"With every new wave of optimism or pessimism, we are ready to abandon history and time-tested principles, but we cling tenaciously and unquestioningly to our prejudices." --Benjamin Graham

BUY TLT AND EDV (May 18, 2026): TLT is a fund which invests in U.S. Treasuries and which consists of U.S. government debt averaging 25.70 years to maturity. Generally long-term U.S. government debt pays interest every six months. EDV is a fund consisting of zero-coupon U.S. Treasuries averaging 24.5 years to maturity. Zero-coupon bonds, unlike other U.S. Treasuries of 2 years or longer, don't pay semiannual interest. This causes these "stripped" Treasuries to be more volatile than their underlying securities. Therefore, EDV is riskier than TLT, going up more when this sector is in favor and dropping more when it is unpopular.

Long-dated U.S. Treasuries and Tips were among the biggest percentage winners of the first two major bear markets of the 21st century (1999-2003 and 2007-2009). TLT, EDV, and other U.S. Treasury exchange-traded funds did not even exist in 1999 or 2000, because investors at that time, just like in 2026, were far more excited about purchasing wildly overvalued popular tech stocks than seeking safe havens. Many funds of U.S. Treasuries weren't created until their gains during the internet bubble collapse had almost been completed. Not surprisingly, long-term U.S. Treasuries and Tips far outperformed collapsing U.S. stocks by late 2002 and early 2003, when finally the powerful outperformance by U.S. Treasuries encouraged the introduction of numerous exchange-traded funds in this sector.

If you were invested in QQQ near its March 10, 2000 peak then you ended up losing more than 5 out of 6 dollars including all reinvested dividends by the time it had bottomed on October 10, 2002. In contrast, if you were invested in VUSTX or a similar fund of long-dated U.S. Treasuries or Tips in the same year when their yields had exceeded 6%, then you would have roughly doubled your money over the same period of time.

INVESTORS DON'T WANT SAFE HAVENS WHEN STOCKS ARE SO POPULAR DUE TO THEIR OUTPERFORMANCE IN RECENT YEARS

The investing world has made as complete a transition as has ever occurred from value to momentum. Almost everyone wants to own what has gone up the most in recent years, rather than whatever presents the most worthwhile current valuations. This has resulted in the highest-ever allocation and overpricing for most popular U.S. stocks, while U.S. government debt had been trading near multi-decade lows with proportional multi-decade highs in yields. No one can say when or how much more extreme this disparity will become, but its unavoidable resolution will lead to unexpectedly large losses from their latest levels for the most widely-own U.S. stocks and a total return of more than 100% for allegedly boring long-term U.S. government debt compared with their current prices. As you will see from the second chart later in this update, most valuations measures for popular U.S. stocks during the AI bubble are moderately to considerably more extreme than their most lopsided levels of the internet bubble about 26 years ago, so their subsequent percentage losses over the next few years could generally be greater.

When stocks are highly trendy, as they have been recently, investors are not interested in alternatives where safety and guarantee of principal are major considerations. This is the main reason that many U.S. Treasuries and Tips have been trading near their highest yields since 2001. Once investors realize that U.S. stocks are not as safe as most people believe they are, investors will become far more concerned with maintaining their net worth rather than making windfall profits. When this happens, there will be such a sharp surge into U.S. government debt that current yields exceeding 5% for long-term Treasuries and Tips will drop to 2.5% and possibly lower. Investors will discover that, just like an American football team, sometimes you have to play defense instead of putting the offensive team on the field.

DOUBLE YOUR MONEY IN A FEW YEARS VIA U.S. GOVERNMENT DEBT

Most investors might think of U.S. Treasuries as "boring" but their historic record shows otherwise. Their prices can fluctuate dramatically in both directions. Because they are paying yields of almost exactly 5%, by the rule of 72 their interest alone would cause them to double in value in fourteen to fifteen years assuming zero price change. However, funds like TLT and EDV can actually result in one dollar invested to be worth two dollars or more within a few years, rather than having to wait 14 or 15 years for the 5% annualized yield to compound sufficiently for a doubling. That is because, if you lock in a yield of 5% for 25 years, and yields drop to 2.5%, then everyone is going to want your 5% yield that is guaranteed by the U.S. government for a quarter century. You will therefore end up with the ability to sell your long-term Treasuries at a much higher price than you had paid for them, where the total return including all reinvested dividends could surpass 100%.

Of course this mathematical reality works both ways: if long-term U.S. Treasury yields rise to 7% or higher instead of dropping to 3% or lower, then if you sell your U.S. 5% 25-year government debt it will be worth much less than what you had paid for it. There's no free lunch.

U.S. GOVERNMENT DEBT PERFORMS MOST STRONGLY WHENEVER U.S. STOCKS ARE MOST VOLATILE IN BOTH DIRECTIONS

Whenever the U.S. stock market disappoints most investors by being both increasingly volatile and more likely to produce losses instead of gains, U.S. investors will turn to U.S. government debt as a safe haven. This shift doesn't always happen simultaneously. In 2008, when U.S. stocks were especially jumpy and unpredictable, U.S. government debt generally moved only slightly higher overall until the final quarter of 2008 when government debt surged in price and yields plummeted. This pattern of U.S. government debt responding to increased U.S. stock-market volatility after a delay of several months is common.

Some investors become disappointed when their holdings don't quickly go up in price. Often this is a blessing in disguise. If funds including TLT and EDV don't immediately surge higher when the most popular U.S. stocks are slumping, then this gives you additional opportunities to purchase more TLT and EDV at bargain prices before everyone else thinks of the idea.

THERE ARE TAX ADVANTAGES TO U.S. GOVERNMENT DEBT

All interest on direct U.S. debt obligations, as well as on funds of direct U.S. debt obligations including TLT and EDV, are free of state and local income taxes by U.S. law. In addition, in some states including New Jersey, you pay no income tax on capital gains for funds including TLT and EDV which consist primarily of U.S. government debt.

U.S. GOVERNMENT DEBT IS BEING HEAVILY SOLD SHORT BY MANAGED MONEY

Hedge funds and other pools of managed money have been aggressively selling short TLT and other popular funds of U.S. Treasuries, Tips, and other U.S. government debt. Ironically, these funds weren't aggressively shorting TLT when it was dropping in price and shorting it would have been profitable. Almost all of the short positions were accumulated since October 2023 when the price of TLT has been moving mostly sideways while paying 5% dividends. If you short anything which yields 5% then you have to pay this amount in dividends, making the vast majority of hedge fund shorts in this sector losing positions even with TLT trading not far above multi-decade lows.

Hedge funds who are long or short will often close out their positions whenever those positions move against them by about 25% or 30%. Thus, whenever TLT eventually climbs by 25% or 30% for any reason, it will likely rise another 25% or 30% as hedge funds nearly simultaneously close out their short positions. We saw what happened when hedge funds closed out their shorts in precious metals and emerging markets during the past year: these mostly ended up surging higher in price.

EXCHANGE-TRADED FUNDS OF U.S. GOVERNMENT DEBT MOSTLY FEATURE ONE-CENT BID/ASK SPREADS, MAKING THEM FAVORABLE TO TRADE WITH MINIMAL FRICTION

In 2008, when zero-coupon long-dated U.S. Treasury funds including EDV and ZROZ were among the biggest percentage winners of all exchange-traded funds, there was a spread of several cents between their bid and ask prices and relatively low average daily volumes, making it difficult to accumulate a substantial position without friction. Fortunately this has changed primarily due to a more serious commitment by market makers in these funds. The bid-ask spread nowadays is usually one cent during regular trading hours. TLT remains by far the most liquid fund in the U.S. government debt sector, often sporting narrow bid-ask spreads both during and outside of regular trading hours.

THERE ARE SIMILAR FUNDS TO TLT AND EDV

If you don't prefer TLT, or you don't want to pay its 0.15% management fee, then alternatives with lower annualized management fees are available including SPTL (0.03%), VGLT (0.03%), and SCHQ (0.03%). Funds which are similar to EDV include ZROZ, although EDV has the lowest annualized management fee of all zero-coupon bond funds at just 0.05%. If you live in Europe then your best choice in this sector is probably IS04. It is headquartered in Germany and has an expense ratio of 0.07%. IS04 is very similar to TLT and related funds of U.S. government bonds averaging roughly 25 years to maturity.

WE HAVE ALL-TIME RECORD EQUITY NET INFLOWS WITH INVESTORS PUTTING OVER 55% OF THEIR TOTAL HOUSEHOLD NET WORTH INTO POPULAR U.S. STOCKS AND STOCK ETFS

Both the above and below charts use data as of 4 p.m. on April 20, 2026:

INVESTORS NO LONGER SEEM TO CARE ABOUT DIVIDENDS OR YIELDS

With U.S. Treasuries and Tips approaching or surpassing their highest yields in both nominal and real terms since either 2001, 1990, or the early 1980s, the yield on VOO, a fund based upon the S&P 500 Index with a very low expense ratio, recently yielded less than 1.1% for the first time in history. Most investors have either forgotten or pretended to forget that more than half of the total return in the U.S. stock market since its inception has been from dividends, not from capital gains. This is also the highest ever ratio of the return on risk-free U.S. government debt to the dividends on the most popular U.S. stocks.

The above chart by Mark Hulbert highlights the overvaluations for U.S. stocks measured by price-to-earnings, price-to-sales, price-to-book, price-to-GDP, and other reliable fundamental valuations. Assets at extremes can become even more extreme, but they must inevitably regress toward the mean to a nearly opposite extreme. The following chart from Bloomberg is on a similar theme, comparing today's valuations with the entire period since 1995:

THE MOST EXPERIENCED INVESTORS HAVE GENERALLY BEEN SIGNIFICANTLY LESS FAVORABLE TOWARD STOCKS AND EAGER TO OWN U.S. GOVERNMENT DEBT; THE LEAST-EXPERIENCED INVESTORS HAVE BEEN TAKING MONEY OUT OF SAFE INVESTMENTS TO BUY THE MOST POPULAR U.S. STOCKS

As a general principle, those investors with the longest and more relevant experience including top corporate insiders and Warren Buffett have been the most conservative in recent months, selling stocks while purchasing U.S. government debt. Those investors who have the least familiarity with the financial markets have been among the biggest net buyers of stocks over the same time period. Whenever the most experienced participants in any field have been doing the opposite of the newest players, it should be pretty obvious what must occur afterward.

THE MEDIA AND ANALYSTS REMAIN FAR TOO BULLISH ON ENERGY AND MOST COMMODITY PRODUCERS, AS WELL AS MOST EMERGING MARKETS

In my last posting I cited the all-time record selling by top executives in the energy sector. This has somewhat subsided, but prices have been making lower highs as they have been doing for several weeks to months for most commodity producers and emerging markets. Hardly anyone wanted to purchase shares of emerging-market securities in April 2025 because they had underperformed, and almost everyone was recommending them in early 2026 after they had outperformed; naturally these assets surged when they were hated and have been slumping now that they are loved.

We are certain to achieve worthwhile purchasing points for both commodities and emerging markets at some point in the not-too-distant future. If you see the U.S. dollar index reaching a multi-year high and then starting to form lower highs, this is often signaling an ideal entry point for both of these asset classes.

ALMOST EVERYONE IS STILL SAYING GOLD 6000, ALMOST NO ONE IS FORECASTING 4000 (OR LOWER)

As I had described in my previous post, when gold was near five thousand U.S. dollars per troy ounce the number of analysts and brokerages anticipating six thousand outnumbered those expecting four thousand by a huge ratio. Even with gold recently dropping to around 4500, those who are expecting 6000 still far outnumber those forecasting 4000 which makes no sense mathematically. Meanwhile, gold and silver commercials have been increasing their short-to-long ratios into price weakness rather than becoming less bearish. Whenever commercials sell into price declines it usually sends a bearish signal about where the market is going.

Gold mining and silver mining shares become compelling bargains usually a few times per decade and will do so again, but don't expect this to happen soon. Whenever silver commercials are net long, it is probably an ideal time to start once again buying funds such as GDX and GDXJ.

Disclosure of current holdings:

Below is my current asset allocation as of 4:00 p.m. on Monday, May 18, 2026. Each position is listed as its percentage of my total liquid net worth. The long positions should add up to just about exactly 100%, while the short positions all use U.S. Treasury bills as collateral since those count as 99% cash.

I recently added to TLT, PSQ, EDV, LTPZ, and WEN, in that order, whenever each of these was near a multi-decade low, while reducing shorts for GDX and GDXJ into recent weakness. TLT is heavily shorted, pays almost exactly 5% in annualized dividends, and has been forming marginally higher lows since it had touched 81.92 on October 23, 2023 at 5:40 and 5:41 a.m. Eastern Time.

The order is as follows: 1) U.S. government bonds; 2) shorts; 3) bear funds; 4) precious metals; 5) individual U.S.-listed stocks.

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: 26.95%;

VMFXX/TIAA Traditional, TIAA money market/bank CDs/FZDXX/FZFXX/SPRXX/SPAXX/BPRXX/Savings/Checking long: 26.22%;

TLT long: 14.08%;

I Bonds long: 3.89%;

EDV long: 3.17%;

LTPZ long: 1.84%;

PMM long: 0.01%;

XLK short: 32.93%;

QQQ short: 27.04%;

SMH short: 1.64%;

GDXJ short: 1.54%;

PSQ long: 8.33%;

Gold/silver/platinum coins: 12.88%;

UTZ long: 1.28%;

CAG long: 0.76%;

GPK long: 0.41%;

WEN long: 0.17%.

"The intelligent investor realizes that stocks become more risky, not less, as their prices rise—and less risky, not more, as their prices fall." --Benjamin Graham

DXY UP, GOLD/SPY DOWN (April 20, 2026): Whenever any asset has made an extended move in one direction, and is about to make a huge move in the opposite direction, the vast majority of analysts, brokerages, and investors become convinced that the trend of recent years will continue indefinitely. One clear example in 2026 is the very popular belief that the U.S. dollar is going to collapse and that it will no longer serve as the world's reserve currency. This perception is so pervasive that one often finds financial articles that begin with a phrase such as "because the U.S. dollar is likely to continue to decline in upcoming years" followed by the conclusion that a weakening U.S. dollar will lead to higher prices for most other assets including precious metals and global equities.

I HOLLER FOR THE U.S. DOLLAR (WHILE ALMOST EVERYONE ELSE IS EXPECTING A GREENBACK COLLAPSE)

The myth of an upcoming accelerated pullback for the U.S. dollar has encouraged at least three well-known financial publications to highlight the alleged upcoming plunge for the greenback. Barron's, The Economist, and Forbes each featured a separate cover story about how the U.S. dollar will collapse. At least the cover artists had original visual presentations as you will see from these three magazine covers beginning with Barron's from February 23, 2026:

Barron's large-font feature headline states, "The reign of the [U.S.] dollar is coming to an end. What investors can do about it." The first line of the article proclaims, "The [U.S.] dollar is in decline, and investors have to learn to live with it."

Earlier that month, on February 5, 2026, the Economist reached the same conclusion, illustrated creatively with a green snake:

The accompanying Economist headline declares, "The age of a treacherous, falling [U.S.] dollar," with the story beginning, "Those holding American assets will have to get used to it."

On February 17, 2026, Forbes featured a burning U.S. dollar bill on their magazine cover:

Forbes' headline warns, "IMF Issues Serious U.S. Dollar Collapse Warning" with this statement: "High debt, combined with persistent inflation and high interest rates, puts massive pressure on the U.S. dollar and risks a long-term erosion of its dominance as a global reserve currency."

As I was writing this essay, Elon Musk--timely as always--issued a warning that the U.S. dollar would plunge while Bitcoin surges in price. I plan to write several paragraphs or more about cryptocurrencies and how they will become nearly worthless over the next few years, but I want to remain focused here on the repeated "urgent" and "must act now" tone of most of the media's coverage of the greenback and its future prospects.

The U.S. dollar has been in a powerful bull market since March 2008 when it had slumped to its all-time bottom, followed by a slightly higher bottom in July 2008. Near the July 2008 low, the greenback was so unpopular that supermodel Gisele Bündchen declared that she wanted to be paid going forward only in euros, which that year had reached an all-time high just above 1.60 U.S. dollars. I expect the U.S. dollar to climb substantially higher during the collapse of the AI bubble, just as it had done during the collapse of the internet bubble. The U.S. dollar index will very likely reach its highest level since 1985 by the end of the decade while I expect the euro to fall below 90 U.S. cents within a few years or less.

There were no recent cover stories, or hardly any other feature articles, in any well-known media publication pointing out that the U.S. dollar index has repeatedly rebounded from all selloffs. By itself, repeated recoveries from sharp short-term pullbacks are how most powerful bull markets begin. Unfortunately they aren't recognized until after the most important part of the gains have already occurred.

As the U.S. dollar at first gradually and later more convincingly moves higher rather than lower over the next few years, this will lead to eventual depressed valuations for most assets including stocks, commodities, corporate bonds, and cryptocurrencies. Residential real estate will lose perhaps half of its current value in many neighborhoods. Only U.S. Treasuries, Tips, and related U.S. government debt is likely to benefit from a strengthening U.S. currency that will encourage investors to put more of their money in U.S. dollar-denominated time deposits.

FAR TOO MANY ANALYSTS ANTICIPATE "PERMANENTLY" HIGH ENERGY PRICES, JUST AS IN THE SUMMER OF 2008 PRIOR TO HISTORIC LOSSES BY THE END OF 2008

Besides the nearly unanimous negativity surrounding the U.S. dollar, the media have featured numerous other myths which are in sharp contrast to the way that the most experienced investors in any given sector have been behaving. One popular recent fairy tale is that because of Iran or some other combination of factors, energy prices will allegedly remain "permanently high." If this sounds familiar, it was also heard frequently during 2008 especially in the summer. Top corporate insiders sold energy shares more aggressively during the past several weeks than they had done at any time in recent decades including 2008, and shortly afterward funds of energy shares including XLE began what will eventually become dramatic percentage declines.

Energy prices soared to all-time zeniths during the first half of 2008, and then when nearly all analysts had turned bullish we had one of the biggest percentage declines for gasoline and related commodities during the second half of 2008. I expect an approximate repeat during the next several months or so.

EVERYONE IS SAYING GOLD 6000, ALMOST NO ONE IS FORECASTING 4000 (OR LOWER)

Gold and silver had their turn at reaching "permanent rally" status not many weeks ago when we had both aggressive selling by top executives of gold and silver mining companies in addition to commercials (the equivalent of insiders for futures trading) featuring substantially above-average short-to-long ratios for gold, silver, and platinum. Those ratios remain lopsidedly in favor of lower rather than higher prices. The same media outlets, analysts, and brokerages which warned investors not to buy precious metals when they were especially depressed at other key buying points, including January 2016, March 2020, and the autumn of 2022, have tooted among the most bullish horns in recent weeks. Top corporate executives of precious metals mining companies had done some of their strongest-ever insider selling when gold and silver had been peaking several weeks ago.

My favorite misleading media excuse for gold to rise in price is central bank buying. Throughout their history, central banks have been repeatedly and aggressively buying assets near peaks and selling them near bottoms. The U.K. central bank sold most of its gold in the late 1990s when prices were at all-time lows in real terms. The central bank of Canada sold most of its gold near the end of 2015 and the start of 2016 when gold prices were similarly very depressed and were set for substantial upcoming gains. China has been selling U.S. Treasuries and buying gold recently, thereby both buying high and selling low. The next few years will demonstrate why they should have been doing the exact opposite.

EXTREME OVERALLOCATION TO ANY ASSET, IN THIS CASE LARGE-CAP U.S. STOCKS, INEVITABLY LEADS TO MAJOR LOSSES

Let's turn to the U.S. stock market, where the average U.S. household allocation to equities in recent decades has averaged very close to 26%. In March 2000 the total allocation to stocks briefly touched 51.1% of total household assets, by far an all-time record until that point. In March 2026 this allocation climbed to 55.1%, as you can see from the following chart from last month courtesy of Mark Hulbert who has persistently done excellent research on this topic:

In addition to the highest ever allocation to the stock market, more than double the typical amount for the first time in history, those who are most knowledgeable about their companies' future prospects have done their highest ever selling relative to buying:

According to Bloomberg, the current AI bubble has become more overpriced relative to earnings not only compared with typical valuations but when measured against the internet bubble of 1999-2000:

John Hussman has a useful benchmark which allows you to compare any year since 1928 with the present, with clear evidence of investors recently substantially overpaying for U.S. stocks:

A combination of 1) ordinary investors having by far their highest allocation to the stock market in history; 2) close to the 99th percentile for valuations including price-to-sales, price-to-book, and price-to-GDP; along with 3) top corporate insiders making their heaviest-ever sales in history both in absolute U.S. dollars and also as a ratio to total insider buying, provide compelling evidence for an impending dramatic percentage decline especially for those shares which have experienced the most intense selling by top corporate executives including the CEO. Of course this doesn't tell us the shape of the bear market, or how high a particular index will climb before it collapses, or when the bear market will end, or how often it will bounce along the way. There is no way to know how high an overpriced asset will climb before it dramatically retreats, or when it will occur. The same is true with anything near a historic bottom: it is unknowable how low it will continue to fall before it bottoms, or when that will happen. However, you can be certain that all assets--especially those which have been priced the farthest away from fair value-- will eventually regress to the mean and usually beyond to an approximately opposite extreme.

From the intraday high on March 10, 2000 to the intraday low on October 10, 2002, QQQ lost 83.6% of its value assuming that you reinvested all dividends. Since most valuation, allocation, and insider activity measures have approached all-time records relative to fair value in 2026 compared with their greatest extremes during the internet bubble of 1999-2000, it is mathematically probable that the total percentage loss for QQQ over the next few years will be greater than the internet bubble's plunge rather than lesser. Investors are not aware how likely it is that they will lose 5 out of 6 dollars by remaining in these shares, and will likely hang in there almost all the way to the bottom when they finally sell out of fear of prices dropping even lower.

Disclosure of current holdings:

Below is my current asset allocation as of 4:00 p.m. on Monday, April 20, 2026. Each position is listed as its percentage of my total liquid net worth. The long positions should add up to about 100%, while the short positions all use U.S. Treasury bills as collateral.

I recently sold most of the stocks I had bought at all depressed points since early 2025 as I had done in late 2021 and whenever the likelihood of a significant pullback was greatest, while adding to PSQ. I also bought more TLT as this massively-shorted fund has continued to steadily form higher lows for 2-1/2 years while paying 4 dollars in annualized dividends.

The order is as follows: 1) U.S. government bonds; 2) shorts; 3) bear funds; 4) precious metals; 5) individual U.S.-listed stocks.

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: 27.95%;

VMFXX/TIAA Traditional, TIAA money market/bank CDs/FZDXX/FZFXX/SPRXX/SPAXX/BPRXX/Savings/Checking long: 27.84%;

TLT long: 13.59%;

I Bonds long: 3.87%;

LTPZ long: 1.54%;

EDV long: 1.51%;

PMM long: 0.01%;

XLK short: 34.02%;

QQQ short: 26.75%;

GDXJ short: 1.93%;

SMH short: 1.67%;

GDX short: 0.37%;

PSQ long: 8.10%;

Gold/silver/platinum coins: 13.22%;

UTZ long: 1.30%;

CAG long: 0.77%;

GPK long: 0.37%.

"But just months later, swept up in the wild enthusiasm of the market, [Sir Isaac] Newton jumped back in at a much higher price and lost £20,000 (or more than $3 million in today’s money)." --Benjamin Graham

REVERBERANT REVERSALS (February 8, 2026): We have become conditioned by society to want to "turn over a new leaf" each time we approach and enter a new calendar year. We join a gym pretending we will exercise frequently for the entire year; we close out losing positions which have been the most disappointing performers and are set to enjoy powerful rebounds, in order to not have to look at big red negative numbers each time we log into our accounts; we assume that the previous calendar year's trends will continue indefinitely. As a result, whenever I possess shares which used to enjoy insider buying but have recently experienced notable insider selling, while the media have become far more optimistic and brokerages have been making frequent upgrades, I may be tempted to sell such holdings near the end of any given calendar year. Instead, I usually wait until part of January has passed before doing so, giving investors enough time to pile into the previous year's biggest winners. I have been selling some shares which I had bought from October through December 2025 that had been wildly oversold due to their becoming tax-loss favorites, if they have rebounded sufficiently so they are no longer meaningfully undervalued and previous top executive buyers in the autumn have become recent sellers. The start of 2026 fits classically into this pattern, combined with unusually priced large-cap U.S. stocks similar to how the year began in 1973 but generally with even more dangerous overpricings of stock prices relative to their earnings.

I have been aggressively increasing my allocations to TLT and PSQ, although using small amounts per trade as I always do whenever I am increasing risk.

TLT is one of the least-appreciated and most-shorted funds in history. Hedge funds in particular have multiplied their net short position by a factor of about twelve, and all of this increase was done after TLT had already completed its bottom at 81.92 at 5:40 a.m. in the pre-market session on October 23, 2023:

TLT has been in a very unappreciated bull market for 27-1/2 months and yields 4.82% annualized.

We'll leave aside the obvious question about why anyone would want to sell short something with an annualized yield of 4.82% which has been in a bull market for 27-1/2 months, choppily forming numerous higher lows along the way. The media have been insisting for months that the U.S. dollar will collapse and will allegedly no longer serve as the world's reserve currency. Meanwhile, the reality is that the U.S. dollar keeps rapidly rebounding from all selloffs since July 1, 2025, with the sharpest selloffs leading to the strongest recoveries. The media also keep insisting that long-term U.S. Treasury yields will surge higher. The truth is that it is the strong gains in large-cap U.S. stocks, in no way justified by their earnings climbing far more slowly than their stock prices, which has encouraged investors to foolishly conclude that they will always be able to get a 20% or 30% gain in large-cap U.S. shares. if you are sure you will achieve such outsized profits from U.S. stocks, then you will have zero interest in investing in something conservative and guaranteed like the TIPS which mature on February 15, 2053 with a fixed yield of 2.64% which is added each month to the urban CPI for a current total yield near 5-1/4 percent.

PSQ is an unleveraged fund which tracks the inverse of QQQ. QQQ remains one of the most overvalued exchange-traded funds in history and is also one of the most popular exchange-traded funds.

Buying PSQ is like shorting QQQ, except that you have to pay the 0.95% management fee and you can't sell covered puts against it as you can with QQQ. You can own PSQ in a retirement account where short selling is not permitted, and if you own it in a non-retirement account then it will qualify for long-term capital gains if you hold it for at least one year and one day from your purchase date for any lot. Investors have been piling into leveraged long funds of most equity groups, while they have fled from bear funds whether they are leveraged or unleveraged. Any extended uptrend creates the psychological perception that it will continue indefinitely, and since we haven't experienced a true U.S. equity bear market since early March 2009 which was almost 17 years ago, many people can't emotionally imagine a similar percentage decline occurring soon.

Top corporate insiders have been selling their shares at an all-time record pace, along with other very experienced investors including Warren Buffett. The same very experienced investors have been making all-time record investments into "boring" U.S. government debt. Meanwhile, the least-experienced investors have been making by far their biggest-ever inflows into stock funds and have been shunning safe guaranteed investments of all kinds. You can ask yourself whether the most experienced investors will be proven right, as has always occurred throughout history, or whether this will be the first time that the least-experienced participants end up with the biggest gains.

I sold many of the shares I had purchased throughout 2025, primarily emerging markets and energy shares in January and April and tax-loss favorites in October through December.

I sold all of the energy shares I had bought in April 2025, especially RIG, WTI, and PTEN. Fortunately most of these shares had more than doubled in value. I also sold all of my Brazilian, South Korean, Turkish, and other emerging-market shares which I had purchased primarily in January for Brazil and in both January and April for several other countries including South Korea. The South Korean shares more than doubled, while the Brazilian shares including both exchange-traded funds and individual company shares had gained an average of between 60% and 75%. While additional gains are possible for emerging markets and energy shares, I believe that the easy money has mostly been made while the downside risks have increased proportionate to their percentage gains.

I sold all of my PALL and MOH and a few smaller positions especially when brokerages switched from downgrades to upgrades while top corporate insiders changed from aggressive buyers to sellers.

MOH had gained 44% from my average purchase price in just over two months and the media had become far more favorable toward its future prospects, so I sold all of it. PALL, a fund of physical palladium, was an exchange-traded fund which I began purchasing near the end of 2023 and kept buying into the spring of 2025 within a few dollars of 80. In the futures markets, commercials--those who actually use palladium for manufacturing or mine palladium themselves--built up a long position which was more than ten times their short position. This is one of the most lopsided ratios for any futures contract in history. Recently, commercials shifted dramatically to being short:long 3:2. Palladium went from being one of the most popular short positions for hedge funds to a recent net long hedge fund favorite. I therefore sold all of my PALL even though it hadn't quite reached my target. The average gain was about 125% (not annualized).

Many popular assets experienced intensified upward moves followed by downside reversals.

You probably already know how nearly all cryptocurrencies accelerated their uptrends during the summer of 2025, and afterward reversed so dramatically that they have mostly lost more than half of their previous peak valuations. The same will occur with many other asset classes. Large-cap U.S. stocks, including funds like QQQ, SPY, and VOO, will similarly lose more than half of their value over the next few years. The degree of the decline will be proportional to the percentage of very overpriced shares they own in their portfolios. During the collapse of the internet bubble, QQQ lost 83.6% of its peak valuation in exactly 31 months if you adjust for all reinvested dividends. A similar or greater percentage decline for this and similar funds is likely by 2029 or sooner.

We have experienced sharp upward bounces for the most overvalued stocks, with the sharpest surges higher often occurring near the opening bell. This is highly characteristic of U.S. equity bear markets and almost never happens during bull markets.

Investors during the early years of bear markets repeatedly conclude that "the bottom is in" and excitedly pile in numerous times, ultimately being disappointed at not achieving new all-time highs which had become routine in recent years. This is especially true of the most severe bear market years including 1931, 1974, 2002, and 2008, which featured far more frequent sharp up days than the strongest bull market years including 2013 and 2017. Mark Hulbert has done extensive research into this phenomenon. Friday, February 6, 2026 was a classic short-term upward spike.

Prior to a large percentage drop for the U.S. stock market, VIX will almost always form a sequence of numerous higher lows following a historic bottoming pattern.

While the S&P 500 during the previous severe bear market had peaked on October 11, 2007 and bottomed on March 6, 2009, VIX had actually bottomed several months earlier in December 2006 and peaked in October 2008. VIX is likely forming a similar pattern in recent months, sliding to 13.38 on December 24, 2025 which had marked its lowest point in over a year. Whenever VIX reaches an especially elevated level, perhaps during the final months of 2026, and then begins to form several lower highs, it will likely be followed by a multi-month recovery for large-cap U.S. stocks before they resume their multi-year bear markets.

There will continue to periodically be worthwhile purchases for unloved shares with brokerage downgrades and insider buying.

My favorite stocks for purchase in any environment are those where the top executives including the CEO are buying into all extended pullbacks, where brokerages have been downgrading their prospects, where the media have become persistently gloomy, with single-digit price-earnings ratios, and with above-average long-term annualized earnings growth. If this sounds like something that Benjamin Graham or Peter Lynch would have said decades ago then that is not a coincidence.

Expect far more dramatic intraday fluctuations over the next few years than we have experienced during the past few years.

The financial markets have become much more volatile since October 2025 than they had been for several previous months, with generally larger spreads between intraday highs and lows. This is typical of a transition from the final stages of a lengthy equity bull market to a classically severe equity bear market. Often the early part of any trading day, especially near the opening bell, will experience sharp gains which are followed by pullbacks later in the day. The most popular shares will often be among the most eager to move higher in the morning. Whenever we are approaching the next intermediate-term bottoming pattern, perhaps several months from now, we will see roughly opposite behavior with frequent downward spikes near the opening bell followed by multiple rebound attempts as they day progresses.

February 2026 has been even more volatile than January in both directions for many assets.

Last week was a classic example of intensified intraday swings which characterize all transitions to true U.S. equity bear markets. QQQ rallied to a Tuesday, February 3, 2026 peak of 630.54 at 2:58 a.m., not far below its all-time top of 638.94 at 11:49:13 p.m. on October 29, 2025, before sliding to a Thursday, February 5, 2026 bottom of 587.44 at 7:16 p.m. and rebounding sharply since then. In case you aren't accustomed to readings outside of regular trading hours, such activity has become increasingly common and increasingly extreme and will likely continue to do so for at least the next several years.

The following charts highlight the incredible unsustainable extremes of the first several weeks of 2026 which will be remembered as one of the most unusually lopsided inflection months in world financial history.

The price-to-sales ratio of 3.43 for the S&P 500 one month ago, which was already surpassed several times in recent weeks, was far above its peak of 2.30 from the 1999-2000 internet bubble and thus probably has further to drop in a bear market:

There is a popular myth that high-P/E shares gain more in annualized terms than low-P/E shares, but the opposite has been proven to be true for decades:

Commodities retested all-time lows relative to U.S. equities during the past several years. Commodities have since rebounded moderately, especially during the past year, and are likely to surrender most of their recent gains before resuming their uptrend into the 2030s:

Precious metals have become unusually overpriced relative to energy commodities:

Investors consistently make the most intense net inflows near market tops and the most dramatic outflows near market bottoms:

U.S. corporate bond yields have been trading at spreads relative to U.S. Treasuries of similar maturities that are among their lowest in history:

There is a clear correlation between the extent of overvaluation and subsequent underperformance of U.S. stocks:

The media often assume that Fed rate cuts are bullish for U.S. stocks, whereas history proves that they are far more often bearish:

Rolling 3-month net inflows into U.S. exchange-traded equity funds are consistently their highest just before the biggest percentage pullbacks in those funds:

U.S. stocks overall are among their most overvalued ever recorded by several fundamental measures:

The out- or underperformance of U.S. stocks is inversely proportional to the percentage of total U.S. assets that are invested in the U.S. stock market:

Disclosure of current holdings:

Below is my current asset allocation as of 4:00 p.m. on Friday, February 6, 2026. Each position is listed as its percentage of my total liquid net worth. The long positions should add up to 100%, while the short positions all use U.S. Treasury bills as collateral.

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) individual U.S.-listed stocks; 6) currencies.

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: 25.50%;

VMFXX/TIAA Traditional, TIAA money market/bank CDs/FZDXX/FZFXX/SPRXX/SPAXX/BPRXX/Savings/Checking long: 25.12%;

TLT long: 13.07%;

I Bonds long: 3.97%;

LTPZ long: 1.38%;

EDV long: 1.31%;

PMM long: 0.01%;

XLK short: 32.88%;

QQQ short: 25.35%;

GDXJ short: 2.42%;

SMH short: 1.55%;

GDX short: 0.53%;

PSQ long: 6.22%;

Gold/silver/platinum coins: 13.51%;

WEN long: 1.31%;

UTZ long: 1.20%;

HUN long: 1.04%;

LYB long: 0.86%;

SG long: 0.83%;

OXM long: 0.75%;

CAG long: 0.52%;

VIRC long: 0.50%;

AVTR long: 0.49%;

VAC long: 0.45%;

BLMN long: 0.34%;

FMC long: 0.30%;

ALIT long: 0.29%;

OGN long: 0.28%;

MOS long: 0.27%;

DEI long: 0.26%;

FISV long: 0.17%;

FXY long: 0.05%.

"A technique that works repeatedly is to wait until the prevailing opinion about a certain industry is that things have gone from bad to worse, and then buy shares in the strongest companies in the group." --Peter Lynch

3 FAT YEARS, 3 LEAN YEARS (December 28, 2025): It is appropriate that the Bible parshah for this week is about Joseph interpreting Pharaoh's dream. Seven fat cows are swallowed by seven lean cows, and the lean cows are just as skinny as before. As you probably know, Joseph correctly interpreted this dream to mean that seven prosperous years would be followed by seven years of famine. Therefore, Joseph recommended that Pharaoh stockpile as much as possible during the seven good years, so that there would be plenty available during the difficult years which followed. Those who didn't live in Egypt mostly assumed that the prosperous times would last indefinitely, so when the famine arrived they weren't ready for it and were forced to go to Egypt to buy food. Eventually Pharaoh was able to trade food for real goods, land, and finally for labor. Pharaoh and Joseph succeeded in creating massive wealth because they had planned for the future to be different from the recent past.

Most people become maximally confident just before the biggest losses, and maximally pessimistic shortly before the strongest rallies for any asset.

Many investors have become dangerously overconfident after three bull market years for the most popular large-cap U.S. stocks. The problem with already overvalued stocks becoming even more expensive is that they eventually have to drop even farther to reach their fair value relative to their profits. That is exactly what will occur with very popular large-cap U.S. equities which have never been more overpriced by most fundamental measures. There has never been any country in history with such high ratios of prices to earnings, sales, book value, and most other benchmarks. Instead of intelligently preparing for a bear market for those shares, investors have been making all-time record inflows into them and into funds of those shares, with a record number of those funds having their debut in recent months as always occurs during a major topping process for any asset. The total net inflow into U.S. exchange-traded stock funds for 2025 will be a new calendar-year record by far of approximately 1.5 trillion U.S. dollars.

The most important time to prepare for tough times is when hardly anyone except for top corporate insiders has been doing so.

We have the most insider selling ever recorded in total U.S. dollar terms in 2025, along with the highest-ever ratio of total U.S. dollars of selling divided by the total U.S. dollars of top executives buying their own shares. This is true even with hundreds of shares falling toward multi-year lows during the fourth quarter of 2025 from a combination of tax-loss selling, regressing to the mean sooner than the most popular favorites, and typical underperformance by unfavored shares in the early part of any severe U.S. equity bear market. Some of the most depressed shares have enjoyed notable insider buying from October through December 2025 and I have been recommending those shares for purchase in my recent postings.

U.S. government debt has been slowly gaining in popularity since October 2023, but yields remain mostly not far below their highest levels since the beginning of the 21st century.

During the past several months we experienced the first time in history that the government bonds of any country were yielding roughly quadruple the yield of the most widely traded index for the same country. Those yields have somewhat retreated in recent months, but the 30-year U.S. Treasury yield of 4.82% is well above four times the 1.10% yield on VOO which tracks the S&P 500 Index with the lowest management fee, and is almost eleven times the 0.44% yield for QQQ, a popular capitalization-weighted fund of the top 100 Nasdaq stocks. Investors are so certain about achieving capital gains that they are willing to accept record low dividend yields.

Investors have been so eager to own winners that they have been selling those shares which are the most compelling bargains in order to raise the money needed to purchase their favorite megacaps.

In recent postings I have been listing those shares which are trading near or below half fair value, are near their lowest levels in several years or more, and have been enjoying buying by the top executives running the company. Some of those have already been experiencing sharp recoveries. Paradoxically, if a very depressed stock finally moves higher, it is likely to gain a lot in percentage terms to return to its former levels, which then attracts momentum players who wouldn't have touched it when it was most worthwhile. Many investors will eagerly buy something which has already doubled in price instead of buying it when it was out of favor and the profit potential was far greater.

Partly for not understanding the mathematics of the situation, and mostly for emotional reasons, far too many people refuse to buy near the beginning of any bull market and are especially eager to participate near the end.

If an asset moves from 10 to 60 then you might think you will still experience most of its profit gain by purchasing it at 20, since 20 is only 1/5 of the way from 10 to 60. However, if you buy it at 20 then your total profit will be 200% versus 500% by buying it at 10, so you have given up 60% of your profit instead of 20%. It is also far more dangerous to buy anything which has recently surged higher, regardless of whether it is shares of a highly popular stock that has been in the news, or silver, or anything else, because it is likely that this asset will have to drop by a substantial percentage whenever it decides to regress to its fair value and beyond.

Investors psychologically don't want to own anything when they keep hearing negative comments about it from brokers and the media, which is usually when it is completing a bottoming process. They desperately want to participate when they are bombarded with stories about how so-and-so who can barely tie his shoes is supposedly getting rich from owning a particular asset. Of course those so-called rich folks aren't really rich because they buy more near the top instead of selling, and thus lose even more during the next downturn.

Some formerly trendy assets including cryptocurrencies have already begun historic bear markets with far less media coverage than they had enjoyed when they were frequently making new all-time highs.

Have you noticed how little media coverage there has been of cryptocurrencies in recent months? Even the most popular ones like Bitcoin and Ethereum have received far less press than when these were making new all-time highs earlier in 2025. The reason is not because of a lack of volatility, as most cryptocurrencies have been dropping significantly faster than they had previously been climbing. It is mainly since the media know that viewers and listeners don't want to hear about falling assets. Given who most of their advertisers are, they don't want to mention that buying fluctuating assets may end up ultimately with losses instead of gains especially when measured in real terms.

The same treatment is likely to occur for large-cap U.S. stocks, gold, silver, and everything related to AI. From time to time you'll hear about how much these have dropped in percentage terms, especially if there is an especially sudden surge in volatility or a huge down day for a particular asset. However, you are likely to hear much less on the way down than you did on the way up, and financial journalists will try as hard as possible to find something which is making new all-time highs rather than dwelling on the weaknesses of former top favorites.

I recently added AVTR, FMC, DEI, and MOS to my holdings while buying more TLT, EDV, LTPZ, UTZ, SG, and LYB. I sold a little PALL and RIG to take advantage of their prices more than doubling over the past several months. Top insiders of gold mining and silver mining companies have been doing their heaviest net selling since 2011. I have been buying shares where top corporate insiders are buying, the shares became popular for tax-loss selling, and the valuations are near multi-year lows.

Intelligent investing requires frequent gradual adjustments to capitalize on whatever the most knowledgeable participants have been doing. The traders' commitments are almost up to date while insider buying and selling has consistently been useful in determining the best course of action. Precious metals shares, which had been by far the heaviest percentage of my total asset allocation, have become far too popular with the public although I still have most of the gold coins I had purchased in 1998-2001 when this had been the least popular sector and gold was averaging below 280 U.S. dollars per troy ounce for lengthy periods of time. Tax-loss selling has somewhat abated and some of the shares I had previously recommended have been smartly rebounding, partly aided by momentum players who prefer to buy after recent gains instead of before.

I have been allowing some U.S. Treasuries to mature without reinvesting them in similar U.S. Treasuries whenever their current yields are near their lowest levels in a few years.

The bigger the bear market, the longer it will usually last.

The biggest bear market in U.S. history by percentage loss occurred from September 3, 1929 through July 8, 1932 with the average stock losing about 87% of its value assuming reinvestment of all dividends. This decline thus lasted over 34 months. The second-biggest drop by most measures was the plunge from March 2000 through October 2002, which lasted exactly 31 months to the day for some funds including QQQ which had dropped just about exactly 83.6% if you assume reinvestment of all dividends. The Nifty Fifty shares from January 1973 through December 1974, a period of just about exactly 23 months, was a smaller percentage decline of about 81% for the average name in the Nifty Fifty favorites.

Most measures of valuations for large-cap U.S. stocks had surpassed their previous bubble peaks in recent months. Therefore, it seems possible that the current or upcoming bear market for funds including QQQ will take longer than these previous examples. Even if 2026 is a big down year for the U.S. stock market, the final lows for nearly all funds of U.S. stocks will likely not occur until the second half of 2028 and perhaps in 2029. There are likely to be several powerful upward bounces along the way with some of them being approximately 50%, similar to what we have experienced during the five previous bubbles for large-cap U.S. stocks. The total decline for QQQ will likely surpass its 83.6% total decline during the collapse of the internet bubble.

If you're surrounded by sharks then it doesn't matter why you had originally decided to swim in that part of the ocean. You have to leave.

Many people tell me that they're going to hold their large-cap U.S. stocks "for the long run." Some of them are aware of the all-time record number of new U.S. exchange-traded stock funds, or the all-time record inflows, and some know about the massive selling of the biggest U.S. stocks by top corporate executives. However, they think they can somehow "ride through" any pullbacks, or that they're long-term investors who don't care about fluctuations. You can't ride through a loss of 80% since you have to quintuple your money to get back to where you started and if you adjust properly for inflation you probably have to gain much more than that. If you're going to be devoured then it doesn't matter why you were there in the first place. There will be far better opportunities to accumulate most of today's overpriced assets in upcoming years.

In order to buy low and sell high, first you have to buy low. In order to have the money to buy low, you have to first sell high and then wait patiently for the next bottoming process. You will know it is arriving when the top corporate insiders are becoming aggressive buyers.

Investors have been concentrating into fewer and fewer shares even more narrowly than they had done at the height of the 1999-2000 internet bubble:

Mutual funds usually keep about 10% of their total assets in cash near market bottoms and close to 4% near market peaks, and recently set a new all-time record of only 1.5% in cash in December 2025 (thanks to Elliott Wave International for this chart):

By far a record number of companies have been mentioning AI in their earnings calls even if their lines of business have little or nothing to do with artificial intelligence:

Just as had been the case during the internet bubble in 1999-2000 when internet was the magic word, companies which have mentioned AI in their conference calls have enjoyed over twice the percentage gains in their stock prices as companies which have not:

Disclosure of current holdings:

Below is my current asset allocation as of 4:00 p.m. on Friday, December 26, 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: 26.44%;

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: 22.81%;

TLT long: 12.68%;

I Bonds long: 4.08%;

LTPZ long: 1.08%;

EDV long: 0.88%;

PMM long: 0.01%;

XLK short: 33.97%;

QQQ short: 26.10%;

GDXJ short: 2.20%;

SMH short: 1.49%;

GDX short: 0.46%;

AAPL short: 0.16%;

PSQ long: 4.02%;

SARK long: 0.29%;

Gold/silver/platinum coins: 13.17%;

PALL long: 3.38%;

FLBR long: 0.76%;

EWZ long: 0.69%;

EWY long: 0.23%;

FLKR long: 0.17%;

TUR long: 0.03%;

EWZS long: 0.02%;

UGP long: 0.55%;

VALE long: 0.40%;

GGB long: 0.20%;

BBD long: 0.17%;

RIG long: 0.62%;

WTI long: 0.08%;

PTEN long: 0.02%;

MOH long: 1.21%;

UTZ long: 1.00%;

HUN long: 0.88%;

LYB long: 0.77%;

SG long: 0.62%;

AVTR long: 0.51%;

CAG long: 0.48%;

VAC long: 0.45%;

ALIT long: 0.33%;

FMC long: 0.30%;

DEI long: 0.28%;

OGN long: 0.24%;

MOS long: 0.17%;

FXY long: 0.04%;

CLF long: 0.01%.

"When the neighbors tell me what to buy and then I wish I had taken their advice, it's a sure sign that the market has reached a top and is due for a tumble." --Peter Lynch

OVERLOOKED BARGAINS (December 7, 2025): Whenever we are in the process of completing a major bubble peak for large-cap U.S. equities, as we had previously experienced in the years 1837, 1873, 1929, 1972, and 1999, investors crowd increasingly frenetically into the most popular favorites while progressively abandoning most other assets. It is not a coincidence that in recent years we had experienced the lowest prices, and thus the highest yields, for U.S. Treasuries going back to the early years of the century. We recently saw the most extreme ratios in history for most small- and mid-cap U.S. stocks relative to the biggest megacaps, with an all-time record concentration in the largest companies by market capitalization. We also had record undervaluations for emerging-market stocks near the beginning of 2025 relative to large U.S. stocks. It is possible that cryptocurrencies, private equity, and private credit have joined the group of disfavored assets and may have begun their own severe bear markets in recent months. As more and more investors have been crowding into fewer and fewer assets, many of those approached or achieved all-time overvaluations relative to their earnings either recently or earlier in 2025.

As an increasing number of stocks go out of favor during and after any bubble topping process, some of them become especially compelling for purchase.

An increasing number of stocks which are not among those lucky enough to be trendy have suffered multi-year bear markets. It is often true that the longer that a particular stock has been in a general downtrend, even if its current and future earnings are impressive, investors will become increasingly unwilling to wait for the price to rebound and will become more likely to sell it in order to put their money into the much-hyped favorites. As I had mentioned in my previous posting from November 23, 2025, this is especially true near the end of the year when many investors are looking for tax losses to offset their realized 2025 capital gains. Ironically, the biggest losers which can provide the largest tax losses are often the shares which have become the most undervalued relative to their earnings and are thus the most likely to rally sharply sooner or later.

I usually prefer to rely on top corporate executives to tell me when to buy and when to sell.

You can learn a lot from carefully studying earnings reports and official government filings. You can learn more by visiting a company and speaking with the top executives, as Peter Lynch had famously done to an impressive extent. However, I think the most useful way to gauge whether a particular company's stock is really worth buying is when top executives of that company have recently been purchasing their own shares, especially if the same executives have previously bought low and sold high. Whenever a particular sector has gone sharply out of favor, as chemical shares and some other groups have recently done, I look for those in those unpopular sectors where insiders have been the most aggressive.

UTZ has recently fallen to a multi-year bottom accompanied by several top executives making purchases.

When I was growing up in northwest Baltimore we often greeted the drivers of the Utz trucks who delivered snacks to the schools I had attended. This company remains important regionally and has been doing test marketing in more distant places including California as they are considering becoming a national brand. Their earnings are temporarily lower through the extra expense from leaving their home turf, while they have been prudently expanding with sustainable discount pricing. I have been continuing to buy shares in recent weeks as the price has fluctuated near its recent lows.

ALIT, ENR, CNS, WDFC, BBWI, and FISV have all been trading near multi-year lows accompanied by insider buying.

As a general principle, I prefer to purchase assets which are trading near or below half fair value while selling short assets which are trading at triple or quadruple fair value. This is especially true when most investors have been doing the opposite, feeling more comfortable owning the dangerously overvalued shares which have been the biggest winners during the past three years while unloading the biggest losers over a similar time period.

I increase risk gradually using ladders of good-until-canceled orders, because there is no way to gauge the timing or extent of any extreme.

All assets eventually regress toward the mean and beyond, a principle which has been true for centuries. However, in spite of all kinds of mystical attempts to gauge the extremes of timing or price, it is inherently impossible to do so. I will gradually increase risk into pullbacks, especially when these shares appear to be forming several higher lows, and will be especially cautious not to become too heavily committed to any individual stock. By spreading out the risk among a group of compelling assets, eventually you will come out well ahead of inflation.

Some U.S. Treasuries and TIPS had recently sported some of their highest yields in some cases since 2001.

For reasons which are unclear, 30-year TIPS, which are U.S. government guaranteed inflation-protected securities, had climbed to their highest yields since 2001. In recent months these yields had somewhat retreated, while recently not reaching their extremes from earlier in 2025 but still being very compelling. I have therefore been purchasing these and related TIPS of 25 years and more to maturity in the secondary market. This is a fancy way of saying that I have been buying used long-term TIPS, rather than new ones which are sold at auction. Other funds of U.S. Treasuries and TIPS, including TLT, EDV, and LTPZ, have been trading with impressively high yields while forming numerous higher lows since their respective bottoms. TLT has made numerous higher lows since October 2023, and continues to be highly unpopular. Hedge funds in particular have become aggressive short sellers of TLT as they had previously done with emerging-market shares in early 2025 and Chinese stocks in the summer of 2024, before both of those enjoyed dramatic percentage gains:

The investment industry is excellent at massively increasing the supply of popular basket products which are available to the average investor near each important U.S. stock-market peak.

In the late 1920s and especially during 1929 we had a massive increase in the number of closed-end stock mutual funds which the average investor could purchase in order to buy baskets of stocks instead of individual shares. A handful of the best-run funds in that category including ADX, CET, and TY still exist today, while hundreds of them went out of existence during the crushing bear market which followed. There was a similar explosion of open-end mutual funds in the early 1970s, especially in 1972, which similarly became extremely popular just before the 1973-1974 collapse in their values. After that we had the introduction of the earliest exchange-traded funds, mostly broad-based index funds including SPY and QQQ, which skyrocketed in popularity in 1999-2000 just in time for the most severe bear market since 1974.

Recently there has been a nearly vertical increase in the number of exchange-traded funds which are listed in the U.S., including a massive rise in the number of leveraged long ETFs:

We are likely to continue to experience additional bargains between now and the end of 2025 as the final weeks of tax-loss selling encourage some of the most oversold shares to temporarily become even cheaper.

Let me know if you believe you have identified some worthwhile bargains where stocks are trading not far above multi-year lows, top corporate executives have been buying, and where current and future earnings will likely be impressive. Especially if these stocks are in sectors which have gone out of favor or have simply been forgotten due to the AI bubble, some of these are likely to significantly outperform roughly in proportion to how deeply they are trading below their respective fair value levels.

A small minority of brokers and analysts have been intelligently warning us of the dangers of overcrowding into the most popular megacap U.S. stocks, just as has always been and always will be the case during any especially elevated market topping process.

Vanguard deserves credit for warning investors that they should have roughly 70% of their assets in the safest bonds including U.S. Treasuries and TIPS, and 30% in a widely diversified group of stocks, which is roughly the opposite of their usual recommended allocation. Because it has been just over three years since the October 2022 U.S. stock market bottom, many investors have foolishly concluded that everything will be sunshine and chocolate cookies from now on. We haven't had a severe bear market since early March 2009 which has created the impression that bear markets were something our parents had to deal with but won't happen during our lifetimes. Investors shared similar dangerous delusions at each of the five previous U.S. stock market bubbles, with almost identical results each time. We can debate whether funds like QQQ will drop 80% or 90% over the next few years, but those who are holding on for the long run will likely end up behind even after decades. Those who didn't sell the equivalent of the S&P 500 Index at the September 1929 top ended up behind by 38% in real terms (i.e., adjusted for inflation) by August 1982, almost 53 years later, while those who owned a similar basket of stocks in June 1851 were behind in real terms more than 81 years later in June 1932:

Instead of following Vanguard's lead and increasing safety, the percentage of investors' allocation to bonds has fallen under 20% and currently is not far above its low levels from both the 2007 and 1999-2000 stock market peaks:

Disclosure of current holdings:

Below is my current asset allocation as of 4:00 p.m. on Friday, December 5, 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: 35.33%;

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: 26.81%;

TLT long: 12.29%;

I Bonds long: 4.05%;

LTPZ long: 0.92%;

EDV long: 0.76%;

PMM long: 0.01%;

XLK short: 33.81%;

QQQ short: 25.76%;

GDXJ short: 2.15%;

SMH short: 1.48%;

GDX short: 0.44%;

AAPL short: 0.16%;

PSQ long: 3.62%;

SARK long: 0.31%;

Gold/silver/platinum coins: 12.04%;

PALL long: 3.17%;

FLBR long: 0.76%;

EWZ long: 0.72%;

EWY long: 0.23%;

FLKR long: 0.17%;

TUR long: 0.03%;

EWZS long: 0.02%;

UGP long: 0.55%;

VALE long: 0.40%;

GGB long: 0.20%;

BBD long: 0.17%;

RIG long: 0.66%;

WTI long: 0.10%;

PTEN long: 0.03%;

MOH long: 1.17%;

LYB long: 0.71%;

HUN long: 0.62%;

CAG long: 0.50%;

VAC long: 0.43%;

UTZ long: 0.41%;

SG long: 0.36%;

ALIT long: 0.27%;

OGN long: 0.24%;

FXY long: 0.04%;

CLF long: 0.01%.

"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%.