Fragile Investors, Fragile Markets: QTR With Michelle Makori

This past weekend I joined internationally acclaimed journalist, news anchor, and producer Michelle Makori for a wide-ranging conversation on markets, monetary policy, and the future of global finance.

Our discussion dug deep into market valuations, The Fed, gold, bitcoin, where I see value in the markets and other general uncomfortable truths most investors don’t want to hear — and why I think the next five years in the U.S. markets may look unlike anything in living memory.

I pointed out one name that is up 13% already from the interview, which took place on Sunday, and reviewed my list of 25 names for 2025 and other names I find interesting heading into the back half of the year.

I opened the conversation with a stark warning: “I don’t think the next five years in the U.S. are going to look like anything of years past. The market could potentially have a seismic enough pullback that it is going to, and I wrote this, break the brains of the very fragile market participants that we have created today through monetary policy.”

The idea that investors are psychologically unprepared for a prolonged period of pain framed much of our dialogue. Too many market participants, I argued, have been conditioned by years of Fed backstopping and relentless market cheerleading.

That complacency, I said, could prove fatal when the tide finally goes out.

Michelle pushed me on whether I thought we could see an actual 40–50% pullback, and my answer was that the catalyst doesn’t have to be obvious ahead of time. “These black swans come out of nowhere and we again have leverage on top of nonsense, on top of valuations, on top of relentless market cheerleading.” History has shown that cracks in the system often remain hidden until the moment they explode into full view.

Much of our conversation revolved around the Federal Reserve and how its actions have warped natural market mechanics. I argued that the Fed has been “working the gas and the brake at the same time,” floating the idea of rate cuts despite inflation still running above target. “The notion that they’re entertaining interest rate cuts in an environment like this shows they’re not really concerned about price stability at all.” Investors may cheer every dovish hint, but I warned that many of the worst crashes in history began only after the Fed’s first rate cut.

We also discussed the distortions of passive investing and options-driven flows. Instead of fundamentals driving the market, I explained, ETFs and options hedging have created artificial bids that keep valuations inflated.

“You have a $2 trillion crypto air pocket with leverage layered on top of all-time high valuations which are being driven by major market mechanics that have nothing to do with common sense fundamentals.” In that environment, a sudden air pocket or credit event could easily turn into multiple “limit-down” days.

Michelle pressed me on what a prolonged sideways market might look like, and I made it clear that this scenario could be just as devastating as a sudden crash. “Maybe we just crash 20% and stay there for 10–15 years. That’s also a distinct possibility and I don’t think anybody psychologically, including the new horde of investors now in the market, is prepared for it.”

A generation raised on Robinhood options trading and passive ETF flows has no concept of markets that grind sideways for decades, as happened in Japan, I noted.

Still, I wasn’t purely bearish. We talked about the sectors I remain constructive on, such as gold miners, uranium, oil companies, and select emerging markets. Gold in particular, I argued, is more relevant than ever. Michelle asked when I would think about selling gold miners, which are up about 80% this year. I told her:

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