This Week in Barrons: 8.17.2025

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•  I took the week off…  in order to take a break from this market.  As you’ll see by this post, valuations are becoming ridiculously stretched – going into the worst timing of the year = September & October. [FYI: If you haven’t heard the above podcast - I highly recommend it.]

• I have a deep love for Martha’s Vineyard (MVY) – and this year marks the 50^th anniversary of the release of the movie: ‘JAWS’.  The Free Press’ Peter Savodnik wrote a great piece about that magical moment – in the summer of 1974, when MVY was transformed into the fictional Amity Island.  The movie was never about a shark, but rather about man’s continued inability / refusal to confront his own fears.  As Peter says: “We live in an age where safety reigns supreme: We don’t want any bumps, bruises – or even words or ideas that might upset us.  We understand that our quest for this perfectly manicured, curated, cordoned-off sort of life - has cost us dearly.”  And that alone explains why we still watch ‘JAWS’ – the seventh highest-grossing movie of all time.

• I’ll be back ‘in the saddle’ next week… enjoy the abbreviated blog post.

• Keep saying to yourself: “As long as the world allows our dollar to be the global reserve currency, and our government to print money to buy its own bonds – our stock market will move higher.

• All eyes are on Jackson Hole, Wyoming…  as Powell is scheduled to speak at the Jackson Hole Economic Symposium on Friday, August 23, at 10:00 a.m.

• My easy rule for Crypto is…  Whatever crypto you buy – make sure it has a liquid OPTIONS market for actively managing your risk.

   

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• When you consistently track the breadth of overvaluation… you’ll see things getting particularly extreme, and you’ll notice their warnings: hiding in plain sight.

• Once you enter the later stages of a market’s cycle… more and more investors negotiate with facts.  Investors will say: (a) Profit margins are higher now (true), (b) The largest companies are less capital intensive (true) and have a greater proportion of intangible assets (also true), and (c) The index composition is now skewed more toward companies with those characteristics (also true).  Per Callum Thomas: These things always start with good reason, and end abruptly – when they get unreasonable.

• Emerging markets (EEM) have already broken-out…  and are entering their bull-market phase.  EEM has always been a value-trap, and only recently added the technical, bull-market breakout piece to its resume.  At this point any more additions are simply an exercise in conviction building and risk management.

• SPX Expected Move (EM):

  o Last Week’s EM = $93 … and we touched the upper end of the EM – ending the week higher by +$70.

  o Next Week's EM = $91… and with the VIX having nowhere to go but higher – I’ll still take the ‘over’ on that $91 EM.

• Factually:

  - Sentiment is slipping as we head into a seasonally ‘slippery’ part of the year.

  - Valuation indicators are reaching ‘stupidly’ extreme / expensive levels.

  - More people are ‘negotiating’ with the facts.

  - Emerging Market equities are cheap and breaking out.

  Overall, per Callum Thomas: It’s just another day in the late stages of the market cycle. Aside from the speculation, there’s a bull market in the number of charts showing valuation extremes and pressure points.  More people are ‘negotiating’ against those facts using phrases like: “valuations don’t matter” and “it’s different this time”, but the facts are ironically what tend to give valuations a greater weight and meaning...

   

• HODL’s: (Hold-On for Dear Life)

  - (+) IBIT – Blackrock’s Spot Bitcoin ETF ($66.65 / in at $24)

  - (+) Physical Commodities = Gold @ $3313/oz. & Silver @ $33/oz.

  - Bitcoin (BTC = $117,500 / in at $4,310)

  - Ethereum (ETH = 4,400 / in at $310)

  - (+) GLD – Gold ETF ($307.4 / in at $212)

   

• Options for Income:  De-Risking a Portfolio… (using IBIT for example)

  - BUY-n-HOLD the IBIT ETF

  - BUY PUTs: 1 Std. Dev. Lower, Expiring = 3-weeks away, OTM (out-of-the-money) for protection.

  - SELL Covered CALLs: 0.75 to 1 Std. Dev. Higher, Expiring = 2-weeks away, OTM for income and to finance the PUTs.

   

• ‘De-Gen’ Economy:

  - Chainlink (crypto) == LINK: ($22.7 / in at $19.4)

  - Aave (crypto) == AAVE: ($296 / in at $254)

  - Ethereum ETF == ETHA: ($33.6 / in at $19.9)

  - Emerging Markets ETF == EEM: ~$50

   

  Please be safe out there!

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