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 [Music] hey gold silver alen Hibbert here with another video this time I want to walk you through the stock market because it's at record highs which means the economy is doing record well right I'm not so sure let's look at some charts first I want to compare the S&P 500 now to in 1929 just before the Great Depression and thank you very much to Kevin Smith for putting this together the technical setup compared to 1929 combined with the valuation and market cap concentration similarities should be

top of Mind in other words people should be paying attention to this and thinking about it the S&P 500 now is in white 1929 is in red look what happens next yeah and correlation of 0.94 of course correlation is not causation but these two patterns are very similar let's take a look at another Trend uh this is the do era so we can see that Cisco and Nvidia looking similar Cisco leading up to the do com boom and bust here in blue Nvidia in Pink So What Happens Next you tell me here we have Stanley dren Miller

commenting on the 1987 stock market crash this is what he said when asked what determined the timing of your shift from bullish to bearish and of of course he's one of the greatest stock market investors of all time usually bullish but he became bearish why well he said it was a combination of a number of factors valuations had gotten extremely overdone okay so high valuations and the dividend yield was down to 2.6% and The Price to Book value ratio was at an all-time high also the FED had been tightening for a period of time

finally my technical analysis showed that the breath wasn't there that is the market strength was primarily concentrated in the high cap stocks with the broad spectrum of issues lagging well behind this Factor made the rally look like a blowoff so is there anything similar today does it also look like a blowoff let's take a look at valuations and dividend yields to see first we have the Schiller PE ratio this is the ratio of price to earning so a stock market's price relative to how

much they're earning as a company and you can see uh back in ' 87 it went up to about 18 and then crash down and you can see compared to other crashes uh we've had some other blow-offs look at this int com era PE ratio of the S&P was up to almost 45 and where we are now at 34 is higher than we were in 1929 that peaked at about 31 right now we're at 34 so it looks like valuations are even higher than preceding the biggest crash of all time looking at dividend yields 1987 when we

were down to about 2.6 2.7 this is what duck and Miller's talking about at the time these were record lows but even after that stock market crash we've gone even lower and even lower still we're around 1.3% now which is even half of where we were back in 1987 so you tell me are we due for another crash or is this just normal moving right along we get a reminder here from Charles Payne thank you Charles for reminding us that the stock market is not the economy I can't tell you how many times I hear people

say oh the stock market is doing well that means the economy is doing well they're not connected and here is a chart that shows that and then I want to explain the basic concept that underlies that so here we have the S&P 500 in blue and we have the truck tonnage index in yellow or gold so this is truck tonnage basically how much stuff is moving in trucks that feels more like the real economy than stock prices and you can see that they used to be pretty tightly correlated until around 2020 they split

apart and truck tonnage has been relatively flat while the stock market is soaring so there's a huge disconnect here between what feels like the underlying economy and the stock market which is the you know headline economy so what's the principle that underlies this why could there be such a Divergence here well this is what's an example of what's called good Arts law good Arts law simply expressed is when a measure becomes a Target it ceases to be a good measure in other words when we

set one specific goal people will tend to optimize for that objective regardless of the consequences so what does this mean okay we could think of examples from just about anywhere in life because it does apply everywhere not just in economics but the classic example I like is in academics right we all want our children to be smart critical thinkers well read uh mathematically literate financially literate and in order to measure that which you know it's it's a hard thing to measure but in order to measure that we

give them grades letters numbers you got 90% or 100% you get an A or an A+ but over time student students learn to chase the grades directly and the grades no longer reflect the actual learning and teachers do the same thing and administrators and the same thing happens with test scores and because it's really hard to measure the thing we actually care about like our students learning it also happens in the economy we want the economy to be strong we want it to be vibrant but it's hard to just know is

the economy good how do we measure that well the stock market is one proxy but it's not an AB absolute and over time you get CEOs and other decision makers that actually go after stock prices directly instead of the actual business activity that should cause stock prices to go up down the road and we also have the Federal Reserve lowering interest rates and flooding the economy with currency and that causes stock prices to go up even though there's no improvement and actual business activity so that's

how we can get a chart like what we just saw where the stock market is completely disconnected from the underlying economy and in my opinion the economy is not as strong as the s&p500 index would lead you to believe and it's not just my word it's also professional investors it's insiders it's CEOs it's people who have been around a long time here we have a a tweet from Anthony Pompano Jeff Bezos is selling a lot of stock the last time he did this was at the top of the market in

2021 what does he know what does he know that maybe we don't know another tweet here Bill Gates is getting rid of his entire portfolio now I don't know if that's true or not but that's what this tweet says historically the movement of billionaires of this magnitude indicate the imminence of a stock market crash and there's a short video here and I paused it with a clip about Jeff Bezos selling another two billion of Amazon shares bringing his weekly cash total to $6 billion so it's

Jeff basos it's Bill Gates and it's also Congressman um in in this video here we see Nancy Pelosi and uh Tommy tuberville selling a ton of their stock portfolios overwhelming majority of their trades are sells lately what do they know what do they know you tell me so I just want to return to this one that we started with a friendly reminder that the S&P 500 now looks a lot like it did in 1929 and this isn't just a discovery that we're making now in fact Mike Maloney has been saying this for years

and he made this awesome video putting together the Eerie similarities of the 1929 crash and today this is an awesome presentation with so much data in it he was really ahead of the curve way ahead of all these other people so I really encourage you to watch this video If you haven't watched it already and thank you very much for watching today stay safe out there