In Parts 1 and 2 of this series, I've walked you through the first two alarm bells that are signaling major danger for the US economy…

The bond market is screaming, inflation is still a problem, and most importantly, the Fed has lost the ability to affect either through interest rate management for the first time in my lifetime…

Well today we’re going to dive into the 3rd danger signal which is arguably the most concerning…

While every warning light in the financial system is flashing red, the stock market is acting like it's the best time in history to buy…

It's not… And I'm going to show you exactly why, with a single number that has only appeared twice before in the last 150 years...

First, a quick definition so we're on the same page…

The S&P 500 is just the index that tracks the 500 biggest companies in America. When people say "the market hit a new high," this is usually what they’re referring to…

And right now, despite everything we've covered… The S&P just hit new all-time highs...

On the surface, that sounds great… But investors are playing with fire right now and here's the number that proves it…

Don't let the name scare you…

All it does is measure how expensive the stock market is compared to the actual profits these companies are really producing.

The long-term average is around 17. Anything above 30 is considered a dangerous bubble.

Well… It just crossed 42…

In the entire 150-year history of the US stock market, that has only happened twice before…

In 1929 and 1999…

The first one ended with an 89% crash and the Great Depression…

And the second ended with a 78% collapse in tech stocks and a decade of going nowhere.

There is no third example with a happy ending… because there’s been no third example to measure until now…

Right now, just seven tech companies make up roughly 30% of the entire US stock market…

And almost all of them are riding on a single bet… That artificial intelligence is going to grow fast enough, soon enough, to justify the staggering amounts of money being poured into it.

If that bet pays off on schedule, great!

But if it doesn't, the whole thing comes crashing down...

Just a week ago, hedge funds dumped tech stocks specifically at record numbers ahead of Nvidia's earnings…

Meanwhile, regular retail investors are pouring their money into tech at a record pace, buying the dream right at the top.

And we have the biggest IPO in history (SpaceX) launching on June 12th… Which is just the kind of event that markets like to sell into.

This is the exact same pattern we saw in 2000, right before the dot-com crash.

Wall Street was selling, Main Street was buying, and the bond market is telling us, in no uncertain terms, which side is going to be correct…

Higher bond yields mean three things at once: inflation isn't going away, the math underneath stock prices just got worse, and investors can now earn a guaranteed 5% from the US government instead of taking the risk of owning expensive stocks for the same return…

Historically, every major stock crash in the last 100 years was preceded by warnings from the bond market that the stock market ignored as it’s doing today...

When you put all three alarms together, there are really only two paths in front of us from here…

Path #1: The miracle…

Yields settle back down, the conflict in the Middle East cools off, and oil prices drop…

AI revenue grows fast enough to justify the spending, and everybody breathes a collective sigh of relief, and the party continues… This is possible, but it requires at a lot of small miracles to happen at the same time…

Path #2: The reckoning…

The warning signs keep flashing, money keeps leaving stocks for the safety of guaranteed returns on government bonds, and corporate borrowing costs eat into profits…

The AI bet wobbles, and the market that's currently priced for perfection slams back down to earth…

As an investor, I genuinely hope for this option…

Why? Because this is the kind of moment that creates fortunes for the people who can see it coming…

Wealth is built by accumulating the world’s most valuable assets at the lowest possible prices, and big economic crashes are what create that opportunity…

Before I tell you what I'd do, let me show you what actually happened to different assets during the last two times the CAPE ratio hit these levels…

1929: The Great Depression crash…

The Dow lost 89% of its value over the next three years and took 22 years to recover. Real estate collapsed alongside it. Stocks were the worst place to be by an enormous margin.

But while stocks were getting destroyed, US government bonds actually went up about 15%. Gold preserved its purchasing power so well that by 1934, the same amount of gold could buy twice as much real estate as it could in 1929...

And in 1934, the US government officially revalued gold from $20.67 to $35 an ounce, a 69% gain in one stroke. Sound familiar to yesterday’s email?

2000: The dot-com crash…

The Nasdaq fell 78%, and the S&P 500 lost about 50% over the next two and a half years, and didn't fully recover for 13 years...

But over that exact same decade, gold went from $250 to $1,900 an ounce…

A 660% gain while stocks went nowhere.

Bonds also performed well as interest rates fell. And real assets like real estate, oil, and commodities massively outperformed the stock market for the entire decade.

The pattern in both cases was the same... Stocks collapsed, and hard assets exploded.

The investors who came out wealthier weren't the ones who hid in cash. They were the ones positioned in the right assets before the crash, with enough dry powder to buy more of those assets at fire-sale prices when everyone else panicked…

That brings us to today's playbook…

The smartest setup for an environment like this is what's called a "barbell…"

On one end, cash and short-term Treasuries earning a guaranteed 5%…

That's your dry powder for when the crash creates the buying opportunity of a decade.

On the other end, hard monetary assets like gold and Bitcoin. These are the only assets that can't be printed, debased, or inflated away by a desperate government.

When central banks are trapped like the Fed is right now, these are the assets that historically explode in value...

In the middle, a smaller allocation to productive real assets and high-quality businesses with real pricing power.

What you want to avoid: long-duration bonds (locked into low rates while inflation runs hot), and the broad S&P 500 index (it's 30% AI stocks right now, you're not diversified, you're concentrated in the bubble), and speculative tech stocks with no profits.

The BIG opportunity will be to buy the strongest AI stocks at the bottom of the crash… Tesla, Google, NVidia, SpaceX, Palantir, etc…

But we’re years away from this opportunity at the moment…

The investors who come out of events like this wealthier, aren't the ones who hid in cash… They're the ones who held cash for the crash, then deployed it into the right assets while everyone else was still frozen in fear…

This is EXACTLY what the CLEAR Algo was built for…

It signaled the start of the 2000 and 2008 crashes when it turned red, and it gave you the giant “BUY” signal when it turned green… No guessing or financial degrees required.

History clearly shows us that we’re likely going to have a big market crash at some point in the future… It could start in a month, in 6 months, or two years from now… No one knows the timing.

But you don’t have to if you’re using CLEAR…

If you want to stop guess and start investing with confidence as we head into the most consequential period in history…

It’s the most valuable tool any investor can use…

And you can get access to it here today at a 50% discount for life…

Sincerely,

Mike Dillard ✞
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