Should We Really Be Piling Into Equities and Options?

“It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.”

– Charlie Munger

June 18, 2025 — First, a review of some key economic data.

Auto prices have soared in the past decade, while auto loan interest rates have more or less doubled in the past two years. The result: hugely expensive “car mortgages” and spiking loan delinquencies:

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But as ominous as auto loans seem, they pale next to credit cards and student loans, where delinquencies have gone parabolic.

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Over in commercial real estate, offices continue to empty out:

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Banks, which own a lot of the resulting bad office building paper, will have to report big losses in the year ahead:

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Not surprisingly, given the above, workers are getting worried. The share of American employees with a positive view of their employer’s business outlook over the next 6 months is now 44.1%, a record low.

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Worried workers translate into concerned consumers, who now assess their current financial situation, when compared with 5 years ago, as the worst since the 1980s.

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So why then are we piling into equities?

Continued Below…

Porter Stansberry: “I met with Trump’s biggest backers… they’re scooping up these ten stocks”

I recently met with one of Trump’s longest-serving advisors.

We helped put together a plan to help investors capitalize on Trump’s election.

And we found out these 10 stocks are the most likely to boom…

But you’ll miss out on the gains if you don’t get in before January 20.

Go here now to find out the names of these ten stocks.

The global “Buffett Indicator” (equities market cap to GDP) is at imminent-crash highs, implying a wild level of investor overconfidence.

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Looked at another way, the proportion of investible capital currently in equities — the riskiest major sector — now dwarfs what is in bonds and cash.

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But for a growing number of “investors,” equities aren’t volatile enough. Option trading — especially 0-day contracts that expire by end-of-day — is soaring.

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The most likely resolution?

Faced with souring loans, banks will tighten their (already tight) lending standards. Borrowers stuck with unmanageable debts won’t be able to refinance and will have no choice but to default.

Equities, wildly overvalued and over-owned, will do what they usually do in that situation: plunge by 40%.

In retrospect, it will all look so obvious.

John Rubino
Substack & Grey Swan

P.S. from Addison: Tomorrow, at 11 a.m. ET, Chris Mayer joins us for Grey Swan Live! When I reached out to him earlier this week, I was not at all surprised to find him excited about investing in Sweden.

As his publisher, we traveled together on many of the excursions he curated for his bestselling travel & investment book The World Right Side Up, including Dubai, Mumbai, Sao Paolo, Bogota, Buenos Aires… and the Pacific coast of Nicaragua.

During our missions, we adapted quite nicely to absurdistan—the state of being cooped up in otherwise luxurious accommodations while flying around the globe.

Among other topics, we’ll get a rundown of his investment strategy at Woodlock House, a “family” office founded to solve one problem: “How to invest our family wealth without turning it over to Wall Street and to people who do not have ‘skin in the game’?”

Chris’ insights after a career of global travel and investment are quite entertaining. They have to be if you’re stuck on a 787 jumbo jet from New York to Doha, Qatar, while en route to Mumbai, India. There’s a lot of free time for meandering conversations about all kinds of things: family, history, philosophy… and investing, too.

Meanwhile, our Portfolio Director, Andrew Packer, will be attending the Rule Investment Symposium in Boca Raton, FL, July 7-11, 2025. Click here to view the stellar speaker lineup and learn how you can attend.

Your thoughts? Please send them here: addison@greyswanfraternity.com

“It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.”

– Charlie Munger

June 18, 2025 — First, a review of some key economic data.

Turn Your Images On

But as ominous as auto loans seem, they pale next to credit cards and student loans, where delinquencies have gone parabolic.

Turn Your Images On

Over in commercial real estate, offices continue to empty out:

Turn Your Images On

Banks, which own a lot of the resulting bad office building paper, will have to report big losses in the year ahead:

Turn Your Images On

Worried workers translate into concerned consumers, who now assess their current financial situation, when compared with 5 years ago, as the worst since the 1980s.

Turn Your Images On

So why then are we piling into equities?

Continued Below…

Porter Stansberry: “I met with Trump’s biggest backers… they’re scooping up these ten stocks”

I recently met with one of Trump’s longest-serving advisors.

We helped put together a plan to help investors capitalize on Trump’s election.

And we found out these 10 stocks are the most likely to boom…

But you’ll miss out on the gains if you don’t get in before January 20.

Go here now to find out the names of these ten stocks.

The global “Buffett Indicator” (equities market cap to GDP) is at imminent-crash highs, implying a wild level of investor overconfidence.

Turn Your Images On

Looked at another way, the proportion of investible capital currently in equities — the riskiest major sector — now dwarfs what is in bonds and cash.

Turn Your Images On

But for a growing number of “investors,” equities aren’t volatile enough. Option trading — especially 0-day contracts that expire by end-of-day — is soaring.

Turn Your Images On

The most likely resolution?

Faced with souring loans, banks will tighten their (already tight) lending standards. Borrowers stuck with unmanageable debts won’t be able to refinance and will have no choice but to default.

Equities, wildly overvalued and over-owned, will do what they usually do in that situation: plunge by 40%.

In retrospect, it will all look so obvious.

John Rubino
Substack & Grey Swan

During our missions, we adapted quite nicely to absurdistan—the state of being cooped up in otherwise luxurious accommodations while flying around the globe.

Your thoughts? Please send them here: addison@greyswanfraternity.com

Our forecast will feel obvious in hindsight and controversial in advance — the hallmark of a Grey Swan.

Most analysts we speak to are thinking in terms of the history of Western conflict.

They expect full-frontal military engagement.

Beijing, from our modest perch, prefers resolution because resolution compounds its power. Why sacrifice the workshop of the world, when cajoling and bribery will do?

Taiwan will not fall.

It will merge.

Wars, technology races, and political upheavals — all of them rest on fiscal capacity.

In 2026, that capacity will tighten across the developed world simultaneously. Democracies will discover that generosity financed by debt carries conditions, whether voters approve of them or not.

Bond markets will not shout so much as clear their throats. Repeatedly.

Taken together, the seven Grey Swans of 2025 behaved less like isolated events and more like interlocking stories readers already recognize.

The year moved in phases. A sharp April selloff cleared leverage quickly. Policy shifted toward tax relief, lighter regulation, and renewed tolerance for liquidity. Innovations began to slowly dominate the marketplace conversation – from Dollar 2.0 digital assets to AI-powered applications in all manner of commercial enterprises, ranging from airline and hotel bookings to driverless taxis and robots.

Back in April, when we published what we called the Trump Great Reset Strategy, we described the grand realignment we believed President Trump and his acolytes were embarking on in three phases.

At the time, it read like a conceptual map. As the months passed, it began to feel like a set of operating instructions written in advance of turbulence.

As you can expect, any grandiose plan would get all kinds of blowback… but this year exhibited all manner of Trump Derangement Syndrome on top of the difficulty of steering a sclerotic empire clear of the rocky shores.

The “phases” were never about optimism or pessimism. They were about sequencing — how stress surfaces, how systems adapt, and what must hold before confidence can regenerate. And in the end, what do we do with our money?!

Our forecast will feel obvious in hindsight and controversial in advance — the hallmark of a Grey Swan.

Most analysts we speak to are thinking in terms of the history of Western conflict.

They expect full-frontal military engagement.

Beijing, from our modest perch, prefers resolution because resolution compounds its power. Why sacrifice the workshop of the world, when cajoling and bribery will do?

Taiwan will not fall.

It will merge.

Wars, technology races, and political upheavals — all of them rest on fiscal capacity.

In 2026, that capacity will tighten across the developed world simultaneously. Democracies will discover that generosity financed by debt carries conditions, whether voters approve of them or not.

Bond markets will not shout so much as clear their throats. Repeatedly.

Taken together, the seven Grey Swans of 2025 behaved less like isolated events and more like interlocking stories readers already recognize.

Back in April, when we published what we called the Trump Great Reset Strategy, we described the grand realignment we believed President Trump and his acolytes were embarking on in three phases.

At the time, it read like a conceptual map. As the months passed, it began to feel like a set of operating instructions written in advance of turbulence.