According to Global Markets Investors, “US stocks have NEVER been this expensive: The S&P 500 price-to-sales ratio is up to 3.47x, an all-time high. This means investors are paying $3.47 for every $1 of revenue generated by S&P 500 companies. The ratio is now +53% above the 2000 Dot-Com Bubble peak of 2.27x. It has also surpassed the 2021 peak of 3.21x, which was followed by a bear market. The ratio averaged ~1.0x in the early 1990s and bottomed at ~0.8x during the Financial Crisis. US stocks are priced for perfection. There is no room for error.”
Also, noteworthy is the fact that the entire US stock market has massively outperformed the rest of the world from 2010 until 2025, and has therefore become by far the largest stock market in the world when measured by its market capitalization.
Furthermore, the dominant feature within the US stock market was until just recently, a vastly superior performance of growth stocks versus value stocks since 2014. More so, growth stocks became more expensive relative to value stocks since 2021 and since the peak of the dot.com bubble in 2000.
The outperformance of the US was driven by a few important factors: global liquidity continued to expand despite higher interest rates. Global liquidity flowed to the US because American growth companies were able to capitalize on new technologies, on innovations and on growing markets in emerging economies.
Other factors that led to the strong performance in the US included the rise in margin debt, the meaningful decline of cash holdings by institutions, and the enthusiastic buying of US assets by foreigners.
I have tried to show that multiple major economic, social and financial changes are occurring right under our eyes. Likely changes would include: Money flowing out of the pricey US stock market into Europe and emerging markets. This trend got underway in 2025 and continued in 2026. Year-to-date, Brazil is up 20% in US$ terms.
Above, we have seen that the US benefited in the last few years from unusually favorable financial conditions: Expanding global liquidity, strengthening US dollar (until 2025), rapidly expanding margin debt, investors’ confidence, which led to a draw-down in cash held by fund managers, and record foreign purchases of equities. Unquestionably, these trends will reverse one day and lead to steep capital losses.
As I explained in earlier reports, Mr. Trump is a gift of God for precious metal holders who keeps on giving, and a graveyard so far for speculators who shorted them. [This may have changed on January 30, 2026, as investors begin to have a “Liquidity Preference.” Furthermore , the most recent crash in precious metals reminds me of the 1987 stock market crash, which was just a sharp correction within an uptrend.]
It is probable that Mr. Trump and his cronies who are all large asset holders, and the sycophants on his team at the White House would all be willing to do “everything” to support stock prices even at the expense of the US dollar selling-off at an accelerating rate. Therefore, in nominal terms, US stocks may continue to increase but decline in gold terms as they did since year 2000.
Lastly, the conditions for war have greatly improved. The economic rise of emerging economies including the BRICS countries, threaten the US hegemon, which is governed by an impulsive narcissist Buffon who is most unlikely to give up its military and economic supremacy. Under these conditions it is probable that the US dollar will continue to depreciate against precious metals.
Remember, in the words of the Italian Marxist philosopher and politician, Antonio Gramsci, “The old world is dying and the new world struggles to be born; now is the time of monsters.”
With kind regards
Yours sincerely
Marc Faber
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