"OF COURSE IT'S A BUBBLE" - Gary's Comprehensive Bubble Analysis + Big Banks Breaking Out

 

📊 Market Sector Tracker - Gary Kaltbaum's "Investor's Edge"

Tracking leading/lagging sectors, top stocks, and market positioning

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📅 Tuesday, December 3, 2025

"OF COURSE IT'S A BUBBLE" - Gary's Comprehensive Bubble Analysis + Big Banks Breaking Out

Market Action

• Dow: Up 408
• S&P: Up 20 (tech waning)
• NASDAQ: Up 40
• NASDAQ 100: Up 50
• Russell 2000: Strong (broad market)
• SOX (Semis): Up 131
• Advance/Decline: 3:1 to the better on both indices
• New highs picked up - good to see

Gary's Key Statement: "Big banks breaking out, semiconductors strong with a few breaking out, ain't nothing bad gonna happen overall, I can promise you that. There'll be weakness, there'll be bear markets, there'll be bearish names, there'll be bearish sectors, but an overall market, hell no."

Leading Sectors 🟢

1. Big Banks - BREAKING OUT TODAY!
   • Morgan Stanley: New high
   • Citigroup: New high
   • Goldman Sachs: Getting close
   • Bank of New York: Getting close
   • Bank of America: Getting close
   • Wells Fargo: Right there
   • JP Morgan: Weakest of bunch
2. Regional Banks - Good day
3. Semiconductors - Up 131, another good day, some breaking out
4. Housing-Related - Strong (10-year yield dropped to 4.057)
5. Transports - Broke above range today
   • IYT broke above 73.70 (hit 6 times since January, finally broke)
   • Rails, truckers, airlines
   • Gary: "As we had told you for a long time, avoid, not anymore"
6. Oils - Very good day
   • OIH (oil services) broke above range at 298
   • XOP (exploration/production) needs to get above 139
   • XLE (big oil) needs to get above 93, currently 91.83
7. Steel, Metals, Mining - Strong (copper, aluminum)
8. Retail - Good day
   • American Eagle Outfitters: Up $3, new yearly high
   • Boot Barn: Getting close
   • Capri: New highs
   • Dollar Tree: Decent reaction to earnings
   • Five Below: Up in aftermarket on earnings
   • Ralph Lauren, Ross Stores, Urban Outfitters: Recent good reactions
9. Private Equity - Woke up (Blackstone, BlackRock better)

Lagging Sectors 🔴

1. Technology - Waning, only up 40-50 points
2. Microsoft - Down $11 today (AI software growth targets lowered)

Leading Stocks 🚀

Big Bank Breakouts:

• Morgan Stanley - New high
• Citigroup - New high
• Goldman Sachs - Getting close to breakout
• Bank of New York - Getting close
• Bank of America - Getting close
• Wells Fargo - Right there

Retail:

• American Eagle Outfitters - Up $3, new yearly high
• Capri - New highs
• Dollar Tree - Decent earnings reaction
• Five Below - Up in aftermarket on earnings

Transports:

• IYT - Broke above 73.70 resistance (6 attempts since January)

Oils:

• OIH - Broke above range at 298

Lagging Stocks 📉

After-Hours Mover:

• Salesforce.com - Up $12.50 to $251 on earnings
  • But topped at $369 in December 2024
  • Trading at August 2020 levels (over 5 years no gain)
  • Earnings still going up but "much slower, much, much slower"

Microsoft:

• Down $11 today
• "The Information" reported: Lowering AI software growth targets
• Originally titled "lowering software sales quotas," later changed

Gary's Positioning 💰

• Watching big banks closely (breaking out)
• Watching transports (broke out)
• Happy about semis staying strong

🫧 COMPREHENSIVE BUBBLE ANALYSIS 🫧

Gary's Definitive Answer on AI: "Gary, what do you think? Well, we're very careful with our words here. So I never guarantee, I never promise, but I state belief, and my answer is, of course it's a bubble, of course it is. But on whom and where and how long is another story."

BUT THE KEY CAVEAT: "Here's the key on bubbles. They can last a long time, and you can miss a hell of a lot of gains if you sell too soon. I think all that you're seeing lasts a good long while from here. I think it can last another year, who knows?"

How to Know When It's Over: "Do you know how we'll know if the end is near? The stocks will top out, break down, and not go back. Simple as that."

Bubbles Already Popped (First Time):

1. Quantum computers - 50-70% drops
2. Drones - 50-70% drops
3. Robo-taxis - 50-70% drops
4. Space - 50-70% drops
5. Nuclear - 50-70% drops
6. Rare earth - 50-70% drops (government interference caused it)
7. Trump coin - Down 95% (insiders made billions, massive selling)
8. Melania coin - Down in the 90s
9. NFTs - From years ago

Gary: "Notice the words, the first time. They certainly can ram them again because they have help. Unfortunately help from this administration that is now interfering in industry like we have never seen, taking position in companies."

AI Bubble Evidence:

1. Oracle Example:

• Announced "gargantuan numbers"
• Stock went 345 → 197 → 207
• "Massive amounts of debt being foisted upon the public to pay for all this. But you know what you're paying for? Projections."

2. Insane Projections: "When I hear somebody come out and say, $100 billion by 2030, well, I say, I don't know what I'm eating for dinner tonight."

"The number one bubble is, they're projections. They don't know, they really don't know."

3. OpenAI CEO Response: "The CEO of OpenAI was asked a simple question. How are you supposed to commit to $1.2 trillion in whatever when you have $10 billion? And the guy got mad and said, well, just go sell your stock. It was asked by an investor. That worries the hell out of me."

4. Circular Financing: "Oh, I'm gonna invest $100 million in you, just buy my stuff. For me, it just reminds me of everything I've seen in the past that blows up to a certain extent."

5. Microsoft Today: "Microsoft dropped $11. Microsoft is lowering AI software growth targets. Bubbles are also priced, not just for perfection, for unbelievable perfection. So any cheek of the arm, so we'll see."

6. Valuations: "Valuations are up there in the trees. I'm pretty sure you're paying $2 for a lot of $1 bills right now in some names, and I don't know which ones yet."

7. Nobody Will Make Money: "There's been talk of $100 billion, $50 billion. Nobody invests $100 billion dollars if they don't think they're gonna get back $100 more. I see no way that anybody's gonna make that kind of money off of these investments."

Gary's Prediction:

"I think in a few years, we're gonna look back and say, holy crap, that's my take."

What Gary DOESN'T Think:

• "Do I think there's a pets.com? There's probably one or two in there."
• "Do I think NVIDIA's gonna be here forever? Hell yeah."
• "Oracle, hell yeah."
• "These companies aren't going anywhere."
• "But I do believe a lot of it is being based on numbers that are promised going out in a few years. They don't know, but we're supposed to believe them. Why? Because they're very successful people. They're very wealthy people. They've done magnificent things. But I repeat, the projections are insane."

AI Benefits (Gary Acknowledges):

• "Drug companies to get drugs out 70% quicker than normal"
• "They'll be able to tell cancer way before they used to"
• "If they could do better on screening, I'd love that. My family's been touched by cancer."
• "But then it gets back to return on investment."

Other Bubbles Gary Sees:

Baseball/Basketball Cards:

• Kevin O'Leary showed cards selling for $6 million
• Gary asked: "Do you ever worry that the bubble's gonna pop?"
• They said no bubble
• Gary: "But you just said that was worth $1 million just two years ago, it's now $6 million"
• "It's a baseball card"

High-Priced Watches:

• "Went insane to the upside and they're getting crushed"

Sneakers:

• "There's been a gargantuan bull market in sneakers"

Pokemon Cards:

• Gary has one he thinks is worth $10K

Art:

• "I can't believe what some of the art's going for"
• Guy sold invisible sculpture for $15K ("There was nothing there")
• Guy sold banana on wall for "craploads"

SPACs/Electric Vehicles:

• "When all the SPACs a few years back announced they were doing electric vehicles, we laughed at them"
• "One of them went to jail, and of course the president just pardoned them"
• "A bunch of them have shut down because it's not easy for car companies"

Gary's Investment Wisdom:

"Just always think about, am I paying $2 for a $1 bill? Always think of that and give yourself a good, honest answer."

Book Recommendation: "Extraordinary Popular Delusions and the Madness of Crowds - It's a big book, but you should go read it if you have an interest."

• Study tulip bulbs
• Study past bubbles

Recent Example:

Tesla: Up $17 today Why? "Administration, gonna talk about robotics now. And of course, Tesla is a leader in those robots."

The Google Switch:

"Just in the past six months, Google was supposed to be crap, remember that? And now Google's the leader. They call it Alphabet. I don't know why they changed the name."

Crash/Correction Outlook 🎯

NO CHANCE OF BEAR MARKET: "If the semiconductors and financials are doing fine, there is no chance of bear markets. Except for individual areas."

"Big banks breaking out, semiconductor strong with a few breaking out, ain't nothing bad gonna happen overall, I can promise you that. There'll be weakness, there'll be bear markets, there'll be bearish names, there'll be bearish sectors, but an overall market, hell no."

Index Targets: All indices need to break above recent highs:

• S&P: High 6,920, currently 6,849 (needs 71 points)
• Dow: High 48,431, currently 47,882 (needs 549 points)
• NASDAQ: High 24,020, currently 23,454 (needs 566 points - "needs a little more work")
• NASDAQ 100: High 26,182, currently 25,606 (needs 576 points)

What Gary Likes: "I like the fact that the broad market, and I like the fact that the big banks, and I like the fact that some of the worst names are getting strong."

Key Observations 💡

Easy Money Coming:

• "Dollar is acting like the south end of a northbound jackass"
• Why? "We're getting easy money Trump going forward"
• Powell stopped QT, "so he's easing"
• "Looks like he's lowering rates next week"
• Kevin Hassett coming in: "You might as well put two strings on his shoulders because Trump's gonna run him to convince everybody at the Fed, we're gonna lower rates, or you're fired"

Economic Reality:

• "The job market sucks"
• "They're gonna come out with a strong GDP number, but to take out government spending ain't so strong"
• "Our government is spending four times as much as they used to 25 years ago. And for what? You getting anything out of it? They're sure taking out a lot from you."

Bitcoin Status:

• Up today
• "We thought maybe an island reversal, maybe the bear's over, I don't know"
• "To us, it's just a bounce in a bearish market"

Rare Earth Government Involvement: "Unfortunately, they caused the big quick bubble in the rare earth stocks that went straight up, straight down, 50, 60, 70% drops. This is not a rip on them. I think they mean well, do their best, but they started promoting no sales rare earth stocks. One of them announced, oh, we have talked to the president and we're cutting deals that never came to fruition. I'm surprised there hasn't been lawsuits."

Robo-Taxis Logic: "We know just by adding one plus one to get two, there's no 50 companies that are gonna do robo-taxis, yet there's so many out there."

Salesforce Reality:

• Trading at August 2020 levels (over 5 years no gain)
• "It's done that while earnings have still been going up, but much slower, much, much slower"

Dollar Weakness: "This Trump and his buddies want a weaker dollar, which is not good news overall, but does help our multinationals"

Winston Update: "My doggy, Winston, my cancer doggy. Three years ago, terminal cancer, they said, and he's doing great."

Politics: "I had one jackass email me and call me almost every name in the book because I'm too nice to Trump. I have another one saying I'm too mean to Trump. Interesting, huh? You get two different things from two different people because they're politics."