"There are no new eras; excesses are never permanent." --Bob Farrell (Rule #3)

TIPPING POINT: BUY LTPZ (July 31, 2026): As I had described in my recent postings, U.S. government debt has become unusually undervalued, with many U.S. Treasuries recently dropping to their lowest levels since 2007 or earlier. I am continuing to buy TLT, EDV, and related funds of U.S. Treasuries; there are also closed-end funds in this sector which I will discuss in a future update. A lesser-known and often misunderstood asset class, which also falls under the category of U.S. government-guaranteed securities, are Treasury Inflation Protected Securities. These are often called Tips which should not be confused with the pink-sheets stock which uses that symbol. In particular, I currently favor those Tips which mature in 20 to 30 years which have average fixed yields of just about exactly 3%. I will discuss and attempt to demystify this asset class which is currently at its most compelling undervaluation in history with the sole exception of a number of weeks in the year 2000. Pimco offers the exchange-traded fund LTPZ which I am recommending as an easy way to purchase long-dated Tips. The timing of the unusually low prices for Tips in both 2000 and 2026 is not a coincidence; near all U.S. stock market bubble tops, investors will ignore the best guaranteed bargains of their lifetimes to chase after the trendiest stocks which are set to plummet 80% or 90%.

TIPS CAN BE AMONG THE BEST INVESTMENT CHOICES WHENEVER U.S. EQUITIES ARE TOPPING OUT AT BUBBLE PEAKS AND ARE SET TO DRAMATICALLY UNDERPERFORM: As is true of the vast majority of assets, if you can purchase something at a 26-year bottom then you are probably going to outperform most other assets over the next several years or so. In June 2000, if you were invested in the S&P 500, then if you reinvested all dividends and paid zero management fees you would have lost 15% of your capital by June 2010 even without adjusting for inflation. If you had instead owned the Vanguard broad-based Tips fund VIPSX then you would have doubled your money by June 2010. Obviously different starting points would result in widely varying results. The conclusion is certainly not that Tips always outperform large-cap U.S. stocks, but that if you purchase Tips anywhere near a bubble peak for U.S. stocks then you will probably come out way ahead. One main reason I am currently recommending LTPZ instead of VIPSX is the VIPSX has an average maturity of only 7.0 years, versus 21.56 years for LTPZ. The yield difference between these maturities is currently high.

2000 and 2026 have a lot in common. In both years, Tips were especially compelling bargains. Both years featured slightly different kinds of bubbles featuring all-time record overvaluations for popular U.S. stocks. Investors put slightly over 51% of their money into U.S. stocks at the March 2000 peak and 55.1% at the early June 2026 top, versus the average of 26.0% of U.S. household assets invested in U.S. equities and their funds since 1950 [source: Mark Hulbert]. Just as in 2000, the popular consensus today is that U.S. stocks will keep climbing regardless of valuations, while U.S. government debt will always be unpopular.

TIPS PAY A COMBINATION OF TWO DIFFERENT YIELDS TO GIVE YOU A TOTAL: Whenever you purchase most U.S. government debt, such as ordinary U.S. Treasuries, you are locking in a particular annualized interest rate which continues until the security matures. With Tips, at the time you purchase them, you are locking in what is called the fixed yield which remains constant through maturity; this is added to the urban CPI each month to give you the total yield. In case the urban CPI is negative, you are still guaranteed the fixed yield as a minimum monthly amount to be credited; a negative CPI is never subtracted from it. Thus, the total yield fluctuates each month and the total of each six-month period is credited to your account.

During the past several trading days, I have been repeatedly purchasing U.S. Tips which mature on February 15, 2053 and which have the cusip 912810TP3. The fixed yield on these has varied with each purchase, but has recently been slightly above 3%. For purposes of simplicity, let's assume that the fixed yield is exactly 3%. Each month, this fixed yield is added to the exact percentage increase in the Consumer Price Index for All Urban Consumers, sometimes abbreviated CPI-U. This index is different from the CPI you will hear reported in the media on the second week of each month at 8:30 a.m., because the urban CPI is not seasonally adjusted. You can find the official data for the urban CPI from the U.S. Federal Reserve since 1913 at the following link:

Consumer Price Index for All Urban Consumers Since 1913

The urban CPI index increased 3.5% for the year ended June 2026. Therefore, if your fixed yield is locked in at exactly 3.0% for 26-1/2 years, your current total yield is 3.0% fixed plus 3.5% urban CPI for a combined total of 6.5% annualized. From the rule of 72, we can see that if you compound your money at 6.5% annualized then it will take 72 / 6.5 or 11 years and 4 weeks to double your money. The actual monthly rate will fluctuate, perhaps considerably, over the 26-1/2-year period, so you can't be certain in advance exactly how much your principal will increase each month. In the worst-case scenario, if U.S. inflation as measured by the urban CPI rapidly drops to zero or negative and remains negative (i.e., deflation) for decades--obviously not likely, but possible--then you will only get the fixed rate of 3.0% annually so it will take 24 years to double your money instead of 11 years. Conversely, if the urban CPI suddenly increases to 6% and stays there, then your total return will be 3% plus 6% or 9% annually and you will double your money in 8 years.

YOU CAN ACHIEVE SUBSTANTIAL CAPITAL GAINS OR LOSSES FROM TIPS, NOT JUST HIGH MONTHLY RETURNS: If you buy Tips with a fixed rate of exactly 3% for 26-1/2 years, as in the above real-life example, then you have the potential for much more than a higher guaranteed yield than almost all other safe investments. When you lock in a rate of 3%, your principal will fluctuate in value depending upon what happens to fixed yields going forward. Let's say that a year from now the fixed rate on the same Tips has climbed from 3.0% to 4.0%. If you then want to sell your Tips prior to maturity (maybe your spouse wants to purchase a sports car or a second home), you will have to accept a significantly lower price than you had originally paid for it. That's because everyone else can get 4%, so there is much less eagerness to buy a piece of paper that only yields 3%. It works the other way also, and here is the key fact that hardly anyone appreciates: the long-term average fixed yield on 30-year U.S. Tips is only 1.14%. If the fixed yield approaches its multi-decade mean, you will be able to sell your Tips for more than double the price you paid for them. That's because investors in the open market will only be able to get half of the yield you have guaranteed, so they will pay you twice your purchase price for it. (The calculations are being slightly rounded off for simplicity; I can give you the exact data to a few decimal places if you want to know it.)

By U.S. federal law, your interest is exempt from income taxation in all U.S. states and localities. In some states including New Jersey, not only is your interest on Tips free of all state and local income taxes, but also all capital gains on those securities and funds of those securities, as long as the securities or funds have nearly all of their capital invested in direct U.S. government debt and not repos or other artificial substitutes. There is a quirk in the Tips rules where you may have to pay tax on some of your principal increase prior to maturity; fortunately, this so-called phantom tax will reduce your ultimate net gain at maturity or whenever you sell your Tips. It is not that different from how you have to pay tax on dividends from most securities even if you don't sell them. Fortunately all necessary tax information by federal law has been automatically reported on your broker's 1099 since the year 2011 so you don't have to do any fancy calculations.

YOU CAN PURCHASE TIPS AT AUCTION, ON THE SECONDARY MARKET, OR USING EXCHANGE-TRADED FUNDS: The easiest way to purchase U.S. Tips are using the auctions established by the U.S. government for this purpose. Just as with 26-week U.S. Treasuries or any other form of U.S. government debt, these auctions are guaranteed to be free of commissions by federal law. You will also receive exactly the same yield as everyone else who participates in non-competitive auctions for the same securities, even if they are the Bank of China or a large hedge fund.

The main problem with U.S. government auctions of Tips is that they don't occur often. There are auctions for 5- and 10-year Tips which are sometimes worthwhile, but don't pay nearly as much at the present time as very unpopular 30-year Tips. Unfortunately the 30-year Tips auction only occurs once every six months. By good fortune, the next auction will be fairly soon on Thursday, August 20, 2026. I definitely plan to participate in this auction, but a lot can happen between now and then, so the yields might or might not still be near 3% or above. Therefore, I would recommend one of the two methods below for purchasing most of your long-dated U.S. Tips.

I OFTEN PURCHASE U.S. TIPS ON THE SECONDARY MARKET, WHICH IS LIKE BUYING U.S. AUTOMOBILES: If you have ever purchased a vehicle of any kind, then perhaps you have gone to an automobile dealership. I assume that after taking a test drive, you don't write a check payable to the dealership, sign it, and leave the amount blank. Hopefully you also don't say to the salesperson: "I'm sure you'll be fair to me, so fill in any amount you choose and I'm fine with it." If you like that method of buying a car then you're probably already placing market orders to buy or sell any security, rather than using a limit order which is far safer especially for anything which is not completely liquid. Since Tips bought in the secondary market are not as liquid as exchange-traded funds like TLT, it takes a little practice learning what price to bid for each purchase, or which price to ask for each sale. Once you have done it several times you will become more adept with it. Start with small purchases to become familiar with how the secondary Tips market works before committing large sums.

A SIMPLE COMPROMISE IS TO BUY THE EXCHANGE-TRADED FUND LTPZ TO SUPPLEMENT THE SECONDARY MARKET: I have purchased roughly half of my total long-term Tips via the Pimco fund LTPZ instead of repeatedly entering the secondary market. As is usual with exchange-traded funds versus direct investment in the components of those funds, this makes it far simpler to place a ladder of good-until-canceled orders (ideally including outside of regular trading hours) at different prices, so that the more the price drops, the more you buy. I purchase all exchange-traded and closed-end funds using this gradual approach. It is especially effective if your broker does not charge commissions, as is the case with nearly all U.S. discount brokers, so that you can have numerous orders filled at no extra cost.

The daily trading volume for LTPZ is over seven million shares. The average effective maturity is 21.56 years which will fluctuate slightly through time and currently captures nearly the highest possible Tips yields of all maturities. This fund dates back to April 30, 1998 so it has dealt with the ups and downs of this sector through those decades. The fund is rebalanced monthly and also pays dividends monthly.

One disadvantage of purchasing LTPZ instead of directly at auction or in the secondary market is that you will pay an annualized management fee of 0.20%. The big advantage of Tips trading at their lowest prices in 26 years has the negative feature of hardly any fund companies wanting to create new funds in this sector until after prices have already doubled. If you look at cryptocurrencies, nearly all of the exchange-traded funds in that sector were created within months and often within weeks of their all-time tops in 2025, prior to cryptocurrencies losing half or more of their value. Similarly, a huge percentage increase in the total number of exchange-traded precious metals funds happened during the first quarter of 2026 when these funds were at or near all-time highs prior to their recent losses (such as GDXJ) of roughly 40% from their peak valuations at 4:00 a.m. on March 2, 2026. Whenever there has been a recent surge of new exchange-traded funds of long-dated Tips, it will probably be a useful sell signal.

I don't want to pretend that I am the only analyst who has noticed the unusually compelling bargains for long-dated Tips, although they are not frequently mentioned in the mainstream media. Randall W. Forsyth penned a useful analysis of this idea in the July 27, 2026 issue of Barron's. The following article by Brett Arends was also recently published on this topic:

A Generational Buying Opportunity Guarantees Inflation Plus 3% a Year

Here is an interview with the same analyst:

This May Be the Closest Thing to a Risk-Free Investment

In news which may not seem immediately to be related but which is absolutely relevant, top corporate insiders haven't experienced such a high ratio of total U.S. dollar selling to total U.S. dollar buying in approximately two decades:

The Warning Signal Insiders Are Sending

You thus have a choice of buying long-dated U.S. Tips at their highest fixed yields since 2000, or purchasing popular U.S. stocks which are experiencing some of their heaviest recorded selling by those who know the most about these companies.

Disclosure of current holdings:

Below is my nearly current asset allocation as of 4:00 p.m. on Tuesday, July 28, 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 very recently added to TLT, PSQ, EDV, and LTPZ, in addition to purchasing the TIPS which mature on February 15, 2053 with cusip 912810TP3, whenever each of these was at or near a multi-decade low. TLT is heavily shorted, pays just about 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: 27.12%;

TLT/VGLT long: 17.25%;

VMFXX/TIAA Traditional, TIAA money market/bank CDs/FZDXX/FZFXX/SPRXX/SPAXX/BPRXX/Savings/Checking long: 15.37%;

EDV long: 5.33%;

LTPZ long: 4.84%;

I Bonds long: 3.86%;

PMM long: 0.01%;

XLK short: 28.88%;

QQQ short: 24.31%;

GDXJ short: 1.40%;

SMH short: 1.38%;

PSQ long: 10.65%;

Gold/silver/platinum coins: 11.21%;

UTZ long: 3.04%;

CAG long: 0.73%;

GPK long: 0.42%;

WEN long: 0.17%.

"Excesses in one direction will lead to an opposite excess in the other direction." --Bob Farrell (Rule #2)

THE FORGOTTEN BUBBLE (July 28, 2026): I have discussed numerous assets which reached bubble status during the past year and which have entered what will become some of the most severe bear markets ever recorded. Cryptocurrencies reached all-time highs less than one year ago, including Bitcoin on October 6, 2025 and Ethereum earlier on August 24, 2025, with nearly all cryptocurrencies since declining by half or more from their peaks. High-yield corporate bonds mostly topped out in the early autumn of 2025 or the early winter of 2026 or both, with many of them sporting all-time low spreads relative to U.S. Treasuries of equivalent maturities. Most commodity producers and emerging-market securities achieved multi-decade zeniths during the first quarter of 2026 and have been forming several or more lower highs, not coincidentally around the same time that the U.S. dollar index touched a four-year bottom of 95.551 on January 27, 2026 and which has since begun a powerful bull market. I expect the U.S. dollar index to reach its highest point since 1985 within a few years.

We can endlessly debate whether or not U.S. stocks have or have not yet begun bear markets, and which sectors are more vulnerable than others. In general, the biggest winners of recent years have been among the most recent percentage losers, partly since those gains had far outpaced earnings and thus left many large-cap and other trendy U.S. stocks at their most elevated levels in the history of any global stock market.

What is discussed far less frequently is that real estate in many parts of the world, including the U.S. and Canada, reached all-time overpricings in real terms. Just as stocks can be compared with earnings to determine whether they are underpriced or overpriced, real estate in any neighborhood can be compared with the average household income in that neighborhood. While many U.S. residents remember the real-estate bubble of 2005-2006 when prices climbed to roughly double their average historic levels, we quietly reached even more elevated overall valuations in the first quarter of 2022. Since then, U.S. prices in real terms have been mostly flat. Thus, residential U.S. housing is vulnerable to a drop of roughly half in real terms. Of course this percentage will end up varying considerably from top to bottom depending upon which part of the country you are looking at, just as it had done from 2005-2006 through 2010-2012.

Any price that is far too low or too high relative to fair value must eventually trade near fair value--with real estate just as with stocks, bonds, and all other assets.

MOST PEOPLE COULD NOT AFFORD TO BUY THEIR OWN HOUSES: I had a friend who was one of the few people to publicly state in 2005 and 2006 that U.S. housing prices would have to fall by about one third overall, which was just about exactly their nationwide average decline from 2005-2006 to 2010-2012 if you don't adjust for inflation. Sadly he passed away in 2006 just before his forecast was set to be proven true. He pointed out to me that he wouldn't have been able to afford to purchase his own home if he had to buy it at the price it was supposedly worth near the end of 2005. That comment stayed in my mind over the next several years. U.S. housing prices today, adjusted for inflation, are more overpriced now than they had been at their 2005-2006 highs with a few exceptions for those cities where housing prices had been especially elevated two decades ago. Here is the proof from the U.S. Federal Reserve which has been maintaining meticulous records:

U.S. Real Housing Prices Since 1970

Canadian Real Housing Prices Since 1970

CANADA HOUSING REACHED TRIPLE FAIR VALUE INSTEAD OF DOUBLE: The media have had all kinds of explanations about why housing prices in Toronto, Vancouver, and some other Canadian cities overall had far surpassed their ratios to household incomes that they have seen during the past several years in the United States. Since February 2022, when both Canadian and U.S. housing prices had mostly peaked in real terms, prices overall for homes in Canada have also declined far more significantly. A simple explanation is that U.S. residents experienced housing prices dropping an average of one third (not adjusting for inflation) from their 2005-2006 peaks to their 2010-2012 bottoms, while in Canada the average pullback was less than 10%. Therefore, people in Canada mostly concluded that Canadian housing prices "couldn't go down." I actually heard a large number of Canadians stating this belief. It is similar to the way that prices for the most popular big U.S. stocks have recently become so overpriced, largely since it has been such a long time since U.S. stock prices had suffered substantial percentage losses. Extreme overconfidence or extreme lack of confidence will almost always lead to unusually overvalued or undervalued price levels respectively.

U.S. HOUSING PRICES FALL TO HISTORIC LOWS EVERY 18 YEARS: I looked back at those times when U.S. housing prices ranged from moderately inexpensive to absurdly cheap. If we go backward from the present, we see that the last bottom for U.S. residential real estate on average had been in 2011. Prior to that, there were even lower lows in inflation-adjusted terms in 1993, while some of the lowest levels since 1950 occurred in the year 1975. It is interesting to observe that these bottoms were separated by 18 years. Continuing the 18-year pattern going backward, 1957 was not as depressed as 1993 or 1975; 1939 and 1903 were both notably undervalued; 1921 was the lowest point in history for U.S. residential real estate when you adjust for inflation. For purposes of this research, I used many of the charts and data compiled by the early and revised editions by Case and Shiller dating back to 1890 that are summarized here:

Case-Shiller U.S. Real Residential Real Estate, 1890-2006

If we now extrapolate forward then we may conclude that 2029 is the next year in the 18-year cycle of bottoms and is only three years away. Since the year 2029 corresponds with similar potential lows for many other assets including popular U.S. stocks and high-yield corporate bonds, and perhaps other assets such as cryptocurrencies, it fits the pattern of previous bottoms. Notice the correspondence between U.S. stock bear-market bottoms and U.S. real estate being depressed; 1921 was one of the lowest points in history for the U.S. stock market, as was 1939, while U.S. stocks had been especially depressed in December 1974 which of course is very close to 1975.

THERE WILL BE VARIATIONS FROM CITY TO CITY DURING HOUSING'S BEAR MARKET: From their 2005-2006 peaks to their 2010-2012 bottoms, there were wide regional variations in the percentage losses for U.S. residential real estate. In many cities in Ohio, Arizona, Nevada, and Florida, prices fell by roughly two thirds if you don't adjust for inflation which is roughly double the nationwide average over that time period. I have studied this phenomenon to determine if there was any way to know in advance which neighborhoods would experience the largest percentage losses. It would be useful to know that the most overvalued real estate fell by the most, or that prices had dropped the most where there was the highest level of overbuilding, or that there was some other repeatable pattern, but unfortunately I couldn't find any consistent behavior. It will probably be the case that the current decline will similarly feature greater or lesser regional losses than the nationwide average, just as it has already done in Canada where Toronto real estate has so far retreated substantially more than Montreal real estate.

In places where real estate fell by more than the nationwide average during its 2006-2011 bear market, it was often much more than the average rather than modestly more. Partly this could be due to the fact that if a family has purchased a house with a modest down payment and its price has fallen by 15% or 20%, then that family will probably conclude that prices will rebound eventually and will keep making all necessary mortgage and other payments. However, if prices are down 40% or 45% and the remaining mortgage balance is considerably higher than the current value of the property, then the chance of that family deciding to stop making payments and default, eventually probably being foreclosed and evicted, is many times greater. A higher rate of default also tends to lead to a surge in the inventory of properties for sale in any given area, thus adding to supply relative to demand and often depressing prices further especially in the short run. This problem could be exacerbated with the dramatic rise in the percentage of properties worldwide which are owned by investors rather than being owner-occupied. Investors have no emotional attachment to anything, whereas owners occupying their own homes are much more likely to hold onto their properties into multi-year adversity.

THE NEARLY SIDEWAYS MOVE IN U.S. REAL ESTATE IN REAL TERMS SINCE FEBRUARY 2022 IS PROBABLY MOSTLY DUE TO THE VERY STRONG PERFORMANCE OF U.S. LARGE-CAP INDEX FUNDS: Probably the main reason that U.S. housing prices in inflation-adjusted terms have been nearly exactly flat for the past 4-1/2 years is that a buoyant U.S. stock market has made it very easy to borrow money and to sustain the illusion that assets of all kinds will keep indefinitely rising in price. As a result, fewer people so far have sold their houses out of a need to raise money or out of concern that falling prices for stocks and high-yield corporate bonds could spread to residential real estate.

THE INVENTORY OF NEW U.S. HOUSES HAS SOARED TO ITS HIGHEST POINT SINCE 2009, WITH LIMITED MEDIA COVERAGE: Have you read the headlines about the inventory of new U.S. housing climbing to its most elevated point since 2009, which was 17 years ago? I thought not. While this is an important story and has ample supporting data from reliable sources, it doesn't fit the media's narrative about an alleged "permanent shortage" of U.S. residential housing. In early 2022 we actually had a real inventory shortage which by some measures was the lowest on record since the start of the baby boom around 1950, when hardly any homes had been built since the 1920s due to the Great Depression and very depressed prices for houses and many other assets, thereby making it uneconomic to build throughout the 1930s and 1940s.

I don't usually go to Crypto Briefing to get information about U.S. housing prices, but they ran a valuable article on this topic at the end of June which was passed over by most of the mainstream media:

US [New] Housing Market Sees Inventory Rise to 10.3 Months, Highest Since 2009

THE INVENTORY OF EXISTING U.S. HOUSES HAS RISEN, BUT REMAINS WELL BELOW THE DISTRESSED LEVELS OF 2009-2012: If I walk around where I live, there are a lot more houses for sale now as there had been four years ago, although there are far fewer houses for sale than I remember from 2009-2012. As the above article stated, the inventory of existing [just as for Treasuries, people don't like the word "used"] homes is a much more modest 4.5 months of supply. I expect existing home inventory to first rise sharply before the biggest percentage losses occur for U.S. residential real estate.

Just as a multi-decade low for housing inventory led to record prices in both 2005 and 2022, multi-decade highs for inventory are consistently followed by dramatically lower housing prices. A few years ago the Covid crisis and stay-at-home popularity led to multi-decade inventory highs for office building rental space, which not surprisingly soon led to a nationwide decline of about half for office rents. I have no doubt that after housing prices fall by large percentages and the inventory of existing homes becomes much greater, the media will mention how "obvious" it was that prices would have to drop due to the record inventory that they have so far refused to report. The media are expert at telling you anything after it is too late to benefit from it.

U.S. LONG-DATED TIPS HAVE BECOME UNUSUALLY COMPELLING FOR PURCHASE: In other financial developments, long-dated U.S. Treasuries continued to form higher lows, while long-dated U.S. Tips yielded over 2.99% fixed during part of last week, meaning that when you add a CPI rate of 3% then you get a 6% total return. This return will fluctuate with the CPI for the next three decades, but even if there is deflation you will get 2.99% guaranteed with this yield free of state and local income taxes.

Here is a very recent article explaining the little-appreciated advantages of Tips whenever they are especially undervalued:

A Generational Buying Opportunity Guarantees Inflation Plus 3% a Year, Says This Hedge-Fund Manager

The end of the above article states an important point about the internet bubble in 2000 which applies even more strongly to the AI bubble in 2026:

In the decade from June 2000, the Vanguard Inflation-Protected Securities Fund VIPSX doubled your money, while the S&P 500 SPX lost you 15% - before inflation.

MARGIN DEBT REACHED 1.5 TRILLION U.S. DOLLARS, FAR EXCEEDING PREVIOUS TOPS EVEN IF YOU ADJUST GENEROUSLY FOR INFLATION:

S&P 500 PRICE-TO-SALES ON JUNE 5, 2026 FAR EXCEEDED COMPARABLE DATA FOR ALL GLOBAL STOCK MARKET TOPS EVER RECORDED:

INVESTORS ARE WILLING TO ACCEPT CORPORATE BOND YIELDS THAT ARE FAR TOO LOW RELATIVE TO GUARANTEED U.S. TREASURIES:

Disclosure of current holdings:

Below is my current asset allocation as of 4:00 p.m. on Tuesday, July 28, 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.

As recently as last week, I added to TLT, PSQ, EDV, and LTPZ, in addition to purchasing the TIPS which mature on February 15, 2053 with cusip 912810TP3, whenever each of these was at or near a multi-decade low. TLT is heavily shorted, pays just about 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: 27.12%;

TLT/VGLT long: 17.25%;

VMFXX/TIAA Traditional, TIAA money market/bank CDs/FZDXX/FZFXX/SPRXX/SPAXX/BPRXX/Savings/Checking long: 15.37%;

EDV long: 5.33%;

LTPZ long: 4.84%;

I Bonds long: 3.86%;

PMM long: 0.01%;

XLK short: 28.88%;

QQQ short: 24.31%;

GDXJ short: 1.40%;

SMH short: 1.38%;

PSQ long: 10.65%;

Gold/silver/platinum coins: 11.21%;

UTZ long: 3.04%;

CAG long: 0.73%;

GPK long: 0.42%;

WEN long: 0.17%.

"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%.

"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%.

"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%.