"Exponential rapidly rising or falling markets usually go further than you think, but they do not correct by going sideways." --Bob Farrell (Rule #4)

TREASURIES' THREE TALL TAILS (October 4, 2026): The media have dramatically increased their frequency and intensity of articles regarding U.S. government bond yields. Around March 2020, the coverage on this topic was almost unanimously of the opinion that Treasuries' and Tips' yields would remain permanently near zero. After 2020, there were several subsequent years of very limited discussion of U.S. Treasuries; stocks were stars in nearly all of the financial press with brief flurries about cryptocurrencies one year ago and gold this past winter when those had briefly achieved all-time bubble peaks.

Recently, U.S. Treasuries have once again been featured frequently. There are three tall tales, or tall tails since these have achieved multi-decade extremes, as follows: 1) U.S. government bond yields will allegedly continue to climb for years or decades; 2) supposedly the very high rate of U.S. government borrowing is primarily responsible for 26-year highs in some Treasuries' and Tips' yields; 3) finally, the pattern in recent years of U.S. stocks outperforming and U.S. government debt underperforming is very widely believed to continue indefinitely. I will discuss the major flaws in these false popular conclusions and what is most likely to occur going forward.

MYTH #1 IS THAT U.S. GOVERNMENT BOND YIELDS, WHICH ARE ALREADY AT MULTI-DECADE EXTREMES, WILL CONTINUE TO RISE: One clear mistake that the vast majority of investors will make through the centuries is to conclude that any especially lopsided multi-decade extreme will become more extreme for many more decades. In the short run, a combination of momentum and sentiment will often cause an asset which is especially far from fair value to go even farther away from its intrinsic value. Partly this is because the conversation about that asset shifts so that the inevitable long-term mean regression is almost completely eliminated from serious discussion, creating an obsession about what will happen soon rather than what must happen in the longer run.

PRECIOUS METALS PROVIDE A USEFUL PARALLEL FROM 30 YEARS AGO: A very useful example is gold, silver, gold/silver mining shares, and related assets. I had written about these especially frequently during the first several years of my blog and internet postings which began in August 1996. In those years, buying gold below 300 U.S. dollars per troy ounce was almost universally considered to be a terrible investment. If I would recommend buying gold at 280 or 270, then the most popular belief was that gold would drop further. There were numerous downward spikes to even lower lows. Most importantly, no matter how low gold or silver would decline, investors didn't say "now that it's at an even lower point, it's a fantastic bargain." Instead, they said that "the extended period of gold's underperformance proves that it should be avoided." Central banks were aggressive gold sellers near all of the lowest points of that cycle, doing their heaviest net selling ever recorded.

During the past year we can see the mirror image of gold's extreme bearishness, as it became nearly unanimous among brokers and analysts that gold's price would keep climbing forever. Central banks have done their most aggressive buying ever recorded. Mainstream analysts during the first quarter of 2026 were competing with each other in outdoing each others' upside gold price targets. Throughout history, the outlook for any asset swings from extreme bullishness to extreme bearishness and back again, over and over.

INVESTORS REPEATEDLY FORGET TO APPLY THE MARTIAN TEST: Roughly thirty years ago I introduced the idea of the Martian test on my blog to determine which investments currently make the most sense. A major reason most of today's investors don't perceive U.S. Treasury yields as being absurdly high, or valuations for U.S. stocks as being dangerously overpriced, is because even the most irrational situation is perceived to be normal once it has persisted long enough. Therefore, you must look at the financial world as if you had been on Mars for a decade or two and you just returned to planet Earth, with a terrible internet connection while you were gone so you couldn't keep track of fluctuations.

Looking at the current financial situation from a completely fresh perspective, instead of having time to emotionally adjust to recent valuations, what would you perceive as being an obvious bargain and what would seem to be wildly overpriced? Without the baggage and brainwashing of repeated media exposure, you would have quickly realized in 1998 that gold and silver must be compelling bargains. You would have observed how incredibly undervalued Brazilian and other emerging-market shares were near the end of 2002 and the start of 2003, and today you would have no difficulty realizing why long-term U.S. government debt in particular is an unusually worthwhile purchase opportunity.

MYTH #2 IS THAT HIGH U.S. GOVERNMENT BORROWING IS PRIMARILY RESPONSIBLE FOR TODAY'S HIGH U.S. GOVERNMENT BOND YIELDS: This misconception is so widely accepted that it is taken almost for granted in most coverage of this topic. Let's stop to consider why U.S. government bonds had such high yields in 2026 and 2000, and had reached less extreme peaks in 2007. Even a brief examination of the data shows that there is almost zero correlation between the amount of government borrowing and the yields on U.S. Treasuries and Tips.

Certainly we have unusually high recent U.S. government borrowing. No doubt the U.S. national debt surpassing the round number of 40 trillion U.S. dollars received a lot of press, and perhaps justifiably so. However, was there a noticeably sharp rise in U.S. government borrowing in 2007 or 2000? Many people have forgotten and today's younger investors would probably not believe that the U.S. ran an actual surplus in 2000, where the total amount of the U.S. national debt dropped instead of climbing sharply. The 2000 surplus was the highest surplus in decades in real terms. And yet U.S. government bond yields in 2000 were especially high, in some cases modestly above what they have been recently.

In 2007 we had moderate U.S. government net borrowing. There was a sharp rise in such borrowing by the end of 2008 when we had the biggest ever U.S. government stimulus up to that time, and this was accompanied by a sharp decline for U.S. government bond yields rather than a rise.

Thus, we have an actual budget surplus in 2000 which was accompanied by especially high U.S. government bond yields. We have a surge in U.S. government borrowing near the end of 2008 and unusually low U.S. government bond yields. Since the amount of U.S. government borrowing has nothing to do with the high U.S. government bond yields in 2000 or 2007, then what could 2000, 2007, and 2026 possibly have in common? Is there anything so obvious that most people are overlooking it?

Those who are familiar with U.S. financial history are well aware that 2000, 2007, and 2026 have one very important common thread: in all of those years we had U.S. stock-market peaks followed by severe bear markets. Of course we don't yet know that the U.S. stock market will begin a major downtrend in 2026 since it hasn't yet happened. Historically, if you go all the way back to when U.S. government debt was initially issued in 1789, it is clear that the most significant pullbacks for U.S. government bond yields had a meaningful correlation with the steepest losses for U.S. stocks.

This correlation also makes sense logically. If investors are certain that they will continue to gain 20% or 30% annualized in the U.S. stock market then they won't be interested in "boring" U.S. Treasuries even if there are multi-decade highs for U.S. government bond yields. In contrast, if the U.S. stock market has recently been losing a lot of its previous value, then investors will be frightened and confused by the volatile stock market and will be much more eager to seek the safety of guaranteed U.S. Treasuries even when those Treasuries have below-average yields.

MYTH #3 IS THAT U.S. GOVERNMENT BOND YIELDS WILL KEEP CLIMBING, WHILE U.S. STOCKS CONTINUE TO OUTPERFORM: The recency bias is alive and well in the financial markets, where almost everyone at any major turning point is convinced that prices will continue to move in whatever direction they had been doing. The longer that any given trend has been intact, the stronger it is believed to be. This is why almost no one wants to buy low or to sell high. When something has been dropping for an extended period of time, it is psychologically perceived to be inferior and most investors won't buy it no matter how underpriced it is. The better a bargain it becomes, the more that most investors will avoid it rather than jumping in. Similarly, whenever anything achieves all-time overvaluations, investors don't perceive the huge downside risk. They pile in even more aggressively rather than reducing risk near each top.

It is useful to review what has been going on in the financial markets and what is most likely to occur over the next several years. I will attempt to stick to the Martian test, applying proven value concepts established through the centuries, rather than being overly swayed by the most popular trends of recent years.

AN INCREASING NUMBER OF ASSETS HAVE BEGUN ABOVE-AVERAGE PERCENTAGE DECLINES: Many investors don't stop to think about how all assets worldwide are correlated in complex ways. There are common historic patterns in which certain sectors tend to begin rallies or bear markets earlier or later than other assets. For example, gold mining and silver mining shares tend to lead the overall stock market by several months in both directions, completing both major tops and bottoms in advance of something like the S&P 500 Index. High-yield corporate bonds also usually lead in both directions relative to large-cap U.S. stocks.

Cryptocurrencies don't have a lengthy track record, but they may also be leading indicators. Bitcoin completed its all-time zenith on October 5, 2025, while most other cryptocurrencies including Ethereum had peaked during the summer of 2025. Most high-yield U.S. corporate bonds had reached their most elevated levels around October 2025. Gold mining and silver mining shares generally reached all-time highs in the pre-market on March 2, 2026, and have made numerous lower highs since then in classic bear market style. Most emerging markets and commodity producers appear to have begun important downtrends at various points during the past several months. Semiconductor shares have generally been leading indicators for U.S. stocks since the 1960s; funds of semiconductor producers including SMH and SOXX mostly climbed to all-time highs on June 22, 2026.

Just as with U.S. Treasuries reaching especially high yields in 2000, 2007, and 2026, it is probably not a coincidence that all of the assets mentioned in the past two paragraphs had begun key downtrends in both 2000 and 2007 as well as during the past year. This is not a guarantee that U.S. government bonds will start or have already begun historic bull markets, or that U.S. stocks are in the process of experiencing especially severe bear markets, but history usually repeats itself with variations.

I CURRENTLY FAVOR A PORTFOLIO OF VERY SAFE GUARANTEED SHORT-TERM DEBT COMBINED WITH ASSETS WHICH ARE LIKELY TO AT LEAST DOUBLE IN VALUE OVER THE NEXT FEW YEARS: U.S. Treasury bills are the best and safest asset to own at the present time, and if you are very conservative you could keep 100% of your money in those. One important advantage of U.S. government debt is that by federal law you owe zero state and local income taxes on all of the interest.

I am willing to accept the volatility of other assets which are likely to at least double in value by the end of 2029. That would include funds like TLT, VGLT, SPTL, and other funds of long-term U.S. Treasuries. Long-term Tips including LTPZ and actual Tips obligations of the U.S. federal government which mature on February 15 of 2053, 2054, and 2055 are also likely to at least double in value. These have dropped so much in recent weeks that you could double your money from current levels even without counting the accumulated interest payments. EDV is a riskier choice since it consists of zero-coupon U.S. Treasuries; these could triple in value within a few years.

Other volatile choices include PSQ and other bets on lower prices for the most popular large-cap U.S. stocks. As long positions, Chinese internet shares and their funds including KWEB feature deeply depressed stocks which mostly have annualized profit growth which exceeds the price-earnings ratio, a rarity in today's overpriced equity world. PALL is a fund of palladium where commercials are net long more than 2:1 in the latest traders' commitments, meaning that those who own actual palladium are confident of prices eventually doubling. Palladium will fluctuate wildly, so as with all fluctuating assets, it is essential to gradually build up a position using ladders of numerous good-until-canceled purchase orders. In modern times those orders can include the periods outside of regular trading hours, as almost all listed U.S. securities now trade continuously from 8 p.m. Sunday through 8 p.m. Friday Eastern Time.

CHARTING SECTION:

Inflows into technology funds far exceed the inflows at past market peaks, even if you adjust generously for inflation:

Margin debt consistently expands most rapidly prior to peaks and contracts most quickly leading up to bottoms:

No matter how well the U.S. dollar has been outperforming most currencies since January 2026, with its longer-term bull market going all the way back to March 2008, investors remain solidly bearish toward its future prospects:

If the pattern from the internet bubble repeats during the AI bubble, we will get a final meaningful pullback for emerging-market shares followed by several years where they far outperform most developed stock markets:

Just as investors have more than doubled their long-term allocation to U.S. stocks, they are woefully underinvested in the safest investments which are guaranteed by the U.S. government:

Too many analysts are projecting recent allegedly strong earnings into the indefinite future, which is especially perilous since unrealized capital gains invested in other stocks constitute a substantial percentage of those earnings:

Investors have put more money into U.S.-listed exchange traded funds in 2026, even with more than three months left in the year, than they did for all of 2025 which had been by far an all-time record year:

A Record ETF Year Takes Shape

Brett Arends states precisely what I have been expressing for months:

Institutional Investors Are Dangerously Overinvested in Stocks

Hedge funds piling into long positions near multi-decade tops and surging into short positions near multi-decade bottoms are largely responsible for many extremes becoming even more exaggerated before they dramatically reverse. Hedge funds will eventually be forced to close out their all-time record U.S. government debt short position, much of which was established recently using borrowed money:

Speculative Treasury Shorts

Treasury Short Squeeze Increasingly Likely

P.S. The 3-Year U.S. Treasury note is set to be auctioned in the morning of Tuesday, October 6, 2026. The annualized yield will be near 5%. Be sure to participate.

Disclosure of current holdings:

Below is my nearly current asset allocation as of 4:00 p.m. on Friday, October 2, 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.

The order is as follows: 1) U.S. government bonds; 2) shorts; 3) bear funds; 4) precious metals; 5) emerging markets; 6) 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: 26.54%;

TLT/VGLT long: 18.33%;

VMFXX/TIAA Traditional, TIAA money market/bank CDs/FZDXX/FZFXX/SPRXX/SPAXX/BPRXX/Savings/Checking long: 13.31%;

EDV long: 7.12%;

LTPZ long: 6.05%;

I Bonds long: 3.77%;

PMM long: 0.01%;

XLK short: 26.98%;

QQQ short: 24.72%;

GDXJ short: 1.42%;

SMH short: 1.36%;

PSQ long: 11.70%;

Gold/silver/platinum coins: 10.88%;

KWEB long: 1.00%;

CAG long: 0.71%;

GPK long: 0.41%;

WEN long: 0.17%.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Disclosure of current holdings:

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

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

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

17-Week/52-Week/26-Week/13-Week/2-Year/8-Week/3-Year/5,10,30-Year TIPS/4-Week/6-Week/20-Year: 27.95%;

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

TLT long: 13.59%;

I Bonds long: 3.87%;

LTPZ long: 1.54%;

EDV long: 1.51%;

PMM long: 0.01%;

XLK short: 34.02%;

QQQ short: 26.75%;

GDXJ short: 1.93%;

SMH short: 1.67%;

GDX short: 0.37%;

PSQ long: 8.10%;

Gold/silver/platinum coins: 13.22%;

UTZ long: 1.30%;

CAG long: 0.77%;

GPK long: 0.37%.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Disclosure of current holdings:

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

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

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

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

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

TLT long: 11.21%;

I Bonds long: 3.88%;

PMM long: 0.01%;

XLK short: 34.11%;

QQQ short: 25.12%;

GDXJ short: 1.52%;

SMH short: 1.43%;

GDX short: 0.24%;

AAPL short: 0.15%;

PSQ long: 1.24%;

SARK long: 0.38%;

Gold/silver/platinum coins: 10.55%;

PALL long: 2.62%;

EWZ long: 0.52%;

FLBR long: 0.51%;

EWY long: 0.11%;

FLKR long: 0.06%;

TUR long: 0.02%;

EWZS long: 0.01%;

UGP long: 0.42%;

VALE long: 0.30%;

GGB long: 0.17%;

BBD long: 0.15%;

RIG long: 0.44%;

WTI long: 0.07%;

PTEN long: 0.04%;

OGN long: 0.25%;

CLF long: 0.01%.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The following are recent useful charts:

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

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

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

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

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

Disclosure of current holdings:

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

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

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

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

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

TLT long: 10.66%;

I Bonds long: 3.80%;

PMM long: 0.01%;

XLK short: 32.09%;

QQQ short: 23.46%;

SMH short: 1.36%;

GDXJ short: 0.79%;

AAPL short: 0.15%;

GDX short: 0.08%;

SARK long: 0.51%;

PSQ long: 0.26%;

Gold/silver/platinum coins: 9.57%;

PALL long: 2.15%;

EWZ long: 0.33%;

FLBR long: 0.31%;

EWY long: 0.05%;

FLKR long: 0.03%;

TUR long: 0.02%;

UGP long: 0.32%;

VALE long: 0.21%;

BBD long: 0.11%;

GGB long: 0.11%;

EWZS long: 0.01%;

RIG long: 0.28%;

PTEN long: 0.03%;

WTI long: 0.02%;

OGN long: 0.22%;

CLF long: 0.01%.