Special Announcement: We have completely revamped our FreedomFest website to introduce the most exciting, revolutionary FreedomFest ever. We’re calling it THE WORLD’S FAIR OF LIBERTY! Reserve the dates now: July 8-11, 2026, at Caesars Forum Convention Center in Las Vegas, in celebration of the 250th anniversary of two major events: Thomas Jefferson‘s declaration of political independence (July 4, 1776) and the publication of “The Wealth of Nations,” Adam Smith‘s declaration of economic independence. Check out our new website here: http://www.freedomfest.com. The first 400 to register pay our lowest price ever, but it won’t last for long. Our keynote speakers are lining up already: Steve Forbes, John Mackey, Kennedy of Fox News… and more than 200 speakers, 300 exhibits and over 2,000 attendees. Even George Washington, Ben Franklin and Thomas Jefferson are expected to appear…! A brand new Anthem film festival, three-day financial freedom conference, special pavilions of the major freedom organizations and think tanks, the comedy show and an unforgettable Saturday night celebration on July 11 in Vegas. The most memorable FreedomFest ever!
If you’ve never been to FreedomFest and always wanted to come, this is the one to attend. As Steve Forbes says, “I changed my schedule to attend all four days!” See you in Vegas!
“How many insecurities traded on Wall Street today?” — Franz Pick (p. 65, “The Maxims of Wall Street”)
“Never bet on the end of the world. It only comes once, which is pretty long odds.” — Arthur Cashin (New York Stock Exchange Floor Manager, p. 110)
The stock market has had an incredible run, especially for a first-year Presidential term. But a growing number of investors and Wall Street analysts are worried about a crash. Recently, stocks, bitcoin and even gold have declined from their all-time highs.
Wall Street escaped the traditionally two worst months of potential stock market crashes — September and October.
Still, many investors are sitting in cash. According to the St. Louis Federal Reserve, a record $7.5 trillion is sitting on the sidelines in money market funds, up 57% from $4.8 trillion just five years ago.
That’s actually a good sign. Investors have not entered the euphoria stage. Sir John Templeton identified the four stages in the stock market cycle as follows: “Bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria.” (p. 9, “The Maxims of Wall Street”)
And we have our stops in place to protect us on the downside, especially in my four short-term trading services (see www.markskousen.com).
To Quote “The Maxims” on a Crash…
I have collected a large number of quotations in my “Maxims of Wall Street” on the dangers of a crash and bear market, such as:
“The market takes the stairs up, and the elevator down.” — Old Wall Street saying (p. 97)
“The light on Wall Street can at any time go from green to red without pausing at yellow.” — Warren Buffett (p. 111)
“Everyone is a disciplined, long-term investor… until the market goes down.” — Steve Forbes (p. 135)
“Nothing is more difficult than holding onto your stocks in a bear market.” — Mike Turner (p. 109)
“Owners of sound securities should never panic.” — J. Paul Getty (p. 111)
Many of them apply today.
Have you Read the New Bestseller, ‘1929’?
A lot of analysts are reading the bestseller “1929,” by CNBC commentator Andrew Sorkin, and wondering, “Could it happen again?” It’s a fascinating account of the greatest bear market in history, lasting four years.
It’s sobering reading of the important characters, winners and losers, in that fateful year. The stock market ultimately fell 90% from 1929 to 1933. Unemployment reached 25%. Prominent men committed suicide, or their reputation was destroyed.
One important lesson one learns: It’s possible for Wall Street to collapse in ways unrelated to the economy.
I well remember October 19, 1987, Black Monday, when the stock market collapsed by 22.5% in one day. It happened to be my 40th birthday, and it was not a happy one, even though I had urged my subscribers to “sell all stocks” six weeks before it happened.
Nobody comes out of a crash unscathed. As Dick Russell once said, “In a bear market the winner is he who loses the least!” (p. 105)
The problem with predicting a crash is that it keeps you from getting back in. It took me a year to get back into the market, because of the fear it might happen again. But the fact is that the stock market bottomed on October 20, 1987, a day after the crash!
‘Who Predicted the 1929 Crash?’
Oddly enough, a few months before the crash, I gave a talk on “Who Predicted the 1929 Crash?” that later became a full-length academic paper. It includes many players who did not make it in to Sorkin’s book, such as British economist John Maynard Keynes, Friedrich Hayek of the Austrian school of economics, speculator Joe Kennedy and Benjamin M. Anderson, chief economist at Chase National Bank. It’s found in chapter 15 of my book, “A Viennese Waltz Down Wall Street,” which you can read here for free: A Viennese Waltz Down Wall Street: Austrian Economics for Investors (LFB).
Two Reasons Why a Full-Scale Crash Is Unlikely
But there is good news. For several reasons, another crash à la 1929 or 1987 is unlikely in today’s markets.
I’ve said for some time that tech stocks could fall in half and still be overvalued. They sell at 100 times multiples or more.
But it’s unlikely to happen overnight for two reasons (both created after the 1987 crash):
First, the New York Stock Exchange has imposed “circuit breakers.”
To curb panic selling and ensure orderly trading, the NYSE has instituted a three-tier system tied to the S&P 500 index: a 7% drop halts trading for 15 minutes (Level 1), a 13% drop causes another 15-minute halt (Level 2) and a 20% drop results in a market close for the rest of the day (Level 3).
Second, the federal government has created a new agency called the “plunge protection team” to counter an outright crash.
The formal name is the President’s Working Group on Financial Markets, a U.S. government body that can meet at any time to actively intervene in the markets to maintain financial stability.
It consists of the Secretary of the Treasury and heads of the Federal Reserve, Securities and Exchange Commission and the Commodity Futures Trading Commission.
A high-powered group! It can theoretically buy dollars, government securities and even stock market indexes or futures.
What they can’t do is prevent an orderly bear market that might develop over several months or years.
So that’s why I have argued that since 1987, we have witnessed many bear markets, but no crash as bad as 1987 (stock indexes down over 20% in one day). Even the financial crisis of 2008 witnessed daily declines as much as 7%, but not 22.5% like we saw in 1987. Stocks did fall 50%, but it took a year to do it.
The United States has always survived and recovered from crashes and bear markets, and I expect it to do so again.
That’s why J. Paul Getty’s advice is worth noting in his book “How to Be Rich”: “Businessmen can profit handsomely if they will disregard the pessimistic auguries of self-appointed prophets of doom”… “The seasoned investor buys his stocks when they are priced low, holds them for the long-pull rise and takes in-between dips and slumps in his stride.” (pp. 110, 136)
Sir John Templeton offers the same advice: “If you are a long-term investor, you will view a bear market as an opportunity to make money.” (p. 108)
But that’s easier said than done. As Mike Turner warns us, “Buy-and-hold works if you live long enough, never need the money and don’t mind losing 50% or more from time to time!” (p. 137) Turner is currently in cash, waiting out this downturn.
How to Buy ‘The Maxims of Wall Street’ at a Bargain Price
“The Maxims of Wall Street” is now in its 11th edition, having sold nearly 50,000 copies. To buy a copy at a discount, only $21 ($11 for all additional copies), go to www.skousenbooks.com. I autograph all copies and mail them at no additional charge in the United States.
Upcoming Events
This week, I’ll be at George Gilder’s COSM conference in Scottsdale, Arizona, and will be on a panel debate with Steve Forbes and John Tamny on the topic, “Is the Bill Coming Due?” about the growing debt crisis in America. The sparks will fly.
Then on Friday, Nov. 21, I’ll head over to the Goldwater Institute…
Live Interview on “Ben Franklin and American Liberty”: Vice President for Legal Affairs Timothy Sandefur will interview me at 2:00 p.m. Arizona time (4:00 p.m. ET, 1:00 p.m. PT) this Friday, Nov. 21, at the Goldwater Institute. To register, go to Webinar Registration – Zoom.
Speaking of Franklin, I see that Ken Burns is out with a new series, “The American Revolution.” Franklin shows up in the very first scene as the first American to propose that the colonies unite politically and adopt a confederation similar to what the Iroquois had with the other Native American tribes.
To order your copy of my new book “The Greatest American” at a discount, go to www.skousenbooks.com.
LAST CALL: Sunday Fireside, Nov. 23, at the Heritage Academy in Queen Creek, Arizona
I’ve organized a very important get together in Arizona to discuss this vital topic: “America’s Divine Destiny: Is the Constitution Hanging by a Thread?”
Keynote speaker Congressman Andy Biggs, who is also running for governor next year, will join me and Jo Ann for speeches and a panel.
I will also be moderating a panel on “Trump and the Limits of the Constitution,” with Congressman Biggs, Floyd Brown (founder, Western Journal), Earl Taylor (president, National Center for Constitutional Studies) and Jo Ann Skousen.
Jo Ann and I will also be speaking about our book, “There Were Giants in the Land: Episodes in the Life of W. Cleon Skousen,” followed by an autograph session. My uncle Cleon (former FBI agent, anti-communist, defender of the Constitution) was extremely popular in Arizona and Southern California. Find out why…
Cleon Skousen, Special Assistant to FBI Director J. Edgar Hoover
This is a free event, but space is limited; you must register at this event using code SKOUSEN1787 to join us. Use this code to get tickets for you and friends and relatives. To register, go to https://www.eventbrite.com/e/americas-divine-destiny-tickets-1875631055979?aff=oddtdtcreator.
Good investing, AEIOU,
Mark Skousen
You Nailed It!
Is the AI Sector in a Bubble?
Double, double toil and trouble;
Fire burn and cauldron bubble.
— The Witches in Macbeth
Wall Street can’t seem to shake the AI (artificial intelligence, what I like to call “advanced intelligence”) bubble fears. A Bank of America survey found that 45% of investors view an AI bubble as the top risk.
No doubt there is some “irrational exuberance” in the AI tech sector these days, with market valuations exceeding $1 trillion while income is $50 billion.
Tyler Cowen, economics professor at George Mason University, takes a more sanguine approach in his latest Free Press column entitled “Is the AI sector currently in a bubble?” He states:
“Nvidia is often considered a bellwether AI stock. That’s because much of its revenue comes from selling graphics processing units to power advanced AI systems, meaning that its success gives investors insight into the health of the sector overall. Currently, Nvidia’s stock-price-to-earnings ratio is in the 54 to 55 range, roughly twice the typical market average. That means the market expects great things from this stock. Those projections may or may not be validated, but it’s hard to conclude they’re entirely divorced from reality…
Keep in mind that the tech sector as a whole is still earning more than it is shelling out in capital expenditures. The current AI boom is being financed by earnings more than by new issuance of debt, which makes it less prone to a sudden crash. By one estimate, capital expenditures in Big Tech are about 94 percent of cash flow in 2025. You could imagine that number moving into unstable territory, but so far, the U.S. tech sector is managing to pay its bills without going into debt.
You may recall we are coming off a period when everyone complained that the big tech companies were sitting on trillions of dollars in cash and capital. Now, they are spending it, and complaints are heating up once again. Damned if they do, damned if they don’t.
In fact, what we are seeing right now is a shortage in the AI sector’s capacity to meet demand. Major tech companies are investing in more computing capacity, but they still cannot serve all the customers who want access to AI systems. That augurs well for the future of the sector, even if there are dips and spills along the way.”
