In this week's Stansberry Investor Hour, Dan welcomes Dave Collum back to the show. He's the Betty R. Miller Professor of Chemistry at Cornell University. He's outspoken about many topics and issues ranging from finance to politics and everything in between. And he brings this same no-holds-barred attitude to today's podcast.

Dave kicks things off by discussing the "everything bubble," or as he prefers to call it, the "complacency bubble." According to him, previous market bubbles had logic behind their euphoria, but he says the current one does not follow logic because the companies' earnings are not as good as they appear. He then says that based on a report he received, passive investing could be reversing. The problem with this is that folks could build a passive portfolio and sell individual stocks if a company gave reason for fear. With index funds, investors are holding all the stocks and will sell the stocks they might like while trying to remove a stock they dislike. And Dave warns that the wave of trillion-dollar IPOs could be the breaking point due to passive investors not being able to support them...

One of the arguments that was made for why the [dot-com bubble] eventually broke was that there was a supply of shares coming out of lockout. And you just couldn't absorb them. And that began the bust. We've now got trillion-dollar IPOs coming. And I believe that the market is being jerry-rigged up the kazoo to get those out before something bad happens. And then the question is, what's going to happen when all of a sudden there's a multitrillion-dollar series of IPOs? We're not talking billions, we're talking trillions, in which the passive flows will not be able to buy them... Now the passive flows are going to go to SpaceX and whatever else they manage to shove in the index. Which means the other 498 stocks in the index will get less of the passive flows.

Next, Dave explains how the market is overvalued and says that while many folks won't mind a correction, they should be concerned. As an example, he says that the average Boomer-generation investor has $300,000 in their retirement savings account. And if the market collapses, that will halve their income flow. Dave shifts the focus to interest rates. Folks aren't quite certain what to make of Federal Reserve Chair Kevin Warsh and whether he'll raise or lower rates. Dave believes that he could be a "Paul Volcker 2.0" who makes America "take its medicine" and start things over despite the short-term pain. But regardless of how things are handled, if the market bubble bursts, it will cause a "multidecade secular bear market"...

Bring up an inflation-adjusted S&P [index]. They often go back to 1870... and go to the key market tops and draw a line across and ask how far across the x-axis does that line go before the market leaves that price for hopefully the last time, and the answer is 40 to 75 years. And so the average investor just can't fathom this. They're not ready for this... So everything will hurt. There's no way there's going to be very, very few people who come out of it.

Finally, Dave shares what kinds of stocks he owns. He says that he bought gold after selling off platinum. While he initially had a rocky period with the precious metal, it has served him well over the past few years. Energy has also been doing decently in recent times. Dave also says that he has given up on sentiment indicators because he was dissatisfied with them. But he says that engaging in reading outside of your comfort zone and the markets is a great way to get insight into multiple areas and learn about developments in the world...

Read outside your expertise and read outside the markets. Because from there, you learn about outsiders often looking in, and see a very different world. Charlie Munger's favorite book was Influence, which is a neurotic book. And I've read a ton of neuroscience and I've read a ton of books on authoritarianism, which I believe is heading our way in a serious way... You've got to understand these things, to understand the world, and... [learn] about the outside world. Then you'll understand that the markets are not to be trusted, either.

Click on the image below to watch the video interview with Dave right now. For the audio version, click "Listen" above.

(Additional past episodes are located here.)

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This Week's Guest

Dave Collum is the Betty R. Miller Professor of Chemistry at Cornell University. He has also served as director of undergraduate studies, director of graduate studies, associate chairman, and chairman while running a research program in organic chemistry for 40 years. In recent years, he has become interested in the interface where politics and markets meet. He compiles an annual Year in Review, does several dozen podcasts per year, and occasionally stirs up trouble on more mainstream media sources.

He received a Bachelor of Science from Cornell University in 1977 and an MA, MS, and PhD in chemistry from Columbia University in 1980.

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Dan Ferris:                 Let's talk about everything everywhere all the time with a guest whose mind goes everywhere, not just to the market, but all around the world to all kinds of topics. His name is Dave Collum. He's a tenured Cornell chemistry professor. Brilliant guy. Lots to say about the market and lots to say about all kinds of things. That's why we have him on the show. Before we talk to him, remember, though, the Stansberry conference is coming up September 28 through 30 in Las Vegas. We do it every year. I'll be there again this year. I'm there every year. Plus all kinds of other folks. We've got Henry Winkler speaking this year. Yeah, that guy. It's going to be great. September 28 through 30 in Las Vegas. And you can find out more at stansberryconferencevegas.com. Stansberryconferencevegas.com.

All right, let's do it. Let's talk with our guest Dave Collum. Let's do it right now.

                                    Dave, welcome to the show. Been a while.

Dave Collum:             It has been a while. Must have been about a year, maybe.

Dan Ferris:                 A year or two, yeah.

Dave Collum:             Yeah. And then, we go back about 10 years besides that. Yeah.  And of course, the markets are totally sane and we have nothing to talk about.

Dan Ferris:                 No, it's really a boring, uneventful sort of a time that we live in, but it's nice to –

Dave Collum:             Zero risk. Just steady as she goes.

Dan Ferris:                 Yeah, so here we are, now that you mention it. And by all the usual sort of metrics it looks like March 2000 or something with – and with the same sort of frenzy near the top with the market just kind of up and up and up and then ballistic since about March 30 here. And I look at it and I – we lived through that. And at the time – I guess let me just boil it down. This to me feels – it doesn't feel as crazy as that did. And I don't know why. But it feels crazy to you, doesn't it? It feels extra crazy, doesn't it?

Dave Collum:             Actually, it feels crazier in the sense that every bubble – [Jeremy] Grantham called this the biggest, most epic of his career and I think he's correct. Every bubble has euphoria. But it's a euphoria where people are true believers. So, when the dot-com bubble is going, it really felt like we had totally transformed the world into the digital age and it really felt special. And if you look at the valuations and you. – I once calculated how long it would take eBay at a 20% earnings growth to become fair valued and it was about 15 years, so I knew there was trouble. And so, I actually ducked that entire decline after making sevenfold on WorldCom and sevenfold on Dell. So, I actually was a tech bull. Very few people believe that, probably, but I was.

                                    But the euphoria was logical. 1929 was logical. And the Nikkei in '89 was logical to the extent that the 14 biggest companies in the world were in the Nikkei, so you have to own the Nikkei, right?

Dan Ferris:                 Sure.

Dave Collum:             This one, I call it the – Jesse Felder, I think, called it the "everything bubble." It might be someone before him, but he's the one who I seem to want to give credit to. I call it a "complacency bubble" because I don't think there's anyone out there who doesn't think it's a bubble. I don't think there's anyone. And –

Dan Ferris:                 I know some folks. I know some folks.

Dave Collum:             They really think it's not bubble valuations? Or they think that they're going to be saved?

Dan Ferris:                 No, Joel Litman from Altimetry told me recently, he said, "We do real accounting work, so we don't trust [generally accepted accounting principles ("GAAP")] earnings. And if you do real accounting work, the earnings are actually stronger than they appear. They're not weaker. And they're higher."

Dave Collum:             I think he's totally full of baloney on that. I'm going to come right out the chute and say I think he's totally – I think they're cooking the books in a higher order. I think they're doing roundtripping. I think they're doing all sorts of vendor financing and they're all calling it revenues. I think it's global crossing 2.0. So, I don't know where the hell – he can say he does accounting on it. There's something so wrong with that. That's like the CEO of Pfizer saying the vaccine's safe and effective, if you ask me.

Dan Ferris:                 Yeah, I don't do the work that he does, but for – I don't know, for basically my whole career, 30-plus years here, the assumption has been that the S&P 500 earnings are anywhere. It depends on who you talk to at what time, but 5%, 10% worse than the headline number because of various accounting tricks. So, I don't know when the accounting went the other direction, but I'm just saying there's a lot of work.

Dave Collum:             Oh, I think it could even be worse. It could be even worse because the earnings for the megatechs are highly, highly opaque because of the shenanigans. So, I think when the sh** hits the fan, I think we're going to discover Enron levels of crazy. And –

Dan Ferris:                 Well, we know they use those – they're using those entities, the same entities that Enron used. So, not – that's a fact now. We already know that. So, we assume – and I assume the same thing that you are, that you use those entities to do things that you could get away with if you didn't use – right?

Dave Collum:             But on top of that, we have a real estate bubble. We have a general-equity bubble. We have a private-credit bubble. We have a private-equity bubble. I don't think there's a single investor in private equity who's not trying to figure out how to get out of it. And I keep saying that. And you're about to tell me you know a guy who's putting more money into private equity. You're nuts. They're all looking for the door and they're all gated and they can't get out and they know it. And therefore – I think that started when Harvard Management Corp. said, "We're going to thin down our private-equity exposure." And everyone knows those are – those guys are smart. And I think all of a sudden people looked at them and said, "Holy cow, we've got to get out, too." And then, "Well, wait a minute. We can only get out 5% a year? That's 20 years of exit ramp." So, you kind of deserve what you get when you buy something that lets you out in 20 years. They're like [special purpose acquisition companies ("SPACs")]. They're like SPACs.

Dan Ferris:                 Yeah, the – Cliff Asness calls them a volatility laundering scheme. You mark them however you want because they're private, so there's no volatility. The price stays the same.

Dave Collum:             Private means fraud. Apollo has over a trillion dollars and it's something like 83% private investments. So, I – it just is – and people say, "Well, the banks aren't exposing." These guys, what are they using? S&H green stamps? No, they're using the banking system. So...

Dan Ferris:                 Yeah. Well, yeah, we know there's a lot of leverage in a lot of mysterious places now because more companies than ever are staying private. More – put it – more is happening private than ever in a very, very big way. It's really just that crudely simple.

Dave Collum:             And the public are passive flows. So, the public ownership is coming in without any analysis whatsoever. I one time cornered John Bogle and said, "John, is it not true that by virtue of indexing that you've taken the big fund managers out of the game?" And these are the guys who'd walk into the CEO's office and say, "Get your sh** together or else we're pulling our shares. We're getting out." And the CEOs would have to – so, [there] was adult supervision. There is no longer adult supervision. There's no short sellers. There's no Jim Chanoses out there saying, "Enron's crooked" because they've all been destroyed.

Dan Ferris:                 Yeah. Well, late in his life, he also – he publicly said more than once that passive is great, but if it does get too big a part of the market, which a lot of folks think it is now, or very – getting there very rapidly, it'll break – it'll basically break the market. And what you're talking about is there's no price discovery. People are not doing analysis every two weeks when they put their 401(k) money to work. They're just buying $10 or $12 – so, my colleague Bryan Beach likes to say, "They're just buying $10 or $12 worth of Apple every single time without knowing anything about what Apple even does."

Dave Collum:             Or worse, they're buying the S&P 500. And as a consequence, when those slows reverse, the huge debate is what would reverse them. So, I read a draft of Mike Green's white paper he sent me. And I don't know when it's going to come out, but I begged him to put in a paragraph for the Golden Retrievers to list the things that could cause passive to reverse. I think he thinks passive may be beginning to reverse. I think he's now sort of ringing a very quiet bell with passive may be reversing. But when passive reverses, the problem is that in the olden days, let's say you had a portfolio, and you'd say, "I'm getting pretty sketchy about this market, so I'm going to sell my Nvidia, but I'm going to hang on to Phillip Morris." Now with one keystroke, you sell the entire wad.

Dan Ferris:                 Right. Yeah, Mike Green is an interesting fellow. You probably saw the bit that he and Hari Krishnan and a third fellow whose name I can never remember –

Dave Collum:             Cem. Cem Karsan.

Dan Ferris:                 Right. So, talking about the likelihood of the stock market going to zero because their volatility gets so bad. And I was like – I was waiting for it as a punchline. I was waiting for them to say, "But not really." And he was doing it with a straight face. He said, "Yeah, the volatility can get this bad," sort of like there's flash crashes but for the whole market.

Dave Collum:             Well, it could go bidless is the problem. It can get to the point where there simply is not a bid underneath it.

Dan Ferris:                 Which is basically zero. That's a market of zero.

Dave Collum:             Yeah. Right. There will be dip buyers. They do appear.

Dan Ferris:                 Right. Yeah. Yeah, I didn't have – he's talking about the end of the world in five years, if you've seen him on podcasts and read what he's written about this – the end of the world. There are a lot of people who I expect to talk about the end of the world. He was not one of them.

Dave Collum:             Right. Well, it also it's a bad bet because the world only ends once, so you're really betting on an inside straight if you bet on the end of the world.

Dan Ferris:                 Yeah, you can't cash in your puts after it. You don't get the benefit, even if you call it right.

Dave Collum:             But if I had given you a crystal ball and said, "Look, we're going to be bombing Iran and they're going to close the Strait of Hormuz," you have advanced notice of this, you would have gone broke betting in a totally rational way what to do with the markets. You would have gone 3X short. I wouldn't have because I actually don't believe in shorting because I think it's just a sucker bet for amateurs and it's for suckers and pros, and I think the Venn diagram overlap of those two is pretty high now. So, I shorted twice and actually made money both times using Prudent Bear Fund years ago, but I wouldn't do it again.

                                    At one point, I tried to short the bond market. I told Mark Gilbert at Bloomberg I was going to do it and I told a guy from Morgan Stanley. I never can remember his name. And he said, "Be careful." And they were dead right. These guys could see that bond rates were going to go down and the price was going to go up from there. And I just didn't believe it because they seemed so ridiculously low. And I got out. It was also a RYJUX fund, which had a terrible correlation with the actual price of the bonds.

Dan Ferris:                 Yeah, I think I actually know the fund you're talking about. Yeah.

Dave Collum:             R-Y-J-U-X.

Dan Ferris:                 Yep. So, yeah, shorting bonds. The past five years it hasn't been a terrible idea.

Dave Collum:             No. No. And did you happen to catch the Rick Santelli rant from 2023 –

Dan Ferris:                 No.

Dave Collum:             – where he was CNBC and he had the usual panel of boobs and he was saying, "I can imagine in a half a dozen years interest rates of 13% to 14%." And to my shock, they actually were seriously listening to him and asking serious questions. And he made this interesting comment, which gets me to something that's been bugging the crap out of me. He said, "And the Japanese could blow the whole system up." And then, they seem as though they did when interest rates went from essentially 0.2 to four. That's a 20-fold increase in the cost of carry. It's not just 3.8%. That's a 20-fold increase, which means if you're way out over your skis in leverage, you just got a 20-fold increase in the cost of that leverage. And the question I ask you is why has the Japanese carry trade not blown up the world? Because it has to be big. It has to be.

Dan Ferris:                 Well, right. And I can only answer with a question. At what point does it blow – if not now, then when? So, I have the same question.

Dave Collum:             Well, and the answers I've gotten say the yen has been weak, which has kept it from blowing up the world. And I'm going, "OK, that's – that may be a sort of a bumper sticker answer. It may be a deeply insightful answer." I just don't know.

Dan Ferris:                 Yeah, you and me both.

Dave Collum:             Yeah.

Dan Ferris:                 Why hasn't the world blown up? We could ask that several different ways. The Iran war is not a terrible one. I think triple-digit oil is – I think – I feel like I understand that one better because I think we tolerate just triple digits, $105 or whatever it was, better than we tolerate $130 or $150 a barrel. And I tell you, I think –

Dave Collum:             Well, we even tolerate that. We've tolerated that. So...

Dan Ferris:                 Yeah, for a minute. For a minute. But I think that's coming back actually. I think that no one realizes exactly there's real supply destruction, like two of Qatar's 14 [liquefied natural gas] trains are toast, three to five years and billions of dollars to rebuild them. One estimate I saw was just around the number of 10,000 oil wells off line in the Middle East. People don't realize the geology and the chemistry – you know a little bit about that, don't you, Dave?

Dave Collum:             I'm told. I used to –

Dan Ferris:                 Yeah. Yeah. So, that doesn't stop. The machines stopped turning, but the geology and the chemistry don't stop, so the wells get water flows, and they have those sort of layered reservoirs over there in the Middle East that they fill full of water and gas. You take the pressure away and it all sort of migrates into a place where you can't get at it anymore. The rock compresses and traps the stuff, the paraffins and asphaltenes and stuff sort of – it's like you stop –

Dave Collum:             Congeal. They congeal.

Dan Ferris:                 Yeah. They congeal. It's like you stop mixing the salad dressing in your blender and it all starts to separate and –

Dave Collum:             Well, it's like an aluminum plant. There's an aluminum plant in – I think it was aluminum in Australia. Australia went to totally green technology while producing more coal than any country in the world, but not using any of their coal because they were green. And their grid became unstable. And I think it was an aluminum plant that went black. And you've got an entire plant that goes from being molten aluminum to being solid aluminum. And that's sort of what the oil wells, I'm told, are doing. Now, Doomberg said something interesting. Where are we going to see this? Where are going to see the pain? He said that China had way more reserves than they told us. They lied. I'm shocked. But he said that there's no flow into China. Now, I don't know where he gets this, but he's pretty connected, so I'm going to just take him at face value.

                                    So, he said that there's no flow in China. Someone else pointed out that because there's no oil being pumped in a lot of places, the natural gas reserves, which are – which you build in the summer and then you consume in the winter are not being built. And so, this winter could be just catastrophic because the reserves, it'll be like Lake Mead. It'll be a serious deficiency problem. When we actually see the sh** hit the fan is an interesting question because it always takes longer than you think it ought to always. When COVID-19 showed up, it was patently obvious to me, I go, "Holy sh**. Everything's going to shut down." And the market stayed up and I'm going "Why are the markets staying up?" And the answer is they just – markets are not forward-looking. Markets are dumber than bricks at this point. They don't – if markets were so smart, why didn't they see the dot com bust coming? Why didn't they see the [global financial crisis ("GFC")] coming? Why didn't they see the Nikkei crash coming? Markets are not smart. Especially at turns.

Dan Ferris:                 Right, especially when you get to this level.

Dave Collum:             The peak. The peak.

Dan Ferris:                 Right. The frenzied level of crazy stuff like zero [days to expiration ("DTE")] options just sort of influencing pricing.

Dave Collum:             But do you also remember in the dot-com bubble one of the arguments that was made for why it eventually broke was that there was a supply of shares coming out of lockout, and they simply just couldn't absorb them. You just couldn't absorb them. And that began the bust. We've now got trillion-plus dollar IPOs coming. And I believe that the market is being jerry-rigged up the kazoo to get those out before something bad happens. And then, the question is what's going to happen when all of a sudden there's a multitrillion-dollar series of IPOs. We're not talking billions. We're talking trillions. And which the passive flows will not be able to buy them. The passive flows are not going to –

Dan Ferris:                 Well, but they're rigging it so that they can get it in the index, though.

Dave Collum:             No, no, but – so, here's what happens. You get it in the index. Now the passive flows are going to go to SpaceX and whatever else they manage to shove in the index, which means the other 498 stocks the index will get less of the passive flows.

Dan Ferris:                 Well, sure, but it's – yeah.

Dave Collum:             Well, therefore, they're going to get hurt because there's a finite amount of passive flows. SpaceX is all of a sudden going to become this instantaneous overnight glutton. Now, it's possible that SpaceX's floats going to be so small that it won't absorb much if it's a float-weighted allocation, which I'm still groping with to try to understand.

Dan Ferris:                 Which it is. Yeah. Yep, the do adjust for –

Dave Collum:             So, SpaceX may not have much float when it first hits the index.

Dan Ferris:                 Yeah, they're saying $75 billion, I thought it was.

Dave Collum:             But it also makes the index go nuts if the float's low, so that people bidding for SpaceX will be running into a supply-demand curve which is very much in favor of higher prices.

Dan Ferris:                 Right. It's like a closely held stock at that point. Right?

Dave Collum:             Right. Right.

Dan Ferris:                 I mean, it is closely held. So, it's – but it's $75 billion out there, but still it's – there's another trillion, or $1.6 trillion or $1.7 trillion or whatever. Yeah. All right. I think we see eye to eye on that. It's –

Dave Collum:             But the banks are going to want to get rid of their share. The banks and the angel investors or whatever you call it. Do you call it an angel investor when you're invested in a $1.8 trillion IPO? Boy, that's a – it needs a new name.

Dan Ferris:                 I think the angels, they were the earlier one. The folks – the ones with the really big need to get out or the later ones.

Dave Collum:             Right. The guys who got allocated shares pre-IPO.

Dan Ferris:                 Yeah. Yeah, so we assume they'll sell as soon as they can within whatever it is, 180 days or something.

Dave Collum:             Yeah, something. And then there'll be a big whoosh potentially because there's others. There's SpaceX – I keep forgetting. There's a couple more coming. What else am I forgetting?

Dan Ferris:                 Anthropic and OpenAI.

Dave Collum:             Right, right, right, right. Speaking of –

Dan Ferris:                 And that's $900 billion or whatever, a trillion also. So...

Dave Collum:             Right. With no profits in sight.

Dan Ferris:                 And same dynamics.

Dave Collum:             With no profits in sight.

Dan Ferris:                 Right. Same dynamics, probably same float dynamics and all the rest of it.

Dave Collum:             So, we're talking almost $4 trillion of market cap hitting the market in, what, I don't know if it's 180 or six months. I don't remember. This is way, way above my pay grade. But at some point, there's going to be a bunch of people who want to sell their shares of bloated $4 trillion IPOs.

Dan Ferris:                 Yeah, so say it happens now-ish to the end of the year, then you're talking mid-'27, look the hell out because whoever wants to sell will be able to. And we assume that –

Dave Collum:             And then, of course, smart guys will see this coming and they'll want to get out of the markets in general. I noticed Buffett just cleaned out the last dregs from his – it's not the last dregs but a bunch of dregs from his portfolio. He's now over $400 billion.

Dan Ferris:                 I saw you posted that sort of Berkshire blowing out the portfolio tweet.

Dave Collum:             And it wasn't a lot of money. It was about 2% of their equities. But put it this way: They didn't buy more of those.

Dan Ferris:                 No, no, they sure didn't. And the size of the cash hoard and the repurchases say a lot, too.

Dave Collum:             $400 billion.

Dan Ferris:                 Yeah. So – and what they're doing with it – well, selling equity and buying back their own is – it kind of speaks for itself.

Dave Collum:             It's a tell. It's a tell.

Dan Ferris:                 Yeah. Yeah. And I remember – it's funny because I think it was – maybe it was in your feed also recently that – I saw the thing about Charlie Munger. We were talking about him. Do you care when the stock is – when Berkshire is down 50%? And we expect – I expect something like that, maybe not with Berkshire but with a lot of other stocks in the relatively near future. And of course people panic, and they panic the most at the bottom, which creates bottoms. But Munger is like, "If you can't survive a 50% drawdown, you have no business being in stocks" was the basic message. And I just –

Dave Collum:             And most people cannot. Most people cannot.

Dan Ferris:                 No, they cannot. And the – actually, I think I saw this on LinkedIn because the response to it was, "Well, this is great, but this guy never had to explain a 50% drawdown to a client." And I'm sitting here going, "Yeah, I might know a little bit about that" because you have to explain them to subscribers who punish you. They punish you for those kinds of things.

Dave Collum:             So, I read Grantham's book, which is part a personal biography and part a discussion of being early and calling tops.

Dan Ferris:                 Yeah, I don't have that book.

Dave Collum:             And a recurring theme in his book is that the biggest problem is career risk, which keeps people from making the calls that they know they ought to make. And so, he said this –

Dan Ferris:                 He's been telling us about this for years, yes.

Dave Collum:             That's right. And he said that his clients always made a ton of money when he was shown to be correct, but they were not the clients that he had when he was telling them to get the hell out. Those guys all left him. These were clients who recognized the merits of the sticking after the fact. And so, there's some smart guys out there warning us, but they – the markets were overvalued in 2015 and what's happened since then? Well – so, for those who are listening casually, the CAPE Shiller PE is sitting over 42 now. A hundred and twenty years, it averaged 15, so you can make a crude estimate that that's probably about a 65% correction just to get a regression to the mean, which assumes therefore there's no damage by that correction. The economy doesn't get hurt by that correction and people – they just correct to the mean and people are OK with that.

                                    And they won't be OK with that. The average boomer has something like $300,000 in their retirement account. So, they're already toast. They really are toast. If you do the math on what you can what you can take out from a $300,000 retirement account without risking running out, some guys say liberally 4% – others say 3%. There's no revenue stream there.

Dan Ferris:                 Minimum required is four. Right?

Dave Collum:             Is that the current – I'm about to hit that so I have to start paying attention, but it's – that's not a lot of money. And if the average boomer knew how to live frugally, they'd have more than that much money. So, there's kind of a paradox here. And if you tell someone, "By the way, for the rest of retirement, you are going to have half the income flow you expected," that's going to blow their circuits.

Dan Ferris:                 Yeah. Yeah. Instead of being a paltry, what, $12,000, it'll be $6,000.

Dave Collum:             Right. Right.

Dan Ferris:                 A year. We're talking about a year.

Dave Collum:             Right. Right. Hard to live on $6,000 a year. Then you have Social Security, but if you're that average boomer, I don't know what your – what the average Social Security payment is. It's probably something like – I know it goes up to about $60,000 a year if you maxed out on Social Security for your career. But I'm guessing the average is much closer to $30,000 a year minus some taxes, and so you're down to $25,000 a year income. And you've got to pay taxes on that, on that drawdown from your retirement account.  So, you're down to after tax probably $20,000. Not going to buy a lot of kung pao chicken, are we?

Dan Ferris:                 No, we're not going to buy kung pao chicken. But maybe all the boomers will sell their homes finally and not care how much they get for them.

Dave Collum:             And pay a big capital gains on them.

Dan Ferris:                 Yep, and not care about any of that because they're so desperate.

Dave Collum:             Right. But where are they going to live?

Dan Ferris:                 Well, they've –

Dave Collum:             It'll say Frigidaire on the side.

Dan Ferris:                 Yeah, they've built – that's right. They've built a sh** ton of apartments in the Sunbelt in the past couple of years.

Dave Collum:             Yeah, there should be a bus there to help him out.

Dan Ferris:                 Yep. Well –

Dave Collum:             The other thing that drives me nuts turns out to be the – so, I don't think you can find anyone on the planet who's not willing to phrase that now trope-ish level phrase that that the Fed kept rates too low for too long. Everyone agrees. I add to that too many times because they did it over and over and over. And now, these same pundits say that the Fed have to drop the rates and I go, "Didn't you just admit they completely screwed the pooch? Didn't you just admit that dropping the rates caused the problem?" So, here's what I think that'll do. I think that'll hike the rates. I think that'll let the houses cut in half. That'll let the assets cut in half so that the next generation can afford a house and buy assets that have a good return.

Dan Ferris:                 Yeah, the market is already telling me, though, that even just keeping them where they are is seen as tightening. I agree, cutting rates, it seems really dumb. But I don't know. I don't think the market is anticipating – I don't think the 30-year is 5% because the market is anticipating some rate cuts. I think it's seeing real price increases and triple-digit oil and all the rest of it.

Dave Collum:             I think the market – and also lack of demand from foreign sources for which the demand was big. So, the petrodollar or the whole – Russia's not buying our Treasurys. China's not buying our Treasurys, I don't think. Who's buying our Treasurys? The Cayman Islands.

Dan Ferris:                 The Fed.

Dave Collum:             Heaven only knows who they are. So, the other interesting question is, Warsh for 15 years has been hypercritical of the Fed. And so, you have this paradoxical problem where you have to either assume that he's been lying for 15 years and that he's not a hawk, while at the same time you have to accept the notion – or alternatively, that Trump who was said to – guaranteed to appoint a money printer somehow didn't get told that Warsh wasn't the right guy, because Warsh really doesn't look like a money printer to me. And everyone's saying, "Oh, Warsh is going to become one." And this is the complacency part. What if his job is to be Volcker 2.0? What if his job is to say, "Look, as painful as it's going to be, we have got to shake this Etch-A-Sketch. We're at an unsustainable path. It is time to take your medicine. It is time to –"

Dan Ferris:                 Dave, I don't see that. I see him more likely – he's a human being. We know the circumstances. The politics certainly wouldn't tolerate not being able to control him, so I get that. Everybody wants lower interest rates. But yeah, human beings being what they are, I would bet on the politics influencing him more than him going in – because he doesn't have a mandate from the president. The president isn't saying, "For God's sake, crush inflation. Do whatever you have to do." We didn't just have Arthur Burns and we're trying to get over that. We're saying that we sort of did, but this moment, it's not seen as that. So, I don't know. I hear you because his history speaks to –

Dave Collum:             Volcker was tough. Volcker was tough.

Dan Ferris:                 He was tough and had to be and had a mandate and it was – the whole country was saying, "Oh my God, I'm tearing my hair out because everything is going up 14% a year" or whatever it was at that moment. It was an insane inflationary moment. A lot – not a lot of people – and they're pushing a good narrative that "No, inflation is not that bad. It's not down to our 2% target yet, but it's not double digits."

Dave Collum:             Well, but that narrative is a big fat lie. Here's the question I'm going to ask you.

                                    [Crosstalk]  

Dave Collum:             I'm going to ask you a question. I'm going to ask you a question. If I – here's a hypothetical, but it's not totally absurd. If I said, "Look, I'm going to sell you a 30-year U.S. Treasury, a new issue of Treasurys, and here's the rule: You have to hang on to it. Period. You can't sell it. This is not a trading sardine anymore. You are signing up a revenue stream." Call it 20 years since we're both old men now. So, about 20 years. You've got to sign up for – you've got to hang on to it. And you can't – the hypothetical part is you can't hedge it. This is like you're buying an annuity. What interest rate would you demand? Not knowing the future, not knowing what inflation's going to do, not – you don't even know for sure the government will pay you but I think it's going to be rational to assume they'll pay you. What interest rate would you demand?

Dan Ferris:                 Double digits. Easy.

Dave Collum:             Right.

Dan Ferris:                 Double digits. Easy. It's not even –

Dave Collum:             Which means the bond market's broken, then.

Dan Ferris:                 Yeah. Yeah.

Dave Collum:             Right? And it's broken in a number of interesting ways, one of which is there's too many statutory protections. So, there's too many places that say if you're an insurance company, you have to buy Treasurys at this amount. You have to buy – so, there are too many built-in statutorily mandated demands to buy Treasurys by the financial system.

Dan Ferris:                 You know something?

Dave Collum:             But you wouldn't sign up for that Treasury at 5%.

Dan Ferris:                 No. There's – that – when you talk about the statutory requirements, it reminds me of something. It was a story in, I think, one of the Market Wizards books about lumber, and the price was controlled at $110. It was like – I think it was like 1,000 board feet contracts. The price was controlled at $110. And all the reasons in the world told you should be long. But the price was $110.0- and that was it and it was illegal to go above. And the guy's looking at his screen and it's like $110.50, $111. He's like, "This isn't allowed to happen." In other words, at some point, those statutory requirements, no matter what they be, they break. And I have this issue with the overall – with the circuit breakers, too. The market can't – the market will close when it's down 20%. That's it. Trading ceases. So, it can't go down more than 20% in a day.

Dave Collum:             Except for we know that once it closes, then when it opens again, you've got a bigger problem.

Dan Ferris:                 Right. But I even go farther than that. I insist that it can go down. Humans are in markets the way fish are in water. We didn't invent them. They just happened when we stopped beating each other over the head as a primary way of interacting. If we say, "OK, we're going to interact peacefully now –"

Dave Collum:             "Let's trade."

Dan Ferris:                 – they just happened. So, we don't control them the way we think we do with all these circuit breakers and crap. We don't control the lumber market just by saying the price isn't going to go up. We don't control the bond market just by saying, "Well, these people are all going to buy them all the time. So, don't worry about it. We're going to create the demand for it." I don't think you can mess with markets with any of this. And the longer it goes on, the worse the outcome. The longer the control seems to work, the worse the outcome. It's like a fraud. It's like that story David Einhorn told about Allied Capital. They kept it under wraps for years and years and then bam, it just blew – it blew up.

Dave Collum:             Well, so, interesting, that Allied Capital story, though, the funny thing is – so, he takes the story to the feds and says, "OK, here's where they're committing all sorts of crimes." And he's talking to two regulators, and one of them seems to be listening and one of them seems to be a punk. And then what happens is a month later, the punk joins the staff of Allied Capital, which shows you the level of corruption. Then, what you also realize is that he didn't actually – Allied Capital didn't actually get crushed until the GFC. So, he was not able to short them under normal conditions. It really required the GFC for that short to finally pay.

Dan Ferris:                 Right. And I'll tell you something. I have to loop back around to what we were talking about with the stock market being overvalued, whatever, it's a bubble, it's going to crash at some point. I'm sure that it will shock the sh** out of you and I for how long it can go on. It probably already –

Dave Collum:             I think it's going to be a multidecade bear market. I think we're looking at a secular bear market of a higher order.

Dan Ferris:                 I've been saying that for five years or whatever it is since about 2017. When this thing breaks, it'll be 1929 to 1954. It'll be sideways for 25 years. It'll be post-Japan –

Dave Collum:             Well, so here's the thing people don't realize, is that after it recovered in 1954, inflation-adjusted, it rallied off of that and then it came back and tested that peak again. And it tested that peak, it retested the '29 peak in 1981. So, from 1929 to 1981, capital gains broke even on an inflation-adjusted basis.

Dan Ferris:                 Real. OK. Yeah.

Dave Collum:             Real. Real gains, broke even. So, I've got this chart that I made where it always rallies back, but then it goes back. And so, my model is, we are going to go up and we're going to come back and touch the inflation-adjusted 2000 peak.

Dan Ferris:                 Oh, as – I see. As the bottom.

Dave Collum:             That's going to be the return trip to test it one more time. All the big market peaks recovered in about 15 to 25 years but came back and tested that value one more time about 20 years later, 45 to 75 total time of treading water. Now, guys will say, "Well, you didn't have to own it the whole time." I go, "But the market was owned that whole time." So, someone owned it.

Dan Ferris:                 Somebody owned it. Yep.

Dave Collum:             Yeah.

Dan Ferris:                 So, what do you do?

Dave Collum:             Pretty surreal. Duck.

Dan Ferris:                 Duck.

Dave Collum:             I think the boomers – let's start with the boomers. I can't even tell a young guy to just start buying. And the reason I can't is because – I went on a podcast with someone. I said, "If anyone out there can do this math, please do it and send it to me." And they did. If you graduated from Tokyo University in 1989 and you started averaging into the Nikkei, because of course you have to, because 14 of the 20 biggest companies were in the Nikkei, and you're Japanese, so you're just going to do the Nikkei. If you averaged into the Nikkei, it took you 20 years to break even, owning none of it in 1989.

                                    If you owned the Nikkei in '89, like you're some 55-year-old shogun type, you're toast. Completely toast. And by the way, those guys who have broken even, we don't know – that Nikkei is going to come back and test that level again based on what I just said. It goes down, it recovers, it took 35 years, it starts taking off, and then comes back down and tests that peak one more time.

                                    And if you look at just – for those listening who are having trouble understanding what I'm saying, bring up an inflation-adjusted S&P that goes back – they often go back to, like, 1870. They're reconstructed S&Ps. And go to the key market tops and draw a line across and ask how far across the x-axis does that line go before it – before the market leaves that price for the last – hopefully the last time? And the answer is 45 to – 40 to 75 years. And so, the average investor just can't fathom this. They're not ready for this.

Dan Ferris:                 I know I'm not.

Dave Collum:             I am. I've been waiting. I've been ready for too long.

Dan Ferris:                 I'm not psychologically ready for it.

Dave Collum:             Well, it's going to hurt –

Dan Ferris:                 It could all start –

Dave Collum:             – because everything will sell. You'll be selling your goddamn dishware. So, everything will hurt. There's no way – there's going to be very, very few people who come out of it – sort of Jesse Livermore made a ton of money in the crash sort of thing. There's going to be very few of those people. They're just statistical anomalies.

Dan Ferris:                 Right. Well, yeah, some of us are content to pay an insurance premium, I call it, each year. It hurts, but it's always there and it lasts. It actually lasts me about two years with not many bips of my portfolio. And I say, "Well, this is probably going to expire worthless." And I just started doing it in the past few years because I thought, "This is insane. It's got to end." But you have to – there's no way – the only way to hedge without paying for it is to hold cash. And who knows what that'll be worth in five years.

Dave Collum:             Well, but a 4% yield on a two-year Treasury is not crazy.

Dan Ferris:                 No, it's not crazy.

Dave Collum:             Now, you're losing to inflation, but let's say – what do you think the real inflation rate is? Seven, eight, something like that? Is that leading you too much?

Dan Ferris:                 No, that's not – that's fine. We can say seven, eight. Sure.

Dave Collum:             OK. So, if the real inflation rate is 7% or 8%, and it's not like it's been low – it was higher back in the Biden era. So, what that tells you is that the actual measured GDP of two and a half, 3% is wrong, and it's wrong by probably about 4% or 5%, which means we've been in a recession the whole way. We've been in a long drawn-out recession. And that's consistent with the fact that that all of our capital is being committed to produce – to creating investments that are revenue-free. And during COVID-19 we took out the mom-and-pop industries to the tune of two million of them. And we shoved that entire consumption and productivity into the S&P. So, the guy who used to eat at Linda's Diner, and Linda made a decent wage and etc., etc., now has to go to Chipotle. So, the S&P did basically a hostile takeover of the mom-and-pop shops.

                                    Private equity is doing hostile takeovers of the rest. So, the real meat and potatoes of the economy, the plumber who you think is just a plumber, but he's actually owned by Apollo, they've all been absorbed and they're charging too much. And they've got these micro monopolies. So, every car dealer in Ithaca, New York is owned by one guy. So, you go to the car dealer and you find out that they don't have – they don't – the salespeople will say, "Well, we don't get a commission," which sounds good because then they don't make money if they sell or don't sell cars. They don't want them competing with the guy down the street because it's owned by the same guy. They don't want a bidding war.

Dan Ferris:                 Interesting.

Dave Collum:             In Ithaca, there's 10 veterinaries because we have a vet school. Eight of them are private equity-owned.

Dan Ferris:                 Interesting.

Dave Collum:             And they're just gouging.

Dan Ferris:                 So, Veterinarians of America or whoever it is?

Dave Collum:             VCA. VCA. By the way – my dog became diabetic about two weeks ago. And she was on death's door maybe on a Friday. My vet, who's not privately owned, who's not private equity-owned – and I like her, she couldn't handle the dog over the weekend because I don't have facilities for it and VCA guys do. They called up to VCA, and VCA said, "Oh, if we hospitalize her, it'll cost you $9,000 to $12,000." That's too much money. There's no way that that the free market – there's no way that's price discovery.

Dan Ferris:                 No, I've paid a lot of vet bills over the last 20 years and hospitalized dogs at the – take them to the emergency – and emergency, those clinics are through the roof.

Dave Collum:             Oh, God. Yes.

Dan Ferris:                 And I don't know, I think the biggest bill I ever paid was $5,000 or $6,000, and that was for days and days and days. That is insane. $9,000 to $12,000 for a weekend is crazy.

Dave Collum:             Well, I have a dog getting a tooth pulled. I have three Boston terriers and a lab. The lab went diabetic. One of the Boston terriers has a tooth that – my vet says, "Look, in this breed, this – the teeth that are in this bad position will cause trouble later and you'll really wish you'd pull them." I trust her. It's still $1,200. Do you pay $1,200 to pull a tooth at your dentist? I don't think so.

Dan Ferris:                 Right. Well, I don't know. I don't know about that. Yeah, I don't want to look at the bills but –

Dave Collum:             Put it this way. You wouldn't be shocked – right. You wouldn't be shocked if it didn't cost that much.

Dan Ferris:                 Yeah.

Dave Collum:             Of course, the dentists are all private equity-owned, too, now. So...

Dan Ferris:                 Right. So, what do you own, Dave? You still own gold. I know your own – do you still own Impala? You still own Impala Platinum, didn't you?

Dave Collum:             Yeah, yeah. The platinum miners have geographic risk. And one day I was playing golf with Mitch Feierstein, who's a smart guy, and he – this was two – if you track platinum, platinum was [flatlining] for 10 years after dropping. And so, it was 900, plus or minus pennies, for 10 years. Even Lyn Alden at one point posted a tweet that showed the woman in Titanic, the old lady saying, "It's been 84 years."

                                    And I asked a couple of TA guys, who I'm not, and said, "What would you want to see in this chart to convince you that this flatlining is over?" Because it turns out the fundamental case for platinum is very strong. Platinum is in deficit production for four or five years. The aboveground supply you could buy at present prices for about $5 billion. And current rate of consumption is a couple years of consumption for the aboveground supply. So, there's just nothing about platinum that doesn't look phenomenally fundamental.

                                    Platinum also comes from South Africa, which could become a failed state in a heartbeat. And then, the rest of it comes from Russia, and it's not like we've kissed their asses. And so, they'd be much happier to send it to China than to us probably. And there's a little bit coming out of North Dakota or something. But – so, the platinum story is great.

                                    And then one day I saw the flicker. And so, I started buying it. Now I bought gold from '99 to 2003 very patiently. And it waited patiently. So, I think the last big purchase was at $457 an ounce. That was my 2003-ish purchase. And then I bought some more when it was in the $1,200 zone a decade later. But the modern markets won't wait for you now. I can't spend four years averaging into a position. You've got to kind of a Druckenmiller a little more than I'd like. So, I started hitting the buy button. So, I bought it all the way up, and even though it went up 100% in 2000, 120% in 2025, my total net gain was more like 50%, something like that because of the averaging in.

                                    I'm still not up to a real big position. It's what I call the boomer's dilemma, where the good news is I have enough wealth that if I say, "OK, I should buy an asset," let's say you say, "We should buy platinum," well, what percentage should you be committed to platinum? And you go "I don't know, 5%." Then I do the math and I go "That's too much money." So, I'm not comfortable with the number of dollars required to get a good position. And it's absurd because if, let's say, I did it all in one day, if it went down to zero the next day, I'd be down 5%. BFD, right?

Dan Ferris:                 Sure.

Dave Collum:             But somehow my brain does not let me get there. So, I still – I'm probably gonna start buying some more. And I've been averaging into energy, but I think the energy is going to whoosh. I was phenomenally lucky in the naughts. So, in '99 – you probably know this, but in '99, partially due to Y2K, which turned out to be Silicon Valley's grift on society, I exited all equities 100%. Not an equity in sight.

                                    And then I – the first thing I did was I paid off my mortgage. It was nine and a quarter percent, so I said, "OK, that's a good return." I actually went – starting around 2001, went long energy. And the logic, I was just looking for an inflation hedge. And I talked to Jimmy Rogers, second in command about the Rogers Raw Materials Fund, but I didn't like – all these derivatives and sh**, I didn't – I just didn't like it. I'm a meat and potatoes guy.

                                    And then, so I ended up just going into my Fidelity accounts, which are job-based, and bought about a half a dozen energy funds that Fidelity offered. And I started buying in '01, and it turned out the naughts, relative to my peers, was the best decade ever. And the '90s were clearly the best decade ever because it was a tech bull, but everyone was making money. In the naughts, owning gold – I forgot that I bought gold from '99 to 2003-ish, too. No gold equities. Prudent Bear Fund to short the market twice. And energy equities. I compounded 13% a year in the naughts. Now, if you think of what the naughts were, it was two big bear markets. And so, that has to be some sort of – and for a ding dong in Ithaca, New York with no training whatsoever, that's – that was a good decade.

                                    Then, the teens I rode out getting something like four and a half percent while everyone else was partying their ass off. And gold didn't help. Energy didn't help. Nothing helped. And so, the teens were my shi**iest decade relative to my peers. But the last couple years have been great. They've been phenomenal because gold has done exceedingly well and the platinum play was good. And I'm averaging into energy. But I think when the markets go down, everything, it's going to be a big whoosh. It's going to be like Lake Peigneur. You know Lake Peigneur?

Dan Ferris:                 No, I don't.

Dave Collum:             OK, Lake Peigneur is a lake in Louisiana where they were drilling in the lake for something and they hit a salt mine. And the lake started going down into the mine. It started dissolving the salt. The entire lake formed this big whirlpool and the entire lake drained down into the salt mine. And so, I think it's going to be – Lake Peigneur is something worth watching. It is a hysterical documentary. It's about a 10-minute documentary. Lake P-E-I-G-N-E-U-R. It is a great thing to watch. And the lake, it formed – because it back flowed from, I think, the Mississippi or something, it had a 150-foot waterfall flowing back into the lake. And it changed the whole ecology of the lake and everything.

                                    But that big whoosh, that big doing laps around the drain thing, I think the energy equities, I think everything is going to go. I think it's going to be a real liquidity problem. And I don't think the feds are going to be able to fix this one. I just – I think they've played their last real big trump card. Now, I could be dead wrong on that. That could be me hoping. I don't want a 20-year bear market that's uninvestable. which is what I really think is going to happen, because it means I can't invest in it. Right?

Dan Ferris:                 Right.

Dave Collum:             But that's my bet. My bet is it's going to be a real b**ch.

Dan Ferris:                 Starting... soon?

Dave Collum:             Don't know.

Dan Ferris:                 Don't know.

Dave Collum:             I feel soon, but I've been saying that for a long time.

Dan Ferris:                 Yeah.

Dave Collum:             But now you've got these IPOs that – the insanity is way past the dot-com insanity, in my opinion.

Dan Ferris:                 Yeah. Well, if you want to –

Dave Collum:             Because the dot coms were these silly little companies. They weren't big companies.

Dan Ferris:                 Well, Dave, if you want a good sentiment indicator, in the Stansberry Digest, in my newsletters and various places, starting in May of 2017, I was writing about the level of speculation and valuations and all of this stuff. And I just stopped doing it within the past year. I was tired of listening to myself do it. I was tired of looking like an idiot.

Dave Collum:             Totally.

Dan Ferris:                 It just gets to be like – it's tedious.

Dave Collum:             Broken clock. Broken clock.

Dan Ferris:                 Yeah, broken clock. It's just tedious. Everyone's [saying,] "Oh, yeah, yeah, yeah, yeah, yeah" and the market's making new all-time highs. "Yeah, yeah, yeah, yeah, yeah." But – and the whole time –

Dave Collum:             Well, you're on record at least. You're on record.           

Dan Ferris:                 Yeah, I'm on the record. Oh, I'm way on the record. I can't get away from that. That record is big. It's years long. So, if you want the sentiment indicator, I might be him. I might be it.

Dave Collum:             Well, I can also see the sentiment indicator where I'm getting many, many more catcalls from people who are saying, "You're just missing great opportunities."

Dan Ferris:                 Oh, the smugness is huge right now.

Dave Collum:             The smugness is bad.

Dan Ferris:                 Yeah. Yeah, it's –

Dave Collum:             And they know it's overpriced. They just think they're going to be saved. Now, here's an amazing step that I – if you look at the rise from the lowest valuations in history in 1981 to the present – valuation shouldn't trend. They should go back and forth, and for 120 years that's what they did. They'd get high, they'd get low, and they always corrected back through the mean.

                                    From '81 to the present, valuations compounded, which they shouldn't do, compounded 4% a year for 45 years. Compounded 4% a year. Now, I like to ask a rhetorical question: What happens when they compound negative 4% a year for 45 years? And people say, "Well, that'll never happen." I go "Of course it will. I guarantee you it will, because there's never been an asset class that got way overvalued that didn't find its way back to cheap." And cheap means compounding at negative 4% a year for 45 years. Now, maybe it will only take 20 years and compounds at minus 8%. I don't know. But it's going to be a painful compounding of negative valuation. And we'll end up back at single-digit valuations. CAPE valuations. And you could use 25 different valuation metrics – they all tell the same story. They all tell the same story.

Dan Ferris:                 Yeah, I published that one too about a year or two ago. I just – I found there were 20 of them and they all told the identical story. It wasn't like mostly in the same – no, it was all the identical story. So, every measure –

Dave Collum:             And you've got the positive valuation stories. You've got the four – Doug Short's composite valuation, and I think Felder now has one. And some of those are scarier than the CAPE. Some of those are way above the dot-com.

Dan Ferris:                 Composite valuation. What do you mean?

Dave Collum:             Well, they take four or five of the – the Buffett indicator, CAPE, Tobin's Q – they take about four or five of the big ones.

Dan Ferris:                 I see. Right.

Dave Collum:             Price to revenue, price to earnings, price to book, price to you name it. They take about five of those and they average them in and say, "What is the collective valuation story?" And they're awful. They're wretchedly bad. You can say, "Hey, maybe they'll never come down again." I go, "OK, but that means therefore we're priced to return to about a two and a half percent cash flow as opposed to 6% or 7% or 8%."

Dan Ferris:                 Sure. Well –

Dave Collum:             That won't happen.

Dan Ferris:                 Yeah. Yeah. You're not going to get the same return. This is like – Buffett has been telling us this for years in various ways with his own stock and with the market and everything else. Yeah.

Dave Collum:             He said in his '99 article, "After you're done with all the fees and everything, but not taxes –" he didn't include taxes – he said that the most you can expect to get, inflation-adjusted and all the fees – he said, "If you don't think there's fees, you're dreaming. There are so many fees that you can't see." He said, "The most you can expect to get per year is 4%."

Dan Ferris:                 Well, bring it. Give me my 4% if it's real.

Dave Collum:             I would, but it's going to be an ugly trip potentially. I don't want to be on the downslope for that on average 4%. And so, I might go to my grave without being in the market seriously. At my age – I'm 71 – I'm not supposed to be speculating on Nvidia.

Dan Ferris:                 Well, you're not.

Dave Collum:             I'm not. Well, I hope not. There's some money – I have a little bit of money I don't control, and I'm guessing they own Nvidia. So, I'm guessing I have Nvidia exposure. But Dell just jumped up 30%. Well, you saw the Micron – so, here's the intriguing Micron story. This is – this baffles me. Micron jumped up, what, two-and-a-half-fold in two weeks or something?  It was really an absurd jump. And some guy said it was cheap. And I said, "No, it's that cheap." So, he asked Grok. And Grok says that based on forward earnings – which I hate because you've got earnings that in theory you measured, which I don't believe actually, and you've got earnings that you completely fabricate and you go with the fabricated ones, which never hold up, especially in a world where they're projecting third order, fourth order exponential growth – and it says that it has a P/E of seven. And I'm going, "What?"

                                    So, I dig up Grok's earnings history – not Grok's – Micron's earnings history. And back in 2018, earnings were at a peak then. And it turns out from 2018 to the present, the earnings are up something like 70%. The share price is up 18-fold. So, those two should correlate. And they don't. So, I said to the guy, I said, "Let me ask you this. In 2018, when earnings were that much lower, was the P/E 0.7?"

                                    What's wrong with this picture? Someone's lying in a very big way. Some guy just put out a video the other day that said that all these big-cap AI stories are completely fabricating earnings growth now. He's talking sort of prison-level fabrications, Enron-level fabrications of their earnings to get the IPO through, to get the roundtripping of the revenues and all that crap. So, it's got to be – if it's not close, it's...

Dan Ferris:                 Yeah. Well, maybe we'll – if the market suddenly tumbles soon or whenever, if we're both still alive, then we'll call you back and we'll see if there's anything to do.

Dave Collum:             Well, I don't think it'll be sudden. So, please don't let your media team – and I know they're listening – don't say, "Collum calls a crash." I've never called a crash. Never in my life have I called the crash. Collum calls secular bear markets. And I watch these – I look at these AI-generated pictures of me and my host looking at each other on YouTube and the headline is never accurate. It's never accurate.

Dan Ferris:                 I'm glad you said that.

Dave Collum:             So, tell them to – they're always bullsh**. I go, "I didn't say that." But crashes don't fix anything because dip buyers always show up. And you have to do what the Israelis have learned to do – I know you're going to love me saying that. You have to do a double tap so that when they've got dip buyers come in, you then drop a bomb on their asses. And you have to do that over and over and over until finally people say, "I am never touching this bullsh** again" and that will be your bottom.

Dan Ferris:                 You have to obliterate sentiment for a full generation.

Dave Collum:             That's right. It is a generational change in attitude. That's exactly right. All right.

Dan Ferris:                 Right. And we have yet to see that occur.

Dave Collum:             Well, they haven't let a generational change in attitude occur since – for the last 40 years. The 40-year recency bias, it is not shocking that the muscle memory is not being shaken off.

Dan Ferris:                 Yeah. All right, Dave, I think this is a good time to ask my final question.

Dave Collum:             Fire.

Dan Ferris:                 It is the same for every guest, no matter what the topic, even if it's nonfinancial, which we get into some nonfinancial areas with you. Whatever you want the answer to be is fine. If you've already said it, you can repeat it. Same question. That is simply – it's for our listeners' benefit. If you could offer them one takeaway, if there's one thought that you want to leave them with today, what would that be?

Dave Collum:             Read outside your expertise and read outside the markets because from there you learn about – outsiders often looking in see a very different world. And so, Charlie Munger's favorite book was Influence, which is a neuropsych book. And I've read a ton of neuropsych and I've read a ton of books on authoritarianism, which I believe is heading our way in a serious way. I can go for hours about these topics. And here's – so, here's my one bit of advice. Outside-the-box reading. Audiobooks. We all drive around. My wife asks me to go to the store. I – "Yeah, sure, I'll go to the store. I don't care." She doesn't – she thinks she's imposing upon me. She's asking me to read for 10 minutes.

                                    So, audio books. And so, right now I'm listening to Aaron Siri's book about how the vaccine industry is a complete and utter fraud. And it's unassailable evidence he's supporting. And I've known this for years because of it. But you've got to understand that. You've got to understand these things to understand the world we're in. And once you do by learning about the outside world, then you'll understand why the markets are not to be trusted, either.

Dan Ferris:                 All right. Outside reading. I love that answer. That's – that's half my thing in life, is outside reading, because the inside reading, all that technical math, half of it, it's incomprehensible to me and it doesn't apply. It's useless. Knowing lots of events –

Dave Collum:             Do you remember you and I had a minor clash in Vegas one day on books? I'm going to – let me repeat this story. I forgive you.

Dan Ferris:                 OK.

Dave Collum:             You gave a talk on 10 books that were garbage.

Dan Ferris:                 Oh.

Dave Collum:             Remember that?

Dave Collum:             Boy, that's years ago. Yeah.

Dave Collum:             Yeah, yeah. I challenged you on one of them. I said, "I don't think you read it. I think you've taken advice from people on that book." It was The Millionaire Next Door.

Dan Ferris:                 Oh, I'm still the same on that. Look, they're principles, they're good principles, but I don't like the method. But you're right. It's –

Dave Collum:             Well, but it's not about investing, though. It's not about investing.

Dan Ferris:                 Right. It's about behavior.

Dave Collum:             It's about behavior. It's the psychology of money.

Dan Ferris:                 Right. Sure.

Dave Collum:             Right. Well, that's interesting.

Dan Ferris:                 I remember that.

Dave Collum:             Yeah, I gave you some guff. And you and I did a little of that. Nothing major.

Dan Ferris:                 I remember that, but I didn't remember that it was you.

Dave Collum:             Yeah, that was me. That was me. Right. I gave a talk last year at a meeting in New Orleans on satanic cults and child trafficking. So, I go outside the box further than – farther than most investors do.

Dan Ferris:                 That is outside the box.

Dave Collum:             That is outside the box.

Dan Ferris:                 All right. Well, we'll need to spend – next time, we'll – maybe we'll do the Dave Collum outside-the-box reading list or something. That'd be cool.

Dave Collum:             Right.

Dan Ferris:                 Yeah. Well, thanks for being here, Dave. I wish that we did a three-hour podcast every time I talk to you, but they restrict me to one hour. So...

Dave Collum:             I have hard stops that are weeks away, so I can go forever. So, when you said, "If you pause, we will edit it out," I'm going, " I've never paused." So, I don't think you have to worry about that.

Dan Ferris:                 All right, Dave. Thanks again and we will talk to you soon.

Dave Collum:             Thanks for inviting me.

Dan Ferris:                 Well, when we talk with Dave Collum, you never know what you'll get. And you get what you get because Dave's mind goes in a million directions. He's an extreme – obviously an extremely highly intelligent guy. Tenured Cornell chemistry professor in organic chemistry. If you know anything about any of that, you know it means he's an extremely smart guy. But yeah, he goes into finance and a million other places. We talked about real estate and we talked about – I don't even want to list it all. Just listen is what I would tell anybody. Just listen.

                                    And the takeaway actually was brilliant at the end because that really sums up why you talked to Dave Collum. His takeaway was read outside the box. Read things outside of investing and outside of the normal sort of things that you might – that are popular that people are reading about investing, and you will then be able to turn your attention back onto the market with a totally different perspective, which he contends, and I totally agree, you really need right now. You need a different perspective than you might have needed in 1980 or 1990 even because things have changed.

                                    So, I couldn't get behind that advice more. Read all kinds of things, fiction even, fiction and other disciplines. Any subject. History is a big one with me. All kinds of history, not just financial history or economic history. History. The history of the Roman Empire. The history of the United States. The history of whatever. And you can learn something from it. And then it will train your insight. It will train your – that muscle that you use to just look at the world and develop a view about what's going on in it, including in the stock market. So, that alone, that is the reason – that is a good enough reason alone to have Dave Collum on. And of course, we'll have him on again in six or 12 months.

                                    Maybe if the market falls a whole bunch, we'll have him on again to ask him if he's buying anything. It sounds like he won't be because he's predicting a multidecade, he said, bear market. Not a crash. He doesn't want us to say that he predicted a crash. He never predicts a crash. He predicts a bear market, a long one, a brutal one, one, as we spoke about in the interview, that will just sort of destroy the sentiment toward investing for a generation. A generational change in sentiment toward the market. That's what – the kind of event that Dave is talking about. And that doesn't happen quickly. That's not a quick 30% down in a month like we saw in March of 2020. That's what he said, minus 4% a year for, he said, I think, 45 years or something like that. Or 8% a year for 20 years or something, however it plays out, it would be that kind of an event that he's expecting.

                                    All right. So, it's always interesting talking with Dave. That was a fun, wide-ranging interview, and a fun, wide-ranging episode of the Stansberry Investor Hour. I hope you enjoyed it as much as we did. And remember, hit like, hit subscribe, and sign up for our free daily e-mail.

Announcer:                 Opinions expressed on this program are solely those of the contributor and do not necessarily reflect the opinions of Stansberry Research, its parent company, or affiliates.

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