Street Analysis

Intersection of Main Street and Wall Street

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Jitendra (Jay) Patel
jpatel51@yahoo.com

  • Fed & POTUS in the Box: Trouble Ahead & Time to Buckle Up

    “You can fool all the people some of the time, and some of the people all of the time, but you cannot fool all of the people all of the time.”, the quote, widely attributed to the President Abraham Lincoln, says it all of current times.

    Time has come and the Truth is out…for the most part.

    No, it is not the Epstein files, the current rage of the populace. “It’s the economy, stupid”, the famous words associated with the President Bill Clinton and his campaign advisor during 1990s.

    Party is over. Literally and figuratively…it is unofficially official! 😊

    Genie is out of the bottle and these two, the most powerful actors in the world – Federal Reserve (Fed) and the current President of the United States (POTUS), Donald J. Trump, both are IN the bottle or boxed in metaphorically.

    “Bakari dibbe me” as the saying in Hindi language goes, i.e. ‘goat in the cage’.

    What people of America could not do easily, “Law of Karma” did or at least appears to start doing… just as it always does.

    Federal Reserve (Fed):

    Federal Reserve (Fed) is really in a tough spot with the current economy. Misery index (inflation plus unemployment) is only getting worse, not better, by the month. Split opinions on the rate cut by the Fed Governors for the upcoming December meeting precisely demonstrates that conundrum. The contemplated rate reductions due to heavy political pressure and the state of economy are being heavily debated within the Fed meetings.

    On the one hand, we do need to reduce the interest rates given the weakening economy, though, on the other hand, we cannot ‘afford’ to do what is needed simply because it risks a major unleashing of even greater and greater inflation and dangers associated with it, which already is kind of out-of-control to a degree with its highly elevated level for the longest time with no indication of budging to more acceptable level. See the Consumer Price Index (CPI) chart below for the last 60 years, which shows it currently at one of the highest readings in last 30 years outside of the post COVID recovery time.

    Similarly, 10-year treasury rate continues to hover around 4%, near 25 years high, and not backing down below that level in spite of two interest rate cuts this year. So is the case with the 30-year mortgage rate which also stubbornly stays at well upwards of 6%.

    See the 10-year treasury rate chart below for the last 60 years.

    President of the United States (POTUS):

    President of the United States (POTUS) is out with two ‘unhinged’ proposals adding or crowning his long litany of highly questionable and even completely deranged things he has charted to do all along. They are both economic items pinned on usual suspects of getting attention and plain ‘appearance’ of doing something meaningful, a knee jerk reaction, conceived out of sheer fear of losing the ground further after election losses to democrats in New York, New Jersey and Virginia.

    Snake Oil Product # 1:

    First is the $2,000 ‘dividend’ check for everyone in America. Clearly, what does the term ‘everyone’ mean is being debated and discussed in the crony, corrupt and inept presidential administration which is full of thugs, goons and attack dogs. By the way, it is the money America does not have and cannot afford to dole out no matter how badly we want.

    A simple math shows that the US has collected $192 billion thus far in the tariff revenues in FY2025 and if we were to give this handout to everyone, it will be upwards of $700 billion with the giant gap of $500 billion. That is on top of the $5 trillion deficit spending bill passed this summer via the President’s Big Beautiful Bill (BBB), which in fact, was nothing but one hUmongous, Ugly, Underwater Undertaking (U4).

    In a major contrast, Norway, the Scandinavian country, has about $2 trillion sitting in its sovereign wealth fund amounting to about $400,000 per every individual in the country…every Individual. Whoa is the only word in terms of the positive feeling and astonishment! In America, instead we have a debt of about $38 trillion increasing by $2 trillion every year now which equates to over $100,000 for every individual…again…every Individual. In other words, the gaping hole of about half a million dollars per person between the two countries. Norway is positive. We are negative here.

    We printed much money during the COVID time with a lot of stimulus. No one questions whether it was necessary. The only question was how much of it was necessary. Just as during the Great Financial Crisis (GFC) of 2008, Trouble Asset Relief Program (TARP) was necessary. Whether we underdid it or overdid it then during the GFC remains a lifelong debate.

    However, right now, there is no basis to print more money…that is unless we want to go down to the hellhole at even the faster rate than we are going at this time. Suffering is on the rise on much of the populace here in America and we can only quicken the pace if we print more and more money like this that our buffoon President has no clue about except to fill his own pockets and his cronies’.

    All we need to do is watch both the gold price and the 10-year treasury rate like a hawk. None of that is pretty, unfortunately. They both portend some more ugly times to come. Gold is up over 50% this year already at $4,000 an ounce and 10-year treasury rate does not want to go down below 4%.

    Besides, even the revenue that has been generated out of the tariffs falls significantly short of what the outlay could be for the tariff ‘dividend’ checks as a simple math showed up above. It is another ‘terminology scam’ like that is being commonly used for ‘social security fund’, the fund that does not exist in reality with the U.S. government. Similarly, tariff ‘dividend’ is not out of some investment, which is generally the case with any dividends. It only will be out of even more deficit spending, if it were to even materialize, for which the odds are not that great.

    Snake Oil Product # 2:

    The second ill-conceived, if not outright foolish idea floated by the POTUS, is the 50-year mortgage product in wake of the recent election losses. It is akin to one ‘desperate’ person dangling a carrot in front of another ‘desperate’ person, a distressed house buyer who is planning to make the biggest purchase of his / her life during this housing affordability crisis. Actually, it is worse, it is not a desperate man dangling a carrot, rather it is the biggest conman in the U.S. history selling a snake-oil to an innocent or uninformed buyer. Chances are it is not going to fly, at least this time around. Thank God!!

    Poll numbers for the POTUS are tanking materially with his popularity waning little by little even within his base. That is a good sign! He is getting in trouble gradually for sure. A little bit of a progress made by America, no matter how little. He even admitted that his numbers are ‘bad’, really the first or rather rarity per his conman playbook, though, the numbers are good amongst the ‘smart’ ones according to him. Imagine that! Oh, well, all we need to do is replace ‘smart’ with the ‘bootlicker supplicants’. That is where he does well and has always done well anyways without a doubt.

    The stock ticker ‘DJT’ representing his eponymous firm, Trump Media & Technology Group, where bulk of his fortune is tied, clearly is a good proxy as it trades near 52-week low at around $10 now that ‘People of America’ are waking up gradually out of their long slumber, about 10 years. Enough damage, intentionally or inadvertently, has been done already, though, hoping no more at least from the actions of this country’s individual citizen’s standpoint. Thank God again!!

    In summary, this $2,000 ‘dividend’ check and ’50-year mortgage’ are two snake oil products that can only inflict more harm on Americans if we end up buying it after having such products amply sold in last 10 years by this greatest conman in our history, the man who can be described in only three words: “Delusional Monstrous Evil” symbolizing recklessness and lawlessness unlike of Real America.

    However, enough is enough. No more non-sense this country can tolerate. Everyone is at his or her wit’s end. Media is outright in the rebellion mode. It is quite refreshing to see how media stands up, really to this biggest bully of the world. People for their part are starting to wise up from their foolishness as well.

    Also, take some MAGA (Make America Great Again) folks or firebrands. Major cracks have started to appear as they are turning on each other, not to mention some of the voters to this evil conman who have started to realize their mistake of voting for this evil to their and country’s detriment.

    On the financial markets front…Nvidia (NVDA) announced solid results yesterday just as it was expected and has been reporting since it is on the tear due to artificial intelligence (AI) wave for the last 3 years. As a result, the rise in Nvidia stock price is not only breathtaking, but rather meteoric during this AI craze, which also appears to be peaking now.

    Going forward the major capital expenditure (CapEx) outlays behind the AI party will be scrutinized heavily by the corporate world and need to be justified with the proper return-on-investment (ROI) calculations.

    When and where would it all stop is anyone’s guess. However, the stock market is starting to crater after years of excesses and it appears to be the ‘beginning of the end’ for its irrational behavior. We can only hope that the rational heads prevail soon – in both the corporate world as well as the investor world.

    AI CapEx binge may peak in a year or two, if not less, whereas the stocks are already peaking now.

  • Quadriplegic Ills of America: Debt, Deficit, Inequality & Healthcare

    Oops! These are the words we can use for the ‘heart’ of America, which is ‘governance’, as it just skipped the beat. Federal Government shutdown ended with the stunning defeat of democrats. They stood for something (healthcare) yet achieved nothing. Republicans stood for nothing and gained everything.

    Similar, oops was said from the financial market’s perspective as well when OpenAI CFO made a comment about the government ‘backstop’ for AI investments only to be retreated later by CEO to avoid further carnage. In other words, the quiet part was said out loud by the center of all excitement and hype of current times – AI, raising all sorts of alarms on top of that are already out there in an elevated state.

    Another one is the intentionally pursued slower depreciation schedule by mammoth big tech companies to beef up their earnings. Heart of corporate America is ‘valuations’ or asset prices, which is also at a precipice with a great danger of falling off the cliff as covered in an earlier piece.

    As for the government shutdown, it was like a super exciting game when the outcome is not certain till the very last moment as to which team will win the game, or worse yet, the game changes in a last minute only to see the least likely to win team ends up winning the game. How sad! Certainly, some folks and constituencies are to be disappointed in quite a meaningful way.

    Except that this was not a game of real life; it is a serious matter, in fact a super serious matter that affects the livelihood of millions of people in dignity that the ‘kids of Washington’ do not seem to grasp (or rather do not want to grasp) and have not been able to figure it out for years.

    Instead of Republicans that may have fallen flat on their face as expected in this longest ever and 6 weeks long government shutdown fight, the exact opposite happened after weeks of all pain and no gain. Democrats are in disgrace with such shameful defeat on their ideological fight.

    The end result is that ‘Rich and Powerful’ (select few) won and ‘People’ (24 million to be exact) lost with huge spikes in their healthcare premium without government subsidies as part of the Affordable Care Act (ACA), one of the most successful legislation in recent decades. This is probably the biggest blow thus far from Republicans after 70 attempts earlier to repeal the act. What a shame for America!

    None of this consternation was necessary without accomplishing something useful. Fight was fought for nothing. The only thing it accomplished was inflicting pain upon people of America.

    Healthcare in America is whether a right or privilege is a much debatable topic unlike it being well accepted in other advanced economies that it is a right, not privilege for the societies that can well afford a universal healthcare.

    Oh well, election spending by billionaires says it all. The following picture is worth the thousand words. Really.

    With that one can easily see, how exactly, this once great nation on earth became quadriplegic, the roots or seeds of which were sown in early 80s with then U.S. President, Ronald Reagan, chopping the top federal income tax rate from 70% to 30%. All in the spirit of ‘Reaganomics’. See below.

    Source: Bradford Tax Institute

    If the heart is in the right place, then everything can be solved, the biggest or only issue for America. Heart that is weak (rather small), debilitated or with the evil intent in fact is causing self-inflicting wounds on American people and making it quadriplegic with four limbs – two arms and two legs paralyzed with four major issues – debt, deficit, income / asset inequality and healthcare. Yet, they are all interrelated.

    In fact, you solve one and solve them all. That is how interconnected they all are. Such a simple thing it is, however, only if we have a right intent and heart in a good place.

    Twin ‘untouchable’ rails of politics are social security and Medicare that no politician seems to be able to touch it until some brave soul comes along on this soil of America and rescues it. One such soul did arise here on this land, aka, Donald J. Trump, our current President, and created a humongous phenomenon called ‘Trumpism’ during his 10-year tenure inside and outside his presidency.

    However, it is all with the ill or rather evil intents, the exact opposite of what was needed in this country fostering division instead of unity and pursuit of higher goal and happiness. Trumpism is nothing but a ‘social unrest’ except that it is using the wrong ‘instruments’ and hence led by unscrupulous leaders to deceive the less educated and uninformed. These so-called leaders define and turn the good into evil and evil into good. That is how deviated these leaders are.

    Social unrest has arisen in its current form due to variety of issues such as income and asset inequality, housing affordability, poverty, minority rights (LGBTQ+, transgender), abortion, hatred, division, immigration, racial tension, social injustice, two-tiered justice system and culture wars.

    The hate and extreme division we see in the American society is by design and to a smaller extent all over the world as the most polarizing institutions for the mankind are politics and religion which can often foster the hatred, the most lethal form of ignorance or evil in other words.

    One of the most recent obnoxious actions or rather delusional is floating an idea of a 50 year mortgage by our President as a knee-jerk reaction to Democrats’ recent win in off-cycle election in few places such as New York City, New Jersey and Virginia, which obviously is not only the dumbest idea in desperation by the evil forces rather it is akin to selling a snake oil to unsuspecting public as an ill-devised and ill-fated cure to the housing affordability crisis.

    To top it off, $2,000 carrot was thrown in the mix as a dividend for tariffs, another ill-devised and ill-fated idea from the suicidal strategy arising out of delusion with the money U.S. does not have and cannot afford. Not even a simple math was done as to it is way too higher than the tariffs received already by our government. In other words, a freebie without a compensating tax collection only to exacerbate the U.S. debt problem even further to put on a show of sound strategy.

    Such depravity from the leader of the greatest country on this earth is beyond fathom.

    This place truly can be a heaven on this earth, a model for the entire world and very, very close to the ‘Perfect Union’ that this country’s founding fathers envisioned over 200 years ago. Really, it can be done, almost like a utopia…only if we are truly determined to do so. Instead, we are crumbling a little by little that is playing out like a slow-motion movie as we horribly watch this society collapse – from a highly civilized and cultured place to uncivilized and uncultured – a bit by bit and day by day. There is no place for a civil dialogue, only accommodation is for the division or rather extreme one at that with the bonus of hatred.

    In troubled times like these, what are we supposed to do?

    Reflect. Reflect ruthlessly. Reflect more and more…we try to become ‘nobody’ from ‘somebody’. That is the ultimate of life. That is the ultimate Truth. We truly need to ‘transform’ ourselves, the highest vocation of life! Each one of us, myself included.

    Using a similar analogy of ‘Mother India’ as it is commonly known in India, my birthplace (janmabhumi), if USA, the land of my karma (karmabhumi), can be called the ‘Mother USA’, then the mother is for all children, not just for a select few. No mother does that. Mother often has her favorites for the right reasons though does feed them all with the same love.

    From my perspective, the proverbial mother has 4 kids – Republican, Democrat, Independent and Self-Realized. Republican kid is the furthest away from God, the Supreme entity, let us say about 3 feet distance. Democrat is about 2 feet away. Independent is 1 foot away and Self Realized has essentially merged with the Supreme, hence, no distance, it is zero-distance from God.

    Hence, the goal for us here is as follows:

    • If you are a Republican then drop the Republican hat (identification) and put on the Democrat hat as a first step of evolution and see yourself as a bigger part of the whole and certainly not turn the blind eye to the misgivings of your own
    • If you are a Democrat then drop the Democrat hat (identification) and put on the Independent hat and train yourself to look at the things quite objectively without any inherent biases we carry
    • If you think you are truly independent (identification) then be assured that we are still not there for the most part. We eventually need to drop the hat of independent and work towards Self-Realization and wear no hat at all. Be a mere witness. See things as they are without getting identified with it. Be mere existence just as the great scriptures of the world advise us to do

    This is exactly how we progress on a scale of evolution from utterly selfish person and activities to being a completely selfless soul, a true rarity on this earth.

    In this context and framework, where does our current president fit in? Oh well, he is miles away, not just a couple feet away from God like an ordinary American. The fact that the Christian community has put so much faith into this evil fellow is beyond me, my understanding and my limited brain capacity. In fact, how, this greatest country on earth, America, has elected and even re-elected such a felon is beyond my understanding. Probably the biggest surprise of my entire life.

    MAGA (Make America Great Again) band on the other hand, I understand. Some of them are of the same ilk as the leader of the pack – some with the evil intent similar to the leader whereas the others are innocent, if not uninformed, citizens who really want good for them and the society. They all just happened to pick the wrong leader or associate them with the wrong band, the leader who does not have the best interests of masses in his mind, rather strictly of his own and his cronies or supplicants, the marketing mastermind and greatest bully and con-artist of all.

    MAGA initiative really needs to turn into MATGA (Make America Truly Great Again) or MAAWGA (Make America and World Great Again)! Amen!!

  • Financial Markets at Catastrophic Precipice: Disaster Waiting to Happen

    Nvidia (NVDA) hit $5 trillion market cap, largest ever, as covered in the last week’s post.

    Buffett Indicator, i.e. market cap to GDP ratio is at 220%, the highest in over 50 years, a third higher than the dot com days 25 years ago.

    CAPE ratio (Cyclically Adjusted Price to Earnings for 10 years) is at 40, first time ever since the dot com days.

    Outright dangerous territory…

    Why? Financial markets are at unprecedented valuation levels.

    Profiteers from all walks of life go after artificial intelligence (AI) frenzy like there is no tomorrow.

    Our beloved magazine Barron’s writes an article that the next stop for NVDA is $6 trillion. Can it happen? Yes, absolutely, it can as the day dreamers continue to dream as long as the party continues. Eventually, they have to wake-up. Trees can flourish, though, they do not grow to sky.

    Fed is on the collision course with the real specter of sticky inflation, which is under-reported.

    Tariffs from the suicidal strategy, probably the largest lunacy of a century, are starting to bite the real economy where the average Joe continues to pay higher and higher for the everyday goods and services.

    Voters rage at display with significant wins by Democrats recently in key election races while Republican trifecta (Senate, House and President) is in power.

    Federal Government shutdown continues, the longest ever now for over 5 weeks as the second presidential administration term breaks its own record from the first term of 35 days long shutdown.

    Bond holders are being very meek, though, have certainly awakened from their long slumber (multi-decade) of accepting lower and lower yields (lately in low single digits) and stock holders are being foolhardy by being the staunch “greater fool theory” practitioners.

    Some sign of sanity? Yes, there is one we could see in recent days…the largest fund in the world with $2 trillion in assets, Norway Sovereign Wealth Fund, plans to vote against the ludicrous, if not inconceivable, compensation package of $1 trillion for Elon Musk, Tesla CEO, while the rest of the investor base, primarily the cronies, continue to support the hot air balloon.

    10 year treasury rate is being stubborn and persistently sticking around 4% even after 2 recent rate cuts totaling fifty basis points or 0.50% by the Federal Reserve (Fed). This is where the real inflation is yet the reported print is around 3% (core CPI) having adjusted for food and energy as if we can live without food and energy. Reaching back to 2% inflation target remains a pipe dream.

    Yet the Fed continues to pursue “easy money” policy due to extreme political pressure, an understatement, and owing to our addiction and current extremely fragile setup for long for low interest rates. It is going to end very badly without a doubt unless they change the course. In fact, regardless of the course, there is a price to pay. Hence, now, the Fed is NOT just boxed in as mentioned in an earlier post, though, rather on a real collision course now trying to deal with two ugly opposing realities. Either way, we are in a pickle. We go low and we overshoot an inflation. We go high and risk collapsing the economy. Either choice or option is not pretty. What is a lesser of the two evils is anyone’s guess.

    Profiteers on the Street and political world keep insisting (rather forcing) on super-low interest rates, however, it ain’t happening most likely and caving into such pressures will only make things worse for the economy by stoking higher inflation and stagflation (low growth) for years to come. Sub 5% interest rates and continually trending down have been the name-of-the-game primarily after The Great Financial Crisis (GFC) of 2008 with the intense money manipulation by the central banks of the world which now has come to the end in the post COVID environment when it troughed near zero interest rates in 2020-21.

    The real effects and chaos are starting to take place already for the Main Street as well as Wall Street with the effects of the Federal Government Shutdown showing up in from the food stamp program to the airport delays to missed paychecks for the government employees. Now, thankfully, the end appears to be near for the shutdown given some realization (Thank Heavens!) by Republicans after major losses in high profile races. However, there is no guaranty that it may end soon without even a larger amount of chaos given the history of current administration and its crony congress.

    At this time, the Democrats appear to be winning the ideological battle of healthcare with Republicans during this shutdown. Further, the conservatives (Republicans) may fall flat on the issue this time around as well after having attempted 70 times, yes, you read it right, the repeal of Affordable Care Act (ACA), aka Obamacare in the past 15 years, one of the most successful and powerful legislation of recent decades.

    Back to the financial markets…

    Palantir (PLTR) at a whopping 142 times sales of $3.4 billion.

    Nvidia (NVDA), the largest market darling, at 31 times sales of $165 billion.

    Broadcom (AVGO) at 29 times sales of $60 billion.

    Arm Holdings (ARM) at 43 times sales of $4.1 billion.

    Strategy (MSTR) is at 158 times sales of less than half a billion dollars, though, it is more of a bitcoin play than the real business.

    By the way, just as a reminder, these are price to sales ratios, not price to earnings ratios! A perfect trap for the next leg down with these sky-high valuations.

    Yet the profiteers on the Street continue to promote the lunacy to the masses or fools who buy in to this cool-aid.

    Another sign of sanity…Michael Burry, ‘The Big Short’ famed investor for the book and Oscar-winning film, who profited handsomely (in tune of $1 billion) from the housing market crash in 2008 just announced a major short bet, close to $1 billion between Palantir and Nvidia.

    In response: “It’s not even clear he’s shorting us. It’s probably just, ‘How do I get my position out and not look like a fool?’” Alex Karp, CEO of Palantir said to CNBC.

    We will check back in about a year or less who is a real fool between the two and who profited.

    Disclosure:

    The author has no long or short positions in any of the stocks mentioned in the post

  • Nvidia hits $5 Trillion Market Cap: Perfect Time to Run for Cover?

    The biggest lesson from the history is that we do not learn any lesson from it.

    The year 2000 of dotcom mania and 2008 market crash in both housing as well as financial markets is not a distant memory.

    Greed may, may have a limit, though, the foolishness does not. It is amply evident from the history of a mankind.

    Nvidia (NVDA) hit $5 trillion market capitalization yesterday. The first ever company to achieve that valuation level. This number is greater than the GDP of the entire country – India, hosting the highest population, 1.5 billion people, on the earth.

    While this happened…

    Fiserv (FI) was down a whopping 45% erasing $30 billion in market cap yesterday.

    Chipotle (CMG) is expected to be down today by 20% losing about $10 billion in market cap.

    Meta (META) is expected to be down today by about 10% erasing about $200 billion market value.

    Synopsis (SNPS) plunged by 36% on September 10 wiping out about $24 billion in a single day.

    Similarly, it will not be long before the very same investors (trigger happy, fickle, not to say insane) sour on AI and all hot tech stocks. This is all while the ‘real’ economy suffers.

    If someone thinks that it cannot happen to the market darlings, think again.

    Nvidia (NVDA) itself was not immune to the mad rush as it was down 17% in a single day on January 27, 2025 wiping out about $600 billion market value. Can it happen again? Why not?

    Meta (META) was down 26% on February 3, 2022 wiping out about $232 billion market value that day.

    It has been a little over two years since the things have started getting out of control and it appears that we are in the last innings of the game, certainly not the beginning.

    OpenAI is now eying an IPO with a trillion-dollar market cap sometime in 2026. It is another sign that we are closer to the end game.

    All this while the federal government shutdown continues and air traffic delays continues to get worse. It finished 4 weeks today with no end in sight. It already is the second longest shutdown and will soon surpass the longest ever, 35 days long under the same presidential administration, next week.

    Tale of two Americas continue as one part of America is flourishing like anything while the other one is going to be shut out soon of receiving food stamps on November 1. This is all for the ideological battle of healthcare, which is considered the basic right in the advanced countries.

    Market pendulum has only turned more violent now with the advent of social media and AI as the information travels at the lightening speed. Hence, the insane moves in stock prices are not the rarity or inconceivable any longer, rather they are regular occurrences or a norm in many cases.

    Countless other idiotic moves downward have been observed for many large cap and mega cap stocks in the last couple years, a relatively new phenomenon.

    Very few safe havens are left out there for the cautious investors to hide and it is a perfect time to find one. Major market crash is not a remote possibility any longer, it is almost a given. The writing is on the wall.

  • Canary in an AI Coal Mine (or Gold Mine): Surprising Super Micro Business Guidance

    So much for the AI hype and circular contracts that we have seen as of late! Yesterday, Super Micro Computer (SMCI), high performance computing server manufacturer, which saw its revenue skyrocket along with Nvidia (NVDA) almost 10 times in a short few years, to support the plumbing of eagerly anticipated and participated AI gold rush, announced the following:

    Finally, it seems like that rational heads may begin to prevail as it always does – wisdom prevails in the end. Sometimes, it is too late (like this time around) and if we are fortunate, it is early enough. Ultimately, the costs may need to be justified and profitability becomes the guiding factor as the blind faith goes only so far.

    In here, even the best-case scenario for Super Micro was not so glimmering 15%. Instead, it will be more like a flat linish now…

    As a result, the stock went down by 9% on the news yesterday.

    It is only the beginning of the AI mania reckoning. We certainly seem to be in the final innings of an AI gold rush and the beginning phases of the “Great Reset”. The unfortunate part is that along with that, it will take many aspects of economy down as so far that has been the only shining city on the hill.

    This may well have been the first shoe to drop could be Super Micro. The day Nvidia disappoints, it will be really ugly and there will be no place to hide. The second shoe or countless more will be lining up soon after…

    So, what is the message from Super Micro warning? Get off the band wagon as we have indicated in the earlier posts…fast…

    Naturally, questions arise such as…

    1. If the AI business is so strong why such a significantly downward revenue guidance by Super Micro, a leading indicator like Nvidia providing the guts of AI?
    2. If the AI gold rush is a reality, not a hype (in spite of its real potential) then why the numbers have started to plateauing instead of continuing its breakneck speed like initial few quarters at Nvidia?
    3. If the AI is going to transform every aspect of our lives NOW (eventually it will) then why did we see numerous “circular” investment and contractual agreements?
    4. If AI gold rush requires about a trillion-dollar worth of investments from various constituents as has been professed, what is another billion or two for Super Micro that they could not cough up this quarter?

    Basically, the timing is impeccable and it is all coming together just perfect with the slew of announcements of these circular investments between OpenAI, Nvidia, Oracle, AMD, etc., which signify the tail end of the AI gold rush and now Super Micro is a proof in the pudding.

    In good old days, such contracts could have been called “let us scratch each other’s backs” at best and Ponzi scheme at worst as criminals would try to extract every last dollar from the innocent ones.

    The real or even more powerful proof will be in the numbers from Nvidia in about a month. Canary has spoken its last words before it died from the toxic gases of gold mine (or coal?).

  • The Giving Pledge: Warren Buffett, Bill & Melinda Gates Initiative

    I am.

    Above phrase also means “I just am” or “I exist” in a language of Consciousness.

    To expand it further, I am so and so…I am a writer, I am a professional, I am a father, I am a husband, I am a brother, I am a son, etc.

    These are the days of “festival of lights” known as Diwali as per Hindu lunar calendar reflecting light over darkness and signifying the triumph of goodness over evil. It is also celebrated by other religions such as Jain, Sikh and some Buddhists.

    What this light does is help us drop all such identifications described above, which are in sheer abundance for all of us being the binding factor for all of us. Objective or rather destination is easy to identify as to where we need to head in our lives. What is more difficult is the journey to get to that light.

    Warren Buffett, one of the richest persons on earth, saw such light back in 2006 and announced to give away 99% of his wealth during his lifetime and at his death. A few years hence, his close friends, Bill & Melinda Gates formalized the concept with the encouragement from Warren Buffett, announced the “The Giving Pledge” initiative in 2010 and pledged to give away bulk of their wealth as well. It is a pledge, not the commitment, though a fantastic start and holds so much promise, especially in light of a current political environment all over the world.

    Here is the link to the pledge letter by Warren Buffett.

    Since the initiative was launched, it has inspired more than 250 of the world’s wealthiest philanthropists from 30 different countries to pledge their wealth as well and it continues to gain more and more traction each year. One of the best examples, MacKenzie Scott, ex-wife of Jeff Bezos, Amazon founder, has already given away $19 billion of her wealth in a short few years. Another beautiful example is Chuck Feeney, the founder of Duty Free Shoppers Group, who gave away ALL of his wealth, over $8 billion, while he was living.

    Why do they do it? That is a much bigger and lot deeper question that we can only wish more people, especially the wealthy types, would understand or probe into. Most everyone understands the value of charity or ‘giving back’ in some fashion. The short answer is “gratitude” for what they have and who it is truly owed to, not just their own hard work, rather, it is owed to the entire society at large aside from their great fortune.

    Unfortunate reality or contrast is that there is an equal amount of dark or even evil forces out there on this beautiful earth, especially concentrated in the world of rich and powerful. To counter that, we need much more benevolent forces out there so that the mankind as a whole continues to progress not only on the front of material comforts, though also to evolve for the upliftment of each and every individual in this world and raise the level of collective consciousness.

    Ordinary person like you or I also have an immense amount of power and can do a lot – any tiny bit or portion – to leave the world a better place than what we inherited – in and around us. A good example of this is “Giving What We Can” that enables one to pledge 10% of their income. Over 10,000 people worldwide have signed up for the 10% of income pledge that has already donated $321 million to various charities. Money is only one way to contribute whereas the other powerful resource is giving time and at minimum, putting a smile on someone else’s face.

    The world is full of income and asset inequalities, let alone poverty and miseries induced by mankind generated evil forces such as from powerful ethos to unnecessary wars. This giving pledge is just one tiny little effort that tries to make a difference.

    As mentioned in the beginning of the note, the objective is to get to “I am” or in other words “just be”, not “just become” and drop all the identifications. “We are the problem” as Bill Gates also learned from his father as mentioned in his pledge letter. So, let us strive to remove – “We” – and more accurately “I” during, not only this reflective time period of “festival of lights” known as Diwali, though, rather throughout the year. Heaven is right here on this earth.

  • Ominous Signs & Gold Revolt – A Dollar Debasement Trade

    In a previous post, we spoke of the height of imbalances in USA and the creation of a half-trillionaire as a contrast. Now, the shutdown of federal government has completed its two weeks time period and more pain may still ensue as effectively neutering, if not dismantling, of Affordable Care Act (ACA), one of the most successful legislation pieces of a modern history as well as one of the ONLY lesson learned and/or positive outcome from the Great Financial Crisis (GFC) of 2008 is at stake. This oft tried destruction cannot materialize without much pain and of course even more brutal fighting between the two political parties – Democratic and Republican.

    There have been at least 70 Republican led attempts to repeal ACA in last 15 years since its inception in March 2010 as shown here on a wiki page and they have not been able to put any dent to it yet. So, is it rational to expect that the Republicans may succeed around this time to dismantle ACA without much repercussions after all these failed attempts? Probably not…

    What is more ominous is the revolt of a yellow metal – gold, the real money – price of which is surging at a very unusual and fast pace exhibiting a climb as if something bad were to happen. The growth in gold price is indeed explosive especially compared to its traditional pace of slow and steady rise (or even decline) for a valid reason.

    1. Gold price at over $4,200 rose about 5% from $4,000 in just last one week alone in addition to about 50% rise year-to-date and more than double the price in 3 years
    2. U.S. government missed publishing the employment data (unemployment rate) on October 3 due to shutdown
    3. U.S. government missed publishing the inflation data (consumer price index – CPI) on October 15 due to shutdown

    Hence, the net effect…businesses and governments (federal, city and state) need to fly blind without much needed data and be subject to major accident(s). In about three days, it already is on its way to be the third-longest shutdown in a recent history after the 35 and 21 days long shutdown beginning in Dec 2018 and Dec 1995 respectively as shown here.

    Cherry on the top…for the first time in 20 years, U.S. passport has lost the standing from the top 10 rankings of all countries in the world as per Henley Passport Index. It ranks 12th now in the world tied with Malaysia and behind our good old neighbor Canada who is ranked 9th as well as several eastern European countries and of course the western European countries. Since, the index assigns the same score to multiple countries, there are actually 36 countries ahead of U.S. in the list. Clearly, it shows how fast we are declining when we were #1 in 2014.

    U.S. dollar is getting weaker. Hence, the gold is getting stronger on a relative basis. Money printing is easy. Gold discovery and digging (mining) is hard. Fiat currencies have only so much value whereas gold acts like real money and keeps up with the eroding power of inflation, a major pain point of today’s consumer in USA.

    Is it 1970s all over again as it comes to hyper-inflation time period? Probably, that is what we may well end up seeing as the Federal Reserve (Fed) is gradually caving in under the political pressure from the President of the United States (POTUS), Donald J. Trump. Both, Fed well as POTUS are already in the box as covered in an earlier post.

    Both are boxed in. How exactly? Fed is fighting the specter of stagflation and POTUS fights the total collapse of U.S. economy under his watch by surging budget deficits, slowing economy from self-inflicted wounds of tariffs, debt service expense crowding out major outlays and catastrophic assaults on democracy as well as immigration.

    Interest expense alone at over $1 trillion, more than half of the U.S. budget deficit and more than the defense expenditure, is a serious matter. Add to that very fragile situation, the lethal mix of potentially higher interest rate from inflation and the entire system collapses. Monumental rise in the gold price is only a manifestation of that risk.

    While these bad things are happening, bond holders are still sleeping or rather have been sleeping for the longest time one can imagine and the stock holders are partying like anything. Though, gold? It is acting as ever-vigilant and as a good Samaritan. It is a harbinger of things to come…

    While the dollar debasement debate and slow-motion action have been in place for some time, the actual trade reflecting the same is well underway for long. Explosive rally in gold price reflects just that with well over 50% gain this year alone. Gold has literally or effectively revolted against the debauchery of dollar and is asserting its full control.

    This is a move that will end up costing USA dearly as the endless manipulation and abuse of U.S. dollar, the fiat and reserve currency of the world, is finally coming home to roost after U.S. abandoning the gold standard in 1971 under then President Richard Nixon’s watch.

    Gold preserves the value regardless of inflation whereas the fiat currency does depreciate against the crippling effects of inflation. Gold price is not tied to the banking system or any government that can directly influence, if not manipulate, the ‘price of money’.

    World’s major central banks are diversifying away gradually from U.S. dollar and into gold and other currencies to hedge and protect their holdings in light of all geopolitical events and specter of inflation in U.S.

    What all this means is that flight to safe havens shall continue and hedge against the mounting debt of U.S., currently sitting at $38 trillion dollar and increasing by $2 trillion dollars a year or 6% deficit-to-GDP ratio will be the ‘trade of the decade, if not the trade of the century’.

    Cryptocurrencies (e.g. Bitcoin) do not make the cut here since they are nothing but a ‘rat poison squared’ as the investment legends – Warren Buffett and Charlie Munger stated back in 2018. Alternatively, they can be called as the gambling play or the instruments to play into a ‘greater-fool’ theory, not the ‘real’ asset class like a fiat currency backed by the guaranty of any government (no matter how weak), stocks, bonds, real estate or precious metals – in other words, all real asset classes.

    If we were to enumerate or summarize all the reasons, not necessarily in the order of importance, for an underlying thesis, here are those main driving factors behind the revolt of gold, a safe haven asset, that comes in quite handy in the event of some sort of government failure or even a major collapse.

    1. U.S. Federal Government shutdown since Oct 1, 2025 and still counting days…
    2. Specter of stagflation much like 1970s that created one of the worst recessions in U.S. history
    3. Transformation of USA financial picture from a net creditor nation in early 1980’s to the net debtor nation with the ever-increasing debt-to-GDP ratio and inability to service the debt without painful consequences
    4. Healthcare tsunami in the making: Most everyone knows and acknowledges including congressmen that the healthcare system is in shambles and completely broken. It may implode and collapse anytime barring any major or complete reform
    5. Ill-fated, self-defeating and suicidal tariff moves since early 2025 and insanity by POTUS continues with no end in sight. Instead, U.S. needs to be more strategic much like China and many other countries making advancements on various fronts
    6. TACO trade, as known in the Wall Street and an acronym given to POTUS – ‘Trump Always Chickens Out’ since global tariffs announcement on April 2 also known as ‘Liberation Day’ only to walk back in days after seeing a major global market rout, occurred once again on Oct 10 and 13 after the repeat meeting the same fate as April – threat of additional 100% tariff for China imports on Friday, Oct 10 only to withdraw on Monday, Oct 13, after seeing another market rout. Essentially, the POTUS is hellbent on taking a country down with him like many of his prior business engagements into bankruptcy. Remember he is big on debt? Well, it is time to pay the bills. It is a major irony or unfortunate reality that the big part of the country has not yet woken up to that fact and reelected such a whining loser and is still supporting several self-destructive moves as if the mishandling of COVID crisis and adding several trillion dollars in debt was not enough under his watch during first administration
    7. Wealth Transfer is at its peak, which is in the making for the last 4 decades owing to both political parties with their much-misaligned policies that gave a rise to ‘Trumpism’ and why Trump got elected and even re-elected with one term hiatus when people voted more rationally. Wealth and income inequality is at its worst ever in the good old USA and the middle class is fast evaporating – dividing America into two parts – have’s and have-not’s. Gini coefficient measures the wealth and income inequality and U.S. has one of the worst rankings amongst the developed nations. It is essentially a rigged economy in favor of rich and powerful that gave a rise to ‘Trumpism’ and MAGA band (Make America Great Again, which consists of primarily uninformed, self-interested or plain evil) in the first place
    8. Two Americas: Due to wealth transfer as described above, part of America (relatively small portion) does phenomenally well just as the stocks have continued to march higher and higher for years making countless millionaires and billionaires, hack even half-a-trillionaire (guess who?) versus the majority that struggles even for the groceries as of late. In fact, a crowdfunding website ‘GoFundMe’ CEO just stated a couple days ago that he is seeing an alarming trend of people raising funds from his site to buy the groceries. Buy groceries? Are we really an advanced nation? Further, folks are even going into debt to purchase life essentials by putting them onto credit card carrying balances or splitting payments using BNPL (Buy Now Pay Later) methods that is also seeing fascinating growth
    9. Insanity of stock holders, namely Mag 7 and AI cool-aid drinkers, adding major contributing factor to the tail-risk (unforeseen events) potentially pushing the global economy into a major recession. AI investments are now crowding out the ‘real’ economy as it leaves very little or no growth outside of AI in the real economy. Institutional investors, certain company managements and sell-side pimps are acting like morons without any rational thinking that feasts on the money from retail and uninformed investors with an extreme level of greed. Remember Buffett’s wise words? Be fearful when everyone is greedy. As a result of it all, these super expensive financial assets, namely stocks, exhibit mega moves, completely unprecedented, in several large cap stocks including some innocent ones by these ‘Trigger Happy’ and ‘High’ investors
    10. Bond holders are pacified in slumber zone or even in a deep sleep that may one day arise and roar like a lion and drop their moron hat by demanding sharply higher interest rates. Clearly, they are complicit in the making of a current messy situation
    11. Fed Independence: Attack on the Federal Reserve and attempts to take over the control and guide its policy is so lethal that it is beyond the comprehension of our ‘man-child’ president. Hence, the U.S. dollar enjoying the status of world’s reserve currency and treasuries being the risk-free assets are under a great threat, if not a grave danger. Violent rise in the price of the yellow metal, gold, reflects precisely just that. U.S. dollar and treasuries no longer hold the safe haven status from what we can see. A gradual move for refuge from the self-harming government policy is well underway and gold price is a good proxy for that. Silver price is also at an all-time high reflecting the same trend
    12. Sheepish and weak constituency of congressmen, business CEO’s, law firms, media firms and even country heads bending their knees after being bullied by a petulant and evil ‘man-child’ President. Caving into abolition of DEI initiatives (Diversity, Equity & Inclusion) and major infringements on, if not nullifying, the rights of LGBTQ+ community regardless of the shortcomings of initiatives is one good example. Major exceptions are China, Russia, India and Brazil – the BRIC countries that are standing up to the reckless demands and whims of a madman and not giving into it regardless of their own issues
    13. Our President and the government stand for only ‘half’ of the country, alas, not even half of the country, just for their ‘MAGA’ base, unfortunately, instead of standing up for all Americans. A good government is “of, by and for all of the people” not just a few privileged ones as these wise words were uttered by the President Abe Lincoln in his Gettysburg address. Unfortunate reality is that most are unaware of this malice and pledge their ‘tribalism’ to these evil forces disguised as good ones or change makers sometimes in a sophisticated manner
    14. U.S. – China Rivalry: China has been taking all the right steps whereas U.S. has continued to shoot in its own foot and now a suicidal president shall help us get there faster into the abyss, unfortunately. It is a sheer jealousy of China that does not get us anywhere. In order to beat China be it from the economical, technological or military might, we simply need to be better than China, not just attack China. We have been ‘frenemies’ (friends with enemies) for about last 3 decades and reducing reliance on China needs to be a ‘strategic’ and ‘gradual’ move, not an abrupt and whimsical one, certainly not suicidal one
    15. Geopolitics: ‘America First’ approach with the break from the global trade order and upending the very institutions and the methods of how the business and commerce works in a highly interconnected world in 21st century is nothing short of foolish, if not outright suicidal. Unfortunately, wars and conflicts are always there between countries. We do not need any self-manufactured crisis and conflict on the economic and business side of the world on top of the man-made geographical boundaries and related struggles and strife

    In conclusion, both political parties are equally responsible for the mess that we are in, however, more so Republicans now that the party has been taken over and led by the evil forces needing ‘exorcism’ as in the famed movie ‘Exorcist’. Evil forces always need replaced by good and noble forces for the mankind to progress further. Republican party has lost its soul and need to regain it, a tall order, whereas Democratic party needs to root out any ills that the party is facing.

    Blaming and bullying by the leaders of the Republican party is not just rampant, though, pervasive or rather a life blood instead of cooperation with the Democratic party to make any tangible progress. Democrats for their part are unwilling to budge at times only contributing to a mess that has become bigger and bigger in last 4 decades. America then and now is a day and night difference

    Democrats are people too! So, are ‘illegal’ immigrants. Sending federal troops to blue (Democratic) states and harassing them is no good governance whereas the red (Republican) states are spared due to tribalism. Just because, our lame congress cannot enact a good legislation and enforce the ‘rule of law’ to efficiently govern ‘all’ people including legal and illegal immigrants, it does not mean that we can treat any party or any individual as an animal or non-human being. Alas, we are not even supposed to give that treatment to many animals. Of course, no one shall condone any criminal activities, yet, the basic fact of life is that even the hard-core criminal is a human being and deserves certain basic rights. We shall not ever forget that.

    So now what…officially, we have entered the civil war category of crisis in this once-great nation and the fullest extent of dire consequences, unfortunately, cannot be known until after few more years. As mentioned earlier, sheepish congressmen, businesses, law firms, media firms, universities and even country heads only contribute to that in the meaningful ways on top of the ignorant masses and tribalists.

    Separately, not to delve much into the concept of government shutdown itself, it is fair to think that the entire concept is so silly and appears nothing but a child’s play as opposed to serious adults or leaders engaged in solving world’s real problems. The whole concept needs to go away forever so that the U.S. population can never be held hostage to the whims of the politicians.

    We can end the note with these words from some wise men:

    “Unscrupulous and evil men and groups can usurp the power of government and use it to their own ends”

    — First line in chapter 10 “Support a Government Designed and Run for All the People” of “Way to Happiness Digest” written by L. Ron Hubbard

    “When a clown moves into a palace he doesn’t become a king, the palace instead becomes a circus”

    — Turkish proverb shared by Dan Rather

  • Height of Imbalance in USA: Federal Government Shuts Down & Creates Half a Trillionaire

    In a previous post, we discussed a trillion-dollar valuation club members of the stock market in USA. In this post, we can touch upon the height of an imbalance that we are seeing in this day and age now in many facets of our lives.

    Last Wednesday, October 1, at the beginning of the new fiscal year for U.S. federal government, it effectively shut down due to funding impasse in congress. On the very same day, S&P 500 hit another record high at over 6,700 mark and the wealthiest person on this planet earth, a mercurial CEO of Tesla ($TSLA), Elon Musk, hit a $500 billion mark for his net worth as Tesla, all hot air stock, also rose along with the market.

    S&P 500 has achieved about 15% gains for year-to-date (YTD) in 2025 – a third year in a row for a strong performance building onto more and more fluff for about 10 years now.

    CAPE ratio also known as a Shiller PE hit 40 now, already in a dangerous territory.

    Gold surpassed a $3,000 mark early this year in March and just now hit the value of $4,000 an ounce, soaring over 50% YTD 2025, an exceptionally strong performance, not a surprise, given ever-worsening fiscal and debt situation of USA.

    At the same time, MSCI ACWI (All Country World Index) ex USA Index performance is about 29% gain YTD 2025 easily surpassing S&P 500 benchmark for the U.S.

    However, U.S. Dollar index (dollar against the basket of foreign currencies) is down close to 10% for YTD 2025 – matching the reality of an emerging new world order.

    Federal Reserve (Fed) is already boxed in with the specter of stagflation (high inflation and low growth) as covered in an earlier post, now, President of the United States (POTUS) is also effectively boxed in from the political standpoint, first-time ever, an almost unthinkable position to be in for the administration, at least for now, with the standoff between democrats (liberals) and republicans (conservatives) continuing and see who blinks first.

    As a result, inherently speaking, any action by Fed or POTUS is fraught with much risk in either direction, unleashing many undesirable things.

    Writing on the wall for potentially major crash, the absolute worst-case scenario, continues to be affirmed again and again with the new developments. The best-case scenario is that everything fizzles out slowly and gradually without wreaking much havoc. We can only pray for that! However, knowing the temperaments of current investor base and knowing how fickle they are as demonstrated often in completely unprecedented mega movements of the stocks, that scenario seems highly unlikely.

    At the very first sign of trouble, most of this investor base with their unsteady hands, will undoubtedly try to exit out of a narrow exit door, as they have done for many solid as well not-so-solid company stocks in recent months, it will only compound the ugliness of a situation. Just as they have thoroughly enjoyed the ride on a way higher, they may have to go thru the same level of pain on a way down. Unfortunate effect of this is that the entire economy and populace suffer as the Wall Street and Main Street are, not always, though, often interlinked.

    As for the most important topic of the current times, when exactly the federal government shutdown ends, already one week into it, is anyone’s guess and knowing the current stance of democrats, they are going to fight hard this time around as the healthcare is central to their philosophy and political standing, so they would not want to see the hard-won Affordable Care Act (ACA), about 15 years old, be effectively dismantled by the POTUS. Hence, the longer this shutdown lasts, worse the effects will be on the economy and the financial markets. It will be quite a painful contrast to see if this becomes a catalyst to disrupt the economy as well as the markets in a brooding landscape on various fronts.

    In essence, what all of this means is that the currency debasement is well underway as flight to safe havens continue to occur for quite some time to hedge against the mounting debt of USA and not-so-small probability of some kind of a sovereign default or disruption in not too distant future. Debasement trade using gold is in vogue just as with the crypto for different reasons. Basically, we are on the way to ruins unless something changes drastically – which we have shown highly incapable of thus far for many years, if not decades already. The trajectory we are on is similar to the runaway train heading for a major crash and burn. Before it gets too late, it is a time for prudent action and wise heads to prevail in both financial as well political domains.

    Also, we just witnessed the first person ever to hit the $500 billion net worth mark… and it begs a question with some philosophical implications just as the democrats, especially the progressive wing, often bring up; shall billionaire exist? Is trillionaire even a possibility? Amen!

  • Trillion Dollar Valuation Club in U.S. Stock Market

    In an earlier post, we covered the topic of U.S. stock market building a perfect house of cards with four pillars – OpenAI (private), Nvidia (NVDA), Tesla (TSLA) & Oracle (ORCL). In this post, we shall dive into an “exclusive” club of trillion-dollar valuation of U.S. based companies!

    There are currently 9 members of this exclusive club that have crossed a trillion-dollar valuation mark or market capitalization (cap) as it is known in the U.S. stock market. They are listed here in the order from the highest to lowest market cap:

    1. Nvidia (NVDA): $4.55 trillion
    2. Microsoft (MSFT): $3.85 trillion
    3. Apple (APPL): $3.79 trillion
    4. Google parent Alphabet (GOOG): $2.95 trillion
    5. Amazon (AMZN): $2.34 trillion
    6. Facebook parent Meta (META): $1.85 trillion
    7. Broadcom (AVGO): $1.56 trillion
    8. Tesla (TSLA): $1.43 trillion
    9. Berkshire Hathaway (BRK): $1.08 trillion

    I believe that the market participants are going to have the ‘rude awakening’ soon and get the rug pulled from underneath them as we have built all these valuations in the fantasy-land.

    As an example, Nvidia alone is worth now more than the GDP of India, a country with the largest population on this earth – close to 1.5 billion population now having surpassed China. GDP of India is ranked 4th globally now for 2025 after U.S., China, Japan and Germany. Further, India is expected to overtake the GDP number of Germany in a short few years (2 or 3) and become the 3rd largest after U.S. and China.

    Does any of these companies warrant such a high valuation in terms of the multiple? Hardly a few, if any.

    Based on variety of metrics such as price to earnings, price to cash flow, price to sales, price to book and sustainable growth rate, the only company that can come remotely close to a fair valuation is the last in the list – Berkshire Hathaway.

    Even, that, too, is a bit expensive compared to its historical average – close to twice the book value versus 1 or 1.25 times the book value, yet, it is the most worthy candidate of all to command a trillion-dollar valuation. The rest of them is nothing but a fluff or even hot air in terms of valuations, which we have covered at length in our earlier posts even though many of them are having robust numbers when it comes to revenue and profitability with a few exceptions like Tesla and Amazon.

    With a different lens, there are a few worthy candidates for the trillion-dollar club such as Microsoft, Apple, Alphabet and Meta. However, they are priced at about at least twice as high compared to their ‘traditional’ and ‘deserved’ valuation. Hence, the list shrinks significantly – down from 9 to 4 if adjusted for valuations by Mr. Market. With that said, there is an excellent chance that Berkshire Hathaway may surpass all the tech companies in terms of valuation in upcoming years and even be the most valued company in the world. I am counting on that or even rooting for that. More on that a bit later…

    Clearly, Nvidia has a phony crown bestowed by mad market participants enabled by sheepish, if not evil, herd of corporate chieftains who are investing in AI like there is no tomorrow while having a total disregard for human needs and contributions. It may not be long before they come to realize their enormous and inexcusable stupidity and correct their courses which immediately will strip away the crown from the ‘temporary’ beneficiary of this madness.

    Given this extreme level of enthusiasm in a current environment, if not an outright euphoria, market madness or lunacy, we shall routinely review this list consisting of trillion-dollar valuation. Let us say every 6 months to see who remains a member of this exclusive club. As we regularly revisit this list, we may very well start noticing that the list will continue to shrink and shrink, if not outright disappear as the worst-case scenario of economic depression and remain so for the foreseeable future until many of these club members truly “earn” their spot there.

    With each passing six months period or in about 6 to 18 months the list will shrink markedly. Music can play only for so long. Mr. Market will be fortunate to even have one member in his exclusive club under a dire situation that United States is heading into. If any, perhaps, Mr. Buffett, the investment legend, may stand tall and be invited to this club, especially since he has a huge cash hoard (about $350 billion) to deploy once the market crashes and burns. The writing is on the wall now, unfortunately.

    Do expect Mr. Buffett to double his money in next 5 to 7 years, if not sooner, as he would invest in the ‘fat pitch’ deals or opportunities in the market while many investors shall be crying. It is not that far-fetched to think that Berkshire Hathaway could be the only company retaining a trillion-dollar valuation or one of the few once all the dust settles. Further, it cannot be any more timely that Mr. Buffett is exiting the investment scene, at least from the foreground, after a spectacular success (a huge understatement) in the investment world over the course of last 5 plus decades. Mr. Warren Buffett is stepping down from the CEO position at the end of 2025 at the ripe age of 95 and we must pay the greatest tribute to him and his unparalleled success.

    Clearly, the companies and economies will continue to grow and eventually some of them will truly “earn” their valuation of trillion-dollars, though, it will be a “while” before we see that on a truly sustainable basis, at least 3 to 5 years if not longer.

    As an example, Mr. Buffet in addition to his investment acumen was also a fortunate recipient of this market bonanza in terms of the extended valuation namely for Apple, one of his largest holdings. That has been his crowning achievement on top of all the great investments he made over the decades. However, Apple has been on the chopping block in his portfolio for last several quarters as Mr. Buffett has been the net seller of equities (stocks) for over two years now which generally is not the case in his investment career.

    I expected that Mr. Buffet may take his sweet time to “lighten up” on his Apple holdings given his steady hands yet to my pleasant surprise, he chopped off his Apple stake so much more aggressively than I imagined. Instead of couple years, he managed to do it only in a couple quarters. However, he still has a pretty sizeable position in Apple at over $70 billion and 23% of his investment portfolio, which appears to me still highly concentrated in an over-valued stock.

    Apple shares traditionally sold at low teens price to earnings multiple, rightfully so, given its steady, stoic and low growth model. Now, the multiple has literally tripled, close to 40 PE, when the company is much more mature and has already reached over $400 billion in revenue. Go figure!

    The law of large numbers is irrefutable and works like a universal law of gravity. Basically, growing from $1 billion revenue to $10 billion is extremely difficult and herculean task as anyone can imagine. Then growing from $10 billion to $100 billion is even more difficult…so how about growing from $100 billion to $1,000 billion, which is a trillion-dollar mark for the revenue. I think you get the idea…

    Even the gigantic revenue numbers, the highest amongst all companies, are approaching, though, have yet to crack $700 billion by Walmart and Amazon, both low margin businesses.

    Hence, it would not be surprising if Mr. Buffett halves his Apple position once again in the next few quarters. His other major holdings were American Express (AXP), a perennial holding and Bank of America (BAC) that also he is lightening up in quite a meaningful way. These 3 stocks alone currently constitute 50% of his portfolio.

    Apple, itself, not by design, but by a fortunate accident, represented close to half of Mr. Buffett’s investment portfolio as well as the company market cap in 2023, unprecedented amount of concentration even with his own standards. Now, the Apple exposure cut in half yet representing a meaningful concentration is prone to major risk if the markets were to tumble sooner than later. Hence, I would further bet that Mr. Buffett will continue to lighten up more on his Apple stake.

    Former Fed Chairman, Alan Greenspan, uttered the famous words – “irrational exuberance” back in 1996 only to fall on deaf ears of Mr. Market that peaked in March of 2000 to have the Internet bubble burst later. Hence, it took over 3 years for Mr. Market to realize his madness and see that he was on the wrong track. Such is the case now as well – once again helping form the 3rd crisis in less than 3 decades. Poor Gen Z and millennial babies! Baby boomers and Gen X have had so much fun and their share of grief as well, however.

    For anyone seeing this for the first time or needing a reminder, these crisis are enumerated here again: Internet bubble burst of 2000, housing crisis of 2008 and third one is on a count down! OpenAI unveiled ChatGPT in November 2022 and it has been about 3 years now already, so how long the AI craze may continue is anyone’s guess, though, it is reasonable to think that it will not last that long given the lessons of history and past behaviors of Mr. Market who is sometimes euphoric and at times depressed.

    History never repeats, though, it always rhymes.

    Oh well, as if all of this were not enough, the U.S. Government just shut down this morning now even inflaming the risk of flying high altitude and blind with no proper economic data! It is a wake-up call for America from complacency for sure!!

    Mr. Warren Buffett often advised that “Be fearful when others are greedy and be greedy when others are fearful”. It is a high time to become fearful now as U.S. investors continue to play with fire…Wishing the best for us all.

  • House of Cards & Four Pillars: OpenAI, Nvidia, Tesla & Oracle

    U.S. stock market has built a perfect house of cards with four pillars – that is of OpenAI (private), Nvidia (NVDA), Tesla (TSLA) & Oracle (ORCL)

    Why or rather how?

    • Open AI unveiled the ChatGPT product in November of 2022 which unleashed all the frenzy
    • Nvidia built the chips to enable or bring the OpenAI product to life and scaled the production and resultant revenue which is out-of-this world
    • In a meantime, Tesla sold the hype of robotaxi and robots (humanoids) with a spectacular success
    • Final leg now, Oracle is feasting on the build-outs of cloud infrastructure / data centers for the hungry

    Current valuations are as follows: OpenAI at $500 billion (private) as of August 2025, Nvidia at $4.3 trillion, Tesla at $1.5 trillion and Oracle flirting with $1.0 trillion magic number

    Enough of circular arrangements and customer contract announcements in recent days to pump up or at least sustain the elevated stock prices, the kind of arrangements you can only expect to see in a Banana Republic not once-great nation called United States of America. A little more details are captured below…

    • Early this month, OpenAI signed the contract with Oracle to purchase $300 billion in computing power over next 5 years. In a plain language, customer – OpenAI, in a ‘good faith’ signs a contract with the supplier – Oracle
    • Two days ago, Nvidia made an announcement to invest $100 billion in OpenAI. Once again, in a plain language, customer – OpenAI, in a ‘good faith’ sign up for the investment from its supplier – this time Nvidia, not Oracle
    • Does this remind anyone of a good ole’ saying that I scratch your back and you scratch mine?

    This is all while much is unknown or to be determined as to whether OpenAI remains a non-profit entity or how to structure the for-profit arm within the non-profit organization! Hmm! Head-scratcher, right?

    Nvidia’s growth rate is trending down materially or rather coming back down to earth now already as shared in the graphic in an earlier post – from giddying heights of several hundred percent to less than 50%, which is more human-like than super-natural being one, which Nvidia did enjoy for the time-being! If the business is so strong, why does Nvidia need to invest in its customer, especially such a large amount?

    The ilks of the Big Techs and majority of the Magnificent Seven can be “forgiven” for the time being as majority of them have numbers (including profits) that are even though stretched, they can still someday “grow” into that valuation for the very patient investor…be it after a year, 3, 5, 7 or 10 years! Much as what happened after the dot-com bust!

    Institutional mad money rush continues…on the backs of who? It is the retail investors… as they will be the ones left holding the bag once all the dust settles after having this come crashing down at some point, which is a question of ‘when’, not ‘if’ as discussed at a greater length in earlier post. Market crash, unfortunately, is impending and almost inevitable now, which was in our complete control till recent years and even avoidable.

    A rare event known as “Tail Risk” or “Black Swan” event now seems to be just around the corner and plain in sight whereas earlier it can never be predicted, even by the brightest of the bright investors by its very definition of tail risk. Writing is on the wall already now.

    Once one pillar starts crumbling or is taken out when the rubber meets the road, it will not take much to start affecting others due to this gigantic interconnectedness, monumental hypes and unrealistically high expectations. We will be waiting patiently! A smart investor certainly can heed this caution and ask a famous question “show me the money” for this “pie-in-the-sky” valuations…

    Ray Dalio of Bridgewater Associates just warned that the “very, very dark times” are ahead of us! It sends a chill to our spine and it does not appear that he is that far off.

    A bonus bonanza is a state capitalism with increased state intervention in the private enterprises, the topic that we have not even touched upon yet and it continues to increase by the day…

Street Analysis

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