"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%.

"We don't have to be smarter than the rest. We have to be more disciplined than the rest." --Warren Buffett

REVERSAL OF FORTUNE (April 22, 2025): Most investors buy whatever is trendiest at any given time and sell whatever has underperformed in recent years. This pattern of buying high and selling low is why most investors underperform the inflation rate and would do far better in "boring" TIPS and I Bonds. Because it has been so easy in recent years to obtain mostly free reliable research on the internet, you would think that most investors would understand the concept of fair value and through their collective buying and selling would ensure that no asset strays far away from fair value. Instead we have the opposite situation: the ability to continuously track key data and to act almost immediately based upon that information has caused far more emotional piling into the most popular assets and panicking out of those which are the most out of favor. As a result, we have more numerous and more dramatic deviations from fair value today than we have experienced at almost any time in history.

In this essay I will list some of the most important assets which have wildly strayed away from fair value and are thereby providing unusually compelling profit opportunities. If you consistently buy anything which is near half fair value or less, and you sell whatever is more than double fair value, you will come out far ahead in the long run. Periodically assets at half fair value will drop further to one-third fair value or less, while assets at double fair value may keep climbing to triple fair value and beyond. This is one reason that, whenever you add to any position at any time, you must do so gradually using a ladder of very small good-until-canceled orders rather than initiating risky lump-sum transactions. You can never calculate in advance how extreme any asset will become in either direction, or when it will happen. Far too many investors spend ridiculous amounts of time and money trying to discover the inherently unknowable.

Gold has become the latest most overcrowded long position and will likely drop below two thousand U.S. dollars per troy ounce.

In December 2024, when many cryptocurrencies including Bitcoin were climbing to new all-time highs, investors were convinced that no matter what happened with the economy, cryptocurrencies would remain in permanent uptrends. When this myth was soon shattered, investors didn't become more conservative: they simply switched from cryptocurrencies to large-cap U.S. stocks in the belief that those would always come out ahead in the long run. As the biggest and most popular U.S. stocks mostly topped out around February 18 or 19, 2025, investors switched to a new favorite: gold. This is hardly a first for the yellow metal, as gold became similarly extremely popular at its previous peaks including its original all-time modern top of January 1980, its next major peak in March 2008, yet another higher high in September 2011, and a more recent post-coronavirus zenith in August 2020. What many investors don't appreciate is that each of these tops was followed by historic losses for gold, silver, and gold/silver mining shares.

Gold mining shares have been a consistent leading indicator for gold bullion in both directions since the 1800s. While funds of gold mining and silver mining shares including GDX and GDXJ peaked one minute after the opening bell on Monday, April 21, 2025, gold itself continued to climb until it barely exceeded 3500 U.S. dollars per troy ounce at 2:18 a.m. on April 22, 2025. GDXJ spent a total of about one hour above its previous multi-year high from August 2020 even though gold bullion had gained more than 65% from its 2020 highs. This kind of underperformance has consistently led to losses averaging 60% for mid-cap gold mining and silver mining shares including GDXJ.

Large-cap U.S. stocks which had been by far the most popular investor favorite in recent years have fallen modestly overall but remain near triple fair value.

Tesla no longer has a price-earnings ratio above 200 as it did in December 2024, nor is Costco's P/E more than 63.5 as it had been at its February 2025 top. However, the most popular large-cap U.S. shares still feature valuations which are roughly triple their long-term averages relative to earnings and profit growth. After years of almost blindly piling into U.S. equity funds featuring these megacap shares, it will take time for investors to realize that their approach is underperforming and to change their method accordingly.

After U.S. large-cap equity bubbles had topped out in 1837, 1873, 1929, 1972, and 1999, they slid more than 80% each time. QQQ lost 83.6% of its value from its intraday high of March 10, 2000 to its ultimate intraday nadir on October 10, 2002, which is more than 5 dollars out of 6. What is perhaps even more important is that in the subsequent multi-year global equity bull market, the previously popular large-cap shares underperformed most other stocks. One dollar invested in the "boring" emerging-market equity fund EEM near the bottom in late 2002 or early 2003 was worth over five dollars by the 2007 top, while one dollar invested in QQQ even if you timed it to the exact bottom in October 2002 and reinvested all dividends didn't even reach three dollars by its 2007 peak [source: StockCharts.com].

Similar underperformance by previous large-cap U.S. favorites similarly underperformed from late 1974 through early 1980 and from the July 1932 bottom through 1937. It will likely be roughly another decade before the Magnificent Seven and similar shares once again have their place in the sun.

Emerging markets overall surpassed their previous all-time record of underperformance relative to U.S. shares which had existed in 1999-2000.

Emerging-market shares consistently underperform the most when we are close to large-cap U.S. equity bubble tops, and thereafter enjoy a powerful upward reversion. Not all emerging markets are alike, which is why I seek those which have above-average insider buying, below-average price-earnings ratios and similar fundamentals, and are the most unpopular. Currently Brazil and its funds are among the most compelling bargains in the world, including the exchange-traded funds EWZ, FLBR, EWZS, and BRF which in recent months have often featured average price-earnings ratios below 8. A number of Asian stock markets are also trading at worthwhile undervaluations including South Korea (EWY, FLKR), China (ASHR, FXI), Indonesia (EIDO, IDX), Thailand (THD), and the Philippines (EPHE), roughly in that order with my favorite choices listed first.

The biggest risks to emerging markets are two which are among the least appreciated by most investors: 1) the usually-dismissed possibility that the currently hated U.S. dollar outperforms most global currencies for the next few years; and 2) the similarly overlooked danger that a severe bear market for U.S. stocks will spill over into other global equity markets.

The unpopular U.S. dollar will likely climb to its highest point versus most currencies since 1985 when it had achieved its all-time high.

There has been a lot of chatter on the internet and elsewhere about the U.S. dollar allegedly on the edge of losing its role as the world's reserve currency. The U.S. dollar index on April 21, 2025 fell to its lowest level since March 31, 2022. Some people believe that countries which have never cooperated with each other for decades will suddenly cooperate to introduce a new strong currency, while others are convinced that a particular cryptocurrency will take over this key role. It is fun to watch reruns of "Star Trek" but in the real world the idea of anything other than the U.S. dollar becoming the go-to global currency is less likely than my being beamed up or having a regular conversation with aliens any time soon.

During the collapse of the internet bubble, the U.S. dollar surged into 2002. The U.S. dollar was also strong heading into early March 2009 when the next bear market had ended. Similar behavior is likely to occur over the next few years. The only interesting question is whether or not the U.S. dollar index merely approaches its 1985 top or surpasses it.

Cryptocurrencies will not become completely worthless, but they will drop even more in percentage terms than almost all other asset classes.

Most people don't realize that it is not a coincidence that the earliest cryptocurrency, Bitcoin, was created in 2009 when we were at the start of the longest U.S. equity bull market in history. All cryptocurrencies are like exotic plants which have been transplanted from a tropical country like Brazil to the temperate climate of the northeastern United States. If you start to grow a tropical plant in Boston in May or June then it may flourish throughout the summer, but the recent pullback is like having the plant survive a cold spell in October and concluding that it can handle the winter with no problem.

Not only have most cryptocurrency investors never seen a true crypto winter, but most young investors in the U.S. stock market also have zero personal experience investing in a bear market. Someone whose 33th birthday is today, when the last U.S. equity bear market ended on March 9, 2009, was a high school junior. If you haven't personally experienced any major event in the financial markets than psychologically you are much less likely to believe that it will reoccur. I expect all cryptocurrencies to suffer some of the largest-ever percentage losses of any sector in history.

The following are recent useful charts:

At the start of 2025, only 2% of U.S. investors expected U.S. Treasuries to be the top-performing asset class of the year:

U.S. assets overall were never more overpriced than they had been on February 18-19, 2025:

U.S. stocks in early 2025 had never been more overvalued relative to the "real" U.S. economy going back to 1928:

Including the entire period since 1900, the S&P 500 set new-time overvaluation extremes during the first several weeks of 2025:

The bottom line: although investors have far cheaper, more reliable, and more comprehensive access to data than they did in prior decades, they are more likely rather than less likely to emotionally drive assets to absurd extremes in both directions. These assets can often initially go to even more exaggerated extremes, but eventually betting on their mean regression will prove to be consistently profitable as it has always been throughout history.

Disclosure of current holdings:

Below is my current asset allocation as of 4:00 p.m. on Tuesday, April 22, 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) energy.

VMFXX/TIAA Traditional, TIAA money market/bank CDs/FZDXX/FZFXX/SPRXX/SPAXX/BPRXX/Savings/Checking long: 36.12%;

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: 23.54%;

TLT long: 10.59%;

I Bonds long: 3.77%;

PMM long: 0.01%;

XLK short: 28.45%;

QQQ short: 21.58%;

SMH short: 1.14%;

GDXJ short: 0.69%;

AAPL short: 0.13%;

GDX short: 0.01%;

SARK long: 0.59%;

PSQ long: 0.28%;

Gold/silver/platinum coins: 9.76%;

PALL long: 2.22%;

FLBR long: 0.37%;

EWZ long: 0.28%;

VALE long: 0.07%;

EWY long: 0.05%;

FLKR long: 0.03%;

UGP long: 0.03%;

BBD long: 0.02%;

GGB long: 0.01%;

EWZS long: 0.01%;

RIG long: 0.05%.