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is not Main Street. This is Wall Street that this graph represents and it's more than twice the size of the global of the annual GDP of the United States. That is insane bubble territory. and it cannot last. Hi, it's the Gold Silver Show with Mike Maloney and Alan Hibard. And Allan has a presentation and he's already tipped me off. It's about the stock market. So, go ahead and show us what you were going to show us, Alan. >> Yes, thank you, Mike. Uh, yeah. So, everyone wants to know about the stock

market. It's up at record highs and there's a fundamental question. Is it a sustainable rally or are we due for a correction? So, I wanted to look at some uh facts and figures today about the stock market. And first of all, we look at the S&P 500. We've got a one-year chart here. You can see it's up at an all-time high. It's over 6,200. And uh yeah, is it going to keep going up or is it due for a correction? What do you think, Mike? >> Yeah, you know, um uh when you look at

the stock market, most people look at the S&P 500 and they look at the NASDAQ. Uh there's the Wilshire 5000 and so on. uh except that is it in that includes uh some some it's not the heartland. It's not the manufacturing and the actual economy. It's also including these unicorns and these tech stocks that are taking up so much of the market cap of the S&P 500. And so, uh you sort of tipped me off that this was going to this is what it was going to be about. I used to subscribe to the Dow Theory

Letters and there was a guy named Richard Richard Russell and he started the very first financial newsletter called Dowo Theory Letters. I believe it was 1956 when I was born or maybe it was 55. It was the it's been around for years. He's he was right more than just about anybody and he had a couple of theories. And so before this video, before we started recording, I had you make a couple of other charts. So uh let's go to uh the Dow. Okay. So the Dow, I don't know which of the magnificent 7

is not in the Dow, but but uh the industrial companies are not confirming uh the this breakout in the stock market. It's a breakout of basically a few of of everybody's darlings. Uh, and so that is uh saying danger. There's something wrong is what this is saying. What's the next chart? >> Yeah, we've got the Dow transportation. >> Okay. The transportations is all of those the stuff that we make and the stuff that we import being shipped all over the place. So the transportation uh

average is down confirming this is like double confirmation and this is what DAO theory letters was about and for so many years it was right but this was the basic theory behind it. If the transportations don't confirm the Dow then then you got to really be careful. We might be in for something big. The transportations are always showing you the health of the economy versus just uh how many people are rushing in and out of the stock market at any given time. >> Yeah, makes sense to me.

>> Okay. >> Yeah. Uh just in the Warren Buffett indicator soarses to 205% the most expensive level in history surpassing even the dot bubble and the global financial crisis. Yeah. >> Yikes. And this this chart is a little tough to read, so I uh made a cleaner one here. And uh basically for anyone who doesn't know what the Buffett indicator is, it's the value of all publicly traded stocks >> as a ratio of the GDP of the country. So basically value of all the stocks

divided by the GDP and it should be in balance, right? um you know otherwise otherwise if the value of the stocks becomes way out of line relative to the size of the economy something is weird >> and that's the situation we're in right now something's weird >> well we you know we have a whole chapter on um measuring bubbles in uh great gold and silver rush of the 21st century and uh you know we we measure it with PE ratios first and that's the only way that you can measure the stock market that

doesn't show but in the biggest bubble in history. Then we measure it in the number of hours worked to buy one share of the S&P 500. And it was in a hyperbubble uh way back way back then. You can see uh if I can get the reflection gone there. You can see I'm trying to uh that and this was summer of 22 and then uh it had just gotten up to uh 200% in uh 2020, but ours goes back to I believe 1947. The Happy Hawaiians went back to 1980. And how far does this one go back that you made? uh October of 1970.

>> Okay. Now, there is a he's got a mean in there, but what we proved in in this chapter was that we have been in this insane bubble century now. And some of our charts here, you know, hang on one second. I gota I'm approaching 70. Okay. The number of work hours to buy the S&P 500 goes back to 1860. and it had never exceeded 40. And here we were at 130 when this book was or 122 when the book was produced and we're over uh 140 now. And the PE ratios go back to 1880. And the stock market capitalization

to GDP which is uh for 17 advanced countries which is produced by a couple of economists very obscure data that our researcher uh Tim Burus you remember that when he found this right Alan? >> Oh yeah. and we were writing the book, uh, he found this and it was like finding gold because nobody could find a Buffett indicator going back before, you know, this one goes back to 1970. Uh, we took it back to 1947 with a combination of Federal Reserve data. Uh, and then the Big Bang takes it globally for 17 advanced economies

around the world. And it shows clearly that this we have been in the bubble century. you when you're producing a mean in in order to judge whether or not this is in balance with the rest of the economy, you have to eliminate the bubble century and look at everything before that where for a hundred years of data, 120 years of data, you can see a balance where it goes up and down and then right at the very end it just goes like this and you've got the that that's this whole century has been at insane levels.

Now, when you look at that, you come out with somewhere between 50 and 60, maybe 65 at the highest being in balance with the economy. If you go back further than this chart, I see a whole lot of risk and danger out there right now. People are not paying attention to history and there is no reason that this should ever be. This is just the publicly listed companies. It is not Main Street. This is Wall Street that this graph represents. And it's more than twice the size of the global of the annual GDP of

the United States. That is insane bubble territory. And it cannot last. And it had never happened before. It had never gone past that 100%. I don't think if you if you took his mean here on this chart, I don't think it ever exceeded the mean for the first 120 years. >> Yeah, I don't know. >> We have to look at >> I don't remember. >> And you know, you should be able we should be able to put together uh we've got GDP. you should be able to go to um Robert Schiller's data uh goes

back to 1880 and he's got a recreation of the S&P 500 and that's where the PE ratios come from. Does it have market cap? I don't know. If it has market cap, we could take this back to 1880. Anyway, okay, let's move on. >> Yeah. So, the stock market is overvalued. That's >> way overvalued. Nose bleed. Uh, I mean, it's time for the uh oxygen masks to drop from the ceiling because the plane could crash at any moment. >> Yeah, we are beyond nosebleleed levels.

>> Okay. >> Yeah. And for this all-time high in the S&P, we are at the narrowest ever breath for an all-time high. So basically the number of stocks number of individual stocks that have reached an all-time high when the index reaches an all-time high uh this is the lowest it's ever been. So you can see that throughout history all the all the various S&P 500 breakouts in the 90s the 2000s 2020s the number of stocks at an all-time high in those eras was about 50 or 60 80 90 50

60 and now it's only 22 of them so very few of them carrying the entire market. Yeah. So, I wish we had more history because this starts in 1991. It would be really interesting to see what 1928 and the first half of 1929 look like because I'll bet it looks just like this >> where there's just a few stocks driving the entire stock market. And if something goes wrong in the economy, this whole thing just goes down the drain just like it did in from 1929 to 1932. And that was October of 29. So

you're only talking about um two and a half years for it to to bottom. October of uh I I can't remember what month the the Dow was at um I think 396 or 398. It was a breath away from 400 points and it fell to 40.22 points on a day in 1932. And so we could be in for uh a repeat on that order, that scale. Judging from the numbers, you know, people look at this and they go, "Oh, alltime high party," but they're not looking at the fundamentals underneath it. So, yeah. Okay. Yeah. Oh, you know what? This also

confirms uh the Dow Jones not confirming the S&P 500. It also confirms uh the transports not confirming the Dow or the S&P 500. Uh this right here uh says that these are the market darlings driving the entire stock market. So it's just a handful of stocks. And like I said, I'll bet the first half of 1929 looks just like this. >> Yeah, I agree. Um also very interesting is the number of bankruptcies in the United States. We've had 371 large companies in the US that went bankrupt in the first half of 2025.

That's the most in the last 15 years. So you can see that's the the blue bar here is bankruptcies in the first half of the year. So it's the highest going back to 2010 and the orange bars are the rest of the year. So if we get something like that, we'll be we'll be setting records for the last decade and a half. >> Yeah. And it really does look, you know, when you look at yield curves and and all of these other indicators, we should have been in recession now for quite a

while and we are on Main Street, but we aren't on Wall Street. It's this bifurcated society and but now uh numbers are coming in that look like uh we could be plunging into a if if we do have you know we've had uh we don't have the numbers for the second quarter yet do we? No, we don't. Uh so we don't know if we are officially the first quarter was a a GDP contraction. Uh and we don't know yet whether we're officially in a recession or not. And when the news hits, uh, you know, what always happens

is they release numbers that are they've artificially picked the rosiest numbers they can and then they very quietly repost those numbers a month or two down the road and walk back from whatever they've they've posted. So, what is that last paragraph in his uh Oh, you know what? I would agree with that. Pointing 10. Uh you've got to realize that when the bubble popped in 28 uh I mean I'm sorry in 2008 and we had the global financial crisis it started then but it takes a little while for companies to

start folding and they file for bankruptcy and then the bank it takes like two years. So 2010 uh is is some of the it would I would love to see 29 I'm sorry not yeah 2010 I'd love to see 2009 data as well. It's a shame uh that this doesn't go one back one year further because uh 2009 and 2010 were horrific when it came to bankruptcies. So yes. >> Yeah. >> Okay. >> We shall see. Investors are now buying stocks on margin at levels never seen before in history. >> Okay.

>> Okay. Well, margin is driven by two things. Professional traders and idiots. >> Yeah. >> And uh I have a feeling there's a lot of idiots in here that are just gonna get slaughtered. They have no idea what they're doing. a professional margin is the realm of professionals and so if you really do know what you're doing then you you you know you're have at it you're welcome to margin but I've always caut cautioned people against margin because they uh do it during the good

times and they they get it's a self-reinforcing mechanism to use more and more and more margin uh because it feels so good and your winnings can be so huge but when you're too far out on margin, you can get completely wiped out. And if if if you've made a million bucks and you lose 900,000 of it very shortly, what percentage gains do you have to make? I don't know what it is. What percentage gains do you have to make when you're starting at just 10% to break even? >> A,000%.

>> Yeah. Thousand% gains. How many decades is that going to take you to get back what you lost? >> Your whole life. >> Exactly. >> Yeah. >> Right. Yeah. So there there's so you've got professionals and fools here. That's that's that red area. >> Yeah. And you could see how how deep it was, how how much credit there was in the dotcom bubble and then it reverted and we got a recession and the 2007 real estate bubble >> and we're Yeah, >> it was microscopic in 2007. Yeah.

>> Unbelievable. >> And look how deep we are here. This is Oh, this is >> You notice how it goes positive uh um after a crisis, after a whole bunch of uh amateurs have just have just learned a big lesson the hard way. >> Yes. A lot of bankruptcies, a lot of deleveraging >> and then that's that's going to have to happen, right? So, >> yep. This is part of what uh propels all of these people on margin is what causes a crash to be so much worse than it. So

the the upcoming correction that we have is probably going to be a major major crisis because as the market falls these guys have to get out of their they get margin call. They've got to liquidate positions to cover that. That causes the stocks to go down further, which causes their losses to be even bigger, which causes them to have to sell more stuff to cover their positions. It's a vicious spiral that can just get out of control. >> Yeah. Yes. Yes. It's ugly. >> And the short sellers, the professionals

that are betting against these guys, they're the ones that uh that end up actually putting a floor under the markets. They put downward pressure. uh now when they're selling, but there's a certain point where they have to buy back those shorts at a big profit. And they don't have to buy them back, but they do. And when they start when the shorts start covering, that stops the crash basically. >> Yeah. Yeah. We'll see. We'll see what happens. Uh one other chart I want to show here

is equities as a share of household assets. And this shows that US households have a way higher percentage of equities than most other households around the world. So this to this to me looks like a dangerous setup for a stock market that's overvalued. >> Insane. So in the US, 50% of household assets in general, and I know a lot of people that don't have any stocks, and so 50% of the entire US population has half of their household assets in stocks. Wow. You know, again, I wish we had

historical averages. I would love to see what this looked like in 1980 when gold and silver peaked. I would love to see what this looked like in 1970 when gold became free trading. And I would love to see what this looked like in 1929 and in 1932. >> You and me both. I don't I don't know if we're going to get that data, but yeah. >> Yeah. I'll bet that this is the highest in history. It wasn't anything like this. I think I might have data on this in 1929. Um, and it might even be in our book. I

can't remember. >> Whoa. That would be amazing if you have it. Share it with me. >> Well, you know, um, when you go to the homepage on our YouTube channel, uh, there's a video on there all about the 1929 stock market crash and potentially history repeating. And now would be a good time to watch that video again. for everybody out there. Go to the homepage, watch that uh video about 1929 markets crash, the eerie similarities of 1929 and today. Um, so go watch that. One other thing we

have here. Whoa, this is nuts. The US used to make things. Now the US just makes people sick and profits from them. So yeah, what we have here is the top employer in each state in 1990 and you can see it's largely blue which is manufacturing or gold which was retail and now the top employer in each state as of last year is purple. That's healthcare and only a small amount of manufacturing and other stuff. >> So this is quite a significant change. >> I want to point out something for the

viewers. There is no purple in 1990. It's not even on the chart. Exactly. No professional services either. >> Yeah. >> Yeah. So manufacturing was a big thing. Now it's healthcare. So that's that's you know a lot of people would look at that and say oh that's a sign of a healthy society. And I think taken in the context of everything else that's that's not necessarily the case. This could be uh this is more of sick care than health care in my opinion. >> Okay. So anyways, uh kind of relates to

what we were talking about earlier with the Dow Jones hitting that triple top and not breaking through. Well, because we don't make stuff anymore. So, >> yep, that's the industrials, right? >> Yeah. >> Okay. >> So, here's what we can end with our meme of the day. Politics in one picture. Once I'm elected, I will become vegetarian. >> You know, I was never a believer in the deep state. I thought that was conspiracy theory nutcase stuff. But now I see that every president uh promises a

whole bunch of stuff and then they become a slave of this deep state. Uh it it does exist. I what I see uh is Eisenhower warned us when he was leaving office uh about this and then the next thing that happens is the whole world changed when the the one president that went against the deep state was assassinated and I'm I am my opinion is that it was the deep state. So I want to thank everybody for watching and we'll see you next time. Thanks, Alan. Yep.