for Japan a few more upticks, but it's still a net seller So when your two largest Treasury accumulators have been net sellers upticks and same thing for Japan. A few more upticks but it's still a net seller. So when your two largest treasury accumulators

have been net sellers, you got an issue on your hand. You're gonna have to find that demand elsewhere. You do. And you're gonna have to sacrifice something to provide the funding for the overall market with the situation that this administration was left with with the near nine trillion and it's over nine trillion near nintra

Anyway, whatever the number is. I think it's six trillion just this next 30 days Yeah, they have to refinance a lot which means, you know, they go out to the auction market They have nine billion maturing. They got to get nine billion out the door again after they so yeah They're just called rolling the debt. So they got to roll a a lot of debt. Obviously they'd like to roll it under better terms. You know, you'd much rather roll it at four two instead of four six on the 10 year, right? Well, and we can go back and change the past, but I believe that it is near criminal

that when interest rates were as low as they were, criminal from the standpoint of our future generations and our current generation that you didn't turn that debt out 20 or 30 or 40 years. I mean, every person buying a home recognized the fact that three and a quarter or two and a half percent mortgage rate from a long term standpoint was a once in a lifetime opportunity. So why didn't our treasury ladder those out for 20 and 30 years and buy some time as well. There's arguments that they were doing it for political purposes to keep the markets up. I don't know. All I know is they didn't do it.

And now we've got this situation we're having to deal with right now. I consider Janet Yellen, who made those decisions to be the biggest monetary vandal of our time. I agree. Fiscal and monetary vandal. She did more damage than practically any human could ever dream of doing in a lifetime.

Short of the people who created and released the virus from the lab. But outside of that, I mean, from a monetary standpoint, yeah, pretty intense. So so so Paul, I have this theory, right? It's not really a theory. It's this look August 15th 1971 we decided to do an experiment which is what happens if We decouple how much money we'd like to print and lavish upon ourselves as a government. We could decouple that from this

Rusty old anchor gold, you know, it's just terrible. Like, it's just, you run out of it. It's very limiting. We don't like it. So what would we do? Well, what would happen is that, you know, a lot of what's transpiring today, I think is the end of that regime, right? It was 54 years of just nonsense. And the nonsense was we can just expand debts forever and it doesn't matter. Remember, Dick Cheney growled that at the nation one time deficits don't matter debts don't matter

It's like well they do sooner or later You know and I think sooner and later have both arrived, you know And so here we are and so that's what we're gonna have to struggle with here is this idea that there really aren't any good Options there's no like oh we turn the knobs just right and everybody doesn't have to face any consequences like right now. Because as I just mentioned, every single time the Fed does a bailout, it throws another tranche of US citizens under the wheels of the economic bus, right? Poor people then lower middle class, then middle class, and then slightly upper middle class. And I think we're about to hit upper middle class, all thrown under the bus because they

never had the political stones to just say, you know what, we can't have everything. We're going to have to be adults about this. We can't be children kicking for, you know, candy in the candy aisle. We need this, you know, we're going to have to live within our means for a bit. Nobody, nobody ever wanted that as a story. So here we are. And that's going to create extraordinary pressures on the system. But at least at a minimum, I think what used to work is not going to work going forward.

And my hypothesis about that is that passive investing was a very good strategy then, and it's not going to be a very good strategy then, and it's not gonna be a very good strategy for later. And we're at that dividing line between then and later. What do you think about that? No, I believe that's right. I mean, passive investing seems to have run its course at this point. Now we don't know because how much longer

this irrational exuberance can continue. I believe that we have enough warning signs to tell us that we're at the end of the road, that it's a dead end there. But one thing that I can tell you about Wall Street and one thing that I know about studying investor behavior, most investors are chasing performance. Well, the average holding time

for your investors working with your traditional advisors about three, three and a half years. So one thing we know is on Wall Street, they say if you have a strategy that's working really good and you get on the top floor and you feel like nothing can go wrong, that's about the time that the worst performing strategy rotates to the top.

And there are some strategies that are consistent over time. It's not gonna be any different than passive investing. It's had its day in the sun. And I will say for those investors that have been in passive investing up to this point, because that was just what they were taught to do. And they're waking up to the realization that, hey, maybe this is not a good thing to do going forward. Maybe, maybe, you know, there's no other area of my life that I'm passive in. So why would I just blindly be passive with all these changes that are taking place? Those are the ones that are going to be the luckiest of the individuals because those

that are being active and adaptive and prudent have had to walk a path less traveled, but we've been seasoned enough to where we can help these new individuals on the journey walk the days ahead with a lot less stress. So yes, I do believe that, I believe that we've reached the point with all of the data that we have in history and they attributed it to Churchill, I believe, that the further you can look into history, the more clarity, I'm butchering this, but the further you can look into the future, because the history is gonna teach us the mistakes of the past. And we're to the point now that I believe that it is a very dangerous thing

to be a passive investor with all of the changes that are taking place. I mean, think of it, if you're a passive investor and you own the cassette tape coming out of the 1970s, well, you rode that thing all the way down to zero, right? So, so I'm not a fan of passive investing at all. I believe it's going to disappoint a lot of people in the years ahead. Now, I was talking with an exceedingly smart, very well-heeled, very professional, mature

real estate investor a while ago. And his position, might be right, might be wrong, is that they're going to have to drive interest rates down one last time, and that this is going to be a once in a generation, if not longer, low in them, meaning it might not be as low as it was, it won't go to zero, but the next low is going to be one we won't see again for a very long time. And because of that, his entire strategy is to wait for that moment and then pounce and just lever up and buy as many, because he works in multifamily, just get as much of that stuff on the books as he can at a fixed rate.

Normally, when you're doing the deals at his level, they're either a five-year float or a something, but he's going to fix them, pay up. And he said, because he said, this is just like, they're going to pay for themselves in no time, because they're going to have print because he's he's also fallen into the idea that there really isn't it doesn't take a lot of math to figure out there's really no way around this you either print or you don't those are your options you know it's just it's just mathematic and they're going to try to keep the game going as long as they can until they lose control but it's getting shorter and shorter and shorter and the one thing that allowed them to And they're going to try to keep the game going as long as they can until they lose control.

But it's getting shorter and shorter and shorter. And the one thing that allowed them to kick this can down the road for quite some time was the lack of inflation that was easily visible for everyone to see. And when we go back to that 1971-72, when we went to a pure fiat currency and we left the gold standard under Nixon, everything that you look at historically, inflation seems to be beneficial to begin with, and it rewards those who are going to play the debt game. And then all of a sudden it reaches the point where everyone's already in, and then it's an equal opportunity bringer of misery to everyone across the board, except for that very few group at the top

that owns all of the assets and can play the game enough to where they have access to capital. And Wall Street, the big monopolies have access to capital that the average individual doesn't. So, and then ultimately then the system's gonna break at some point in the future, we're gonna go back to the feudal stages where you have to give your bride to be to the regional landowner to have a

child the night before you get married. You know, I mean, this is something that we've seen in history before. And really, look, I'm the type of person I would rather get the pain over with now. Let's deal with it now before it festers into something greater But our politicians are too weak to do that Indeed indeed and Paul. I've got a really strong theory that I just shared with my subscribers. I'd like to share with you But first we're gonna take a quick break and we'll get to that right when we get back Hello, everyone. I'm Chris Martinson of peak prosperity and I want to tell you about something so you probably heard about back. of that which is that there's some people out there, I call them the raccoons of Wall Street, who have found ways legally, air quotes legally, to take your money, your wealth, your stocks, your bonds, maybe even your house from you.

This falls under the idea of something called the great taking and it's a fairly complicated topic but this is what I do and I do exceedingly well. I will find ways to understand this and communicate it to you. And I'll find the other experts out there who are just the best at figuring out what you can do and how you can understand this thing. Now, I hope that nothing comes of this great taking idea. I hope that the trigger is never pulled, but it might. So to help you get there, we have the Great Taking webinar,

a variety of experts, and we have seven strategies that we will outline and also are contained in this workbook that comes along with the Great Taking. It's there any time you want. Once you have secured your access to the Great Taking webinar, you'll be able to download it, look at it, and view it any time you want.

And you should actually do this with people you love, other people you care about, and anybody else you think who might need to know this information. So with that, please consider taking advantage of this amazing offer to get educated, and then take action to protect your wealth. Because the great taking, it's a very real thing. Obviously, they wouldn't have spent so much time

finagling the law and putting in this trigger if they didn't mean to pull it one day. Let's hope that they don't, but if they do, I want you to be on the right side of the line so that you're not on the great taking side of the line. Now, back to our program. All right, Paul, now I wanna get into this, to this theory if I could.

So, I call it the it's happening. Paul, so listen, you know why I invested in gold in 2001? Because I could see the path. I could see that the Fed was just gonna print and print and print. And now people would say, oh, it was so easy to buy gold at 300, it's 3300, it's so hard. It's actually the same decision, because 300 bought the same back then as 3300 buys

today. It's the same decision. And I didn't buy it to get rich. I haven't gotten rich. All I've done is not lose my money to inflation that whole time. Yes, it's appreciated a little over 10 and a quarter percent per year. I think that's what inflation, the true rate of inflation has been. But leaving that aside, so here's the theory.

When I interviewed Luke Gromann, he said, he really crisped it up for me. He said, look, the Fed's at that point in the game where they either have to save the bond market, U.S. Treasury bond market, or they're going to save the dollar. You can't do both. So things were really falling apart last week, you know, and this weekend we came into it and I'm calling all sorts of different people and getting calls and they're like, what's what's happening? I'm like, we're just gonna have to wait to Sunday night to find out how things break

Sunday night, wouldn't you know it, the dollar started to strengthen and stock futures were strengthening and everything was just sort of it's what I call a Sunday night rescue because it takes time to organize these things and the Fed has to call the Bank of England who has to call the Bundesbank and they get their stuff together and off they go. Sure enough, this is the three days here. This is on the left here. This is Sunday. And so bonds suddenly, magically here we have the 30 year bond, the 10 year note, all suddenly

start rising 14th, the 15th, the 16th, so bonds are saved. Now if the theory is right, Paul, and bonds are gonna get saved, what do you think the chart of the dollar looks like? You're right, it looks like that. It looks like it's getting kicked down the stairs, right? So you can't do both, pick one, they're gonna let the dollar go.

This fits into the whole tariff thing, because by the way, while people are complaining, Paul, about will tariffs be 10% or 20%, the dollar's down 10% this year against all the best. That's a 10% tariff right there. Absolutely. Operates the same, at least from a manufacturing standpoint. So if the policy is out to let the dollar go, rich people know about that, big money

knows about that. You and I talked about that mysterious $11 billion purchase and takeaway of gold from comics in a single day on April 1st. Remember that? Yes. I'm old enough to remember April 1st, right? I thought, is this a fool Remember that? Yes. I'm old enough to remember April 1st, right? I thought this is a fool's joke. No. So what do we think would happen if big money got the vibe? Well,

the big money is doing this. Gold is up. I think it would last. This is up 107 today, but this is, I think it was up 115 last I saw, but here we can plainly see gold here starting in, you know, just doing this big run from just under 3000 to 3310% in the last week, week and a half. So that means it's actually happening. It means something really big is happening where the international monetary order based around the dollar is about to get changed. And that's when we talked about needing to pivot and needing to keep an open mind and

maybe the rules of the past aren't the rules of the future. All of that. This chart made me made my eyebrows shoot up on my forehead when I first saw it because this tells me alone that something really magnificent has happened. This is the dollar index in blue against the 10 year yield in a treasury yield in orange or light, whatever you see that color as I see this kind of an orangey color, orangey red. So as you can blame, they see they very, they're highly coincident and they have been for all of time. Every wiggle,

they follow each other except right here, right here, starting around early April, follow each other except right here, right here, starting around early April, 10 year yield goes that way. And the dollar goes that way. I cannot overstate what a departure from every like Paul, I've been watching this pair trade like a hawk for a few decades. This is unusual. I'll say. Yes, that's unusual. And again, I don't know why I don't know is it milkshake theories a euro dollars Is it OTC plumbing piping did some big bank blow up? I don't know about I don't know I Just know that something happened here, and it's a new game, and I'm trying to figure out what that new game is well And unfortunately, we're not gonna know Exactly what that new game is until we have enough time for some information.

But what I can just about guarantee you is that there's somebody else, somebody out there that's been trading off of that pair trade. They found this sliver in the market and that's been their specialty. And they had to have blown up with those type of moves because they don't plan for a correlation like that to break when it's that positive in the same direction. So somebody's been damaged by that. And that's what we're seeing with the basis trade blowing up. You've got that taking place. You've got, you know, what have been historical correlations

and that's the problem with algorithms. So clients will talk to me, hey, are you algorithmic in your trades? And I'm like, well, if we're algorithmic in it, then we're just gonna turn it over to computer because the X happens, you know, this decision is neat, needs to be made. But when everything's traded off of that algorithm,

there's no room for guidelines and slight discretion because there are times where it makes sense that, okay, I've had a decision point, but let's just step back and see how this unfolds right now. So, you know, you, and that's the problem with these, these algorithms and the computer trading is they're based off of a certain period of history. And when that history breaks, they're so confident and investors are so confident in the outcome that it blows them up and they're blindsided and I think we're gonna continue to see more

of that over the next six to twelve months. I do and that's why this is such an important model for me because because of how you operate and this is if the Hippocratic oath is first do no harm to me that the first rule of investing is, you know, don't take unnecessary losses or don't accidentally lose stuff because you didn't understand the game that was being played.

So look, we talked about this before. I just want to set the stage for anybody listening. We had vastly overpriced stocks. You and I have been talking about that since 2024. Not just sort of overpriced, legendary, never more overpriced. When we looked at price to sales, price to book, price to earnings, you name it. There was just all sorts of things. Plus hyper concentrated, really stuck in just the top 10 stocks and you know, and foreigners

were over oversubscribed into the US. And maybe you can tell us about how what happens when they decide to take some of that oversubscription and move it offshore again, because that makes sense. Anyway, overpriced, over leveraged, and definitely over concentrated stocks. So those were going to get into trouble anyway. Right. It's just, that's just the law of the universe, it seems to be. But that somehow turned into a liquidity crisis right quick, meaning when we saw that 10-year USD basic pair trade blow up

or things happening where it's like there's just not money for things and so that's when you see those big downdrafts in the equity market that you know we had a couple days back there where everything got sold, everything. Everything. That's liquidity. There was nowhere to hide. Nowhere to hide because everybody's selling because they have to sell and so when everybody's a seller and nobody's a buyer, prices go down. That's a liquidity crisis. So we had that.

But then now we're starting to hear, ooh, this is a couple solvency crises. We're hearing about some hedge funds blowing up on the basis trade. We're starting to hear some rumblings about some banks. It happens. Okay. But if that goes on long enough, this could turn into what we call a systemic crisis, right? Which is when because bank A can't pay bank B, therefore bank C goes belly up, which means DEFG are all out of the picture too. You can't, a systemic crisis could happen for lots of reasons, right? There's piping and plumbing and the

derivative market every single day, Paul, seven trillion dollars of notional value has to execute. I don't know how many trillions of dollars of other stuff is just going hither and yon every day, right? You know, that's the piping and plumbing. So if that freezes up for some reason, now you have a systemic crisis or, you know, the Japanese market really goes super haywire. So the United States has to just turn off the valve piping, you know, to Japan and that's a systemic, so we don't want to get there, but that is the path to crisis.

That is of course the worst of it all, having a systemic crisis. So that's why when you manage people's portfolios, you and I have spent a lot of time talking, because I wanted to know like, what do you do? You know, and you're aware of the SIPC limits and you're aware of different brokerages and how they handle things differently and Just understanding that this is not a time to just sort of go. Oh, you know That'll all sort itself out. I hope you know, no, that's right

I can't do that. So let's kind of go back and talk through that. So you've got overpriced stocks and That's right. So let's kind of go back and talk through that. So you've got overpriced stocks. And so let's think of it like, you know, a woman becomes pregnant, typically she's going to deliver around nine months. You know, if that baby kept growing inside of there, at some point it's going to, you know,

if it wasn't delivered, but the overpriced stocks is the first kind of warning that we get. That's a mile marker that tells you, you don't know how long they're going to stay overpriced. Now, historically they've never stayed overpriced this long, but historically, we've never had the intervention with a fiat currency like our government has, or just a ridiculous amount of debt accumulation for the purpose of short-term gain.

So that tells us the mile marker of where we are. And then the liquidity crisis is the first birth pain. And on that first birth pain, when you're in the warning sign, you know it's a high risk period of time. So that's where we'll start trending back any weakness in the portfolio, you know, you get a couple of things kicked out. Now, now if they break support, you know more than likely in the short term, that tops take time to process,

but you have to lower that risk somewhere so you kick a little bit out. Then you move into that solvency crisis. The first warning we had about that was when Silicon Valley Bank went down. That was a warning. Now, most investors aren't patient enough to recognize those mile markers. So when Silicon Valley Bank went down, we had overpriced stocks. It wasn't necessarily a liquidity crisis in the short run, but yes, it was because for the treasury market on those long bills, rates had gone up.

It caused their value to go down. They didn't want to harvest those losses. They get a liquidity crisis. Silicon Valley Bank goes down in that solvency crisis. When that spills over into the rest of the economy, when you have major liquidity crisis, like we've seen a little bit here in the short run, I mean, liquidity is, this is, let's see, what was the data that I had? I may have it right here. I'm going to reference this close so don't hold me to exactly to it, but I believe the difference between the bid and ask is that the spread shows that we're at record levels of illiquidity.

So people are having to take what they can get to get out. So that shows a little bit of that liquidity going into the solvency crisis. And the next stage of this, when it moves into that systemic crisis, I believe it's important that you should not be over the FDIC limits. You've got to be cognizant of your SIPC limits. I would rather be in a top one account because you don't want to have your- That's a cash count?

Yeah, cash count. So there's top one, which is cash count, type two is a margin account. So if you're in a margin account and they've loaned your securities out and there's a solvency crisis which turns into a systemic crisis, then you may not get those back

and your account could be at risk if that broker dealer was to go down, which is AKA the risk of the great taking. So you've got to be prudent in these periods of time. It's not at market bottoms that you have to worry so much about being prudent. You do, don't get me wrong. But it's the market tops when nobody sees risk out there, that that risk can really unfold quickly and wipe out the picture that people have of their retirement because they just

don't know. I mean, the reality is, is if you're a passive investor right now, you really have, you don't have any reason to go back and study history. Your broker has no reason to go back and study history because the argument is stay invested, do nothing, pay us the fees and hold on for the long term because it'll always come back. Well, I mean, there's Great Depression took 25 years to come back. What if you're 65? That, you know, you don't have the timeframe that an institution does that modern portfolio theory has been brought into the investment process to institutionalize that process to maximize the fees for the Wall Street firms at the expense of their clients.

You know, Paul, there was this Dr. Semmelweis back in the 1700s, 1800s, I forget, 1800s, who figured out that it was a bad idea to go straight from an autopsy to a birth without washing your hands first. And now doctors, of course, understand that. He died a penniless man. He was hated by his profession because it took him forever.

They're like, you're nuts, Dr. Semmelweis. You're crazy. They couldn't absorb that, right? Okay. So I've just heard from people who've said that their current Financial advisors have said oh no, no, no not gold right look Well, then you guys are even slower than the doctors and they're slow because gold is the best performing asset this year This decade and this year, this decade, and this millennium.

You can go all the way back to 2000, and it's a better performing asset than the S&P 500. So how long does it take to realize washing your hands is a good thing? I mean, I'm shocked, Paul, to still hear this, to hear people getting resistance from their financial professionals, because it's not to me, it doesn't strike me as financial advice, right?

It can't be, like you can't, how do you do in your, in, how does it happen that somebody says with a straight face, this is their job? The best performing asset of this year, this decade, and this millennium is not something you really wanna entertain. I don't get it.

Yeah, and a lot of that is, is there, they've basically been brainwashed by their brokerage houses. I mean, and there's, there's so many barriers that are set up, right? Because the, some of the big firms, they want to do good enough for you to where you make money and good enough for them that they make enough money without losing you as a client, right? So, so one game and one of the reasons why I left corporate back in 2003 was because I found out that they were getting kickbacks or basically pay to play on their preferred fun families. And that was the moment that I said, I don't trust you anymore. You didn't tell me this. So I didn't have the opportunity to tell clients. And now that I can't trust you anymore. You didn't tell me this. So I didn't have the opportunity to tell clients and now that I can't

trust you, I'm better off to do this on my own. So that was one of the reasons we left. So they have to disclose that now and their preferred fun families but gold doesn't have any kickbacks from a long term standpoint, sitting there on the side. And going back to take a look at this, let's share this chart because this is real time as of yesterday's close. This is the year 2000 on the left axis over here. The purple line is gold.

Yikes. Okay. So what is that? Uh, 1000, my contacts are a little blurry, a thousand 30% in the past 25 years. A 10 dagger. Yeah. 10 dagger. The S and P is up to8 over that period of time. Commodities 172.

AGG, which is the aggregate bond index, 89. And emerging markets are 35%. So you've got a whole category, even commodities to an extent, your major firms are not going to overweight commodities or make that adaptation. And if you paid attention to the fundamentals and the history of fiat currencies and how gold has continued to be a hedge to protect your purchasing power, and you had an advisor that was actually thinking for themselves instead of, you know, hey, let's go play golf together and spending time, you know, chasing new clients instead of being a student of the business, you're

not going to have any exposure to gold. Right? That's an amazing chart right there compared to all of those other classifications. And I don't know any Wall Street firm that recommends that clients have even five or 10% of exposure to metals. Now this is not a recommendation because you're not a client of mine out there that you're listening to, you know, I'm sure there are some, but you know, you've got to see, you know, I can't, this is not advice. I'm just sharing information. Well, so Paul, most of our assets in the United States,

to speak provincially for a minute, because I know we have international listeners too, but probably similar story there. In the United States, when wecially for a minute, because I know we have international listeners too, but probably similar story there. In the United States, when we talk about family wealth, it's very heavily concentrated in the top 10% of families, and it's almost all financial assets. So I asked Grok the question that they said, okay, how much did the top 10% have? And it gave me a number like 127 trillion.

And I said, okay, if those families, assuming they have basically zero exposure to gold, which is probably statistically about right, and they wanted a 5% exposure, how much money has to move into gold? And he said, oh, about, you know, somewhere between five and a half and $6 trillion would have to move into gold in the US.

What's the total value of all the gold in the US, including the 261 million ounces that allegedly exist at Fort Knox? Dude, where's my audit? Yo, wait. But yeah, but and I don't think that would ever become available. But but adding up how much jewelry, Fort Knox and private investment gold exists, putting it in one pile. The sum total of that back when I asked this question, which is at least 10% ago, it's probably closer to $3,000 an ounce, the answer was that's $1.2 trillion. So like, well, how does $5.5 trillion squeeze into $1.2 trillion? Like, how does that happen?

Right? You'd be in a better position to answer that, but that's if the top 10% of families just suddenly get the bug and decide, you know what, I want a 5% allocation, which is completely reasonable. I was reading a Merrill Lynch analysis where they said, actually over the long sweep of history, the appropriate amount to have the best possible efficient market returns with gold in the portfolio was 20%. Their analysis, not mine,

but that's what they came up with. Right. Okay. So let's imagine that, that people finally get the idea that they want to move into gold. Well, there just isn't enough at these prices. No, and there's not because of the fact that the government's just continued to expand the money supply and the gold supply has not expanded at that rate. And could you imagine what gold would be doing if we didn't have Bitcoin as a deflection or cryptocurrencies is a deflection to garner some of those assets over. Yeah. And I'm amazed. So one thing that I will say, you know,

and so far I have been wrong on that in the interim period because gold had been so strong up to here recently. You know, my typical advice would be look, if you don't have any average over the next six months, if the price drops 10%, do two months at a time. But gold's been doing a lot of things. It's been breaking a lot of correlations. And it's also surprised me because historically you'll get a little bit of consolidation or

pullback, but that's not occurring right now. And then you're getting the gold miners to break out as well. So something has changed and accelerated, it seems either on a sovereign level, being governments, major institution level. I'm seeing big money that's moving into gold without concern for short-term price. That's because they're looking at the big picture.

But I'm still not getting, now we have exposure to gold in our portfolios and that means clients know they own it so they're not gonna be necessarily calling. But I'm still surprised that I'm not getting average local individuals that aren't as educated enough calling asking for gold because I'm known in the North Georgia area for recommending gold and precious metals over time.

And I'm not getting calls right now. At the top in 2012, we were seeing institutions sell to individuals, and I could have had a line a mile and a half long, take a number with people waiting to come in and buy gold if I had not been recommending to reduce exposure at that time. So now from a long-term standpoint, we reduced exposure and then added back later because our tools were telling us that at least for a couple of years, indication that the path of least resistance would be sideways or down.

I don't have any indication of that right now. Well, you mentioned the super important thing that I just want to bring up here. And again, I went over all this with my subscribers earlier in the week, but this is looking at M2, which is a broad definition of money. So M2 is the broadest we have. I wish we had M3. Here's the United States starting in 2019, starting at about 14 trillion and rocketing all the way up to 21 and a half trillion. But then COVID and 2022, remember that huge crisis we got in in 2022

where stocks and bonds went down, Paul? That's because of that little dip. If M2 goes backwards, everything suffers. That was a bad year, right? Stocks were down and bonds were down like 20% each, roughly. I mean, it was bad, right? So people forget. So they started jamming the liquidity back up again.

So we're here we're going from 20.6 trillion to about 21.6. That's about a trillion dollars the United States poured on. China, same thing, but this is a much different scale. So if we scale those two to each other, it would be a much smaller thing because these are trillions if you want, but it's 7.7 yuan to the dollar. So you have to divide. Japan M2, it's going nowhere, but you see they're struggling like crazy. Their bonds are blowing out right now and their stocks are blowing out right now. They're not having a good time because they can't increase their money supply for whatever sets of reasons. And then the euro area here going from about I'll call that 15 point, I'm going to guess 15.5 15.1 trillion to 15 six.

That's about a half a trillion euros. So in the scheme of things, when we scale it appropriately, this is a trillion. This is a lot less. It's kind of flat, about half of that, about a half a trillion. Got this from Ted Pillows over on Twitter. But when you add it all up, this is what we're up to, Paul. This is this is global M2 right here in the early part of 2025. You want to know why gold looks like it's going up?

Because of this, the governments are panicking. They are printing as fast as they know how right now, and it's still not enough. Somehow it's still not enough to patch the hole. So we have to, you know, I don't know. My man out here in the cheap seats, all I can tell you is when you print that fast and things, stocks and bonds are sort of struggling. Somebody's got, there's a hole in the hole somewhere. There's a problem here.

Well, and Chris, I'm concerned that we've reached the point of diminishing returns, okay? There's always that line of efficiency where you get max efficiency and then you get diminishing returns. So many studies, and I tell clients, there's a point of diversification, and then there's a point of de-worsification, right?

So you want to be as efficient as you can. So the Janus 20 and Janus 40 funds built off the same study that we built, the number of targets in our stock strategy, somewhere between 20 to 40 stocks, 60, 20 to 80, let's say, is the maximum level of diversification for efficiency, because you don't pick up any high, a minimal percentage probability of higher returns if you go all the way out to 500 stocks, and you've diluted your returns to the point that no big, your positions to the point that no one big winner makes a big difference. When we speak of that from the money printing, one thing that I

don't know the future, but I know we had a hint of that back in the 1970s, corporate profits are an all-time high because of globalization, right? You've got your Mag-7 and these others that drive a large majority of their income out. Shipping jobs overseas has allowed them to not have to keep up with the pitiful gain in wages for the average American because of what politicians have supported capital at the expense of labor. But there's going to come a point, and I'm concerned that we're already there, that this inflation is not necessarily going to be beneficial to these big corporations because we're at

all-time high in corporate profits. Commodities have gone nowhere for 24 years. Gold's showing us that people care about that. You know, and you can bring this up in a minute, but you've been highlighting dramatically the energy issues that we have. So if you have these commodity and input and labor costs go up, while the average American is squeezed, how can these corporate profits continue

to be as high as they are? So I think the bait and switch is necessarily gonna be, hey, investors are looking in the rear view mirror, algorithms are looking in the rear view mirror, every time the government printed, it's been great for the mag seven. But there's gonna come a day in the future where the more printing is gonna raise the input costs

for these big corporations, which is gonna squeeze their profits. And that money is not gonna be for institutions, it's not gonna be going into these big companies, it's gonna be going into the commodities and the real goods and the assets that we need to go in there. And that's gonna be really, really bad for your passive, you know, set it on the shelf and forget it investor.

Because if you're passive, right, you're gonna own the S&P 500 index and you're gonna have very minimal exposure to commodities based on the models of Wall Street, you're gonna have no exposure to gold, and you're gonna lose your purchasing power. Even if they go up, they're gonna go up less than what some of those other assets will

that can protect your purchasing power better. So I'm seeing a monumental change in commodities showing strength, international emerging markets showing strength. And if you have all of that money that flees out of the US, this overweight US start to balance, rebalance into those other categories, you have to be adaptive enough to maneuver with that. And it doesn't matter if you get it perfect. If you get the big trend right over the next five to seven years, that's a major difference in the outcome of the financial protection that your money can give you in the midst of

tumultuous times and your family. Well, I agree. And here's why I'm a simple man when it comes to this kind of stuff which is that look I'm reasonably convinced I've convinced myself I might be wrong but I'm not confused the feds gonna print next right they're not gonna allow this to just sort of go into deflationary smoking wreckage heat not gonna happen I might be wrong but if I'm right they're gonna print now here's the hard part you say oh well if they print you know everything kind of goes up so I'll just ride stocks the problem I might be wrong. But if I'm right, they're gonna print. Now here's the hard part. You say, oh well, if they print, everything kinda goes up, so I'll just ride stocks.

The problem with that is, is that when they print like this, particularly if you have a trade war or other frictions or other things going on, it turns out that those are horrible for a lot of companies and I'm not smart enough to know who's gonna be the winner and the loser in that. Is Walmart gonna be a winner or a loser under that? Because if they can't import stuff fast enough to offset the rising prices on the import

side, they get squeezed like everybody else. You know, during Weimar Germany, the stores just got stripped clean because you couldn't stay in business, right? Because you would buy a unit at 10 marks and then you would jack it up and sell it for 12 but the next morning it was 15 and you only had 12 so what do you do you lose three and and so they couldn't like it's it's almost so very hard to pick but commodities win in that in that story every time right because they yeah yeah they are what they are so so i'm also a contrarian investor So I just want to point this out. So for people this is back at it. Excuse me the peak prosperity website I just want to note that on January 31st. I had a big important This is a great public interview here with Adam Rosen schwag of garing and Rosentschweig talking about peak oil arriving at the US shale patch

Are you ready? Right, and they have a whole model and they do these neural nets and they're looking at it and I put that up and a lot of people, not a lot but enough, Paul chimed in and said, oh, we keep hearing this old story, it's not gonna happen. Technology, you don't understand, right? And then in March I was like, uh-uh, it's back, right?

Almost nobody's prepared, I talked about the return of peak oil. Okay. All right. So let me pull this up now. And then in April, I'm like, no, guys, oil realities is getting really close here. It's coming, right? Because the United States, Paul, all of our oil growth has come from the shale patch period

full stop. All of our conventional oil that includes Gulf of Mexico, Alaska, places where you drill a straight pipe in the ground and you put it into an oil reservoir. That's been going down reliably since 1970. So that's, and on top of that, we put this huge burst of shale oil. Fine. People like, you don't understand, Chris. It's not coming. Oops.

So now the Energy Information Agency of the United States has announced in their latest short-term energy outlook for March, and I read it every month, it's a good report. They said, oh, oil production is gonna peak by 2027 as shale boom fades. And then they say it plateaus for three years, and then it starts going down after that. Oil production is going to peak by 2027 as shale boom fades. And then they say it plateaus for three years and then it starts going down after that.

I think they're smoking crack on how fast it's going to go down, Paul. I think that the EIA plays political games with the numbers and I understand why they do it. You and I both know the say the Bureau of Labor Statistics routinely fibs about how many jobs you're just laughing, right? Because you're in the know, right? fibs about how many jobs, you're just laughing, right? Because you're in the know, right? They lie about how many jobs, they lie about inflation, they lie about everything. It's just what they do, right?

So the EIA is no more or less noble than the BLS, is my point of view. Okay. It's a thing. It's a total different set of pressures. I get it. So what did they say? I'm going to tell you, first they say, this is what they said in their EI outlook. Here it is.

You can find the outlook here. So the blue is total US. The bottom is just lower 48. So this includes Alaska. Okay. What's going to happen? Well, it's going to hit a peak here in 2027, flat for till 2030 and then slow. So it peaks out at 14 million barrels a day.

And by 2050, it's only down to 11.3. I'm gonna take the under on this story and I'll tell you, I could wax on lyrically forever about why I would. Got a lot of data behind this. But here's the part where I know I'm looking at a political just fantasy. Here I plotted two things that they had put out.

One is how much we're producing. They say, okay, we're producing less. We've already discussed that. This is the same chart, but it's on a different scale now, because this one has to go below zero, because this is if you have a negative net export, net product imports. If your net product imports is negative, it means you're an exporter. Okay, just two negatives.

We're a positive exporter when we have negative net exports, imports. Anyway, so here we are exporting this much, and over time, Paul, magically, we export more and more and more. We're producing less and exporting more. Nice try, EIA. I'll take the under on that one too. Not happening. Now from an investor standpoint, I love seeing this set up because it means we have bad data. We have a wrong narrative. Most people are still out there rocking around with the wrong story. Oh, it's

Saudi America. We're clever. We'll think of something. The media has been trying to sell us on peak oil demand forever and ever. It just doesn't materialize ever. Every year we use more, whatever. So those are all wrong stories, and I like this setup, Paul. I like this setup a lot.

I do too. I like it because it's in the commodity space, which has done nothing for the past 16 years. In addition, it takes patience for those individuals that are going to own that just like it took patience for gold to be there, but the mathematics, the long term story is there and all of the good things that happen in our lives come from short term sacrifice for long term gain. And if we sacrifice our pride of bragging at Thanksgiving in the interim period,

again, not a recommendation, just kind of an educational discussion. You know, when you move into those areas before everyone gets there, then you're able to ride that trend when it takes off. And based on your work and a few other things, it kind of came to mind, you know, we built a gold mining strategy for to stay in that space. And without getting into the details. So now I'm, I'm planning on building because the mathematics are there building the, the energy strategy in there as well. So we've got that sleeve that people can be confident that they're, they have a strategy that's, that's implemented that can keep them in that space and know that they've got exposure to it from a long-term standpoint.

So I think that's another space that mathematics just say like Gold did back in, you know, 2000, late 90s, early 2000s, that something has changed. And if you're looking at the big picture and you're patient, there's a high likelihood that you'll be rewarded for that long-term patients. And for me, it's easier to analyze.

I know it's still somewhat complex, but if the Fed, when the Fed starts printing and creates a lot of inflation, I get it. The input cost of drilling a well could go up, right? Steel, labor, all of the usual things. Same thing, if you had a gold mine, maybe your input costs are going up, right? Because it's a very energy intensive, labor intensive business. I get that. But it's much easier to analyze that those can stay ahead of their input costs, right?

And it's much harder for me to analyze what happens to Nike, you know, or I'm not particular just picking on things, right? But what happens to retail what happens to things with very complex supply chains that gets much harder to puzzle through right could be good could be bad but but but in a minimum I don't want to be just a passive index funder during a period like that because remember the Venezuelan stock market during their hyperinflationary period? It went up 600,000%.

I mean, that's pretty good. Problem was inflation went up 2 million percent. Not so good on the stocks. You lost money on those, badly. Because that overall index down there had a bunch of companies in it that failed because they couldn't keep up with inflation. Yes.

Yes. And that's why it's important to have a strategy that can help you avoid those that are going to be impacted negatively and overweight those that are going to be impacted positively. And you can see that unfold over time. Yep. I think we'll leave it, leave it there for now. Um, a lot happening. I can't 115 bucks up on gold today.

Yeah, that was a pretty big day, especially in the midst, you know, emerging markets, some of your international, a lot of your commodity producers had really good returns today and, um, and relatively speaking. So, you know, one of the things I'm noticing is we've had this big sell-off, but this market's acting a lot different than what it has in the past. I mean, we're, the Nasdaq's essentially failing on the 20-day moving average. Now, maybe this is just working back in the short run because I don't know what's gonna happen. One concern that I have is, you know, Trump seems to

be tweeting again, you know, the market is to try to hold them up a little bit. He has been, hasn't he? He has. I'm back to, I'm back to throwing my, uh, uh, stress ball at the, at the screen. When I see these things come out, I'm like, come on, really? But, um, yeah, I saw your face last time when I talked about his, his, uh, his tweet, you're going to have to work on your poker face. You'll come to the conclusion, Chris.

I don't play poker. I play back blackjack. If I go gamble, cause I have no poker face. That's, that's one of the worst things in the world. You know, one of my friends is like, ah, is like, I always know when you have a good hand, no matter what you think you're hiding, cause you can't. I'm always the sucker at the poker table because my face gives it all away. Well I saw you when Trump was tweeting last week to rescue the markets, you know, he's

down to day trading the markets again, which means he's watching them. You know what? It's irrelevant what it does this afternoon or whatever. Maybe whatever. But I'm not a fan of that behavior. And I'm not either. And the one thing that I want to point out is we've got monumental changes that are taking

place right now. I mean, this is this is all of a sudden, everything has changed. Okay, maybe it's a big game of 4D chess, whatever it is. But I don't know that any one person can be that intelligent across the board because it's so, it's not like everybody's working together. You're working against each other in a complex system that nobody can understand all of the components and levers that are being pulled inside of there. It has become so complex and so intertwined.

Exactly. Yep. And everything is moving so fast. So yeah, you know, if it works, everybody's going to say it's 4D chess. Now we have to correct these things. I mean, we have to have a government that's serving the people instead of capital. I'd like to see them serve labor or the people and capital and set that up in a free market and let the market work itself out. But you look at what the Fed's doing, I'm not so sure that the Fed's not in a position

to where they can go, we finally have our Patsy, right? So we've been the center of attention. We caused all this inflation. We told people it was transitory. It didn't occur. We've got the greatest wealth divide that we've seen outside of right prior to the Great Depression. Trump comes in with policies to try that if he implements those and does what he says

he's going to do, which a lot of it I'm doubting right now that, you know, we had some hope that we get the Epstein list and everything else and it's not there yet. But you know, all of a sudden now the Fed can say it's terrorists, it's terrorists, it's terrorists, it's terrorists. It's not us, right? So I'm not so sure that they don't have a vested interest in themselves to try to find somebody else to blame this this upon When it comes apart. Well, I agree and then the the Fed let's be clear. They don't care about full employment They don't care about people who live in your neighborhood. They don't care about you nothing personal They don't really care about prices. Although they say that that's their twin mandate, full

employment, stable prices. What they care about is that the banking system doesn't fall apart. So I think they're perfectly willing to step aside as long as there's enough retail bag holders, if I can use that language. And Wall Street's had plenty of time to move the smelly product off of its shelves and they're not holding the bag. They'd be happy. They don't care.

Right. But if this starts to cross into systemic crisis, so I made a call earlier again at peak prosperity that I think the fed's going to have to print again. It's not quite yet. I'm guessing September to December, but when they do, it'll be something new. They're not just going to say we're starting up Operation, you know, Twist or QE because our banking buddies need it. It'll be something, Paul. Oh, we're opening a temporary swap line with Europe to ease a very transitory

liquidity situation, right? It's something. I know what they're gonna name it. It'll be printing. I know what they'll name it, Chris. It's going to be Operation Bend Over American People. I know that's crude, but when they start printing again, it's going to hurt a lot of people if inflation gets out of control. Like I said, that line of people whose noses are just above the water line moves way up, right? I think three to four hundred thousand is going to be the new, I don't know how to make it anymore in a way up, right? To, I think three to 400,000 is gonna be the new,

I don't know how to make it anymore in a city environment, right? People are gonna have, so what does this mean? Like you're gonna have to invest nimbly to get around that. You're gonna have to be a master at controlling your expenses, right? Lot of people are gonna have to swim naked now, Paul. Like people won't be able to afford liability insurance

on their car and health insurance and you know, house insurance, like they're going to have to trim all that back to the basics, et cetera. It's going to be, uh, it's going to be tough. Yeah. Play in a garden, grow your own food, bring everything as close to home as you can develop those skills. Look, the one thing that I keep telling my children because they're 26, 24 and 21, I'm like, look, don't anticipate the future being what it has been in the past, because we know throughout history, that these are cycles that we go

through change happens. Moral behavior leads to good times. Good men lead to good times. Good times lead to immoral behavior because we're focused on a plastic face more so than doing what's right. I mean, you go back, I don't have the chart in front of me, but I was looking at the average pay of CEOs compared to the average employee. Back in the 1960s, 1970s, it was maybe 20 times. Now it's 200 times. All of that changed in late 1990s with globalization.

So, but you know, I know, I know founders of businesses that end up going public that they compensated their employees that helped them build that company ridiculously well, they lived with them. They grew up with them. Now, all of a sudden our C-suite is very similar to us when we're looking at starvation or earthquakes that are taking place in Africa. It breaks our heart when we look at it, but we're so detached from it, we don't understand the pain that they're going through.

And that's the reason why this system can't go on. We don't know when it ends. All we can do is recognize the signs of the times of where we are and say, hey, maybe it's more important to really pay attention to have an adaptable strategy because what's going to happen with your passive investors, they're going to be tempted to throw the towel in at the worst part in March of 2009, or they're going to, you know, freeze completely and just not do anything. And you can't do that in times of crisis because in times of crisis are also the greatest

opportunities that we'll see in our lifetime But it's only for those that are going to be prepared and only for those that have the courage to walk the path less traveled because because fundamentals Mathematics matter in the long run What is it Buffett says? I know you'll remember this and I love that you will. In the short run, the stock market is a voting machine.

In the long run, it's a weighing machine. That's correct. And unfortunately, I believe that this panic buying of retail investors is just going to be something that's going to scar them for the rest of their life. And similar to the Great Depression, the individuals who came through the Great Depression refused to take on debt. I'm not so sure that this generation will be as quite happy to buy these dips without putting some thought and analysis into the decisions and actions that are taking.

Well, and let's parse this from, from a standpoint of your viewpoint. I think for somebody young, like your kids, my kids, roughly the same ages, um, that's fine. You know what? They don't really have a lot of exposure to stocks. It's tough times. They have to scramble a bit, but then when they do decide it's time to get into stocks, much lower levels, fine. Assuming the dollar's alive and hasn't gone, you know, the way of the dodo bird. Big if.

Hold that equal. But for somebody who's just approaching retirement now or planning to retire soon or is in retirement, this is a whole different equation. This is really, this could be bad for, especially for people who are unprepared and don't see this coming, especially for people who just sort of hear the same old mantra from somebody which is like stay the course, just don't do anything, dollar cost average in, buy more, buy the dip. Those can be the right thing or they can be catastrophically the wrong thing.

And at a minimum, everybody deserves to have the context to know Why they're making this decision or that I wouldn't take anybody's just straight advice about this stuff have a conversation educate yourself find out where they're caught how they got to that point of view if you ask them a question like Should I buy gold and it's like you've scratched at the paint you hit primer right away, you know They like have no answer Find somebody else who has an answer because They should so anyway, that's I I really think this is like you huge turbulence There'll be winners and losers. I honestly think Paul

There's gonna be more losers than winners on this next cycle. It makes it a little tougher. But there's winners in this cycle, too. Some of them are gonna be lucky, but the rest of them are gonna be people who saw where the puck was gonna go and got there first. And got there. And that's one of the reasons why, Chris, when I basically mandate that we go through the planning process with everyone. Because I want

to be able to show them, can you endure a 50% decline right before you go into retirement and still continue to live the lifestyle that you live? Now, there are a few people that have accumulated enough assets and inherited enough assets to where they have that flexibility. And I just look at them and say, okay, if you want to be passive, that's fine. If you have a Great Depression type decline, you can't afford to sell at the bottom because you're going to miss the recovery over time that's going to help you be successful. And then there's other individuals that a 35% decline would absolutely wipe them out. And that's a larger and larger number of Americans out there right now, because of the cost of living

and inflation and their lack of ability to save and past mistakes that have been made in the past. So I show those clients and that helps them say, okay, what do you wanna do? Do you wanna do exactly what the S&P 500 does every year or do you wanna go a path that's better for you that can stand the test of time? And so what if you miss a little bit of opportunity because you're cautious in the interim period,

right? We all understand if I'm driving from Atlanta to Los Angeles, you know, depending on the time of year, I'm going to have bright, sunshiny weather. I'm going to have, hey, I was going through Kansas one time and I thought it was going to blow the truck off the side of the road. Man, you guys in Kansas have some unbelievable weather. So they really do. And then you get into the Rockies and you potentially got black eyes. We naturally change the speed and aggressiveness of our driving on those journeys.

But for whatever reason, Wall Street has convinced people. And when it comes to the markets that you don't make any adaptations. So that path less travel is what will stand the test of time. It's not following the herd. Sometimes it's good to be with the herd. We're with the herd in a lot of cases, but sometimes it's the most important decision that you can make to take that path less traveled and, and, and, and, and focus on caution and protection of principle in the short run so that you have money available to take advantage of those opportunities and ramp that risk level back up when the mathematics make more sense. Yeah. And, um, connected to that, trust me, it is connected.

Although this is going to feel like a little bit of a jump. I want to, anybody listening to this, if you're not using Grok at this point, you should play with it for two reasons. One, you're going to get extraordinary utility out of it. Any question you want, it'll ask it, you ask it, it'll answer it. And you just talk to it conversationally. So this is on X, right? You get an X account and Grok's on the side, or you go to grok.com. Did you

know this, Paul? They actually have a separate website now. No, I actually didn't know that. I had the app, but not the website. Yeah. So they got a website and an app and all that connects back to the website. So anyway, you go there and you're just conversational. You can have spelling errors in there and everything. I need to know how to tune a 1973 Lamans, right? It'll tell you all about how to do it, right? You know, it doesn't matter. You can ask it across subjects.

You can say, please compare Romans, you know, verse, this verse in Romans to what this particle physicist said. It'll do its best to make, figure out a way to connect those events. It's pretty cool. Okay. But the second reason you need to know about this is that it's about to change the world. And it could be good, could be bad. I'm not here.

I'm just, it's just change. And so this just came up the other day. Grok 3 Mini, it made AI history. So they have these reasoning tests, Paul, that they put people through. And they have this thing called the Marcus problem, which is full of shuffled sentences meant to trip up the inference. So can you still figure out what's going on

when you've got garbled language? Can you make sense of it? They have the Alice problem designed. It's got a relevant noise to throw models off course. Can you figure out what the noise is and exclude it? So you have to have some sort of reasoning to say, why am I getting rid of this data point here? And then it's these high mix difficulty challenges

where chat GPT-45, Gemini-25 slipped up, it aced them all. Got a 120 out of 120, a 24 out of 24, and a 24 out of 24. So it is now reasoning at the highest level that humans reason that in any subject area. So I reason pretty good, but I do not have in my brain all the information it has. And I can't and I never will. Right. Like it literally so it's so this is and this just happened. So I remember because something happened in January with Grok and I called Nick up and I'm like, you gotta like, and I'm like, it's reasoning.

I'm like, sounding like some crazy guy in his porch yelling at clouds. It's reasoning. Cause I could see it reasoning and now just passed all these reasoning tests. So, so that's a thing. Right? Well, that's going to have enormous impacts on everything and not least of which, Paul, is that now finally, we have something that's going to operate logically. And so I think that so when I ask it logical questions, like, so I like energy, we talked about the idea of peak oil, all

that. So I, I asked it a question like, Hey, Grok, given this, given the importance of oil, given where the United States actually is politically, economically, and where it is in terms of being ready for the reality of having less oil, not more coming out of the ground, tell me about the challenges in what we might consider doing, right? And it's saying the stuff that I would have thought of too, right? But now we have a reasoning model that can sit there and go, oh, well, you probably should have started doing something about this 30 years ago because these things take time, right?

But given you're here, right? So I think that what this model is going to be able to do for a lot of folks is, it's gonna get us to a consensus decision faster, AKA common knowledge. And so I have had extraordinary, here's a pro tip everybody. I've had extraordinary success and heard about extraordinary success of other people saying, I've got this brother-in-law, he doesn't, eh, and I've got this.

You have somebody who's a little resistant to this idea of saying, I think the world's about to change They don't trust you send them to grok ask them to ask the question grok spits out this like ironclad answer and somehow People trust it more That's kind of It's been able to demonstrate trustworthiness and that's amazing.

And look, how fast is this moving? Would we have even considered this 24 months ago? No, like this AI is this thing that's going to be in the future and now all of a sudden it's, it's, it's where it is. And it's developing all on its own. Nobody's, nobody coded reasoning reasoning tested like nobody coded that in You say set up the parameters for that and guided it as it found its way to become a better and better reasoner And you put up little guardrails and reward systems and now it's there

But but nobody trust me nobody sat down and plotted out how to write that up It's not what happened I mean you go back to six months ago when I was toying around with chat GPT and I'm trying to figure out how to, you know, I came to the conclusion it was the supercharged internet search. Well, then I was, I was telling you for the listeners out there, I got the bright idea to take four articles, which were 30, let's say 32, 35 pages somewhere around there, soft consolidate them together. And I said, Hey, Grock, because this is one of the things I'll do during times like this, where I'll take our, our top research analysts and combine the theme across the board, because

together they're a lot more spot on than they are individually, which is why I have multiples. I said, pull out the themes and the common, you know, the agreement between the articles and it takes what 32, 35 pages and there's it down to three and a quarter and so concise like it pulls out the meat and then it's incredible what you can do just the amount of time it would take me hours to do that before and it did it in five minutes yep yep that's that's incredible fun part someday we may actually give AI decision-making authority and we're going to hate the answers, right? Because it's going to say things like, you probably shouldn't grow cotton in Arizona, you know, but there's fifth generation farmers there and water rights.

And, Oh no, there's, you know, some of it belongs to indigenous or native American peoples and that's complicated. Uh, you know, but it's not wrong. It's like, yeah, maybe you shouldn't grow cotton in the desert, just saying, you know? And it may say 110 pound woman driving a 98 pound kid in a 7,000 pound car, 60 minutes to a soccer practice is not the best use of fuel, right?

Oh, wow. Yeah. It's going to say things that are just logical, you know, and, and we're going to have to deal with that. But the good news is we're, we can finally come out of the dark ages in my pet area, which is in, in, um, working with all the medical doctors, right? They're just sitting there banging their heads. Paul, we have all the data.

It's there. Like why we're unhealthy and gro GROC is just not going to be fooled by recency bias, cognitive bias, any of that stuff. It's just going to look at the data and say, yeah, your kids should be healthier than this. Here's some, here's some places to start, you know, so that'll be good. So, so that'll be good. But on the, that's the plus side. So that'll be good. So that'll be good, but on the that's the plus side. The downside is I don't, I

you no longer have to hire a senior research analyst. And we all will all will none of us will have jobs. Just saying, but I did. I called my eldest daughter up and I said, because she lives on a farm in a tiny house, got a cow, does nature programs. And I just said, you're going to have to start using this. So I talked her through it. I really do think it's, you either use it or you don't. But if you don't, you're missing out on a superpower.

Yes. Right. And I believe it's an advantage that we need in today's society as fast as things are moving because with the major corporations utilizing this technology, the speed of change is just going to continue to accelerate. And if we can't control the outcome, we at least need to know how to utilize it and apply it in our lives to make it more efficient for us. It's already, I mean, just the AI tools that I've implemented have saved me somewhere between

six to eight hours a week. And I'm still finding ways on a monthly basis with some of the things that I do to be able to save me time there and just get to the answers and get to the facts quicker than what we otherwise would. Yeah, agreed. Now, I do think that the flip side of this is, is why, um, you know, so I put out an alert for my subscribers on a month ago, maybe Paul. And if I'm honest, it wasn't like there was this alert in the risk past.

Other people may have received it that way. I haven't come off my alert personally since. It's just been like I've stayed there. I haven't like turned off the warning siren because I just see so many things that are developing so rapidly. And I know what I know about how complex our systems are. And I think they're out of the control of any human to really understand at this point, myself included. Right. And that could be good, could be bad. Complex systems are somewhat robust and demonstrate hysteresis. They work hard to stay in balance. But when they do go bad or wonky,

they go really wonky, you know? And so it was interesting when I was at the IMA conference right now, all these doctors up there, and then I was on a panel with Robert Malone, who people may or may not know, but he was one of the original inventors of the mRNA technology way back when, before it became the mRNA shot, and, and obviously smart guy and knows a lot, and Dr. Ryan Cole, a pathologist, and myself, and we were all

three up there because we each own farms, right? And each of us had come to the idea that we needed a farm for from different paths, landing at the same spot, which is, it would be imprudent to not own a farm. Right? It's prudent to own a farm. And that's the conclusion we came to. But it was interesting having that conversation. A lot of people came up afterwards and said,

that was probably what I needed to hear a very important talk, you know because We don't know how this is gonna turn out and let's hope for the best. Yes, but I think we have to prepare for The worst is as it were or Just things not working like they used to yes And I will say you know, I made major lifestyle changes about six years ago and took, you know, I sold family land because I couldn't get any more land to build to do the farm that we did. Nobody in our family sells family land. And so I've worked harder than I've ever worked on Saturdays and Sundays in the afternoons. But I was sitting out there last week and I was like, you know, chickens and goats running around and we've got our asparagus that is coming up and planting our fall garden, you know, all this stuff that we put in blueberries, fruit trees and all that.

And I just sat there and I was just, I was just grateful. I was like, thank you God for all the life that's here. And thank you for being in a position of where we can, we can produce. And there's something that's just good for my soul, and I know it is for yours and the ones on the panel with you, to be that connected to the earth. It just brings a peace that you don't have otherwise, at least for me, and the benefit that it provides extra resiliency for yourself

and your family and your neighbors, you know, if, if, if we go through a cycle that's as painful as those we've studied in the history books. Well, it's the number one thing is like, I would say to anybody young, either lean into these new technologies hard, so you have a job within them, or completely out because the one thing that AI can't do is that resonant thing that happens when we get together, when you and I go fishing together and we just have fellowship together, doing real things out in nature. You know, it's restorative, reparative, rejuvenative, and reconnective, you know? And so that, that I honestly think that if everything goes well,

AI basically takes over and does a lot of stuff for us, well then who are we? I hope we're people who can really be living in the real world as much as possible. Let the AI do all the stuff over here so we can actually really live in the real world. So that's for the young people, skills baby, skills um working with your hand skills with your body figuring stuff out making things that otherwise wouldn't be easily made food in particular. I think that's

the way of the future at this stage based on what I know after getting my my in January, I'm like, it's reasoning. That's amazing. I'm still processing the reasoning. And I can see it now that you mentioned that the conversations is asking me questions. Would you like to consider this? And if you know what questions to ask, then you can find just about any information out there and it points you in the right direction. So it's incredible. No, I find it throwing stuff in. I didn't ask it, but it's relevant. Germain, that's reasoning, right? You know, if you said, Chris, you know, I, I need to, what can you tell me about like, um, tuning that engine up there? And, uh, and, and, you know,

I could tell you specifically about the points maybe if there was such a thing. People still did that. But reasoning would be, oh, well, here's some context and, hey, wait, tell me where you started on this whole thing and what do you actually know? And I would start adding things on to this story, right? Because that's reasoning, right? Mm-hmm. That's right.

Anyway. That's amazing. I just want people to know about that. For anybody listening, if you want to talk to Paul and his amazing team, go to peakfinancialinvesting.com and fill out a simple form and somebody from Paul's team will be back in touch with you within 48 business hours and they'd be thrilled to talk with you. And you should go through a plan. Get the financial plan.

Find out what you're really up against. Are you one of those 35% people or are you a 80% person? You know, need to know. Right. And it brings a level of peace, Chris. This is the one consistent theme that clients will tell me and even people that I've taken through that's not appropriate necessarily for us to work together because there's no obligation to this. I can if I can help the person that I'm talking to Everything else will take care of itself But I had somebody called the other day and they made the comment They said look, you know the level of peace that I have now that you've shown me the reality of my situation

It's far beyond anything that I expected even though it's a challenging environment that I'm in and Sometimes just having that knowledge makes all the difference for you being able to walk that path and stay on the course, instead of being influenced by your brother-in-law, your high school nemesis, or whoever's on the television, or your politician, or, you know, I don't know how many people pay that much attention to celebrities anymore. It's a pure waste of time. But, you know, instead of being pulled by all of this other because you really don't know the reality of your situation, that's why I've found it to be so impactful

because it helps people stay disciplined on where they wanna be and focus on what they need to do to be successful, not what somebody else tells them they need to do. This advertising for the benefit of reaching into your pocket to line their own. I agree. And so maybe someday, Paul, soon people will start asking the question, not how many dollars do I need, but how many ounces do I need? You know, it's a simple calculation. You said, okay, if I need an ounce of gold per month to live on and I plan to live 30 years, that's 360.

Right. That's a good question. Yeah. Increasingly, I ask myself, I'm thinking in ounces now. I'm starting to ask myself the question, you know, at what point does it make sense to diversify? I don't think we're there yet, but I really want to know ahead of time so that I'm able to move two steps quicker than the average

person when that time comes, because there may come a time in the future. I don't know when that'll be, but you know, there may come a time in the future. I don't think we're there yet, though. Agreed. Agreed. We should have that conversation in soon because it's good to have a plan beforehand. All right, with that, thanks Paul, thanks everybody for listening and we'll be back next week. This has been FinanceU. Thanks for being here with us and please give Paul and his team a call if you have any questions or concerns or anything you'd like to know about your portfolio. With that, Paul, good to see you again. Good to see you, Chris. Take care.