Transcription
Michael Bur, the person who predicted the 2008 housing crash and downturn, just released another warning about the stock market in 2026, particularly one of America's biggest companies. Michael Bur thinks, could be on the verge of an aggressive fall.
In this video, I'm going to tell you about Bur's new warning and also show you some very concerning data about the state of the housing market and stock market right now. And this data reflects the fact that we are actually for the first time in US history in what I call a dueling asset bubble. Both stocks in blue and housing in orange are at close to record valuations in 2026. We've never seen a period like this before in US history. In particular, we're looking at the housing to GDP ratio here as well as the stock to GDP ratio. Both of these suggest that the valuations of these assets are not supported by the growth of the underlying economy.
Now, it's been this way for the last 3 or 4 years, and the stock market and economy have kept humming along. However, one has to ask the question, just how much longer can this boom go on for with the fundamentals not really supporting it? With the Schiller Cape PE ratio showing that stocks are now trading at a 41 trailing 10-year multiple on earnings, this is the second most expensive that stocks have ever been other than the 1999 bubble. The only other time also it came close was 1929 right before the Great Depression. And one has to suspect that this stock market bubble is what's fundamentally supporting the economy right now. A lot of people have been confused about how people keep spending, companies keep booking profits. Well, it's because of this record stock market bubble. One has to wonder how long that can go on for, especially with Michael Bur's most recent warning.
The big short investor Michael Bur is now sounding the alarm on Nvidia, who's the biggest company in the world, as well as something called AI token maxing. Michael Bur warned that Nvidia stock losses look vulnerable and that AI token maxing trends won't last into the future. According to a Business Insider article, he's saying the conditions for an aggressive fall are as strong as they've been in the history of the stock. And he added that Nvidia's next decline could be more dramatic than its last three big crashes of 56% in 2018, 67% in 2021, and 43% in 2025.
Now, some of you might know about Nvidia, or at least heard about them. They are now the world's biggest company. Their market cap is over $5 trillion. And what they essentially do is they sell GPU chips to build data centers. The chips used in these data centers are then helped use to train AI models. And there's huge demand for these chips right now from companies such as Meta and Microsoft and Oracle and Google. They're buying up these chips left and right because they're all building data centers left and right. And that's propelled Nvidia's stock price through the roof and their revenue and income through the roof.
But on Michael Bur's Substack, he revealed something very interesting that I want to show you guys. This graphic comes from Michael Bur's Substack called Cassandra Unchained. It's actually a great read, everyone. I would recommend you guys subscribe to it. I'm a subscriber to it. And I saw this graphic showing that the top three of Nvidia's customers are 64% of Nvidia's accounts receivable. Meaning essentially that almost 2/3 of Nvidia's revenue is coming from three customers. Bur postulates that the biggest customer is likely Microsoft and we can guess that probably some of the other big customers could be Google, could be Meta, could be open AI, could be Oracle. And one just has to wonder how sustainable is it for the world's largest company Nvidia valued at over 5 trillion in market cap. How sustainable is it for the world's largest company to just have three customers take up 2/3 of their revenue? I mean ultimately how diversified is that business? How sustainable is that business? How much is that business going to weather a shift in the environment in future years where maybe one of these customers drops out? Kind of an incestuous relationship among quite a few of these largest companies here in the US. A lot of them are buying and selling services and goods from each other and pumping up their own revenues and often using debt to finance it.
And actually, if you want more proof of the fact that we might be in a stock market bubble right now, take a look. SpaceX just IPOed. They're here on this chart from the Wall Street Journal. You can see their market cap, their total value is now higher than Amazon and almost as high as Microsoft, which is pretty crazy. This is another kind of anecdotal indicator of where we are in the market that SpaceX, who's a company who does a couple things. They launch satellites into orbit. They launch astronauts into space. And really what their biggest revenue driver is, they own Starlink, which provides internet for a lot of people around the world. So it's somewhat of a diversified business, but it's a fragmented business. And their total revenue is around 14 billion a year right now. 14 billion a year in revenue to be valued at close to $2.5 trillion. Now this is crazy everyone that price to revenue ratio for SpaceX is 100x multiple. So their market cap is currently more than 100x what their revenue is which actually says 19 billion here. So I stand corrected 19 billion in revenue according to Google Gemini on SpaceX. You could see Microsoft has 320 billion in revenue and Amazon is 640 billion in revenue. And Microsoft and Amazon also have 32 billion to 90 billion in profit while SpaceX loses money. Yet somehow SpaceX is now as valuable in the stock market as Microsoft and Amazon. And this is the type of stuff that happens in a latestage bubble everyone where you see this rush for IPOs. SpaceX just IPOed. Anthropic is probably going to be next. OpenAI is probably going to be after that. And they're all going to be rushing to raise as much capital as they can before the end of 2026. And a lot of the retail investors, they're taking this hook, line, and sinker. They're buying up the shares for a company that I don't know, maybe 10 years from now, maybe it is doing pretty well, maybe not. We don't really know. I think we can say though, it's probably crazy that SpaceX is now valued as much as Microsoft and Amazon. But that's the type of thing that's happening now in this stock market.
And so for those who don't think it's a bubble, I would just say look at these anecdotal indicators next to the data that I showed you in the beginning because we have the US stock market valued at roughly 76 trillion for the Wilshshire 5000 trading at 250% of GDP. So stocks are literally worth 2.5 times more than the value of the entire US economy. At the same time, housing the orange line is 146% of GDP. And what you can see is really interesting about this period in 2026 is that it's unique. We actually haven't seen a period before in US history where both stocks and housing were in a let's call it a big bubble compared to the fundamentals of the underlying economy. You could see back in 2006 it was just housing. Housing was at 163% of GDP in 2006. You could see the big bubble there and then it came crashing down. But stocks weren't really in that big a bubble back then. Going back now to 2000 2001 it was stocks that were in the bubble back then at 160% of GDP while housing was only around 100% of GDP. So this is a very rare scenario fast forwarding to today where both of these assets the biggest assets in the US economy are trading at valuation levels that are not supported by the underlying size of the economy and economic growth.
Many people have been saying for the last couple years that this is just a new reality. Many people have been saying that the old rules no longer apply for stock market and housing market valuation. A lot of these people argue that things like GDP, income, inflation, rent, these things don't really matter anymore. And that valuations are trading on some other basis, some other forward multiple that maybe is hard to understand. No one can really explain it. And what concerns me is that the underlying health of the economy is now becoming inextricably linked to these asset bubbles. That more and more the consumer spending in America is being increasingly propelled by the fact that people look at their 401ks and look at their Zestimate and feel good about their paper wealth. So they'll spend money that they don't necessarily have. And you can see this very clearly on a chart of the personal savings rate in America going back to around 1955. You could see this is the percentage of Americans paychecks that are being saved each month. And in April 2026, this savings rate dropped to a near low of 2.6%. This is close to a series low. Only 2.6% of paychecks are being put into savings. Now, the long-term norm is well above 5%. Actually, was closer to 10% in the '70s, '80s, and '90s. People saved 10% of their paycheck back then. Now, they only save 2.6%. The only other times that we've seen anything like this was in the 2005, '06, '07 bubble, in the housing bubble. We also saw something briefly happen like this during the inflation spike in 2022. And then also right before the.com bust was the last time that personal savings rates dropped like this. And so that's a concerning trend here. Americans are saving less and less of their paycheck.
Actually, in the short term, some people might view that as a good thing. Particularly big publicly traded companies view that as a good thing because the less that Americans save, the more that they spend. So the inverse to this personal savings graph would be percent spent and consumer spending. And sure enough, the consumer spending is still holding up. Retail sales in the US as reported by the US Census Bureau continue to grow. And if we look at the earnings growth rate of the S&P 500 data from Robert Schiller, we can see the growth rate in earnings is still strong. 38% year-over-year growth in earnings through May 2026. So this blue line going up means that the reported growth in earnings of publicly traded companies is strong, meaning that there's a momentum of sorts in spending and that these companies are also maybe able to achieve efficiencies with operations and cut expenses due to AI.
Now what's interesting about this graph on the year-over-year growth in earnings is that it's very predictive of recession. So when earnings growth starts dropping like it did in early 2001 that was a signal of the.com bust and eventually earnings dropped 50%. When earnings started dropping in late 2007 that was a signal of the GFC and earnings dropped 90%. Earnings started dropping during the lockdowns that was a signal of that recession. And you can see pretty much every period more or less where earnings drop corresponds with a recession. You can also see the Great Depression in 1930. Two parts to the Great Depression, 1930 and 1938, had big drops in earnings as well. And so, we're not on some type of imminent doorstep of a stock market crash and recession right now because as long as earnings are still growing as much as 30% year-over-year, you're not going to see a stock market crash tomorrow. You're not going to see a recession tomorrow. The thing to watch out for, though, is if eventually there's a slowdown in that earnings growth. If companies start reporting earnings growth maybe at 10% year-over-year, 15% year-over-year, or maybe 6 months from now, that earnings growth slows to being flat, that would be the signal that we'd be in a more imminent recessionary environment.
So, for those of you who are like worried about like some imminent crash in the stock market, it doesn't seem that way. But what concerns me is that I feel like the earnings are very related to the stock valuation. And as earnings eventually slow, stock values will slow, which will cause consumer spending to slow by more. Because remember, people aren't saving enough to keep the spending going. So if their stock market wealth drops and their housing wealth drops, it could drop their consumer spending, which would then lead to lower earnings growth, which would then lead to lower stock valuations and could cause a vicious circle. And it just seems like a lot of different parts of this economy are all tied up together. We have the AI capex buildout, the AI boom, Nvidia feeding the chips to companies like Oracle on one side, and then the tech boom on stock prices on the other side, and then SpaceX IPOing and people being crazed and obsessed with that, and people feeling good about their 401ks and their stock portfolios because of that, and then propelling their spending because of that, and that making its way into retail sales. But then what happens if just one of these pieces slows down, right? Like what happens if 6 months from now we realize maybe we don't need as many data centers, maybe we don't need as much compute, maybe some of that token maxing that Michael Bur was talking about slows down. And again, Michael Bur talked about this on his Substack Cassandra Unchained. He talked about how he thinks a lot of these companies are actually probably at the peak of their AI token demand because they're training all these models kind of for the first time. He's also talking about how there's a culture in a lot of these companies where employees are incentivized to burn as many tokens as possible. You know, an employee burning 30 million tokens to climb a token maxing leaderboard. This is something some of these companies were doing having leaderboards of how many tokens their developers were using. So, there was an incentive to just use tokens and tokens and tokens. And this of course led to huge revenue growth for companies like Anthropic and OpenAI. But what happens when the models are more or less trained or most of that training is done or maybe some of these companies begin to tighten the budget on how much they're spending on tokens? The cost of these tokens have gone up and we're seeing now some of these AI agents that operate autonomously might cost a hundred to $300,000 a year. With a recent article from Fortune now talking about how the cost of compute is far beyond the cost of an employee according to an NVIDIA executive in their deep learning department saying that right now AI is more expensive than paying human workers which is a bit of a conundrum because a lot of what we've been hearing the last 6 months is the fact that AI is going to lead to widespread job losses that's something I've been reporting on this channel some companies have certainly done widespread layoffs now it seems like the narrative is shifting to maybe AI is going to be more expensive than hiring human workers. And so how is that going to work out? The truth is I don't totally know. What I do know though is that the math isn't making sense on the fundamentals here. And the longer we go on with a stock market valued way above earnings and a housing market valued way above GDP, the more pressure there's going to be on AI, on Nvidia, on these companies to continue to deliver crazy growth and crazy performance. And if these companies slip up at all, if the revenue growth slows at all, if we see even a little pullback, it could potentially cause some problems and cause stock market valuations to drop, which could cause consumer spending to drop on its own. And if that does happen, the question we should ask is then what's going to happen to the housing market?
Well, I think some of the areas on the US housing market that are going to be most exposed to a potential stock market drop, and I'm not saying the stock market stock market's guaranteed to drop, but a potential drop would be areas with lots of shadow inventory, areas with lots of second and third homes, particularly. That's what we're isolating on this map from Reventure Rap. Areas where over 10% of the housing stock is shadow inventory. I think these would be in the crosshairs. We're talking a lot of markets in Florida where people own second, third, and fourth homes, people with big stock portfolios. We're talking a bunch of markets actually in the Northeast, second and third home markets in Maine and Vermont, as well as upstate New York. We're talking areas out in Arizona, in Colorado, particularly Aspen and some ski towns. We're going out also to California and Lake Tahoe. I think the first areas that would get hit by a potential stock market drop would be these high shadow inventory markets because it would be a lot of people who have big stock portfolios and also a lot of second and third homes. I think some of those second and third homes would get sold and get listed if the stock market dropped. In addition, I would also pay attention to areas that have expensive prices to begin with where the typical home is worth more than $700,000. It's not a lot of areas, but it's tech dominated markets. San Jose, Jackson Hole, Wyoming, San Francisco, parts of Utah, Steamboat Springs, Colorado, Haley, Idaho, Breckenridge, Colorado. And very interestingly, a lot of these expensive markets also have a lot of shadow inventory. And so, this is something I would keep my eyes on everyone over the next 6 to 12 months. If we do see a slowdown in the stock market, slowdown in the economy, I think these would be some of the most exposed areas in terms of where the prices could drop the most and where there could be the biggest selloff.
Until then, home buyers and investors should pay close attention to our 2027 forecast for your city and zip code. Where do we think prices are heading over the next 12 months based on the supply and demand in the market today? Knowing the answer to that question is going to help you tremendously as a home buyer or investor right now. So go to www.reventure.app and unlock that 2027 forecast for your area. So you know where values are forecast to head in the next year. There's a lot of variation in different cities. The bluer the zip code is, the bigger the downward price forecast. The redder the zip code is, the more that we think prices are going to go up. Go to www.reventure.app app right now to check out that 2027 forecast for your city and zip.