Markets happen... The (legal) Chinese work-around... Drug and alcohol markets found a way... Like it or not, here comes $100 billion... I'm not being naive... Observe, assimilate, adapt...
'Life finds a way...'
Jeff Goldblum utters that famous line in the 1993 blockbuster movie Jurassic Park.
In the film, a group of researchers travel to an amusement park on a fictional island, which features real dinosaurs that scientists cloned from ancient dinosaur DNA (which was extracted from fossilized mosquitoes).
To keep the animals from breeding to levels they couldn't control, the fictitious scientists bred only female dinosaurs.
After learning this fact early in the film, Goldblum's character, the skeptical mathematician Ian Malcolm, has the following exchange:
Malcolm: If there is one thing the history of evolution has taught us, it's that life will not be contained... it expands to new territories and crashes through barriers, painfully, maybe even dangerously, but, uh, well, there it is.
Scientist: You're implying that a group composed entirely of female animals will breed?
Malcolm: No, I'm simply saying that life, uh, finds a way.
Later in the movie, the characters discover dinosaur eggs. It turns out, the female animals were able to breed because the scientists blended the dinosaur DNA with the DNA of a frog that can change its sex to find available mates.
As one scientist says, "Malcolm was right... Life found a way."
I (Dan Ferris) like this quote because it overlaps with my own ideas about how markets work.
As I've pointed out before, humans didn't create markets...
Markets are simply what happens when humans decide to interact peacefully with each other rather than violently. We are in markets the way fish are in water.
It's why I've said in the past that markets can – and will – find a way to drop more than you think possible – even with major exchanges using "circuit breakers" to halt trading in the event of a one-day 20% decline in the S&P 500 Index.
Some people and institutions can push markets around now and then, but markets always have the last word... And humans simply have to accept their verdict and adapt.
That's why I say...
Just as life finds a way, so do markets...
Our latest example comes from the Wall Street Journal, with a story called "How a Chinese AI Company Worked Around U.S. Rules to Access Nvidia's Top Chips."
For national security reasons, China hasn't been able to buy Nvidia's (NVDA) most advanced chips since 2022. That, plus other U.S. export restrictions, has reduced Nvidia's share of the Chinese graphics processing unit market from 95% to 0%.
But according to the Journal, Nvidia chips made their way into a cloud-computing data center in Indonesia that is jointly owned by companies in Qatar and Hong Kong. Then, a China-based software startup called INF Tech became a customer of the data center – and voila, it had access to Nvidia's chips. Markets found a way, despite the three-year-old prohibition of China buying Nvidia chips.
According to lawyers the Journal spoke with, the arrangement doesn't violate the U.S.'s export restrictions. INF says it will use the data center for finance and health AI applications.
Now, the situation raises concerns about China's military becoming larger and more advanced than America's. It wouldn't be at all out of character for the Chinese government to tell INF that it will have to use its data-center deal to help the Chinese government develop weapons or other military technology. But the point remains, markets found a way.
Another obvious example is illegal drugs...
Lots of folks in the U.S. use them, despite laws against it. That won't change. The government can't stop folks from using drugs simply by making them illegal.
Most folks don't understand that the choice isn't whether people in the U.S. use drugs or not. It's whether we have a society in which people use, and yes, abuse drugs, or we have a society where people use and abuse drugs sold by violent criminals. That creates more murder, extortion, kidnapping, and corruption... along with more people in jail for violating laws against using and possessing drugs.
We should have learned that lesson during alcohol prohibition in the 1920s. People didn't stop drinking just because the U.S. government outlawed it. Far from it. The alcohol industry was simply taken over by violent criminals. So, in addition to people drinking, there was a wave of increased violence and corruption (which I don't think we've shaken off).
Drug and alcohol bans have both been obvious and miserable failures because prohibition creates black markets.
The flip side of prohibition...
Sometimes, governments help products by offering subsidies, tax breaks, loan guarantees, or direct investments.
An easy example over the past couple of years is defense stocks. The Trump administration has been focused on strengthening the U.S. military. That paved the way for a market-beating profit for The Ferris Report subscribers. The model portfolio is up about 90% on defense stocks since December 2022, compared with a 68% rise in the S&P 500.
And the government isn't done picking winners.
The One Big Beautiful Bill Act that became law on July 4 allocates $100 billion in loans and other investments to companies producing critical minerals and other goods and services deemed necessary for national security and self-sufficiency.
I bet investor groups around the world were planning on how they'd get a piece of that pie even before the bill passed. But I don't believe it's too late for individual investors to do the same.
I'm generally not a fan of new government spending in any form...
With every new administration, promises are made but not kept... the spending and debts keep rising... and the bombs keep dropping. But I suspect there's a real opportunity here for enterprising investors. I say that for two reasons.
First, Steve Feinberg is the deputy secretary of war, and the Pentagon will be making many of these investments. Feinberg co-founded Cerberus Capital Management, one of the most successful private-equity firms in history.
His presence makes it less likely that the government's investment capital will be squandered like in the past. For example, you might remember Solyndra, the solar company that collapsed after the Department of Energy guaranteed it a $535 million loan in 2009.
Second, the $100 billion won't be invested by bureaucrats. It will be allocated to investment managers whose responsibility will be to make loans and investments on behalf of the government and their clients. They'll raise money from investors, and the government will match those investments.
These managers are skilled at investing to make returns for themselves and their investors, unlike federal bureaucrats. And they have incentives to earn a return, rather than allocate money to pet projects or friends of the government.
Of course, there are no guarantees. And let's not forget this is taxpayer money that I wish had never been taken from hard-working Americans in the first place. But it seems like the government has set this up in a way that makes it likely to succeed.
I'm not trying to be naive...
I expect we'll see plenty of the usual government pressures and dynamics. But overall, I suspect much of the $100 billion will benefit investors who know how to position themselves.
We've seen how government partnerships can benefit investors. Rare earth miner MP Materials (MP) soared more than 220% in a little over three months following its July 10 announcement of a multibillion-dollar deal with the government. Copper miner Trilogy Metals (TMQ) was up 400% in a week following a similar announcement last month.
Of course, the opportunity for explosive gains passed once the announcements were made.
Investors must observe, assimilate, and adapt in changing market environments...
That's true even if you focus your efforts solely on buying and holding great businesses for the long term. This is a very expensive moment for big-cap stocks, including some of the greatest businesses.
Seven of the 10 largest components of the S&P 500 are trading for more than 30 times earnings. Three are trading for more than 40 times earnings, including Nvidia, trading at 53 times earnings, and Broadcom (AVGO), trading for around 86 times earnings today.
Big, safe "blue chip" stocks got super expensive during the Nifty-Fifty craze of the early 1970s, and some of them lost 90% of their value in the 1973 to 1974 bear market. Likewise, the S&P 500 fell 49% in the dot-com bust and 56% during the financial crisis.
However, if you had noticed that Berkshire Hathaway (BRK-B), for example, was being completely overlooked near the peak of the dot-com bubble, you could have nearly doubled your money over the next two years.
I've learned to understand that the market's current lofty valuation isn't the dealbreaker I once feared. But it is a hint that investors should adapt to the changing environment by looking beyond the names everybody owns in the S&P 500 funds in their 401(k) accounts.
One way to do that is to find stocks that are more likely to see some of the government's $100 billion for lending and investing in the U.S. For example, the government will likely focus some of its $100 billion on one of the greatest advancements of our lifetimes – the development of AI infrastructure and the services it depends on.
You can also learn more about which companies could be next in line on Tuesday, November 18. Resource-investing legend Rick Rule is going on camera with a special guest to reveal the shortlist of "national priority" stocks Washington insiders are rushing to buy. You can learn more here.
A value-oriented investor might find it difficult to operate in an environment where the 10-year inflation-adjusted price-to-earnings ratio of the S&P 500 has hit 40.
But as the late, great Peter Cundill used to say, there's always something to do. The market forced me to confront my bearishness and reconsider what I had overlooked. Now I see opportunities where I didn't see them before.
Life and markets always find a way, and investors can learn to do the same.
New 52-week highs (as of 11/13/25): Altius Minerals (ALS.TO), Alpha Architect 1-3 Month Box Fund (BOXX), Coca-Cola Consolidated (COKE), Cencora (COR), Cisco Systems (CSCO), Gilead Sciences (GILD), IQVIA (IQV), SandRidge Energy (SD), and Travelers (TRV).
In today's mailbag, more feedback on the idea of 50-year mortgages... and thoughts on the "last penny" and Warren Buffett's latest letter to investors, which Corey wrote about yesterday... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.
"As for 50-year mortgages, I think they could be advantageous for young homebuyers if they are managed very carefully with a solid plan and discipline. Young people could buy their first homes with an affordable payment. With a 5- to 10-year plan, they could realize enough appreciation in the home to offset the decrease in equity. When interest rates are lower they could refinance or sell and upgrade. During that time, they could increase their income to afford a shorter-term mortgage and then do it again some years later. It seems like a worthy plan to me. Maybe some readers could influence their 20-year-olds to take the plunge to home ownership and enforce the discipline to make it work.
"Unfortunately, many will enter these loans blindly and end up upside down. It is a matter of options, choice and discipline for it to work.
"As for the penny, I wonder when stock and option prices will be quoted in 5 cent intervals. Many options already are." – Subscriber Tim L.
"Have we reached the point where the more valuable education is to learn how to build your own home versus going to college and working a job in hopes of buying a home?" – Subscriber Alex P.
"I read Warren Buffett's last Thanksgiving letter and to me aside from his massive fortune-making, he stressed his family & friends as his happiness. The other thing he also highlighted was America. This is the only country in the world that guarantees you the right to become Warren himself. That might sound like we all will be him, [but we have] just the chance of it. Nowhere on Earth can you find that. Things seem bleak with the U.S. swimming in $38 trillion of debt and with the death of the penny and likely the nickel not far behind it I'd say real cash is probably doomed too as everyone reaches for their phones or a card to buy anything now. I'd be wary of losing cash though. Digital currencies are here and sure they are easier to use, but with that comes the ability to be controlled. The penny left us with little fanfare, and it seems prudent to cut that cost but be wary for what comes next." – Subscriber James S.
"Recent feedback talks about the cost to make pennies and nickels (more than face value), and the Federal Reserve and their foolish solution... [and] from our government too.
"If memory serves me right, my first purchase of silver eagles were around $12.50 each in the early 2000s. Now, in 2025, I have sold some for over $50.00 each. Gold and silver protects your purchasing power... My 13 or so gold stocks are up over 80%. Before the correction, they were up over 100%. I have a very strong hunch that they will go higher, due to the actions of our Fed and politicians." – Subscriber Mark M.
Good investing,
Dan Ferris
Medford, Oregon
November 14, 2025
