"You will be much more in control, if you realize how much you are not in control." --Benjamin Graham

TAX-LOSS POUNCING (November 23, 2025): I am sure that by this time you have either heard from your accountant or read numerous articles about how you can save on your 2025 income taxes by doing tax-loss harvesting. The idea is to sell whichever shares you own that have lost the most in percentage terms in sufficient quantity so that your capital losses from those sales offset at least 100% of your total 2025 capital gains. That way, you won't owe any capital gains taxes when those are computed in February or March 2026. On paper, this sounds great: you can pay less tax in a few months. It also has the huge side benefit of your spouse not shaking their heads each time you log in and saying, gee, honey, I can't believe you're still holding onto this hopeless underperformer that keeps showing a big red negative change.

Tax-loss harvesting saves you one year's interest at best and often results in converting long-term capital gains to short-term gains the following year.

Clearing out those pesky losing shares so you don't have to look at how much money you lost on them is one of the main reasons people sell losing shares more aggressively at this time of the year. Harvesting tax losses are a convenient excuse for closing out losing positions before the new year. However, there are several serious flaws with this approach. If you sell shares at a loss and then buy them back after more than 30 days to avoid the wash sale restrictions, then you have changed your starting date from earlier in 2025 or from a previous calendar year to November 2025. If you are fortunate to get a powerful bounce in 2026, then unless you hold those shares until at least one year and one day after you have bought them, you will have ended up converting a low-taxed long-term capital gain into a highly-taxed short-term capital gain. This will result in paying much more in additional taxes the following year than you had saved by claiming a tax loss in the current calendar year, only gaining several months of interest on your taxes due.

You might feel emotionally better for not having to look at big unrealized losses when you log in, but you are probably mostly selling out-of-favor undervalued shares where insiders are buying and you should be buying too.

Whenever you sell losing shares for alleged tax savings, you will usually end up unloading those shares which are the most depressed in price, which insiders are probably buying the most aggressively, and which are trading near multi-year lows since that is why you chose them for tax-loss harvesting in the first place. Those shares will usually be among the biggest winners during the following year or so. If you don't buy them back after the wash-sale period ends, then you miss out on any strong rebound; if you buy them back and they recover so sharply within a year or less that you choose to sell them, then you have converted what would have been long-term capital gains into short-term capital gains.

Now is the best time of year to eagerly accumulate those shares which have been the most aggressively targeted for tax-loss harvesting. I love to buy shares which have been retreating for two or three years since many investors are more likely to emotionally conclude that a powerful rebound is hopeless.

There are numerous shares which have been especially depressed and are excellent bargains which top executives have been snapping up at their most aggressive pace in many years. In this essay I will identify those shares which I had notified subscribers from November 17 through November 20, 2025 via email to encourage subscribers to progressively accumulate them, using ladders of good-until-canceled purchase orders since they could continue to drop further in the short run. I had mentioned a few of them in my previous blog from one week ago.

MOH is an unpopular stock in an untrendy sector.

One area of the financial markets where investors have been mostly selling instead of buying is in healthcare insurance. Molina (MOH) had reported somewhat disappointing earnings in a relatively small part of their portfolio which receives significant government assistance, and the recent Congressional dispute about extending health insurance credits for middle-income families temporarily depressed their earnings. Once the price fell to a multi-year low, many investors sold because they saw others selling, were disappointed, and joined the usual tax-loss frenzy, thereby creating an excellent buying opportunity which I mentioned in my previous update. I am continuing to purchase this into pullbacks below 140, with the price briefly touching its lowest point since April 3, 2020 near the height of the coronavirus panic.

VAC is an underappreciated stock in the currently unpopular vacation sector.

With some middle-class families recently cutting back on their discretionary spending including vacation travel, a number of shares in this sector have fallen to multi-year lows including Marriott Vacations Worldwide (VAC) which slid to its lowest point since March 23, 2020 during the most intense part of the initial coronavirus frenzy when some people thought we'd all never go on vacation again. There has been recent multiple insider buying which is always a positive signal, combined with tax-loss selling by investors delighted to be able to save on their 2025 taxes no matter how serious a mistake they have been making with their portfolios. I will continue to purchase VAC into pullbacks using ladders of good-until-canceled orders at gradually higher lows, a useful approach during any potential bottoming process.

SG had been a meme stock a year ago and then collapsed near its all-time bottom.

The restaurant chain Sweetgreen (SG) became a meme stock just over a year ago and surged in price, encouraging many top corporate insiders to aggressively sell. Recently some insiders have been buying to take advantage of this stock transforming itself from a social media favorite to a tax-loss favorite. SG recently traded near 5 dollars a share and recently made higher lows near 6, and in between surging higher and sliding lower could make additional higher lows which are almost always worth buying whenever a given stock is depressed.

OGN continues to generally be depressed and has sported a low price-earnings ratio.

You can spend all day reading negative stories about Organon (OGN), but the company has real earnings and multiple top executives who have been buyers in recent months. The stock was being aggressively sold even before the fourth quarter and periodically suffers sharp pullbacks as is common with losing stocks when the most popular large-cap U.S. shares are experiencing a bubble. I had already been purchasing OGN a few months ago, and added more when the share price became even more depressed.

CAG remains a solid choice with compelling fundamentals.

I have mentioned Conagra (CAG) previously on Seeking Alpha, and it remains an untrendy non-AI choice in today's environment with compelling fundamentals. I would be even more aggressive if there were to be more notable insider buying any time soon. You would definitely recognize several of their products from having been around for decades in grocery stores and supermarkets.

LYB is a premier performer in a very untrendy sector.

Many chemical companies have been out of favor and have fallen toward or below multi-year lows, so I decided to purchase only those which had very recent insider buying. LyondellBasell (LYB) fits this description perfectly, having fallen about half from its previous highs and recently attracting additional selling for tax-loss reasons. The company has been a leader in the industry for a long time, so it is an ideal opportunity to take advantage of its unpopularity and as with everything else to use a ladder of good-until-canceled purchase orders to do so in case it has additional downward spikes as bottoming shares often do.

HUN is in the same industry as LYB and has been even more depressed.

Huntsman (HUN) fell roughly 80% from its previous peak which is one of the biggest percentage losers in this sector. It has featured insider buying which is a big positive, and I would buy more aggressively if more insiders were to step up to the plate and make meaningful purchases. The company has dealt with many challenges, while in the short run it has been attracting heavy tax-loss selling since its percentage losses have been so high.

There are roughly two dozen other names which I will probably buy at some point between now and the end of 2025.

In some cases we have compelling valuations combined with multi-year lows but no recent insider buying; as soon as some top executives jump in, I will do likewise and post those positions here on Seeking Alpha. If you believe that any particular stocks are worthwhile for purchase and are similarly out of favor, please let me know as soon as possible. I always appreciate learning from others; several of the names on this list and a number of my favorite purchases during the April 2025 panic were originally pointed out to me by other people.

Continue to gradually rebalance your portfolio which is especially necessary whenever we are passing through the phases of a major bubble.

While many other investors have been congratulating themselves for their brilliance in continuing to purchase stocks which are trading at four, five, or more times their long-term average levels based upon their profits, this has become an especially dangerous time to own such popular shares since many of them could drop 80% or more and still be overvalued. Ensure that you keep between 60% and 65% of your total liquid net worth in U.S. government debt, while balancing the remainder between stocks with meaningful insider buying that are trading near multi-year lows along with short positions and/or unleveraged bear funds if you have experience in handling their volatility. Whenever Treasuries dip in price, buy more of whatever is cheapest; whenever stocks make extended gains, do some selling; whenever there is a protracted pullback combined with panic such as we had in April 2025, aggressively buy a combination of whatever is most undervalued. In April 2025 this partly involved buying depressed energy shares including Transocean (RIG) which has since more than doubled, along with especially unpopular emerging markets like Brazil and South Korea which had featured numerous bargains. I have been slowly reducing some of those long stock and stock fund positions following impressive gains.

30-year TIPS continue to be among the best conservative bargains in the world.

In contrast with individual stocks which will often fluctuate sharply in price, 30-year TIPS are relatively boring and that is precisely what makes them so appealing. The current yield is about 2.52% fixed for 30 years combined with the urban consumer price index which fluctuates each month. If inflation is running near 3.0% then this means your total yield will be 5.5% which is exempt from state and local income tax. If inflation drops toward or below zero then you will continue to get a minimum of 2.5%, and the yield could be significantly higher if we experience above-average inflation at various points during the next three decades. The last auction for 30-year TIPS had featured their highest fixed yield (2.650%) since 2001 and the yields remain significantly above their long-term averages.

Most fundamental valuations for U.S. stocks are either near or at their highest-ever historic levels going back to 1880:

All U.S. large-cap stock bubbles were followed first by a collapse of more than 80%, and second by a multi-year impressive bull market where value shares generally far outperformed growth shares:

Following the U.S. large-cap bubbles of 1836-1837, 1872-1873, 1928-1929, 1972-1973, and 1999-2000, we first had a two- or three-year severe bear market and then several years of dramatic gains for value shares. This may be because losses exceeding 80% for many popular large-cap shares during their bubble collapses dissuaded investors from quickly getting back into most of their previous growth favorites. For this reason, the vast majority of the shares I have been and will be recommending for purchase during 2025-2029 will be underpriced value shares with meaningful insider buying rather than growth shares.

Incrementally adjust to whatever the global financial markets have been doing:

Since 1981 I increase the ratio of short to long stock positions the more overpriced the U.S. stock market is and the more aggressively that top corporate insiders have been selling. I proportionately increase the ratio of long to short stock positions whenever recent extended selling has enabled worthwhile bargains to be created and insiders have been eagerly accumulating those bargains. Whenever we have a multi-year high in overall insider buying relative to insider selling by top executives, I generally close out all of my short positions.

Disclosure of current holdings:

Below is my current asset allocation as of 4:00 p.m. on Friday, November 21, 2025. Each position is listed as its percentage of my total liquid net worth.

I extracted the totals for each position and grouped these according to sector.

The order is as follows: 1) U.S. government bonds; 2) shorts; 3) bear funds; 4) precious metals; 5) emerging-market funds; 6) individual Brazilian ADRs; 7) energy; 8) other individual shares.

VMFXX/TIAA Traditional, TIAA money market/bank CDs/FZDXX/FZFXX/SPRXX/SPAXX/BPRXX/Savings/Checking long: 35.08%;

17-Week/52-Week/26-Week/13-Week/2-Year/8-Week/3-Year/5,10,30-Year TIPS/4-Week/6-Week/20-Year: 26.50%;

TLT long: 11.91%;

I Bonds long: 3.95%;

LTPZ long: 0.75%;

EDV long: 0.52%;

PMM long: 0.01%;

XLK short: 33.62%;

QQQ short: 25.50%;

GDXJ short: 2.05%;

SMH short: 1.41%;

GDX short: 0.42%;

AAPL short: 0.16%;

PSQ long: 3.12%;

SARK long: 0.33%;

Gold/silver/platinum coins: 11.86%;

PALL long: 3.40%;

FLBR long: 0.84%;

EWZ long: 0.75%;

EWY long: 0.25%;

FLKR long: 0.20%;

TUR long: 0.03%;

EWZS long: 0.02%;

UGP long: 0.60%;

VALE long: 0.44%;

GGB long: 0.23%;

BBD long: 0.20%;

RIG long: 0.80%;

WTI long: 0.13%;

PTEN long: 0.05%;

MOH long: 1.10%;

CAG long: 0.45%;

LYB long: 0.42%;

HUN long: 0.40%;

VAC long: 0.33%;

SG long: 0.28%;

OGN long: 0.24%;

CLF long: 0.01%.

"The stock investor is neither right or wrong because others agreed or disagreed with him; he is right because his facts and analysis are right." --Benjamin Graham

VALUE BENJAMIN GRAHAM (November 16, 2025): Value investing has rarely been as unpopular as it is today in an environment characterized by bubbles, momentum, and hype. Michael Burry, one of the best known value investors of recent decades, recently closed his hedge fund. Many other money managers with solid fundamental approaches that succeeded for decades either retired or became less active in recent years as clients increasingly insisted upon following the thundering herd. Value investing has been the method by which most long-term investors have made money in all kinds of markets, because it is based entirely upon proven mathematical principles. If a given asset is near half fair value or less when you purchase it, then eventually you will end up far ahead whenever it regresses toward fair value and beyond. Similarly, if a given asset is near four times fair value, as QQQ has been recently, then eventually it will have to drop by a dramatic percentage just as it had done when it plummeted 83.6% from its intraday high of March 10, 2000 to its intraday low of October 10, 2002.

Benjamin Graham's concepts have rarely been more important or more unpopular.

Benjamin Graham was the ultimate value analyst who has been much admired by some of the most successful investors of the past century. With an all-time record number of people today making buying and selling decisions based upon social media, star power, brokerage recommendations, doing whatever the teenager down the street has been recommending, and practically everything other than proven fundamentals, it is more important than ever to follow Benjamin Graham's insistence upon tracking earnings relative to stock prices. The best bargains are those where companies have strong earnings and low valuations, while the worst stocks to own are those where valuations have far outpaced present and likely future earnings growth regardless of the current popularity of their business model.

Trendy momentum plays and meme stocks receive a lot more media coverage than successful value choices.

One reason so few investors are currently interested in value investing is that hardly anyone in recent years has been paying attention to value shares. Lots of people have been tracking what Tesla and Palantir are doing, and even relatively boring Costco gets a lot more attention than Transocean (RIG) or any of a large number of energy shares. You have to know where to go to get information about emerging markets such as Brazil and South Korea which had mostly featured single-digit price-earnings ratios and high dividend yields near the beginning of the year and again in April 2025. Obscure cryptocurrencies, which unlike stocks and bonds may not even have any intrinsic value, are mentioned far more frequently in the financial media than well-established companies like Molina Healthcare (MOH) which I just began buying, Conagra (CAG) which is similarly undervalued and I have been purchasing near 17 in recent weeks, or Organon (OGN) which has been out of favor for months and has enjoyed recent insider buying. Beyond Meat (BYND) has been cited in recent weeks many more times than consistently profitable companies with low valuations which have existed for decades.

Just as the word internet caused stock prices to surge in 1999-2000, saying AI causes a similar overreaction in 2025.

A number of shares in 2025 surged in value after AI was mentioned in a conference call, similar to what had occurred in 1999-2000 whenever the internet was cited. Regardless of the technological and popular fascination with artificial intelligence and other popular lines of business, since share prices have enormously outpaced profit growth, many stocks in these industries have reached several times fair value or higher. No one knows when these shares will decline or the shape of such a pullback, but it is certain that eventually all of them will have to retreat substantially in order to reach fair value and probably far beyond because that is how the financial markets have always behaved.

It is far easier to raise money for any investment involving something that has been frequently hyped in the media.

If you are attempting to raise money for an approach based upon value, hardly anyone will be interested. Especially since some popular momentum and related technical strategies have performed unusually well during the past three years, hardly anyone believes they have to try anything different. Solidly grounded principles of purchasing assets which are selling at steep discounts is a challenging concept to promote when some who follow social media postings have temporarily achieved greater percentage gains. Whenever the fewest people are interested in utilizing an approach which has outperformed for centuries, as is the case in any bubble, it is certain that only a small percentage of investors are going to make money over the next several years. Almost everyone else will lose a large percentage of their net worth and will wonder what happened.

Conservative investors taking advantage of above-average yields for bank CDs and U.S. government debt have been psychologically punished by being outperformed by passive index strategies.

Those investors who have recognized the dangerous overpricings for large-cap U.S. stocks, and chose instead to purchase U.S. Treasuries, TIPS, and similar assets with guaranteed safe yields at roughly double their long-term historic averages, have been punished instead of rewarded. They have seen their colleagues and neighbors who became fully invested in large-cap U.S. stocks generally outperforming as already dangerous overvaluations have climbed even higher. Many of these more conservative investors have since capitulated and have decided to join those who are convinced they have to come out ahead in the stock market no matter how perilously overpriced the S&P 500 and similar popular retirement choices have recently become. It is emotionally difficult for most people to foresee how this must end, with the same kind of eventual bear-market undervaluations that have always occurred following the most overvalued extremes. People are psychologically too easily influenced by what they think "everyone else" is doing, which in reality is overcrowding into the U.S. stock market just before it experiences one of its biggest percentage declines for any stock market ever recorded. Mark Hulbert tabulated on October 24, 2025 how we have reached all-time record extremes for the most reliable fundamental indicators:

The biggest outflows will repeatedly occur following the greatest percentage losses.

Hardly anyone sells an asset because it has become dangerously overpriced. Instead, the greatest amount of selling occurs following recent extended weakness. The psychology of the market changes from "how can I make the most money the most quickly?" to "how much more am I going to lose if I don't sell?" Just as in all past large-cap bubble collapses including 2000-2002, 1973-1974, and 1929-1932, the most intense outflows will repeatedly occur prior to each powerful bounce higher. We recently experienced 53% of total U.S. household net worth invested in the U.S. stock market, an all-time record which surpassed the previous peak of about 51% from March 2000. Each leg down in the U.S. equity bear market, whenever it accelerates lower and induces the biggest outflows from U.S. stock funds, will be followed by the most powerful rebounds. Whenever investors become falsely convinced that the worst is over, the next downward phase will occur. The following chart highlights how QQQ had behaved in 2000 through 2002:

During all bubble collapses, there are an average of about one to three opportunities each year to accumulate compelling bargains which are discarded along with the most popular names.

Each time that there have been recent notable outflows, there will be value shares which become especially worthwhile bargains and are being almost totally ignored as the media mostly care about how the most popular shares have been behaving. Often the best opportunities occur with assets which have been in lengthy bear markets of two or three years and had already been out of favor as disappointed investors sold into weakness to buy whatever had recently become trendy. In October 2022 we had ideal buying opportunities for gold mining and silver mining shares (GDXJ), along with Chinese internet shares (KWEB). In April 2025, many of the previous energy bubble favorites of 2022-2023 had been in downtrends for 2 or 2-1/2 years, and have since doubled. Brazilian (FLBR, EWZ, EWZS, BRF) and South Korean stocks (FLKR, EWY) were hardly discussed in spite of (or perhaps because of) their low price-earnings ratios and high dividends. Some of these have rallied so energetically that they are beginning to be recommended by some analysts and brokerages so I have been reducing my long positions.

It is not a simple matter to keep adjusting your blend of assets, but it is essential to make nearly continuous modifications especially as volatility mostly increases during the next several years.

The financial markets consistently behave the most deceptively prior to each major move. Before each of the biggest percentage stock market losses in history, the markets calmly and convincingly moved higher to create the illusion that significant pullbacks were unlikely when they had been most probable. Similarly, as each key intermediate-term bottom is being formed, the financial markets maximally fluctuate in both directions to create the illusion that the choppiness makes it too dangerous to buy when it is actually safest to do so. Analysts often repeat the false messages that investors should "wait for clarity before buying." This usually means that the same analysts and brokers will happily recommend the same assets after they have already doubled.

If something which was already unusually cheap becomes even lower in price, it is a good idea to keep gradually buying more of it into weakness. If something which was already irrationally overpriced climbs even higher, you should consider progressively selling more of it. Emotionally almost everyone wants to buy into extended strength and to sell into protracted weakness, so it is psychologically difficult for most investors to do the opposite.

An increasing number of assets have entered what will likely become historic bear markets with unusually outsized percentage losses.

Cryptocurrencies received almost incessant media coverage a couple of months ago when many of them had set new all-time record highs. They have been mentioned far less often in recent weeks as they have mostly experienced some of their largest percentage losses in a long time. Small- and mid-cap U.S. shares, including the Russell 2000, haven't been in downtrends as long as most cryptocurrencies, but have already been forming several lower highs. Gold mining and silver mining shares reached multi-year highs in October 2025, with so much fanfare near the peak that people literally lined up to purchase precious metals in many parts of the world. GDX dropped 72.1% after gold first reached one thousand U.S. dollars per troy ounce in March 2008, while both GDX and GDXJ suffered dramatic losses for more than two years after gold first reached two thousand in August 2020. The U.S. dollar index, which moves inversely to most other assets except for U.S. Treasuries, has been forming higher lows for weeks, while U.S. Treasuries of all maturities have been forming higher lows (and thus lower yields) for more than two years since October 2023.

It is still unclear whether or not most U.S. stocks have or have not completed their all-time highs. Either way, the way down especially for the most popular large-cap shares is going to be far more severe than most investors have been anticipating.

Keep buying 30-year TIPS whenever their fixed yields exceed 2.5% such as right now.

TIPS are one of the least-understood assets. The last auction for 30-year TIPS yielded 2.650% as its fixed portion, which was its highest fixed yield since 2001. If you get 2.5% as a fixed yield, with the current number being slightly higher as of this writing, then this is added to the urban consumer price index which is currently fluctuating around 2.6% or 2.7%. Even if the urban consumer price index is only 2.5%, when added to the fixed yield of 2.5% it yields 5.0% which is free of all state and local income taxes and is guaranteed explicitly by the U.S. government.

Going back to 1900, U.S. stocks by most measures have never been more overpriced and are therefore likely to experience one of their greatest ever percentage losses over the next few years:

U.S. Treasuries have been yielding roughly twice their long-term averages, while U.S. stocks have been yielding less than one-third their long-term average dividends. Investors are so confident of achieving capital gains for popular large-cap U.S. shares that they are willing to accept the lowest dividends and the highest valuations in history for any country:

I have been gradually reducing my long positions in emerging markets and energy shares which were mostly purchased near the start of 2025 and during the global April 2025 panic, while gradually buying some of the current bargains.

Molina Healthcare (MOH) is my most recent single stock purchase which I am buying and plan to keep buying using a ladder of good-until-canceled orders as I always do rather than lump-sum purchases. MOH has been strongly out of favor with many investors unloading near multi-year lows because of its downtrend, due to tax-loss selling, or out of concern of it being dropped from the S&P 500 Index rather than for any valid reason. I also recently purchased Conagra (CAG) due to low valuations and most investors selling to join the herd or for similar tax-loss excuses which are most intense at this time of the year. I am considering buying shares of EPHE, a fund of Philippine shares, with a current average price-earnings ratio of 8.75. If you know of any other worthwhile bargains that Benjamin Graham would have been proud to purchase then let me know.

The history of U.S. large-cap equity bubbles is clear: declines surpassing 80% for the most popular stocks as those bubbles inevitably collapse, followed by several years of a strong bull market where value far outgains growth.

After the 1837 canal bubble, the most popular U.S. large-cap shares fell over 80% and we subsequently had far greater gains for value than growth shares for several years. The same occurred after the 1873 railroad bubble, while following the infamous 1929 top large-cap stocks dropped 88% to 89% followed yet again by value shares outperforming from 1932 through 1938. After the Nifty Fifty bubble favorites plunged 81% in 1973-1974, we had a major value bull market from December 1974 through January 1980. The more recent internet bubble of March 2000 was followed by an 83.6% plunge for QQQ and a classic value bull market from October 2002 through June 2008 where boring emerging-market (EEM) and other value names gained dramatically more than QQQ or the S&P 500. Once the current bubble in large-cap U.S. shares completes its collapse, perhaps in 2028 or 2029, it will likely result in a total decline of at least 83.6% and will similarly be followed by value trouncing growth through sometime in the mid-2030s.

Disclosure of current holdings:

Below is my current asset allocation as of 4:00 p.m. on Friday, November 14, 2025. Each position is listed as its percentage of my total liquid net worth.

I extracted the totals for each position and grouped these according to sector.

The order is as follows: 1) U.S. government bonds; 2) shorts; 3) bear funds; 4) precious metals; 5) emerging-market funds; 6) individual Brazilian ADRs; 7) energy; 8) other individual shares.

VMFXX/TIAA Traditional, TIAA money market/bank CDs/FZDXX/FZFXX/SPRXX/SPAXX/BPRXX/Savings/Checking long: 35.17%;

17-Week/52-Week/26-Week/13-Week/2-Year/8-Week/3-Year/5,10,30-Year TIPS/4-Week/6-Week/20-Year: 26.64%;

TLT long: 11.75%;

I Bonds long: 4.00%;

LTPZ long: 0.62%;

EDV long: 0.37%;

PMM long: 0.01%;

XLK short: 34.73%;

QQQ short: 25.50%;

GDXJ short: 2.12%;

SMH short: 1.48%;

GDX short: 0.44%;

AAPL short: 0.16%;

PSQ long: 3.02%;

SARK long: 0.33%;

Gold/silver/platinum coins: 12.13%;

PALL long: 3.54%;

FLBR long: 0.86%;

EWZ long: 0.77%;

EWY long: 0.26%;

FLKR long: 0.20%;

TUR long: 0.02%;

EWZS long: 0.02%;

RIG long: 0.81%;

UGP long: 0.61%;

VALE long: 0.44%;

GGB long: 0.24%;

BBD long: 0.21%;

WTI long: 0.13%;

PTEN long: 0.05%;

MOH long: 0.54%;

CAG long: 0.45%;

OGN long: 0.25%;

CLF long: 0.01%.

"The most important quality for an investor is temperament, not intellect." --Warren Buffett

THE GRAND ILLUSION (September 14, 2025): Once every few decades, far too many investors become convinced that if they throw a ball into the air with enough strength, it will go into orbit. By many measures, large-cap U.S. stocks have never been more overpriced relative to corporate earnings not only in the entire history of the United States, but for any country in the world at any time. Many investors have convinced themselves that the U.S. stock market only goes up, and have therefore put a large percentage of their retirement funds into the same stocks that just about everyone else has been buying. Regardless of how high these prices climb, or when they drop, the eventual inevitable regression to fair value and beyond will be an unpleasant event for most people who have forgotten the lessons of past bubbles and are convinced that because of one reason or another, "it's different this time."

Many stocks have proven intrinsic value; the problem is that in many cases today the fair value is far below the current price.

Costco (COST) was recently trading at several times its fair value, most analysts upgraded the stock for one reason or another, usually saying the equivalent of "you should buy it because it keeps going up." The price-earnings ratio eventually reached 62.5. I wouldn't touch Costco at or above one thousand U.S. dollars per share, but if its price went below 100 then it would become a worthwhile bargain and I would gladly accumulate it. This would be especially true if top corporate insiders were to become substantial buyers rather than selling at their heaviest pace ever recorded as they had been doing during the past year.

Any stock is a bargain whenever its valuation is substantially below what Benjamin Graham or Peter Lynch have described in their formulas as representing fair value. Earlier this year, especially in April 2025, we had numerous stocks in various sectors including energy and emerging markets which were trading near or below half fair value, and we accumulated as many of them as possible including RIG, WTI, EWY, and FLBR. During the past year we also had worthwhile undervaluations for U.S. Treasuries and TIPS including the highest yield for 30-year TIPS last month since 2001. Palladium was a compelling bargain at all-time lows in real terms and all-time bullish traders' commitments, which we repeatedly purchased via PALL. As is the case with all undervalued assets, they will generally rebound more than most other assets in percentage terms.

If you own undervalued shares then it is less necessary to sell them following a rally, since they will eventually rally again. If you own overpriced shares then one day a rally will be followed by a dramatic percentage decline in order to regress toward fair value.

More importantly, since underpriced assets have to climb rather than falling to reach fair value, it is less necessary to sell them whenever they have recently rallied. If an undervalued asset retreats, it will eventually recover because it is less than its intrinsic fundamental worth. Ono the other hand, if you own an especially overpriced asset which insiders have been aggressively selling, then you will eventually lose a large percentage of your investment. You just don't know when or how.

Cryptocurrencies have no proven worth and will end up collapsing even more in percentage terms.

It doesn't matter how many people recommend cryptocurrencies or who they are, since a cryptocurrency has no intrinsic value. Unlike a stock, it doesn't represent part ownership of a company, and unlike a bond, it doesn't represent a promise to repay principal with added interest. It is only worth whatever a bunch of other people, most of whom are among the least experienced investors, believe it is worth in their minds. It is like owning part of a fantasy, except that you have to pay real money for it. Perhaps there is some intrinsic value for someone who has to conceal their transactions, such as the black market, but whatever this value may be is far below the current valuations of nearly all cryptocurrencies.

Eventually cryptocurrencies will become nearly worthless. As with all other bubbles, it is unknowable in advance how or when this will occur, but it must happen one way or another. You don't want to get stuck holding the bag.

The long-term ownership of U.S. stocks as a percentage of total household assets has been at a median of 26% for decades, and recently climbed to more than double that long-term average.

The percentage of total U.S. household assets invested in the U.S. stock market briefly surpassed 51% in early 2000 before plummeting again. Recently over 53% of total U.S. assets were invested in U.S. stocks, thereby surpassing their previous 2000 peak. It is just a matter of time before the 26% level is reached again. There was a popular myth in 1999-2000, recently revived, in which investors "had to" put their money into the U.S. stock market because there was no alternative. As soon as the U.S. stock market, especially the most popular funds, retreated 30% or 40% in 2001 and 2002, and again several years later, investors had no trouble finding numerous alternatives including "boring" U.S. Treasuries which saw their yields plummet after 2000 and after 2007.

When any asset is rising in price, investors will do whatever they can to own it. When it is falling in price, they will similarly go out of their way to get rid of it. We had all-time record outflows at each of the past several bear-market bottoms for the U.S. stock market. Even the brief plunge in February-March 2000 experienced two consecutive weeks of the biggest-ever weekly net outflows from U.S. equity funds.

No asset has its fair value changed because a particular group of analysts like it or hate it, or due to any other popularity contest.

The price of any asset will often fluctuate, sometimes hugely, whenever analysts either love it or hate it. However, popularity has no effect on the fair value of any asset. That is based entirely upon current and future earnings for a stock, and current and future income payments for a bond. The best time to purchase any stock is when it is the most undervalued relative to its future earnings, and almost everyone is telling you why you shouldn't buy it. The best time to sell any stock is whenever it is most overpriced relative to its earnings, and almost everyone is eagerly purchasing it.

The U.S. stock market usually tracks the real U.S. economy, but lately this ratio has become absurdly out of line even when it is compared with other bubble periods like 1999-2000.

Large-cap U.S. stocks in particular have far outpaced the U.S. economy, thereby creating a temporary massive gap which will have to be resolved either by U.S. stocks slumping in price or the U.S. economy suddenly tripling or more in value. Guess which will occur:

As measured by another useful fundamental indicator, price-to-book for the S&P 500 Index surpassed its previous all-time record from March 2000:

For the first time in history, price-to-sales exceeded 10 for one-third of all U.S. companies, versus only two-thirds as many during the 1999-2000 internet bubble which was the previous record:

Real earnings yield in the U.S. recently fell to its lowest point ever measured:

Like most of the world's most experienced investors, Warren Buffett made all-time record stock sales and all-time record U.S. Treasury purchases roughly since the middle of 2024. Naturally most investors have foolishly concluded that Buffett's amply proven track record is meaningless and that he must be getting senile, since Berkshire Hathaway has been trading near its all-time record discount to the U.S. stock market:

Gold is not currently a viable alternative, and neither are gold mining shares. Some of the biggest drops in history for this sector occurred simultaneously with bear markets for large-cap U.S. stocks, because bubbles for one asset class usually inspire bubbles in other asset classes.

GDX, the most popular fund of large-cap gold mining shares, plummeted 72.1% from its March 2008 top to its October 2008 bottom. Investors who expected precious metals to be a safe haven from a retreating stock market discovered that they lost more money with gold mining shares than with many other sectors. A similar percentage drop occurred prior to the mid-November 2000 bottom for this sector. The traders' commitments and insider data show that the most experienced investors have been selling gold and silver while central banks and individual speculators have been piling in.

Central banks consistently buy gold near tops and sell gold near bottoms, and will always do so.

At the all-time bottom for gold in real terms in the late 1990s, the Bank of England sold all of its gold. The Bank of Canada sold most of its gold below 1100 U.S. dollars per troy ounce near the end of 2015, the last time that gold was so cheap. Now that we have all-time highs, many central banks have been accumulating the yellow metal. The result will be the same as when they had last piled in during the late 1970s and early 1980s; afterward, gold slid from 850 in January 1980 to 250 in August 1982.

Fortunately there is a simple signal for when you should be purchasing GDX, GDXJ, and other funds of gold mining and silver mining shares.

Here's the "secret" to buying precious metals: wait for silver's traders' commitments to show that commercials, who are those who own actual silver including miners, jewelers, and fabricators who make things from real silver, have a combined long position which is near or higher than their combined short position. As of the most recent weekly reading, silver commercials had combined longs of 40,163 contracts and combined shorts of 113,565 contracts. That is definitely not anywhere close to a buy signal.

On September 6, 2022, silver commercials were long 55,823 and short 50,768. That was a strong buy signal. Compare what GDX and GDXJ have done from then until now.

Investors are obsessed with unknowable data such as how extreme any especially overpriced asset will become, or when, rather than the percentage it will eventually have to lose.

The definition of an intelligent Dutch investor in 1640 was someone who avoided the lure of Tulipmania. In 1723, a smart U.K. investor was someone who didn't participate in the South Sea Bubble. More recently, brilliant investors in 1975 were those who avoided the siren song of the Nifty Fifty in the early 1970s. In the 21st century, an insightful investor in 2002-2003 was defined as anyone who didn't chase after the most popular stocks in 1999-2000. In 2028, an intelligent investor will be described as someone who resisted the siren call of the AI bubble in 2025.

There is no need to change my long-term outlook, since it is based upon proven fair-value principles.

I am frequently asked if I have revised my long-term price targets due to the bubble situation. People expect me to say that I no longer expect QQQ to drop 83.6% as it had done from its peak on March 10, 2000 to its bottom on October 10, 2002, or that I don't think that GDXJ will retreat all the way down to 28. I have retained these and all of my other targets, and am tempted to expect even further percentage losses, since millions of new investors have piled into these and other assets only because they're chasing after what everyone else is doing. The more inexperienced people who crowd into anything, the more that the same people will panic out of the same assets after their losses have become emotionally intolerable. This is why the biggest percentage moves in one direction are followed by proportionate shifts in the opposite direction.

My subscription service includes two 70-minute participatory Zoom meetings each week. In addition to answering questions in real time, I log onto my brokerage account and show subscribers my purchases and sales, as well as my current open orders.

Disclosure of current holdings:

Below is my current asset allocation as of 4:00 p.m. on Friday, September 12, 2025. Each position is listed as its percentage of my total liquid net worth.

I extracted the totals for each position and grouped these according to sector.

The order is as follows: 1) U.S. government bonds; 2) shorts; 3) bear funds; 4) precious metals; 5) emerging-market funds; 6) individual Brazilian ADRs; 7) energy; 8) other individual shares.

VMFXX/TIAA Traditional, TIAA money market/bank CDs/FZDXX/FZFXX/SPRXX/SPAXX/BPRXX/Savings/Checking long: 35.42%;

17-Week/52-Week/26-Week/13-Week/2-Year/8-Week/3-Year/5,10,30-Year TIPS/4-Week/6-Week/20-Year: 25.73%;

TLT long: 11.21%;

I Bonds long: 3.88%;

PMM long: 0.01%;

XLK short: 34.11%;

QQQ short: 25.12%;

GDXJ short: 1.52%;

SMH short: 1.43%;

GDX short: 0.24%;

AAPL short: 0.15%;

PSQ long: 1.24%;

SARK long: 0.38%;

Gold/silver/platinum coins: 10.55%;

PALL long: 2.62%;

EWZ long: 0.52%;

FLBR long: 0.51%;

EWY long: 0.11%;

FLKR long: 0.06%;

TUR long: 0.02%;

EWZS long: 0.01%;

UGP long: 0.42%;

VALE long: 0.30%;

GGB long: 0.17%;

BBD long: 0.15%;

RIG long: 0.44%;

WTI long: 0.07%;

PTEN long: 0.04%;

OGN long: 0.25%;

CLF long: 0.01%.

"You do things when the opportunities come along. I’ve had periods in my life when I’ve had a bundle of ideas come along, and I’ve had long dry spells. If I get an idea next week, I’ll do something. If not, I won’t do a damn thing." --Warren Buffett

TREASURING TREASURIES (May 15, 2025): Investors have become disenchanted with investing in U.S. Treasuries, thereby causing their yields to climb in recent years to their highest levels since the beginning of the century. The most informed insiders, known as commercials, have an aggregate net long position which is near the 98th percentile of their historic range. Some of the most-experienced investors today, including Warren Buffett, have been aggressively accumulating U.S. Treasuries since their yields had reached multi-decade highs during the final months of 2022. The media in 2025 have featured far more bearish than bullish articles regarding U.S. Treasuries. In recent weeks there has also been a sharp surge of stories about how the U.S. dollar will lose its role as the world's reserve currency, which is one of the most important reasons especially for non-U.S. investors to own U.S. Treasuries.

The primary reason for investing in U.S. Treasuries is that, relative to U.S. stocks, they have rarely been more undervalued in their entire history going back to when George Washington was the U.S. President.

The U.S. government began to issue U.S. Treasuries in 1789, which was one year prior to the founding of the Philadelphia Stock Exchange and three years before the New York Stock Exchange officially opened for business. As a general principle, investors can either purchase U.S. Treasuries which pay interest or they can buy stocks which pay dividends. The idea is that since U.S. Treasuries are explicitly guaranteed by the U.S. government, whereas stocks can fluctuate unpredictably, the dividend yield on the S&P 500 Index and for most equity investments will have to be higher than the yield on short-term U.S. Treasuries to induce investors to take the much higher risk of stock ownership. However, because large-cap U.S. stocks have outperformed nearly all other investments in recent years, most people are willing to accept a lower return from equity dividends and to give up 4.3% guaranteed on U.S. Treasury bills, because they are so confident of making 20% or more per year by investing in the biggest and most popular U.S. stocks. This is obvious by the all-time record inflows into funds of U.S. stocks in retirement accounts and for retail investors in general, even as the fundamental valuations of the most popular U.S. equities are near the 99th percentile of their historic range. The yield on the 10-year U.S. Treasury bond, currently 4.431%, is almost 3.5 times the S&P 500 yield of 1.27%.

If someone is certain that he will make at least 20% per year in the stock market then he's not interested in getting a guaranteed 4.3%, or even more than 6% as some U.S. Treasury bills had yielded briefly when there was a Congressional standoff in May 2023. (I should probably say he or she, but hardly any woman would be so foolishly overconfident.) This is the real reason that U.S. Treasury yields are far above their long-term historic averages. The only way the U.S. government can induce sufficient investment in U.S. Treasuries is for their yields to be unusually high, because investors are currently interested in taking the greatest risks possible. This is one of the clearest signs that U.S. stocks are in a dangerous and unsustainable bubble which will be followed by a dramatic collapse.

A popular myth is that U.S. Treasury yields will keep rising because the U.S. government is running an especially large budget deficit which could rise even more due to federal tax proposals for 2026 and beyond.

Here is a simple quiz: in which year did the U.S. government experience not only its lowest deficit in many decades, but also an actual budget surplus? The answer is 2000, the final year of Bill Clinton's term in office. This was also the year when U.S. Treasuries sported their highest yields of the past several decades. This doesn't necessarily mean that a smaller U.S. budget deficit will be accompanied by rising Treasury yields, but it is pretty strong proof that there is no positive correlation between the size of the U.S. budget deficit and U.S. Treasury yields. If you study a long-term chart then you will see that the long-term correlation is close to zero.

The huge U.S. budget deficit and the surging total U.S. government debt are real drawbacks with the U.S. economy. The consequences will be numerous and potentially severe, but rising U.S. Treasury yields is not one of them.

A more recent and especially popular myth, especially in the mainstream media, is that the U.S. dollar will no longer serve as the world's reserve currency, a status it has enjoyed since it had supplanted the British pound in that role over a century ago.

The financial media, including many otherwise respectable publications, have observed the recent three-year bottom for the U.S. dollar index and, as they usually do whenever any asset falls to a 3-year low, are considering the possibility that the euro, the Chinese renminbi (yuan), or even a currency which doesn't yet exist will supplant the U.S. dollar as the world's reserve currency. This has raised widespread speculation that U.S. assets and especially U.S. Treasuries are dangerous to own in case the greenback suffers a serious pullback versus other global currencies. Here is a sampling of some recent articles on this topic:

The New York Times featured an article on the first page of their business section on April 28, 2025 about how the euro could become the world's premier currency. OMFIF made a serious case for a currency that doesn't even exist yet, and which will be shared among several countries which have few formal economic or political ties, to potentially take over the global reign from the U.S. dollar. Serious independent analysts including deVere have speculated that the Chinese renminbi could become the king of worldwide currencies.

Meanwhile, the frequency of bearish commentary about the U.S. dollar and U.S. Treasuries rose sharply in recent weeks, including this CNBC forecast of another 15% to 20% pullback for the U.S. dollar broadcast on April 29, 2025.

Magazine covers often highlight trends which are just about to dramatically reverse.

There are several magazines which tend to feature trends on their front covers just before they violently change direction. A classic example is during the exact week of the U.S. dollar index's recent three-year bottom, where The Economist cover story was entitled "How a Dollar Crisis Would Unfold," complete with a caricature of Edvard Munch's painting "The Scream." To give you an idea about how accurate this publication has been, also on the exact week of the recent multi-year bottom in November 2022 for many cryptocurrencies was this Economist cover story entitled "Crypto's Downfall."

Why is there a recent consensus about the U.S. dollar losing its role as the world's reserve currency, combined with a sharp rise in bearish forecasts for the greenback? The primary reason is that, just as with any asset that has recently achieved a three-year extreme in either direction, the vast majority of investors become convinced that such a multi-year trend will continue indefinitely. It doesn't matter whether it is an all-time high for large-cap U.S stocks, a new historic zenith for gold, or a five-year bottom for Brazilian and Chinese stocks. Analysts are most likely to be bullish toward any asset whenever the biggest percentage losses are about to occur for that asset, and to be maximally bearish whenever the strongest rallies are set to occur.

An interesting question is which U.S. government bonds to purchase, given the wide range from 4-week U.S. Treasuries to TIPS and I Bonds. I have been participating in all U.S. Treasury auctions since the summer of 2022 and have been accumulating a wide range of these, especially those which are consistently undervalued like the 6-week, 17-week, and 20-year Treasuries, along with TIPS from 10 through 30 years.

The 6-week and 17-week U.S. Treasury auctions have been around for a much shorter period of time than the better-established 4-, 8-, 13-, 26-, and 52-week Treasury auctions. Therefore, there are fewer participants out of unfamiliarity and a reluctance to change established habits, thus plumping up the 6-week and 17-week yields. The 20-year Treasury has had a longer existence but it is overshadowed by the 10- and 30-year Treasuries, thereby usually resulting in its yield being higher than it should be in relative terms.

TIPS, which pay a combination of a fixed rate determined at auction which is added to the U.S. inflation rate, tend to confuse many investors which stay away from them primarily for that reason. These have been sporting some of their highest real yields in their entire history, and therefore I have been consistently buying them both at auction and in the secondary market. The next 10-year TIPS auction will be held in the morning of Thursday, May 22, 2025.

There are little-appreciated side benefits to having U.S. Treasuries, especially if they are in a brokerage account.

U.S. Treasury interest is exempt from both state and local income taxes by federal law. This means that if you live in a place where these taxes are high, your after-tax return will be greater than with many competing investments. If you own U.S. Treasuries in a brokerage account, then only 1% of their value for short-term Treasuries and 2% for 52-week Treasuries is required to hold them on margin. This means that 100 dollars invested in U.S. Treasuries is as good as 98 or 99 dollars of actual cash for margin collateral purposes, plus it will currently be yielding close to 4.3%.

U.S. Treasuries are fully liquid, so that if you purchase a 3- or 20-year U.S. Treasury and you decide after several months or a year that you would like to sell it, all brokerages have a very active secondary market where you will get close to fair value for these Treasuries. You can also purchase "used" Treasuries in these secondary markets at generally favorable prices to supplement the Treasuries you buy at auction. The ability to sell a Treasury bond prior to maturity, and not to pay state and local income tax, makes these far superior to bank CDs which are almost completely illiquid and are subject to income taxes in all jurisdictions. In addition, U.S. Treasuries purchased at all auctions are free of brokerage fees. You can also purchase U.S. Treasuries at TreasuryDirect.gov which is maintained by the U.S. government and where no fees are charged, plus you get a detailed 1099 form each year for your income taxes.

The following are recent useful charts:

There was a nearly unanimous bullish consensus to buy gold a month ago when it had been the most calmly and positively behaving asset of 2025, as extreme tranquility consistently precedes the most tumultuous storms:

Retail investors have been especially excited about purchasing large-cap U.S. stocks which are modestly below their all-time highs:

Especially in their retirement accounts, U.S. investors have never been more heavily committed to the largest and most popular U.S. stocks than they are now:

CNN's Fear and Greed Index soared all the way from 3 in early April to 70 during the past week:

The bottom line: with U.S. Treasuries trading near their highest yields and their most depressed valuations since the beginning of the century, investors are shunning them in order to own large-cap U.S. stocks which have only been slightly more overpriced briefly in February 2025. The vast majority of investors have responded to last month's three-year low for the U.S. dollar index by becoming very bearish toward the greenback. Gold mining and silver mining shares have already begun to form lower highs following 12-year peaks on April 21, 2025. Widely popular large-cap U.S. stocks will likely resume and intensify their bear markets which may have begun on February 18-19, 2025 or which will begin in the near future, and which may not touch their ultimate nadirs until they reach their lowest levels since 2013, perhaps during 2028.

Disclosure of current holdings:

Below is my current asset allocation as of 4:00 p.m. on Tuesday, May 15, 2025. Each position is listed as its percentage of my total liquid net worth.

I computed the exact totals for each position and grouped these according to sector.

The order is as follows: 1) U.S. government bonds; 2) shorts; 3) bear funds; 4) precious metals; 5) emerging markets; 6) individual Brazilian ADRs; 7) energy; 8) other individual shares.

VMFXX/TIAA Traditional, TIAA money market/bank CDs/FZDXX/FZFXX/SPRXX/SPAXX/BPRXX/Savings/Checking long: 36.76%;

17-Week/52-Week/26-Week/13-Week/2-Year/8-Week/3-Year/5,10,30-Year TIPS/4-Week/6-Week/20-Year: 24.12%;

TLT long: 10.66%;

I Bonds long: 3.80%;

PMM long: 0.01%;

XLK short: 32.09%;

QQQ short: 23.46%;

SMH short: 1.36%;

GDXJ short: 0.79%;

AAPL short: 0.15%;

GDX short: 0.08%;

SARK long: 0.51%;

PSQ long: 0.26%;

Gold/silver/platinum coins: 9.57%;

PALL long: 2.15%;

EWZ long: 0.33%;

FLBR long: 0.31%;

EWY long: 0.05%;

FLKR long: 0.03%;

TUR long: 0.02%;

UGP long: 0.32%;

VALE long: 0.21%;

BBD long: 0.11%;

GGB long: 0.11%;

EWZS long: 0.01%;

RIG long: 0.28%;

PTEN long: 0.03%;

WTI long: 0.02%;

OGN long: 0.22%;

CLF long: 0.01%.