WEBVTT 00:00.050 --> 00:12.990 Jesus, if this is a measurement of the scale of our bubble and it is, that is saying, this 00:12.990 --> 00:13.590 is horrifying. 00:14.210 --> 00:15.670 This is absolutely horrifying. 00:16.290 --> 00:21.710 If this reverts to the mean, we are talking about a modern dark age. 00:22.010 --> 00:26.490 This isn't like 1929 to 32. 00:26.490 --> 00:32.330 This is going to be, this data is absolutely horrific. 00:32.550 --> 00:42.010 This is the informed people on the Titanic getting into the lifeboats like right now. 00:42.890 --> 00:44.630 That is what's going on. 00:51.760 --> 00:55.060 Hi, it's the Gold Silver Show with Mike and Alan again. 00:55.340 --> 00:56.220 Alan, how are you doing? 00:56.740 --> 00:57.260 I'm great, Mike. 00:57.360 --> 00:57.560 Thanks. 00:57.720 --> 00:58.000 How are you? 00:58.660 --> 00:58.920 Great. 00:58.920 --> 01:06.140 So, you've got something on, you know, I've been collecting data on overvaluation and I 01:06.140 --> 01:15.880 just did a, we released the limitless expo that I did a few months ago and I showed the 01:15.880 --> 01:21.360 overvaluation on certain metrics, but you've got a whole bunch more for us, don't you? 01:21.660 --> 01:22.560 Yes, I do. 01:22.740 --> 01:27.520 I've been collecting some charts and articles and facts and figures over the last few 01:27.520 --> 01:32.540 weeks that show just how insanely overvalued the US stock market is. 01:32.800 --> 01:34.080 So I thought we could go through that today. 01:34.660 --> 01:35.040 Great. 01:35.260 --> 01:40.440 You know, I want to encourage everybody to go and watch the overvaluation that I talked 01:40.440 --> 01:45.560 about in the charts at the beginning of the last video that I did, the limitless 01:45.560 --> 01:48.860 expo and connect the dots with this one. 01:50.140 --> 01:50.620 Yes. 01:50.940 --> 01:52.660 I think they go hand in hand. 01:53.200 --> 01:54.760 So, yeah, everyone, check that out. 01:54.760 --> 02:00.740 And then our agenda for today, we're talking primarily about the US stock market and I want 02:00.740 --> 02:04.560 to look at five things, basically valuation levels in a global context. 02:04.820 --> 02:07.220 I want to look at what asset managers are doing. 02:07.360 --> 02:09.800 Are they allocated very heavily to stocks or not so much? 02:10.120 --> 02:15.760 I want to look at companies' earnings, particularly zombie companies and see how many of them 02:15.760 --> 02:18.800 are more or less, are they growing or shrinking over time? 02:19.320 --> 02:23.380 They're fine zombie company for us right here, though, so that people don't get 02:23.380 --> 02:23.660 lost. 02:23.660 --> 02:24.240 Sure. 02:24.400 --> 02:29.320 A zombie company is a company that is not earning enough money to pay the interest on 02:29.320 --> 02:29.720 their debt. 02:30.180 --> 02:31.580 So that's just the interest on their debt. 02:31.700 --> 02:33.060 So that's a big problem. 02:33.220 --> 02:35.560 They can't let alone the principle. 02:36.240 --> 02:36.720 So exactly. 02:38.380 --> 02:38.580 Yeah. 02:38.700 --> 02:41.880 So generally that means they're going to have to keep borrowing, borrow against 02:41.880 --> 02:46.680 their assets or go deeper into debt in order to just stay afloat and hope that 02:46.680 --> 02:47.760 things turn around somehow. 02:48.280 --> 02:51.100 So sometimes they turn it around, but many times they don't. 02:51.100 --> 02:53.480 So we're going to look in and see what that trend is like. 02:53.820 --> 02:54.180 Yeah. 02:54.500 --> 02:57.240 Also, I want to look at what corporate insiders are doing, right? 02:57.340 --> 03:01.240 Are the CEOs and other executives, are they buying more shares of their own 03:01.240 --> 03:02.280 stock or are they selling? 03:02.680 --> 03:03.280 What does that look like? 03:03.780 --> 03:06.140 And what is Warren Buffett doing at Berkshire Hathaway? 03:06.500 --> 03:08.720 Arguably the best value investor of all time. 03:08.900 --> 03:11.340 Is he seeing a lot of deals right now or not so much? 03:11.680 --> 03:13.100 So that's what I want to look at. 03:13.220 --> 03:15.140 I think it's a pretty wide variety of things. 03:15.820 --> 03:16.180 Excellent. 03:16.800 --> 03:17.300 Let's do it. 03:17.780 --> 03:18.420 Let's do it. 03:18.420 --> 03:18.760 All right. 03:18.800 --> 03:25.040 First of all, we've got the S&P 500 market capitalization as a percentage of world GDP. 03:25.560 --> 03:28.560 So how big is the US economy compared to the rest of the world? 03:29.520 --> 03:34.500 And from the Kobayashi letter here, the S&P 500's market cap to world GDP ratio 03:34.500 --> 03:38.340 officially hits a new all-time high of 46%. 03:38.340 --> 03:39.620 Look how high this is here. 03:40.220 --> 03:40.300 Wow. 03:40.860 --> 03:43.520 Over the last 15 years, this ratio has quadrupled. 03:43.960 --> 03:48.760 So it's even higher than the dot-com bubble peak in the year 2000. 03:49.340 --> 03:55.260 And the market cap of the S&P 500 is over $50 trillion for the first time in history. 03:55.980 --> 04:02.340 And the US stock market cap to GDP ratio has hit an all-time new record high of 205%. 04:02.940 --> 04:05.780 The US stock market has never been bigger. 04:06.860 --> 04:08.800 Never been so overvalued. 04:09.080 --> 04:10.760 Never been bubblier. 04:11.920 --> 04:12.800 It's bubblicious. 04:13.880 --> 04:14.760 It's bubblicious. 04:15.340 --> 04:18.440 You know, like other people would say it's because the economy is super strong. 04:18.660 --> 04:19.580 Everyone's doing well. 04:20.120 --> 04:21.140 Individuals are doing well. 04:21.280 --> 04:22.320 Companies are doing well. 04:23.000 --> 04:24.960 You know, we've got a new administration coming in. 04:25.820 --> 04:26.300 I don't know. 04:26.420 --> 04:31.460 Maybe we can keep that in mind as we go through the presentation and see if it will come up. 04:31.740 --> 04:36.660 The overvaluation of the stock markets is something that I've been worrying about for quite a while now. 04:37.300 --> 04:39.100 And this is the problem with it. 04:39.100 --> 04:42.060 It is you don't know when the bubble is going to burst. 04:42.420 --> 04:48.480 In 2005, 6, and 7, I was going through the exact same thing. 04:49.040 --> 04:51.600 Warning people, warning people, get ready. 04:52.000 --> 04:55.000 Everybody was on the real estate bandwagon back then. 04:55.120 --> 04:57.860 That was the biggest real estate bubble we've ever had. 04:58.880 --> 05:02.200 And I was touring the world with Robert Kiyosaki. 05:02.580 --> 05:04.280 I was presenting all of these charts. 05:04.980 --> 05:08.640 I mean, in my last video, I disclosed that. 05:09.280 --> 05:16.740 Robert's group used to call me the angel of death because I would bring the depressing news to everybody. 05:19.000 --> 05:21.680 And everybody thought that I was wrong. 05:21.920 --> 05:28.040 That this thing will keep on going forever and that they're all going to get rich on leveraged real estate. 05:29.160 --> 05:36.220 And just a couple of years later, you know, when the bubble popped in 2007 and the global financial crisis hit in 2008, 05:37.500 --> 05:40.420 everything fell apart in the real estate sector. 05:40.700 --> 05:42.900 Real estate dropped by about 50 cents. 05:43.360 --> 05:48.580 I mean, 50% gold tripled during that period of time. 05:48.620 --> 05:55.800 So if you had sold a home in the peak and then bought gold and then bought back into real estate down in the trough, 05:56.020 --> 05:59.160 for every home you sold, you would have been able to pick up six. 06:02.960 --> 06:10.860 And most of the people that I was talking to in that audience were broke by 2011. 06:11.780 --> 06:20.300 And I had from 2008 to 2011 was, I mean, it was just absolutely amazing. 06:20.980 --> 06:28.480 So anyway, so this stock market capitalization, this could go on a while longer. 06:28.480 --> 06:33.700 But I do know that it's getting closer and closer and closer to us. 06:33.720 --> 06:37.760 And this is like being strapped to a railroad tracks with an approaching train. 06:38.800 --> 06:44.820 And but we just don't know when, you know, how fast is that train traveling? 06:45.180 --> 06:46.880 So when is it going to get here? 06:47.260 --> 06:48.940 Go ahead. I'm sorry I interrupted. 06:49.360 --> 06:50.980 No, it's no interruption at all. 06:51.080 --> 06:52.420 It's always always great to hear that. 06:52.500 --> 06:54.000 And I totally agree with everything you're saying. 06:54.100 --> 06:57.320 And a lot of these asset classes, they take turns, they revert to the mean. 06:57.860 --> 06:59.320 And so it's just a matter of time. 06:59.460 --> 07:01.200 It's a question of how patient you can be. 07:01.380 --> 07:05.860 And speaking of reverting to the mean, we're going to wonder here 07:05.860 --> 07:07.200 if this is going to revert to the mean. 07:07.520 --> 07:12.860 US stocks are very exceptional, quote, unquote, relative to European equities. 07:13.120 --> 07:17.660 So this is the US versus Europe equities price in US dollar terms. 07:18.240 --> 07:23.340 And US stocks are trading at a 75 year high in relative terms versus European equities. 07:23.340 --> 07:27.720 Do we ever see anything even vaguely resembling mean reversion? 07:27.980 --> 07:29.740 Or is Europe just toast? 07:30.080 --> 07:30.920 I mean, look at this. 07:31.320 --> 07:32.200 This is unbelievable. 07:32.560 --> 07:35.740 This is three and a half standard deviations above the mean. 07:36.060 --> 07:38.440 That's that's such a rare event. 07:38.800 --> 07:43.860 I right. I can't remember three and a half standard deviations. 07:44.220 --> 07:49.020 What the percent probability of that is. 07:49.020 --> 07:54.940 Yeah, over over three standard deviations, I think that's half a percent. 07:56.540 --> 08:01.300 So to either extreme, so total, so a quarter of a percent high, 08:01.560 --> 08:04.560 a quarter of a percent low, I think, and that's three standard deviations, 08:04.640 --> 08:08.480 three and a half, of course, is much further in the further in the tail. 08:08.840 --> 08:10.700 It's much less likely to occur. 08:12.020 --> 08:15.720 So yeah, and if this thing turns around right now, then OK. 08:16.340 --> 08:19.080 But if it keeps going and hits four standard deviations, 08:19.200 --> 08:21.420 I mean, that's that's just insane. 08:21.580 --> 08:24.320 We're talking like almost a one in a million event. 08:24.380 --> 08:27.220 Yeah, it either means that Europe is like gone 08:28.220 --> 08:32.240 or or there's a big crash ahead of us, one or the other. 08:32.580 --> 08:33.140 Yes. 08:33.560 --> 08:37.920 And it's certainly not a normal US stagnates in Europe, 08:38.080 --> 08:39.800 grows and grows and grows. 08:40.020 --> 08:42.800 But we know with their, you know, 08:43.420 --> 08:47.580 they in Europe, their economies are much slower 08:47.580 --> 08:50.000 because they are much more regulated. 08:50.240 --> 08:52.040 They are much more socialistic. 08:53.560 --> 08:58.920 And and and so their economies have been sluggish for a long time. 08:59.120 --> 09:01.080 We're on our economy, except. 09:03.120 --> 09:06.460 This the the last bottom in this 09:06.460 --> 09:09.460 was the global financial crisis of 2008. 09:10.080 --> 09:13.960 And so we've been growing faster than they have ever since then. 09:14.500 --> 09:16.940 If this started back in 09:16.940 --> 09:20.860 nineteen eighty five nineteen ninety 09:21.580 --> 09:24.120 when the Nasdaq boom started, look at that, 09:24.160 --> 09:27.700 it only got up to the red line at the Nasdaq boom. 09:27.800 --> 09:32.100 And that red line actually, you know what, this chart is drawn wrong. 09:32.860 --> 09:36.700 I'm sorry to say that to markets in mayhem. 09:36.700 --> 09:42.460 But you can't when you're talking about that red line is not the average 09:42.460 --> 09:44.420 that needs to go down lower. 09:45.060 --> 09:51.680 You can see that disregard everything after twenty fifteen. 09:53.040 --> 09:55.780 So yeah, even twenty fourteen. 09:56.840 --> 10:00.920 And then imagine everything before that. 10:01.200 --> 10:05.040 I'm pointing the wrong direction. 10:05.040 --> 10:07.080 I've got to turn this around for my camera. 10:07.880 --> 10:10.640 Everything before twenty fourteen, 10:10.920 --> 10:17.140 pick an average there and move that line to where it's it's a mean 10:17.700 --> 10:20.980 when we're not in what I call the bubble century. 10:21.540 --> 10:25.100 And then you've got to drag the first and standard deviation 10:25.900 --> 10:28.840 lines down a bit or the first. 10:29.300 --> 10:32.680 The the the minus, I guess. 10:35.040 --> 10:36.640 Yeah, they would both come down. 10:36.760 --> 10:38.420 That would come down just a tiny bit. 10:38.740 --> 10:40.760 But yes, so. 10:43.220 --> 10:45.920 That that changes the whole scale here. 10:46.180 --> 10:50.300 I have a feeling we are over that three point five percent. 10:50.460 --> 10:52.980 We're probably over four at this point. 10:53.240 --> 10:55.680 So what are what's the percentage chance of a four? 10:56.580 --> 10:59.760 You know, a standard deviation of four. 11:00.800 --> 11:02.960 It's it's probably like one in a hundred thousand. 11:02.960 --> 11:05.640 And it's OK. Rare. Right. 11:05.820 --> 11:09.680 Right. OK. So that says, Jesus. 11:12.440 --> 11:17.800 If if this is a measurement of the scale of our bubble and it is. 11:18.840 --> 11:20.260 That is saying. 11:21.340 --> 11:22.440 This is horrifying. 11:23.140 --> 11:24.540 This is absolutely horrifying. 11:25.140 --> 11:30.640 If this reverts to the mean, we are talking about a modern dark age. 11:30.640 --> 11:35.380 This isn't like 1929 to 32. 11:36.180 --> 11:41.300 This is going to be this data is absolutely horrific. 11:42.060 --> 11:43.400 We should move on. 11:43.720 --> 11:46.040 I think I've said you got anything to say about that. 11:46.280 --> 11:51.980 If if you readjust this for the mean before the bubble century. 11:52.600 --> 11:54.640 You know, you can do this visually. 11:54.980 --> 11:57.360 What do you see in this chart? 11:59.160 --> 12:04.080 Yeah, basically these these standard deviation lines would be below the peak here 12:04.080 --> 12:09.500 because you get 67 percent of the data points between plus or minus one standard deviation. 12:09.720 --> 12:13.080 So we would actually, you know, by definition, by feature of a standard deviation, 12:13.100 --> 12:17.200 we would see a third of the data points above and below those two blue lines. 12:17.220 --> 12:21.000 And we moved them down so everything we're seeing since the bubble century 12:21.820 --> 12:23.880 is so far off the chart. 12:24.060 --> 12:26.300 It's like we have to rewrite what is normal. 12:26.300 --> 12:28.920 And I use the word normal because of a normal distribution. 12:29.200 --> 12:30.480 This is so abnormal. 12:30.900 --> 12:34.820 It's very hard to to quantify it or put it in perspective. 12:35.140 --> 12:40.700 I can see what is going on with this chart that skewed the data a little bit 12:41.520 --> 12:46.460 is just like when we do an index chart. 12:46.740 --> 12:49.780 This started off as a factor of one like an index chart. 12:49.780 --> 12:58.180 It's not starting off with the mean, the average of the swings 12:58.780 --> 13:02.860 before the bubble century started, before everything went crazy. 13:02.980 --> 13:06.860 And that's where it needs to start to give us accurate data. 13:07.380 --> 13:13.780 So this just started at a factor of one when it was actually below the mean 13:13.780 --> 13:17.400 from 1950 to 2008. 13:18.020 --> 13:20.840 I wish this data went back even further. 13:21.080 --> 13:23.380 I'd like to see this data going back 100 years. 13:27.760 --> 13:34.060 So now that you've seen that, would you consider this to be over a deviation of four? 13:36.840 --> 13:40.000 Well, it depends so much on how you calculate it. 13:40.100 --> 13:42.000 But it looks like it's about three and a half. 13:42.080 --> 13:44.360 Obviously, you could calculate it differently to come up with four. 13:45.240 --> 13:50.340 Right. But they're taking a mean that is not a true mean. 13:50.680 --> 13:51.980 The mean is much lower. 13:53.160 --> 13:57.220 That red line should be down closer to the factor of one on there. 13:57.480 --> 13:58.360 Not quite. 13:58.620 --> 14:00.480 That would be a little bit low, I guess. 14:01.040 --> 14:11.600 But the average ratio from 1950 to 2014-2015 14:12.800 --> 14:15.140 is much lower than that red line. 14:15.240 --> 14:16.980 The red line is skewed up. 14:17.720 --> 14:23.020 It looks like at about 3.7 on this chart. 14:23.280 --> 14:25.540 So I would imagine that we're up at four. 14:26.720 --> 14:27.140 Yeah. 14:27.680 --> 14:28.240 So, OK. 14:29.100 --> 14:29.420 Yeah. 14:29.900 --> 14:30.700 Certainly overvalued. 14:30.900 --> 14:32.860 We can definitely agree with that. 14:34.380 --> 14:35.580 Horrifically overvalued. 14:35.840 --> 14:36.000 Yeah. 14:37.280 --> 14:40.060 So I would expect a mean reversion, but we shall see. 14:40.060 --> 14:42.600 So what are the asset managers doing? 14:43.100 --> 14:45.500 Well, asset managers are all in on US stocks. 14:46.140 --> 14:50.080 Asset managers net positioning hit near a record 98%, 14:50.080 --> 14:52.140 meaning they're almost fully invested. 14:52.660 --> 14:55.060 Such extremes have only been seen a couple of times before. 14:55.560 --> 14:58.520 US stock market optimism is through the roof. 14:58.800 --> 15:00.200 What is going to happen next? 15:01.180 --> 15:02.140 So, yeah. 15:02.260 --> 15:05.000 This is kind of a weird chart to wrap your head around. 15:05.940 --> 15:09.080 This is basically the rolling three-year percentile 15:09.080 --> 15:11.700 of net positioning among asset managers. 15:12.380 --> 15:16.940 So basically every data point we see asks the question of, 15:17.000 --> 15:19.120 OK, right now, and I think it's monthly data. 15:19.400 --> 15:22.780 So right now this month, what percentage 15:22.780 --> 15:26.320 of the asset manager's portfolio is invested 15:26.320 --> 15:30.960 in US stocks relative to each month the last three years? 15:31.520 --> 15:33.840 So if it's up at 100%ile, 15:33.840 --> 15:37.460 that means that that monthly allocation is the highest 15:37.460 --> 15:40.540 they've had in the last 36 months, I believe. 15:41.760 --> 15:43.060 So, yeah. 15:43.340 --> 15:47.000 So doesn't necessarily mean they have the same percentage 15:47.000 --> 15:50.660 of their portfolio invested every time it hits 100. 15:50.840 --> 15:54.020 It just means that it's the highest allocation 15:54.420 --> 15:56.300 they've had within the last three years 15:56.300 --> 15:57.660 any time it hits 100. 15:58.180 --> 15:58.680 OK. 15:59.680 --> 16:05.540 You know, I didn't read the side scale there, 16:05.660 --> 16:09.280 the rolling three-year percentile of net positioning. 16:10.360 --> 16:13.780 And this is something that I want to point out. 16:14.300 --> 16:17.860 Everybody needs to go to GGSR 21 16:17.860 --> 16:21.040 and read the chapter three 16:21.260 --> 16:24.240 of the Great Golden Silver Rush of the 21st century. 16:24.580 --> 16:27.700 It's all about how to read charts 16:27.700 --> 16:32.040 and how to see if somebody is skewing your perception. 16:32.940 --> 16:34.540 That changes everything. 16:34.740 --> 16:39.840 I wish this was a percentage of cash to investment. 16:40.120 --> 16:41.580 Just their total position. 16:41.780 --> 16:42.500 What's on their book? 16:42.640 --> 16:43.840 How much cash do they have? 16:44.320 --> 16:47.560 Because if this was at 98%, 16:47.560 --> 16:50.420 that means they would only have 2% cash 16:50.420 --> 16:53.480 if they were measuring it that way. 16:54.020 --> 16:55.080 But they're not. 16:55.080 --> 17:02.200 Still, for the past three years since 2022, 17:04.020 --> 17:08.920 this is an extraordinary position here. 17:10.020 --> 17:13.680 It basically shows that these asset managers 17:13.680 --> 17:16.100 have been allocating more and more and more 17:16.100 --> 17:17.740 to stocks over the last three years. 17:18.280 --> 17:18.500 Right. 17:18.760 --> 17:19.380 And you know what? 17:20.040 --> 17:23.060 Look at how wrong they are most of the time. 17:23.620 --> 17:25.660 2011 was the time to be buying. 17:26.080 --> 17:29.140 It wasn't the time to be not allocated into stocks. 17:29.220 --> 17:31.520 That was the time to go all in, right? 17:32.620 --> 17:37.100 We had had the crisis of 2008 and we hit the bottom. 17:37.400 --> 17:39.020 Look at where they were in 2008. 17:39.220 --> 17:41.860 They were all in when the crash started. 17:42.520 --> 17:44.560 The global financial crisis. 17:45.460 --> 17:49.860 And so they're typically very wrong. 17:49.860 --> 17:51.880 So with it up at 98%, 17:52.480 --> 17:56.100 it says that they are on the wrong side of this trade. 17:56.740 --> 17:57.680 They should be. 17:57.920 --> 17:59.880 If they want to be fully invested, 18:00.020 --> 18:01.980 they should be fully invested in gold and silver. 18:04.060 --> 18:07.580 So, yeah, let's move on 18:07.580 --> 18:10.040 unless you got anything else to say about this chart. 18:10.820 --> 18:13.260 No, no, it just, yeah, they do seem to get it wrong. 18:13.460 --> 18:15.300 And we've got to ask ourselves like, 18:15.320 --> 18:17.360 okay, what, how about the companies themselves? 18:17.640 --> 18:18.740 Are they performing well? 18:18.740 --> 18:19.540 Are they strong? 18:19.820 --> 18:21.360 Are they able to service their debt? 18:22.300 --> 18:23.620 I don't think so. 18:24.400 --> 18:26.000 This is a chart of zombie companies. 18:26.140 --> 18:27.820 As we mentioned at the beginning of the video, 18:28.060 --> 18:30.820 a zombie company is a company that's not earning enough money 18:30.820 --> 18:33.020 or currency to service their debt, 18:33.200 --> 18:34.400 the interest on their debt. 18:34.760 --> 18:37.800 So they have to borrow just to pay their interest. 18:38.480 --> 18:39.940 They can't touch the principal. 18:40.400 --> 18:42.180 You know, they're really hurting for cash flow. 18:43.160 --> 18:45.200 And we can see Mike, do you want to talk about this? 18:45.240 --> 18:47.020 You put it in the book and you had a nice write up there 18:47.020 --> 18:48.820 explaining kind of the peaks and the troughs 18:48.820 --> 18:50.700 and why this takes shape. 18:50.840 --> 18:51.900 Do you want to explain it here? 18:52.760 --> 18:52.860 Okay. 18:53.680 --> 18:57.680 Well, basically, if you look at where it was, 18:57.900 --> 18:59.900 Dan, if you could enlarge that one more time. 19:00.800 --> 19:05.140 So back in the year 2000, we're coming off the Nasdaq bubble. 19:05.600 --> 19:07.780 Everybody is making a lot of profit. 19:08.380 --> 19:10.940 And then we, the bubble popped. 19:11.420 --> 19:12.780 The stock market falls. 19:13.180 --> 19:14.600 The economy gets bad. 19:14.600 --> 19:19.940 The companies are not making as much profit during that, 19:20.040 --> 19:23.640 when the economy takes a big slide and we go into recession, 19:24.400 --> 19:27.080 the companies aren't making as much profit. 19:27.720 --> 19:32.380 And then it peaks in 2003, 2004. 19:33.360 --> 19:36.040 That's where the economy started to recover. 19:36.520 --> 19:40.200 So the reason that this line goes down again is because the 19:40.200 --> 19:43.240 companies become more profitable as the economy grows 19:43.240 --> 19:48.780 and their sales pick up, but they did not pay down their debts. 19:49.880 --> 19:53.260 Allen Greenspan took interest rates down to 1% 19:53.260 --> 19:55.200 and they kept on borrowing. 19:55.860 --> 20:00.560 So when the next crisis hit in 2008, 20:01.240 --> 20:06.320 the economy shrank horribly during the global financial crisis. 20:06.560 --> 20:09.120 And this rises until 2011. 20:11.600 --> 20:16.380 And then the economy bottoms at that point. 20:16.800 --> 20:20.480 So it isn't under the company's control at this point. 20:20.580 --> 20:23.460 They've got long-term debt that they are stuck with. 20:24.200 --> 20:27.240 What they've got to rely on is, you know, 20:27.320 --> 20:30.580 and a whole bunch of companies go bankrupt in those years 20:30.580 --> 20:32.420 right after the crash when the company, 20:32.480 --> 20:35.160 when the economy starts to shrink, 20:35.160 --> 20:39.620 as it did in 2000 through 2003 20:40.700 --> 20:44.820 and as it did through 2008 and 2011, 20:45.680 --> 20:48.900 that's when a whole bunch of companies go out of business. 20:49.640 --> 20:53.220 But even though companies are going out of business 20:53.220 --> 20:55.840 and falling out of the S&P 500, 20:55.980 --> 20:58.440 or this is the S&P 1500, 21:00.400 --> 21:03.680 even though they're falling off of this list, 21:03.680 --> 21:08.360 those companies, there's still more of them, 21:08.980 --> 21:11.560 the companies that are in the S&P 1500, 21:12.020 --> 21:15.060 taking their place as zombie companies and growing. 21:15.800 --> 21:18.480 And so the economy recovers, this line goes down, 21:18.700 --> 21:22.660 Ben Bernanke took interest rates down to a 10th of a percent 21:22.660 --> 21:24.000 on the Fed funds rate. 21:24.460 --> 21:27.760 And so these companies, instead of paying down 21:27.760 --> 21:30.240 some of this debt, just kept on borrowing 21:30.240 --> 21:33.520 and borrowing and borrowing because it's free currency. 21:34.460 --> 21:38.260 And then we go to a place that we've never been before 21:38.260 --> 21:44.180 where, you know, one out of every five companies in the U.S., 21:44.180 --> 21:49.100 more than one out of every five, is a zombie company, 20%. 21:49.100 --> 21:51.240 Is that, or is that, no, that's 12. 21:51.660 --> 21:53.760 Yeah, 20%, one in five. 21:53.900 --> 21:55.440 20%, yeah, okay. 21:56.140 --> 22:01.920 So yes, and we are just in this danger zone that, 22:02.080 --> 22:07.900 and so this ends in late 2022, right? 22:08.060 --> 22:09.300 When the book was published, yeah. 22:10.100 --> 22:10.600 Okay. 22:11.080 --> 22:13.080 Yeah, so we have an extra two years of data. 22:13.160 --> 22:14.560 Now it's really hard to find this data 22:14.560 --> 22:15.660 because you've got to compile it, 22:15.700 --> 22:17.540 you know, on an individual company basis. 22:17.720 --> 22:18.460 So it's very difficult, 22:19.120 --> 22:23.100 but some other companies have made some estimates. 22:23.100 --> 22:26.140 And so the number of zombie companies in the U.S. 22:26.220 --> 22:27.200 is skyrocketing. 22:27.420 --> 22:29.360 This is from October of this year, 22:29.480 --> 22:32.080 so certainly much more recent. 22:32.840 --> 22:36.940 43% of the Russell 2000 companies are now unprofitable, 22:37.020 --> 22:38.640 the most since the COVID crisis. 22:39.300 --> 22:39.580 So they're talking... 22:40.540 --> 22:42.320 43%, oh my God. 22:42.980 --> 22:45.380 Yeah, now they're talking about the Russell 2000, 22:45.560 --> 22:47.180 whereas what we were just looking at... 22:47.180 --> 22:49.340 So with more companies instead of 1500, 22:49.340 --> 22:53.600 the Russell 2000 incorporates the S&P 1500. 22:54.280 --> 22:55.600 Those companies are in here. 22:56.100 --> 23:00.140 This is 2000 of the publicly listed companies 23:00.140 --> 23:01.760 in the United States. 23:02.460 --> 23:03.020 Wow. 23:03.960 --> 23:06.180 Yeah, and so this is the chart here. 23:06.260 --> 23:07.700 The share of Russell 2000 companies 23:07.700 --> 23:09.740 with negative earnings continues to rise. 23:10.580 --> 23:12.500 And you can see where we're at here. 23:12.500 --> 23:15.500 Okay, so the Russell 2000 must include 23:15.500 --> 23:20.420 some less profitable companies 23:20.420 --> 23:23.940 because this chart... 23:23.940 --> 23:25.740 Okay, it goes back to 1995. 23:27.040 --> 23:30.480 The other chart started in 2000, 23:30.800 --> 23:37.620 and this shows it up at about 16% or so 23:37.620 --> 23:39.400 in the year 2000, 23:39.400 --> 23:43.180 where our chart showed it at 3%, I believe. 23:43.180 --> 23:48.360 So it's including the extra 500 companies are weak companies 23:48.360 --> 23:53.160 compared to the first 1500 or 500 23:53.160 --> 23:56.480 or whatever our last chart showed. 23:57.360 --> 24:03.180 So this isn't an increase from 20% to 45%, 24:03.760 --> 24:07.120 but still this is incredibly alarming. 24:08.160 --> 24:09.160 Yes. 24:09.580 --> 24:12.620 Yeah, it's still... 24:12.620 --> 24:17.100 So this includes a lot more publicly listed companies. 24:17.300 --> 24:21.240 And there's the Wilshire 5000. 24:21.860 --> 24:25.060 It used to include 5000 publicly listed companies, 24:25.140 --> 24:26.040 but it doesn't anymore 24:26.040 --> 24:28.980 because there aren't 5000 publicly listed companies. 24:29.180 --> 24:32.660 They grow, they merge, and now there's about 3,500. 24:33.380 --> 24:38.200 So this is the bulk of that 3,500. 24:38.880 --> 24:41.260 So as you get into these smaller companies, 24:41.260 --> 24:44.540 you get into weaker and weaker companies, it looks like, 24:44.560 --> 24:47.140 because this whole scale is shifted up. 24:47.640 --> 24:52.560 You can see that rollover from 2021 to 2022. 24:53.260 --> 24:55.540 That was in our last chart, 24:55.540 --> 24:57.640 and it ended there in 2022. 24:58.480 --> 24:59.400 So this... 24:59.400 --> 25:05.760 And it's headed up again as of March or April of 24. 25:06.440 --> 25:09.880 So, and here we are much later in the year. 25:09.880 --> 25:11.980 If it was headed up on that trajectory, 25:11.980 --> 25:13.600 it's probably higher now. 25:15.980 --> 25:16.920 So, yeah. 25:17.480 --> 25:20.700 And this is over 40% of companies. 25:20.760 --> 25:23.580 So that's two out of five companies, negative earnings. 25:23.880 --> 25:25.060 I mean, this is just unbelievable. 25:25.800 --> 25:26.340 It is. 25:26.760 --> 25:29.000 I mean, like, how does this resolve? 25:29.180 --> 25:33.400 Either there's massive bailouts or massive bankruptcies. 25:34.040 --> 25:35.040 Well, massive bailouts, 25:35.460 --> 25:39.240 the currency has to come from somewhere. 25:39.240 --> 25:43.200 And a bailout from the government comes out of our pockets. 25:43.640 --> 25:50.800 If it's a bailout by telling bond holders in these companies 25:51.480 --> 25:53.940 that, sorry, you're not going to get paid, 25:53.980 --> 25:55.760 but the company is going to go on surviving. 25:56.220 --> 26:00.680 Or maybe we will swap your bonds for some shares in the company 26:00.680 --> 26:03.720 or something like that to get rid of the debt instantly. 26:06.700 --> 26:09.940 Then it comes out of the investor's pockets, 26:10.180 --> 26:13.480 but either way, it doesn't come out of the company's pocket. 26:13.600 --> 26:15.760 Either the company goes bankrupt and it's gone, 26:16.180 --> 26:21.860 or it relies on basically theft in some other form, 26:22.160 --> 26:26.260 like government bailouts where the taxpayers get the bill 26:26.260 --> 26:27.660 for the next 10 years. 26:28.140 --> 26:28.780 Yeah. 26:29.900 --> 26:30.240 Yep. 26:30.860 --> 26:31.460 Not good. 26:31.720 --> 26:32.700 Not good one way or another. 26:32.700 --> 26:39.040 But this is saying, so this is, how many companies out of? 26:40.000 --> 26:43.440 Well, we're 40, 43% out of 2000. 26:44.400 --> 26:44.480 Right. 26:45.100 --> 26:47.260 Imagine driving down Main Street in your town 26:47.260 --> 26:51.980 and four out of every 10 stores are boarded up. 26:53.240 --> 26:57.000 That is a really, really bad recession. 26:57.600 --> 26:59.020 It's worse than the Great Depression. 26:59.480 --> 27:00.660 That's what this is saying. 27:01.640 --> 27:02.080 Yep. 27:02.940 --> 27:03.260 Yep. 27:03.380 --> 27:06.580 Hopefully there's a nice way out of it. 27:06.860 --> 27:07.240 Right. 27:07.860 --> 27:08.220 I'm hoping. 27:09.100 --> 27:12.000 One last thing on zombie companies, an article from Fortune. 27:12.980 --> 27:15.440 This is back in June, so it's a little bit old here, 27:15.480 --> 27:16.900 but that's kind of besides the point. 27:17.320 --> 27:19.180 The number of debt-leading zombie companies 27:19.180 --> 27:22.480 soars globally to nearly 7,000. 27:22.680 --> 27:22.860 Okay. 27:23.000 --> 27:23.900 And if you read the article, 27:24.020 --> 27:27.020 they estimate about 2,000 companies in the United States. 27:28.140 --> 27:29.580 So 2,000 companies. 27:29.800 --> 27:32.340 I mean, that's just, that's so many, man. 27:33.460 --> 27:33.920 Yeah. 27:34.420 --> 27:37.620 That's where it says many of these publicly traded firms 27:37.620 --> 27:38.480 won't survive. 27:39.160 --> 27:39.440 Hi. 27:39.860 --> 27:42.480 I just wanted to take a moment and thank you for subscribing 27:42.480 --> 27:45.180 and mention that if you'd like to help our channel, 27:45.400 --> 27:48.280 please consider my company, GoldSilver.com, 27:48.420 --> 27:50.140 the next time you buy precious metals. 27:50.680 --> 27:53.140 We're one of the most trusted names in the industry. 27:53.500 --> 27:55.580 Our prices are sharp, delivery is fast, 27:55.580 --> 27:58.960 and we have an insiders program where you find out exactly 27:58.960 --> 28:00.980 what I'm doing with my own investments. 28:01.580 --> 28:04.040 Thanks for making GoldSilver.com your dealer. 28:04.620 --> 28:05.940 And now, back to the video. 28:06.320 --> 28:09.380 Many of these publicly traded firms won't survive. 28:10.240 --> 28:12.560 They won't survive the next crash. 28:12.760 --> 28:15.920 They won't survive the next big recession. 28:16.420 --> 28:19.700 And I do believe the energy that is stored up 28:19.700 --> 28:21.360 from papering over, 28:21.840 --> 28:24.840 printing our way out of every crisis, 28:24.840 --> 28:28.920 every recession, the 2008 global financial crisis, 28:29.340 --> 28:33.080 the COVID crash, they printed their way out of it. 28:33.660 --> 28:36.820 That is, you know, you've got cracks in the foundation 28:36.820 --> 28:40.100 of something and you just put a little piece of paper 28:40.100 --> 28:41.680 over and paint it, you know? 28:41.900 --> 28:43.540 And the crack is still there. 28:44.100 --> 28:46.400 It's just got a coat of paint on it 28:46.400 --> 28:48.340 so you can't see it any longer. 28:48.900 --> 28:50.720 And the cracks are getting worse. 28:51.380 --> 28:53.400 7,000 companies, that's amazing. 28:53.400 --> 28:56.620 Yeah, that's globally and then 2,000 in the U.S. 28:56.640 --> 28:59.300 So, so many, so, so many. 28:59.740 --> 28:59.920 Right. 29:02.040 --> 29:04.220 So, what are the executives doing? 29:04.700 --> 29:06.880 What are the CEOs and so forth doing? 29:07.000 --> 29:08.020 Are they buying their own stock 29:08.020 --> 29:10.540 because they have conviction in their companies 29:10.540 --> 29:12.260 or are they selling it? 29:12.540 --> 29:13.880 Well, according to Rani Stofferle, 29:14.120 --> 29:16.140 insiders are selling at a degree 29:16.140 --> 29:17.940 never seen before in history. 29:18.980 --> 29:20.620 And these are corporate executives. 29:20.620 --> 29:23.060 History only goes back to 2004. 29:24.220 --> 29:26.620 Yes, it's not a very long history here, 29:26.640 --> 29:28.060 but still an interesting trend. 29:28.460 --> 29:31.860 I used to show the buy-sell ratio charts 29:31.860 --> 29:34.880 back in 2004, five, six, seven 29:35.620 --> 29:38.400 to real estate investors and stuff, 29:38.700 --> 29:41.000 but just showing that there was a, 29:41.080 --> 29:43.340 this was a general just like this is. 29:43.540 --> 29:44.780 This is S&P 500. 29:45.280 --> 29:47.580 I think this is the data that I was showing 29:47.580 --> 29:49.440 back in 2004, five, six, 29:49.460 --> 29:52.440 but it went back much, much further than this. 29:53.520 --> 29:57.140 But yeah, it was bad then. 29:58.260 --> 30:02.680 Those peaks back in the very first red line 30:02.680 --> 30:04.080 on this graph, yeah. 30:04.880 --> 30:07.860 That's what I was showing way back then. 30:08.800 --> 30:11.680 So, yeah, so go on with what you were saying. 30:11.780 --> 30:12.620 I'm sorry I interrupted. 30:13.220 --> 30:13.840 Oh, no worries. 30:14.140 --> 30:15.800 By the way, you got to send me that data set. 30:15.800 --> 30:17.860 I love a good long-term data sets. 30:19.820 --> 30:23.200 But anyways, so the blue line here is the S&P 500 index. 30:23.380 --> 30:25.800 You can see it's been climbing a lot, especially lately. 30:26.700 --> 30:30.280 And the red columns here are the ratio of sellers to buyers. 30:30.780 --> 30:32.280 So among corporate executives, 30:32.840 --> 30:34.860 how many of them are buying their stock 30:34.860 --> 30:36.300 versus selling their stock? 30:36.680 --> 30:40.060 And you can see that we're up at around five and a half, 30:40.240 --> 30:41.980 almost six, meaning that- 30:42.340 --> 30:42.600 Six to one. 30:43.120 --> 30:44.120 Yeah, six to one. 30:44.120 --> 30:47.760 So for every executive that's buying their own stock, 30:47.980 --> 30:49.940 there's six of them who are selling it. 30:50.500 --> 30:52.300 So they're cashing out. 30:52.440 --> 30:53.220 They're taking their gains. 30:53.320 --> 30:56.400 And we haven't seen a ratio that high in 20 years. 30:57.020 --> 31:00.960 Do you remember, Mike, when you looked before 2005, 31:01.200 --> 31:03.140 do you remember how high that ratio got previously? 31:04.100 --> 31:05.280 It's never been this high. 31:05.420 --> 31:05.800 I don't think. 31:05.920 --> 31:08.280 I think Ronnie is right that this is never before seen 31:08.280 --> 31:08.800 in history. 31:09.400 --> 31:11.120 But one of the things I want to point out, 31:11.120 --> 31:15.260 look at the blue line and look at the global financial crisis 31:15.260 --> 31:16.200 of 2008. 31:17.400 --> 31:19.620 That little tiny dip down there. 31:19.740 --> 31:20.740 Look at where we are today. 31:22.560 --> 31:24.280 This whole thing was insane. 31:25.280 --> 31:25.940 Yep. 31:26.480 --> 31:28.580 That's the whole point of the presentation. 31:31.040 --> 31:31.740 Yeah. 31:32.380 --> 31:33.040 This is insane. 31:33.060 --> 31:33.620 This is crazy. 31:34.020 --> 31:40.260 And so these six insiders that are company executives 31:40.260 --> 31:46.320 that own stock in the company selling versus one buying, 31:47.620 --> 31:55.760 this is the informed people on the Titanic getting into the life 31:55.760 --> 31:57.600 boats like right now. 31:58.580 --> 32:00.280 That is what's going on. 32:01.420 --> 32:07.080 Those six have pretty good information on what's going on 32:07.080 --> 32:08.880 in the economy and everything else. 32:08.880 --> 32:12.860 And I think they're looking at these over valuations and they 32:12.860 --> 32:14.960 are heading for the life boats right now. 32:15.740 --> 32:18.080 Because cash, that's your lifeboat. 32:18.240 --> 32:21.480 Cash, gold, silver, crypto, your lifeboat. 32:21.880 --> 32:24.160 Cash is always going to get diluted. 32:24.560 --> 32:28.220 And we have seen the results, the amount of currency that was 32:28.220 --> 32:31.440 created during the COVID crisis. 32:31.620 --> 32:37.400 Some of it went into direct cash payments to the public 32:37.400 --> 32:41.460 and came back to haunt us as raging inflation that wiped out 32:42.380 --> 32:43.960 people's savings and stuff. 32:44.200 --> 32:49.780 And so cash isn't something, I think, on this go around 32:49.780 --> 32:52.000 because the Fed has shown its hand. 32:52.820 --> 32:55.820 The only thing they can do is create a bunch of currency 32:55.820 --> 32:59.440 and drop interest rates and hope that the banks also create 32:59.440 --> 33:02.080 a bunch of currency every time there's a crisis. 33:02.400 --> 33:05.540 So they dilute the currency supply, diminishing your 33:05.540 --> 33:09.560 purchasing power of your dollars, which causes things 33:09.560 --> 33:14.360 like gold and silver to rise to compensate for that loss 33:14.360 --> 33:18.220 of purchasing power of the dollar from the dilution 33:18.220 --> 33:21.560 of their response to a crisis. 33:22.340 --> 33:23.880 So get ready. 33:25.060 --> 33:25.260 Yep. 33:27.140 --> 33:27.440 Exactly. 33:27.820 --> 33:32.560 And so my final question here is what is the arguably best 33:32.560 --> 33:35.580 and most famous value investor of all time doing 33:35.580 --> 33:36.860 with his currency? 33:37.080 --> 33:38.360 Is he buying a ton of stock? 33:38.500 --> 33:42.060 Does he see a lot of attractive opportunities out there? 33:42.520 --> 33:42.860 No. 33:43.300 --> 33:46.560 Berkshire Hathaway's cash position has just hit a record 33:46.560 --> 33:49.220 high of around $300 billion. 33:50.500 --> 33:53.600 This is the Berkshire Hathaway Hathaway's cash 33:53.600 --> 33:54.800 position over time. 33:55.000 --> 33:56.120 And look at its spike here. 33:56.480 --> 33:58.900 They've never held this much cash, not even close. 33:59.080 --> 34:00.760 I mean, they've really doubled it from just a couple 34:00.760 --> 34:01.340 years ago. 34:02.460 --> 34:04.620 Warren Buffett basically sitting on the sidelines, right? 34:04.700 --> 34:07.840 If he saw a lot of attractive opportunities in the 34:07.840 --> 34:09.680 stock market, he would be gobbling them up. 34:09.960 --> 34:12.700 But we know he sold a bunch of Apple stock lately, 34:12.920 --> 34:15.320 a bunch of bank stock, and he's sitting in cash. 34:15.800 --> 34:17.060 So what do you make of this, Mike? 34:18.040 --> 34:21.760 Well, this is one of the most informed people that 34:21.760 --> 34:22.500 there is. 34:23.960 --> 34:27.460 And he is getting ready to scoop up some great deals. 34:27.540 --> 34:30.140 That's the reason he's got cash on the sideline. 34:30.140 --> 34:33.480 He knows that everything is going to be falling. 34:33.800 --> 34:39.020 And he's going to be looking for the most likely survivors 34:39.020 --> 34:43.740 of all of this data. 34:44.480 --> 34:47.440 And I do, again, want to encourage people to go back 34:47.440 --> 34:50.480 and watch the portion of my presentation at Limitless 34:50.480 --> 34:53.060 that has all of the overvaluation charts. 34:53.480 --> 34:56.260 It's a very important couple of those with all of this 34:56.260 --> 34:56.960 information. 34:56.960 --> 35:02.130 Warren Buffett is getting ready for the biggest thing 35:02.540 --> 35:04.500 that has happened in his lifetime. 35:04.720 --> 35:05.420 And how old is he? 35:06.100 --> 35:07.960 89 or something like that. 35:08.200 --> 35:09.300 Right, right. 35:10.700 --> 35:12.520 He sees the things. 35:13.560 --> 35:14.740 He has, right. 35:15.280 --> 35:18.940 And he knows that there's going to be some screaming 35:18.940 --> 35:21.260 deals out there that he can pick up. 35:21.820 --> 35:22.480 Exactly. 35:22.860 --> 35:24.380 Once those zombie companies go bust, 35:24.380 --> 35:26.480 he's going to be there to scoop up all the assets 35:26.480 --> 35:28.160 at a massive discount. 35:29.300 --> 35:31.420 The assets or the companies that do survive, 35:31.600 --> 35:34.040 their stock is going to be incredibly depressed. 35:34.640 --> 35:36.860 He'd probably be buying a surviving company 35:36.860 --> 35:39.200 that's well managed and then having that company 35:39.200 --> 35:42.000 scoop up the assets of the companies that went broke. 35:42.880 --> 35:43.220 Exactly. 35:44.200 --> 35:44.580 Amazing. 35:44.880 --> 35:47.060 Well, Mike, you have been having this conversation 35:47.060 --> 35:49.180 with our audience for years now. 35:49.620 --> 35:50.920 And so I wanted to end with a meme. 35:51.800 --> 35:53.860 You haven't listened to a single word I've said, 35:53.860 --> 35:54.380 have you? 35:55.080 --> 35:56.740 What a weird way to start a conversation. 36:00.680 --> 36:01.120 Excellent. 36:01.540 --> 36:04.240 So I want to remind everybody to like and subscribe. 36:04.760 --> 36:05.860 Thank you very much, Alan. 36:06.280 --> 36:08.160 And we'll see everybody in the next video.