‘We’ve Entered A Bubble’ And The Crash Is ‘Guaranteed’ Warns Investor

The 10-year yield jumped to 4.6% today. Is this indicating higher inflation expectations, higher economic growth, or a failure in the bond market?

Speaker2

Speaker1

Potentially all three. A new hawkish Fed chair who might refuse QE, combined with massive onshoring and AI buildout capex, will be inflationary and push yields higher. The bond market will be volatile.

If the Fed refuses to print, the market will have to find its own funding, leading to higher interest rates. Inflation is about to land from these capex demands, not just oil.

What has traveling taught you about investing?

Speaker2

Speaker1

Travel gives perspective. The UK market is broken and cheap (1x sales vs 4x in US), making it a value opportunity. Japan's market turnaround was visible from outside.

Local investors are often out of touch. Buying cheap international stocks and waiting for re-rating or takeovers is a good strategy.

What does diversification mean in 2026?

Speaker2

Speaker1

Most people are not diversified. I concentrate on cheap stocks globally, which is a form of diversification. For most, buying the S&P 500 ETF is fine.

If you love stock picking, do it; otherwise, buy the index. A concentrated portfolio of a few winners can work, but it's risky.

Prediction markets show recession odds inversely correlated with S&P. What has calmed investors?

Speaker2

Speaker1

The market crash was met with a massive liquidity injection (bazooka), which lifted equities. That effect is now fading. Prediction markets are sentiment, not prediction.

The price is a sentiment indicator, not a predictor. People get bored or less scared, so odds fall.

Is now the time to take on additional risk?

Speaker2

Speaker1

The US market is in a bubble. It's risky but profitable. I think the crash is about 2 years away. SpaceX is the signal for the bubble top.

Bubbles are fantastic if you get in early. This bubble has 18-24 months to run. Crazy IPOs will signal the end.

Would you chase this sentiment?

Speaker2

Speaker1

Chase reality, not sentiment. Sentiment is a group of men acting like one fool. I look for where sentiment is terrible but reality is better (e.g., Intel at 20).

I'm riding the bubble until it's too much, then I'll jump off.

With stocks at all-time highs and 30-year yield at 19-year high, where would you put money?

Speaker2

Speaker1

Second- and third-order plays in onshoring and AI buildout: generators, transformers, cables, nuclear, copper miners. Avoid utilities (government risk).

Copper has a long way to run. Uranium is not yet a big deal. Be careful with cost pass-through (e.g., wire makers).

Is oil going to nearly $300 given the Strait of Hormuz situation?

Speaker2

Speaker1

It's a wild card. Capitalism will find a way around (e.g., UAE pipeline). The big call is US-China relations. If they muddle along, great future; if hostilities increase, it gets bad.

The world may emerge from high volatility into stability in a couple of years, driven by technological advances.

Why not put money in stable jurisdictions like Singapore?

Speaker2

Speaker1

Geographic diversification makes sense for large portfolios. For most, a simple ETF portfolio (bonds + equities) is best.

Classic allocation: 25% productive assets in home country, 25% equities, 25% cash abroad, 25% in your back pocket.

Gold has underperformed the S&P this year. Should investors rotate out of precious metals?

Speaker2

Speaker1

I've been out since the high. Gold is just another asset. It's dependent on US-China dynamics and the parallel trade (Iran/Russia using gold). That trade could reverse, which would be very negative for gold.

Gold is a signal for me now, not an asset. It's had its moment and won't come again for quite some time. Expect an aftershock in a couple of years.

What has shocked you this year?

Speaker2

Speaker1

Intel surprised me: I bought at 20, sold at 45, then it went to 120. The US market is not hyper-efficient; it can be very wrong. It's extremely bipolar and feels like a tremendous bubble.

There are opportunities lying around. Some very average stocks have incredible valuations.

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