Fact Check: Stock Market Reset Warning vs 1929 Comparison Analysis

There're currently huge risks in the stock market that very few people are talking about. And when I say there are

risks, I'm not talking about a crash or a collapse. I'm talking about an outright reset. And to be very clear, a

reset doesn't look like the GFC. It doesn't look like the dot-com bubble bursting. It looks much more like 1987,

Black Monday. Or even 1929, where stocks went down by 89%

and didn't recover for 24 years. And what you have to understand about a reset is it doesn't just impact

your portfolio. It impacts interest rates. It impacts the national debt. It impacts the dollar. And most of all, it

impacts the economy. Just like it did in 1929, when that reset led to the Great

Depression. But this video isn't about hype. It's not about narratives. It's about facts,

data, and history. And I'm going to reveal everything you need to know, so at the end of this

video, you can determine whether this stock market bubble will end like the GFC,

the dot-com bubble, or something much, much worse. Now, let's go to the whiteboard so we can do a side-by-side

comparison of 1929 and 2026. We'll look at the differences and some of the shocking similarities.

Let's start by looking at a chart of the SPY. We'll use this as a proxy for the stock market. We go back about 10 years.

On the left, we go from 100 up to 700. Now, notice right around here, 2016 or so, we were right around 200

on the SPY. And then we go up up we go really parabolic right here after well, you

know what happened the cerveza sickness here. Everyone got stimmy checks. So, they run that into the market. It goes

straight up but then we had Jerome Powell putting the kibosh on the party when inflation got up to 9.1%

in 2022. He starts hiking interest rates and that creates this big down move in the stock market but we bottom out let's

say right around 2023 and from that time it goes straight up to the point where you could consider

this definitely a blow-off top. Another thing we can do and editor go and help me out with this one is we can throw up

a chart of a typical bubble pattern and you see it looks eerily similar to what has happened in the S&P 500 or the SPY

using as a proxy over the last 10 years. But now let's go over some specific numbers because this is where the

similarities become shocking. Go back to our original point here in 2016 right around 200. Since that point

the stock market is up to 3.83x roughly. So, then the question becomes okay

George, I get it but what happened in 1929? And most people focus on just the stock

market crash or reset of 1929. And by the way, later in the video I'll go over why I'm calling this a reset as opposed

to a crash. But most people focus on the reset here in 1929 or what happened after. What I want to do is look at what

happened before. So, if we go back let's say 1920 and look at at

a 10-year look back like we did here, we see it started and we're using the Dow. So again, a different proxy, but the

concept is the same. The Dow started at right around 100. And it went up to 381.

So from the original starting point in the 1920s, it went up to

3 .8 1 x

before the whole house of cards came crashing down. So just to make sure we're all on the

same page, when we do an apples-to-apples comparison between 1929, when the whole house of cards came

crashing down, using this metric, the current 2026 stock market is in even more of a precarious position.

But unfortunately, there are many other metrics that we're going to go over right now in this video that show how

today's stock market is even riskier than the one that we saw back in 1929. Let's go right back to my desk and we're

going to dive into the details. Okay, so with the help of AI, let's look at an infographic, which I think is a

lot better than just looking at the raw data, to go ahead and compare and contrast these two different, let's say,

historic bubbles, which you can see right here on the Rebel Capitalist >> [laughter]

>> infographic. Now, I'm not sure why AI put a bull on the top corner. You would think they

they would have put a bear, but whatever, we'll go with it. The one thing I do like here is they say,

"Question conformity, invest in reality." I like that. I like that. Or maybe

question the narrative, invest in reality. Very, very cool. Anyway, let's start with the Buffett indicator.

Everyone knows what this is. Right now, it's right around 235%. So, what this is is it's basically the

market cap to GDP. So, the entire market cap of the stock market relative to the domestic GDP in the United States. And

you can see right here, 235% right now in 2026. And we compare that to what it was back

in 1929, and it was, based on different ways of measuring it, anywhere between 87%

and 130%. So, you could easily say that it's twice as bad, twice as precarious, twice as

risky right now. Now, there is an important difference here that we have to consider in our analysis. Back in

1929, the market cap or the revenues from all of these stocks that were traded, these

companies, most of the revenues were coming from the United States. Where now, we've got these mega-corporations,

these multinational corporations that are traded on the stock exchange. So, their revenues are not only coming from

the domestic economy, but coming from the global economy. So, you would expect to see the market cap to GDP higher

today than it was back then. But, it doesn't mean the market cap to GDP should be double what it was back in

1929. So, now let's go down to the next metric, which is more of a direct apples-to-apples comparison here. This

is the Shiller CAPE ratio. We can see back in 1929 at the peak, right around 32.6.

Today, 41, or just shy of 41. And you can see that's in the 99th percentile. It's

mostly carried by the mag 7. Now, I did fact-check this chart right here that AI put up

and it's not exactly correct. So, editor, go ahead and throw up the real chart of the Shiller Cape ratio and we

can see that we are right around 41, but we're slightly lower than we were during the dot-com peak, but we're much, much

higher than we were during 1929. And just for you new viewers, the higher the number, the worse it is.

So, this means that right now the valuations are stretched almost to the point or almost to the level of insanity

that we saw during the dot-com bust. Can the valuations get even more extreme? Absolutely. But, what it tells

you right now is how far we have to fall. And editor, go and throw up that real chart of the Shiller PE ratio

really quick. We can see the average here is probably right around 15. So, when you're at 41,

that shows you not just how far we have to fall, but it shows you that we've got a long, long,

long, long way to fall. This next metric is actually very interesting. It's something I hadn't

thought of before, but the AI is calling it the negative carry. So, what they're doing is they're looking at the dividend

yield on the stock market versus how much the borrowing costs were to actually buy the stocks in the stock

market. So, there was a 600 basis point spread back in 1929.

And today, we've got about a 340 basis point spread, which means that it's, in my view, even worse because it's a lot

cheaper to go ahead and borrow money to go ahead and buy the stock market when you look at the negative carry. There's

a lower negative carry, so that makes the incentive to borrow to buy stocks a lot greater. And then we go down to

number four, and this is the doozy, especially if you watch my last whiteboard video where we talked a lot

about the one quadrillion or more in global derivatives. So, they're calling this the leverage

iceberg where the margin call hides. >> [laughter] >> I guess so.

Back in 1929, the margin debt relative to the market cap was almost 10%. That is an insane

number. And today, it's a little under 2%. A little tough to read here. I'd rather go ahead and throw up the chart

that we have that shows the specific numbers. The problem is when you go over to the right-hand side here, and it

looks like this iceberg that's somehow floating in hell >> [laughter]

>> with with all of the red. But it shows that today we have 1.48

trillion in margin debt, which again, to be clear, is a lower percentage of market cap than what we saw in 1929. But

here is the elephant in the room, the over one quadrillion in derivatives.

Now, this one quadrillion in derivatives is the notional value. It doesn't mean that there's one quadrillion of debt or

margin debt that has been used to buy stocks or assets. But what we have to do is use this to

understand the concept that there are so many things out there, things that we didn't have in 1929

that could have a serious negative impact on the stock market, such as they're calling it hidden leverage, ODT

E options, private credit and special purpose vehicles. We talk about that constantly. Like everyone looks at the

GFC and says we got nothing to worry about today because we don't have subprime mortgages. But what they're

missing is we have subprime. It's just in the form of private credit. It isn't necessarily in the housing

market, but it could be just as devastating not just to the stock market, but also to the economy. And

that's something we're going to talk about in just a moment. And of course, we can't forget about double and triple

levered ETFs on pretty much every single thing that you would ever want to bet on. And at the end of the day, those

triple leveraged ETFs are just that. They're absolutely 100% gambling. Very similar to the gambling that they were

doing back in 1929 by taking out these brokers loans to buy the stocks that they thought could never ever go down.

So the bottom line here is the packaging may have changed slightly, but the fragility did not. When you have narrow

breadth and leverage, it always ends the same way. But

I would argue that it ends in different ways. Like I said at the beginning of this video, I

don't think this is about a crash or a GFC. I think it's more so about a reset. So what's the difference in my view?

Well, a crash is very similar to what we saw in the dot-com bust or the GFC where the stock market goes down, but it just

grinds down over time. Now it is true during 2008 or into 2009, we had some big downward days. That's for sure and

massive massive volatility. But it wasn't like a 1987 Black Monday where the stock market is

down over 20% in one day. Or in 1929 when the stock market was down by 25% in just four trading days. So for me a

reset is far more devastating because the majority of the crash can happen in such a short time frame. Before you know

it, the stock market is down 30, 40% before you even have time to react or before you even have time to sell. And

the economic consequences from a reset don't just last a couple months or a year. They could last up to a decade.

And that's what we're going to talk about right now. Okay, back to the whiteboard so I can

give you guys a visual representation as to why the risks to the economy are far greater today than they were back during

the GFC or back during 2000. I want you to visualize the economy being propped up on this stool. Now, believe it or

not, these are the legs of the stool right here. Three-legged stool. >> [laughter]

>> My artistic ability has no limits. That is for sure. But we've got the US economy right here. Obviously, there's

Florida. And it's propped up on this stool. Now, usually you would want economic activity, economic growth, the

health of the underlying economy to actually represent the real economy. But unfortunately, that's not the world we

live in anymore. Now, the economy is really propped up by asset prices and this AI bubble that we've been

experiencing over the past couple years. But you guys can see there is a doom loop here. And what I mean by that is

the AI really represents the stock market because it's really just the Mag 7.

Because the breadth is so narrow, like we were talking about earlier. So, if this AI goes away, then the asset prices

will absolutely drop. But, what's also interesting is if the assets drop, then the AI is going to struggle as well. Why

is that? Because right now, we've got the AI leg of the stool that's propped up by another two little mini legs, if

you will. Because the hyperscalers, or as I call them, the hyperfailures,

were taking all of this free cash flow that they had, and that's what was going up that AI CapEx spend that was propping

up the US economy. But, the cash flow for a lot of them pretty much gone. They're negative cash flow. So, the only

way they can continue to spend, in other words, continue to prop up the economy and prop up asset prices, is by issuing

debt and equity, more shares. Well, if they issue more shares, then that's obviously going to put

downward pressure on their share price. And if their share price equals the stock market, that's going to put

downward pressure on the stock market, and it's going to make this leg right here very, very wobbly.

But, now let's go over to the very important debt component. If you guys haven't been watching, Coreweave has

been in the news lately because their CDS prices have completely blown out. Ed, if you'd go ahead and

throw up a chart, and we can see that the CDS, and this is insurance against Coreweave going bust, the price for that

insurance is skyrocketing to a point now where it's over 10%, and by the way, increasing daily. So, if you want to

insure a billion dollars worth of CoreWeave's debt, that's going to cost you over a hundred million dollars. And

oh, by the way, the price is increasing almost daily, which means the risk of them going bust is increasing daily as

well. And the credit default swaps on Oracle are doing the exact same thing. As a matter of fact, their debt just got

downgraded to one level above junk. And if it does eventually get downgraded to that junk status, which is very, very

likely, that creates a systemic risks that I've talked about in recent whiteboard

videos. But the key here are these AI models. OpenAI and Anthropic, those are the two biggies, of course. And the way

I look at this, this entire AI ecosystem, is that it's really like an inverted pyramid, and it all sits on

that one Jenga piece. And that is the AI models. In other words, they have to come up with an

economic model that actually is profitable. And right now, they are incinerating cash. We just saw that

OpenAI came out and said, "Oh, by the way, yeah, we told you our revenue is going to be around 70 billion, but we're

still flushing money down the toilet at a very, very rapid rate, but that's actually 50 billion." And Anthropic came

out the other day and said, "Oh, yeah, actually, we just lost 42 billion dollars in the last 12 months, and we

have over 500 billion of unfunded liabilities, and we have no idea how we're going to pay for them." So, it's

just like the movie The Big Short. If you take away this Jenga piece, in other words, they

can't figure out a way to make money and turn profitable even though the demand for AI is absolutely undeniable. But

demand doesn't always meet profit, especially if the cost to deliver the service is

higher than the money you charge. >> [laughter] >> Pretty much basic finance there. But if

you take away that Jenga piece, then this whole inverted pyramid, the ecosystem of AI, comes crashing down.

Well, if that happens, then you eliminate this stool of the stand, or excuse me,

this leg of the stool. And if this leg of the stool is gone, then obviously it represented the vast majority of the

stock market, then this leg of the stool also gone. And then the only thing the economy is

propped up by is the economy itself, which was, like I said, dependent on

>> [laughter] >> asset prices and the AI. So, that goes away and the economy comes crashing

down. And this is why I think we're dealing with a reset today, very similar to 1929 as opposed to a GFC or a

dot-com. Because back then, you didn't have the economy dependent on the asset prices or, let's just say, the dot-com

stocks. The economy was really built on the economy itself, and back then it was obviously a lot healthier, a lot more

robust, and most importantly, a lot more structurally sound than it is today. So, will we have a giant crash, a

collapse, or a reset? Like I say in these videos, there are no certainties, there are only probabilities. But what

you have to do is understand how this stuff works, and you have to be prepared.

So, regardless of what plays out over the next year, you can make sure that you're not only surviving, but actually

thriving. And on that note, I've actually got some good news for you. I just created a very powerful tool,

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extreme urgency, guys, because if we are dealing with a reset, the stock market won't grind lower.

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