Fun While It Lasts
Paul Tudor Jones is on board with our idea... We're not there yet, though... The AI boom isn't in 'dot-com bubble' territory... The White House takes another stake... It looks like the start of a sovereign wealth fund...
A market 'blow off' is coming...
That's what famed investor Paul Tudor Jones said on CNBC yesterday morning. Jones compared today's market with the setup of the dot-com bubble and other past euphoric peaks...
My guess is that I think all the ingredients are in place for some kind of a blow off... History rhymes a lot, so I would think some version of it is going to happen again. If anything, now is so much more potentially explosive than 1999.
However, Jones – who, among other things, called the 1987 market crash – said the difference between now and the late 1990s is that the Federal Reserve today has just begun a new easing cycle by lowering interest rates. (Before the dot-com bubble popped, the Fed was raising rates in 1999 and early 2000 to try to slow down the economy and inflation.)
Jones' view should sound familiar...
Two weeks ago, we wrote that the fuse for the next stock market "Melt Up" had been lit.
We began that Digest by noting that all the major U.S. stock indexes (by which we mean the S&P 500 Index, Nasdaq Composite Index, Dow Jones Industrial Average, and small-cap Russell 2000 Index) were hitting all-time highs... and fuel for higher prices appeared on the way...
Meanwhile, thanks to the Federal Reserve's recent rate cut, interest rates are coming down... with the promise of more to come. The cost of dollars (in the short term, at least) is getting cheaper.
So it sure seems like a good time to consider whether the next market "Melt Up" is around the corner... when stocks will push higher to previously unforeseen heights and a blow-off top.
That's the idea Stansberry Research senior analyst Brett Eversole explored in the [September] issue of True Wealth...
Now, as Brett explained, a Melt Up typically happens after some crisis inevitably leads to a government easy-money policy response that triggers an upswing in stocks.
But "we're in the unique setup where we might not need" the crisis, Brett wrote to True Wealth subscribers last month.
Brett says a big reason why that's the case is interest rates... and the market's expectation for them to keep heading lower through the rest of the year – while U.S. stocks are already at all-time highs.
If money gets too cheap, "it'll spark a fire under the real economy," Brett says. We could see the largely frozen housing market thaw... And the AI boom could turn into a speculative frenzy where "all rationality will go out the window," kind of like it did three decades ago during the dot-com bubble.
It will be fun – while it lasts. And these periods can go on longer than you might think possible. But it will be important to manage emotions and not get caught up in the heightened greed, because a "Melt Down" inevitably follows the good times.
We're not there yet, though...
As we discussed yesterday, some rationality about AI has already been tossed out Mr. Market's front window.
Jones told CNBC that the circular deals, or vendor financing, happening in AI are making him "nervous."
And we're seeing signs of froth in market behavior. "Meme-stock mania" returned to the scene this summer. So far, it has been a "lite version" of what we saw in early 2021 – which was a big peak for a lot of popular tech stocks of the time.
But there are still plenty of skeptics... with a record $7 trillion in cash sitting on the sidelines in money-market accounts right now. Lower rates may bring some of this money into riskier assets, as investors seek bigger returns and to keep up with inflated asset prices.
So I don't think we're near a peak of wild euphoric expectations like what we saw in 1999 and 2000. (Maybe today is more like 1997.)
Stansberry Research senior analyst Alan Gula also says we're not at a dot-com-like peak in stocks. He recently wrote an excellent article for our free Stock Market Trends website detailing five reasons the AI boom isn't in "dot-com bubble" territory – yet.
I urge you to check it out. Among other things, Alan explains why the S&P 500's valuation today – even among the largest stocks like the "Magnificent Seven" – hasn't reached dot-com-bubble status yet.
You can read the entire article here, but I want to share Alan's conclusion here...
Don't get me wrong... Things are getting crazy.
The stock market has gotten extremely expensive. Just because it's not at a record valuation doesn't mean we shouldn't be worried. At the very least, we should expect relatively low, long-term returns from here.
There are also signs of excessive speculation everywhere, including soaring options volumes, ballooning leveraged exchange-traded fund assets, meme stock (and coin) pumping, pre-revenue companies attaining multibillion-dollar valuations, and quantum-computing stocks going nuts.
By all means, be disciplined and follow your investing strategy. Make sure your portfolio is diversified. Hold some defensive stocks. Sell stocks that have unrealistic expectations built into their valuations. Hold some cash.
But whatever you do, don't claim that this market is crazier than the peak of the dot-com bubble.
In short, the next Melt Up may just be getting started. However, that doesn't mean we can't – or won't – see pullbacks along the way. Just keep your head and your portfolio diversified. We continue to like high-quality stocks, hard assets like gold, and bitcoin.
The White House's latest addition to its portfolio...
We've been writing in these pages about the Trump administration's growing number of investments in private businesses.
So far, the government has established equity positions in three different companies – citing national security risks for most of them. Those companies are: Intel (INTC), MP Materials (MP), and Lithium Americas (LAC).
Today, we have another one to report...
Yesterday after market close, Canadian metal and minerals miner Trilogy Metals (TMQ) announced two pieces of good news that sent the stock soaring.
First, the White House has approved permits for Trilogy's Ambler Road project in Alaska, which will build a 211-mile road from a highway to the company's Upper Kobuk mining project.
As Trilogy explained in a press release, this region is "home to some of the world's richest known copper-dominant polymetallic deposits." It's not just copper, though. Trilogy's site will also produce zinc, lead, gold, and silver (though copper is the crown jewel).
Trilogy also announced that the U.S. government, specifically the "Department of War," will be taking a 10% stake in the company.
That stake comes in two parts – a $17.8 million investment directly in Trilogy and a separate $17.8 million to purchase another miner's right to invest in Trilogy.
As we've written in previous Digests (like here and here), copper is a critical resource. It's used in everything from electronics to houses and even our power grid. And AI is using up even more copper.
In their September issue, the Commodity Supercycles team explained that "copper is needed now more than ever." From Commodity Supercycles analyst Bill McGilton...
A conventional data center might use between 5,000 tons and 15,000 tons of copper. The most advanced hyperscale AI data centers can use tens of thousands of tons of copper per facility.
AI data centers could boost copper demand by as much as 36% over 2024 levels within the next few years. In short, copper is incredibly important to both the AI trend and our domestic manufacturing.
That's why the government approved Trilogy's new road project – to boost U.S. copper supplies and production. And it's continuing its trend of taking equity stakes in companies that it deems vital for national security.
It's hard to beat the government's performance so far...
With Trilogy shares up roughly 200% since the government invested, Uncle Sam is already up big on its new position. That's a pattern that's gaining legs...
Intel, MP Materials, and Lithium Americas are also up big since the White House announced its stakes... And the government is already sitting on gains from its entry prices. Just take a look...
Where is this all going?...
Here's one thought...
In February, President Donald Trump signed an executive order to establish a "sovereign wealth fund" – essentially a government-owned and -operated investment portfolio, like what the governments of Norway and Saudi Arabia have.
In the executive order, the White House said a sovereign wealth fund would "promote fiscal sustainability, lessen the burden of taxes on American families and small businesses, establish economic security for future generations, and promote United States economic and strategic leadership internationally."
There haven't been any major updates on establishing this fund, even though the executive order called for Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick to provide a plan within 90 days.
But the equity stakes we mentioned above may be the beginning of a sovereign wealth fund coming together. Typically, sovereign wealth funds are tied to oil or natural resources, and that's what we're seeing with these deals, along with exposure to the semiconductor supply chain.
So far, the government's portfolio is off to a great start. So we expect to see more U.S. government investments in private businesses that have ties to national security. That should help previously overlooked stocks pop higher.
In short, it's just more juice for the next Melt Up.
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In today's mailbag, feedback on yesterday's Digest about the "circular" investments between AI-related businesses... and a note about the late Marty Zweig's 17 investing rules, which we shared in last Thursday's edition... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.
"So let's make sure I got this straight: Someone's been given a chance to acquire 10% of AMD's shares for a penny a share, and AMD's stock is up 25% – not down 25% – on the news?" – Subscriber Scott G.
"Thanks for Zweig's Investing Rules. I have duly copied [them] into a little poster which I have printed off and hung above my desk, forthwith to keep them in mind as I invest (or, perhaps more importantly, do not invest)." – Stansberry Alliance member Jacqueline G.
Corey McLaughlin comment: Love to hear it, Jacqueline. I look at them often. Usually, I find a helpful reminder in the list when it seems the market isn't "making sense."
All the best,
Corey McLaughlin and Nick Koziol
Baltimore, Maryland
October 7, 2025