A 50-Year Market Veteran Just Issued His Biggest Warning Yet. (Most Aren't Ready)

The biggest gains have all been in AI and big tech  over the last couple of years. But what happens   when that AI bubble bursts? Where can investors  still find 10x, even 100x opportunities? It's by   a very contrarian view of the market. Joining  us today is Doug Casey with international man.   He has more than 50 years of experience investing  not only on Wall Street but all over the world.   and he is joining us today with a list of three  areas of the market investors should be looking   at preparing for that eventual AI bubble burst.  And these areas are not only safety areas,   they're also some areas that with opportunities  for incredible growth stories as well that are   completely separate from the AI story. So Doug, I  can't wait to get into this conversation today. I   want to start out by getting your take on where  the AI story and that AI bubble might be right   now. Again, one of my favorite things about  this show for our regular viewers is that we   have on lots of different viewpoints and we just  heard from several guests who said they think the   AI story is still early. There's still a lot of  growth ahead at least for the next 18 months to   3 years. And yet, Doug, you have a very different  view. So, let us know where do you stand on where   this AI bubble is right now. Well, first of all,  let me say that I'm a technophile. It's one of   the things driving the ascent of man. AI is one of  the major drivers of technology itself. It's all   leading towards what Ray Kerszswwell called  the singularity, which he thinks is near at   hand when things like artificial intelligence,  robotics, biotech, space exploration, robotics,   all of these things are going to come together  and finally nanotechnology as well and change   the actual character of life on the planet  unrecognizably from what it is today. So,   I'm a technophile. I really like technology  but uh that's different from my views on the   stock market and technology. I'm a bear when it  comes to AI there. Okay. Interesting. So today is   a bare perspective on how these tech stocks are  going to do. So when you're looking at this from   a bear's perspective, is it the valuations that  have you concerned? How soon of a turnaround do   you think we could see with this AI bubble burst  story? I I think we're not just in a bubble,   but we're in a super bubble. We're in a historic  mania that I think will eventually be compared to   the uh Tula bubble or the uh Mississippi bubble or  the South Seas bubble. It could dwarf the bubble   of the US stock market in 1929. So, I I I think  this is going to turn out to be something really   ugly. There's an old uh saying in the  stock market, high-tech, big wreck. And   uh high-tech has been the place to be for the  last few years. But uh that game is coming to   an end. Just in the last year, the amount of  margin debt uh has increased by 50%. The public   is involved in these things. Mr. and Mrs.  Buggins buying retail think they're going   to become multi-millionaires. Uh they're they're  not. Chances are excellent playing in this arena.   they're going to lose most of what they have. It's  it's a bubble. It's going to wind up very badly   for the average investor. Even though AI is going  to transform the nature of the world eventually.   Yeah. We've heard people who share your bare  perspective often compare this to the dot burst,   but those companies, you know, companies like  Amazon might have hit some major lows at the time,   but have continued to to go on to grow to be  massive companies. So, it's a bubble that burst,   but will every stock lose or will there still be  some winners that that are around long-term and   continue to see long-term gains for investors?  Well, that's the key question. You want to be   sure that you pick the Amazon, but this is very  hard to do. Uh there are so many companies saying   that they're involved in AI on some basis, but  most of these companies don't have any revenues   and they certainly don't have any earnings. like  uh SpaceX. I'm a huge fan of Elon Musk from many   points of view, but at its current market cap, a  trillion half dollars or something on that order,   it's selling at 100 times revenues, and it's not  a SpaceX company. It's not about that company.   Most of the money that he's raised for that is  going into uh data centers and AI. And I really   don't see the point of that at all. There are  hundreds and hundreds of data centers that are   being built in the US. Some of them go on for tens  of acres full of electronic machinery. You know,   I've asked myself and I've asked other people  that are involved in the market and technology   and are financially sophisticated. Exactly how  are these data centers being used? In other words,   what useful purpose do they serve? And believe  it or not, I haven't gotten any good answers.   My answer might have been that if these data  centers, masses of computers crunching data,   if they were making advances in science,  technology, engineering, mathematics,   medicine, this type of thing, I can see it. But,  uh, that's not what most of them are being used   for. They're gathering data about everything  about people. That makes them very dangerous.   And I don't see where they're going to be able to  generate any money doing that. So, as an investor,   I think it's foolish to put your money into  a company that doesn't have any earnings and   I don't think even has a prospect of developing  earnings in the future. I think that's very true   of some of these companies that are investing so  much in this data center infrastructure buildout   right now. But the companies that are the picks  and shovels plays that those data center companies   are going into debt to pay, they do have earnings.  So, let's talk about those really quick before we   move into the three areas of the market that you  say are the best to invest in with this eventual   AI bubble. But I want to talk about companies  like the memory stocks out there that are seeing   tremendous earnings coming in right now. Companies  like cooling companies, even those companies that   are a part of the electrical power story uh  that these data centers are giving a lot of   money to and major contracts to for building out  these data centers. Do you think there's a real   growth story in some of those picks and shovels  names surrounding AI? Well, there's no telling how   high a tree is going to grow, but we're at the  end stage of this bubble, not in the beginning   or the middle. And yes, what you're saying is  correct. Uh inventing investing in the companies   providing the picks and shuggles to the uh data  centers and the data companies. Yeah, that could   be more stable. But it's a daisy chain. And if  the bubble breaks for the data companies and the   data centers are recognized as being a gigantic  misallocation of capital, the companies that are   supplying them with picks and shovels are going to  crash just like they do. So no, I don't want any   part of it. There are much better places to be. A  very contrarian view from many of the the guests   we have on this show. And for those viewers who  are watching and watch our content regularly, you   might be going, "This is completely opposite of of  something we just heard a couple of days ago." And   that is the beauty of of getting many different  viewpoints on how to invest in the market and   picking up the pieces that work for you. You can  listen to Doug right now and you can hear this is   a very contrarian look at the market. And that  is what Doug is known for. He has a newsletter   and a report called the Contrarian Insider. It's a  part of his international man business. And again,   he's been investing all over the world for more  than 50 years and has always approached the   market this way. There's a special offer for our  viewers today. If you like this contrarian view,   going away from the crowd and what every investor  is doing in the market right now, Doug might   resonate best with you. You can scan the QR code  or click the link in the description. There's also   a special offer just for our market beat viewers  today. Use the promo code MB50 for an additional   discount when you sign up for this newsletter.  Again, you can scan that QR code or click the   link we have in the description to sign up for  the Contrarian Insider Report today. All right,   Doug, let's get into your list today. I want  to hear about these three areas of the market   you're suggesting investors should be in right  now getting ready for this eventual AI bubble   burst. What's the first area of the market you'd  suggest? I can break it down into three areas, but   they're all sub areas of commodities in general.  In other words, the raw materials of civilization.   I can break that down into three areas. First  and foremost right now would be energy companies.   Back in 1980, which is ancient history to most  people, energy stocks, oil and gas in particular,   were about 20% of the S&P. Today, it's about 4% of  the S&P. But oil and gas are more important than   they ever have been in in the past. And we have  serious political tailwinds such as the dust up   and hormuz as well. There are some oil and gas  companies that are yielding 8 or 10% in current   dividends. And dividends uh uh to use a a a  religious phrase are kind of an outward sign   of inward grace. The public doesn't know or care  about oil and gas. So uh that's where I want to   be. So when you say energy, you're mainly focused  on oil and gas. What about those energy companies   that are seeing that kind of uh uptick right  now from the data center energy demand? The   the traditional power companies, I'm thinking  companies like Eaton, um Constellation Energy,   other companies that have been around forever  that are getting an uptick right now from the   data centers. Do you think those are safe energy  plays in an eventual AI bubble bursting or could   they be negatively impacted as well? Well, I  didn't mean to limit myself just to oil and   gas because I own a lot of uranium stocks  and a lot of coal stocks and especially   uranium. Nuclear is the safest, the cheapest, and  the cleanest form of mass power generation, but   uh there's always been a hysteria against it. data  centers they take immense amounts of power and the   only way to uh do this is with uh nuclear in the  short run though coal also works u so coal is not   cheap it is safe it's not terribly clean so it's  not just oil and gas it's also nuclear and coal   uh uranium and and coal I mean all of these  things and once again coal stocks especially   ones outside of the US are also showing dividends  of around 10%. Which is a sign of how unloved they   are. All right, a couple of interesting points I  want to break down from what you just said. So,   one thing I'm hearing from you is even if that  AI bubble does burst, AI will still be around.   There will still be a need to power this new  revolutionary AI technology that won't burst with   the bubble. AI will stick around and the power  will still be needed. Is that correct? Well, I'm a   great believer in the coming robotics revolution.  Elon Musk may have been a bit overenthusiastic   when he said that he's going to build a billion  humanoid type robots uh by 2030, but uh AI will   be used to train those things and to monitor them  and so forth. So no, AI is going to be with us.   It's going to stay with us. It's not just the  convenience of using CATG GPT to write your term   papers for you and things of that nature. It's  going to have to be powered. And uh where is the   power going to come from? You're going to have  to burn things in order to generate electricity.   It's going to be gas. It's going to be coal.  And it's hopefully mainly nuclear. So yeah,   I'm I'm I'm heavy in the energy stocks cuz they're  very cheap. I was going to say absolutely. Nuclear   stocks a year ago were incredibly hot in October  of last year. They were very fashionable. They   were what everyone was talking about. And nearly  every stock in the nuclear sector is on a downturn   right now. like you said, very very lowcost uh  entry points for those nuclear stocks and you're   still believing in those long term. Before we move  on to the next sector of the market that you're   recommending of investors be in, are there any  specific stock tickers in this sector that you are   really bullish on that you'd want to share with  our viewers today? In the major oil companies,   I would look outside the US. I look at uh Echo  Patrol, which is the uh kind of the national oil   company of uh Colombia. I would look at uh Petro  Brass which is the equivalent in Brazil and both   of them can be counted on to pay dividends in the  10% area and I think they're very undervalued. If   you want to look at a small oil company once again  being very contrary I would go to Marin Petroleum.   Uh it's only got a billion dollar market cap but  it too pays about a 10% dividend. It produces   offshore oil in Africa and has lots of concessions  which haven't even been uh drilled yet. That's a   company that's got huge upside potential just  based on its own fundamentals and I'm not even   looking particularly at higher prices for oil. I  also think it's fascinating that you are looking   at companies specifically outside of the US uh  oil market. Why is that? And is that true of   uh in general investing for you right now? Are  you looking at more companies in the market that   aren't in US markets right now? Well, I've always  been internationally oriented. I've traveled to   155 countries. I've lived in 10. And even now,  half the year I live in Argentina and Uruguay,   even though I'm in the US at the moment. So, I'm  very eclectic. I'll go anywhere where I see value.   And frankly, I see a lot of value more outside  than inside the US. But we can even look at   Canada for instance. I mean, if we go to Alberta,  uh, which is the center of, uh, the Canadian, uh,   energy industry, there are lots of small oil and  gas companies up there that are are yielding five,   six, seven% in current dividends. So, if Colombia  and Brazil and Nigeria scare you too much,   uh, you can find excellent value in Canada and  Alberta even. And hence the name of your business,   the international man. This now makes a lot  of sense. and also really truly speaks to your   contrarian viewpoint on investing not just in  those popular headline driven US companies but   really looking at broader investments all over the  world. So I love having you on the show Doug. This   is really interesting a great first point and  a lot of really interesting names there. Let's   move on to the second area that you're looking  at for investors to to to move towards if they   want to prepare for the eventual AI bubble burst.  Okay. Well, now we have to talk about the mining   business. And I've been involved in the mining  business for most of my investing life. Uh it's a   stupid business to be involved in quite frankly.  You're playing around with big yellow trucks in   the dirt. Uh kids aren't interested in the mining  business. Not when they can sit in their basement   and uh play with the computer. I've always  been a bull on gold and silver in particular   uh because they are money in its most basic form.  This is a central problem that we're confronting   right now. the fact that uh the dollar is an I owe  you nothing on the part of a bankrupt government.   This is why gold is currently at $4,000 an ounce.  Okay, I'm not buying gold and silver right now as   a speculation because from being uh underpriced  relative to everything else in the world, cars,   clothing, they're about reasonably priced in  my opinion where they are right now. But the   stocks and the companies that mine them are very  very underpriced. The all-in sustaining costs of   mining an ounce of gold. Okay, that's everything  from soup to nuts to to planting grass on the mine   when it's out of business. Uh and all mines go out  of business because it's a diminishing asset when   you're mining something. Right now, for the first  time in many, many years, uh owning a gold mine is   like owning a gold mine. uh they're they're  they're making tons of money at this point,   but fund managers and the public in general  either don't know or don't care about it. I think   eventually uh when their attention is directed  to the mining sector, which is just a teeny weeny   portion, only 2% of the S&P and those are just the  big ones. I'm I'm more interested in the smaller   ones that are still run by founding entrepreneurs  and I see the potential for 10 to one on the group   as a whole. I suspect some of these stocks are  going to go 100 to one. In the past, I've owned a   couple of stocks that went a thousand to one. Not  talking over the course of a lifetime. I'm talking   over the course of a 5year cycle. They're very,  very volatile. much more volatile than any other   sector of the market actually. Yeah. A couple  of follow-up questions here. Again, it sounds   like you had a ton of experience in the sector. I  want to hone in a little bit on that risk that you   mentioned. The volatility is absolutely present  for anybody who's ever invested in these kinds of   mining stocks. And not only volatility, it takes a  tremendous amount of capital to to get these mines   up and running and and to get them to the point  of profitability. And sometimes these companies   just don't make it. you you have investors who  will invest in a company that just goes bankrupt   and never gets to that point of profitability. So  that risk also exists in this sector, right? It   happens all the time. I mean, look, Mark Twain is  famous for having com commented uh a gold mine is   a hole in the ground with a liar at the entrance.  So yes, small mining stocks are uh famous for   fraudulent promotions and uh high hopes that go  bust. uh everything that can possibly go wrong   will go wrong on steroids in the mining business.  Volatility and risk are two different things and   right now as cheap as they are I don't see much  risk because these stocks are so small means   when they move they really really move. That's the  advantage of small cap stocks. We're not talking   trillion dollar market caps here. We're talking  sometimes we're talking nano caps. Interesting   comparison about volatility versus risk. I think  it's less risky if you know what you're doing. And   for many investors, they maybe stayed away from  mining stocks because of that volatility because   they don't understand how to spot those small  mining companies that have potential and the ones   that are just selling snake oil as you said. What  are some of the specific stocks out there that you   are watching in the those small mining names?  And as you talk about those stocks, I'm also   curious to hear what you look for. What makes  a company stand out to you as a good possible   investment and not that more dangerous snake oil  one? Well, I hesitate to mention any particular   stock simply because they are so tiny and you  even have 10 or god forbid a 100 viewers that   pile into a stock that I might mention, you might  double it for no good reason at all. So I I don't   want I I I simply don't mention these small stocks  in public quite quite frankly for for that reason   because they are so small and so volatile as far  as how to select them. Uh years ago I developed   um a pneumonic. I call it the nine Ps. So I've  got nine things that I look at when I'm looking at   these stocks. Uh the first thing is people because  uh good people make for a winning proposition.   uh bad people can screw up and will screw  up anything. So I like to get to know the   management of the company and see that they've  been successful in the past. Second P is property.   And here it's helpful to have a little bit of a  background in geology so that you understand where   deposits are likely to be and how how they're  going to be found and how analyze the methods of   determining whether there might be a deposit there  and so forth. So third is financing spelled with   a ph. Uh can they get the money and can they get  enough money? Because one of the problems with the   mining business is it is very capital intensive.  I mean you spend millions of dollars on an Easter   egg hunt looking for a deposit. And even if  you find a deposit that's when your troubles   start because the chances are a thousand to one.  It'll ever be a mine but it'll cost you millions   more to determine that it can't be turned into  a mine. Another P is politics. The government is   rarely your friend. It's always your enemy when  you're playing around in the dirt looking for   uh these things. So, some jurisdictions are much  better than others. Some are absolutely terrible   and you have to consider that. So, there  are five other Ps, but why go through them   all right now? We have a video program called  expertsroundtable.com where we get together 12   or 15 guys that are expert in mining and each  time we take apart a company. Good investment,   bad investment. I think your listeners might tune  into that to get an education. Well, and if you do   want to hear some of those specific mining names  and the companies that Doug is talking about,   he does share those with his subscribers again at  this contrarian report and on his international   man company. So, if you want access to that and  some more of the training on investing in these   types of companies, you can scan the QR code or  click the link in the description to get that   special offer again from Doug and his team at the  International Man. There's also a special offer   just for our market viewers today. Use the promo  code MB50 for an additional discount when you sign   up for this newsletter. So again, take advantage  of that special offer if you love hearing from   Doug and the wisdom that he has to share from all  of his experience in the market. All right, Doug,   let's move on to that last sector. I know you  mentioned commodities in the first sector you   talked about. Let's continue that commodities  discussion a little more. The last area is not   going to be for stocks really, but we're talking  about commodities. And I would draw your attention   to the agricultural commodities uh traded on the  futures exchange. Now there are 10 agricultural   commodities traded on the US futures exchanges.  But what interests me right now are the grains   which is to say uh corn, soybeans, wheat, and  rice. And they're all once again extremely cheap.   60% of all the calories that people eat worldwide  are from those four commodities. And right now,   uh, all of them are at break even or or worse for  the farmers. There's good reason to believe that   we're going to go into a cyclical commodity bull  market from very low levels right now where they   are. So, I'm long all four of those uh at this  point. You can actually you can go long via ETFs   or you can go long directly in the futures market.  Okay, this is so interesting. A very different   type of investment. Uh we've never talked about  trading commodities in the futures market on this   show before. So I want to dive into the the how  a little bit more. I also love that you mentioned   the break even for farmers because if people have  been watching Marketbeat long enough, they know   we're headquartered here in South Dakota. So we're  very familiar with that agricultural farming story   and the impact it's having on that a community.  Um, so that story tracks very well. The a the a   commodity prices are quite low right now. Um, but  let's talk about logistically if you're interested   in this futures market that you're talking about.  How do investors go about doing that? Most people   should stick to the ETFs. There's an ETF called CO  R N. That's a symbol logically corn. And it's the   same for wheat and soybeans. And so you I I think  if you just buy those at this point, they're going   to treat you very well over the next couple of  years. That's entirely apart from the fact that   there's a worldwide shortage of fertilizer looming  partially because of the uh closure of the Straits   of Hormuz. And incidentally, I don't think they're  going to be opened up anytime soon. You want to   capitalize on higher uh food prices, uh buy an  ETF or one of those things. I I just draw your   attention to the those four big commodities.  Again, very interesting, completely different   area of the market for investors to be looking at  right now. And if that AI bubble burst does come,   the completely different than the tech heavy  conversations we normally have. One thing after   investors who have been very heavily in tech  for the last couple of years, they're used   to those outsized returns. We've talked about  stocks that have had a,000% gain in one year,   uh 700% gains in a span of a few months. So, when  investors get used to those kind of increases,   it can be hard to look at some of these other  strong and steady stocks. So, talking about   commodities in particular and these ETFs you  mentioned that are connected to corn or wheat   or soybeans, what kind of returns can investors  expect with that? and maybe make a case too for   why those are the kinds of returns investors  should also be looking for and not just those   thousand% gain stories in a in the span of a year.  Well, as I tried to uh emphasize earlier, this is   a time when the market is much much riskier,  the general market, in fact, the world economy   is much much more at risk than it's perhaps  than it's ever been in my lifetime anyway. So,   you want to derisk. I'm not sure you want to own  dollars because dollars are being printed up by   the bushel basket by the Federal Reserve just in  order to finance the US government's deficits. So,   you can't be in dollars. You can't be in the  stock market generally, certainly not in tech   stocks where all these people are today. You  don't want to own bonds. They're a triple   threat to your capital. The interest rate risk, I  think interest rates are headed up. Credit risk,   the danger of default is great. the currency risk,  the dollar is going to lose value radically. So   where are you going to be? Where are you  going to put your money is the question.   Generally, I come back to the raw materials of  civilization. They're not going away. They're all   ultra cheap right now, below costs of production  in many cases, farm commodities in particular,   and or below. That's where I would be for those  reasons. Not just reasons of upside potential,   for reasons of safety as well. Where are  you going to put your money? I love this   conversation on this very contrarian look at  how to invest in this market right now. Again,   plenty of guests come on the show and talk about  how bullish they are in the future of tech and   that the tech growth story, the AI growth story  is not over yet. Again, I think it's important for   investors to hear from many different perspectives  on investing in the market. Do your own research   and come up with your own conclusion about  what kind of investing you want to be a part   of. If you want to hear a completely different  take on where AI and tech stocks are headed,   make sure to watch this interview talking about  the pullback we saw last week in some of these   big tech names and what another analyst has  to say about where they could be headed in   the near term and the the the long-term  future. You can watch that full interview