The FBI arrested my friend Oren Alexander this morning.
I met Oren about four years ago. He lived a few houses down from me on Flamingo Drive in Miami Beach.
We met through mutual friends in the spearfishing community. Not surprisingly, there are not a lot of people who enjoy holding their breath, swimming 50 to 80 feet underwater in shark-infested waters, and spearing big groupers that are hiding deep in caves. Why did I want to do this at 50 years old? Well, I was retired. And I needed something to do that was like buying tech stocks at the top of a bull market: there are also lots of ways to die when you’re spearfishing.
(Complete aside: here’s a video of me shooting a big grouper 70 feet underwater, in a small cave. On the next dive, to retrieve that fish, I was attacked by a 12-foot tiger shark and I would have certainly died that day, without the incredibly brave actions of my dive partner, Morgan Williams, who dove down to drive the shark away from me. Here's a photo of us with our catch. Morgan is on my right. Porter & Co. conference attendees will recognize my long time assistant, Alicia Hsieh (pronounced: shay), on my left. Yep, Alicia free dives too.)
Oren wasn’t to everyone’s taste. He’s been accused to raping multiple women, over many years, dating back all the way to high school in Miami. But, of course, when I met him, I didn’t know anything about that.
What I did know was: I’d never before seen anyone spend so much money in my life. Only in his early 30s, Oren lived in a $50 million waterfront mansion. In Miami Beach, it’s not uncommon for people to have their own planes and a nice boat. But in addition to a jet and several yachts, Oren had a sea plane. He’d go out spearfishing, have his seaplane come pick him up in the Bahamas, and then have his chef make sushi with his catch for his friends that same night.
I once had dinner at his house when he served a dozen bottles of Château Margaux, all from great vintages dating back to 1982. And a representative from the estate was there to pour the wines. I’d never seen anything like that kind of incredible extravagance.
Oren, as you might imagine, thought highly of himself. But he’d become a force in the high-end real estate brokerage world, selling condos and mansions in Miami, New York, Aspen. and L.A. for tens or even hundreds of millions. He once sold hedge-fund head Ken Griffin (of Citadel) a $238 million condo on Miami Beach.
Knowing Oren was like being friends with a modern-day Gatsby. Watching it all – like when he bought a lot across the street from his house just to build a pickleball court – was very entertaining. Going to the party when he married a Victoria’s Secret model was fun. And, of course, Oren was connected. Need floor seats to the Miami Heat basketball game for your son’s 11th birthday? No problem.
But you could also see, clearly, tragedy was looming. One way or another, I knew fate would take its course: reversion to the mean. Maybe the people he’d run over in the real estate world would find a way to bring him down. Or maybe it would just be his own hubris. It was going to happen, one way or another.
How did I know? Oren wasn’t a kind person. Once, while he was a guest on my yacht, he put his hands on our beautiful French stewardess, who was like family to us. One of our mates threatened to kill him if he ever did it again. And this guy wasn’t joking. He killed monsters for a living; he would have happily gutted him.
And so, I stopped fishing and socializing with Oren and so did my other friends. I wondered how long it would be before it all blew up. I always figured his demise would correspond to the next big financial crisis. And I still do…
Jason Goepfert, along with Ned Davis and my old partner Steve Sjuggerud, is one of the best technical market analysts in the world. These guys don’t draw lines on charts. They study the underlying fundamentals of the markets quantitatively. They use statistics and correlations to see into the overall health of the market.
Today Jason reported on X: “There have now been more declining than advancing stocks in the S&P 500 for 7 straight days. The index is less than 3% off its peak. That’s happened twice before in the last 25 years.”
This long decline in market breadth, and a top in securities prices, happened in early 2000, just before the massive tech collapse. And it happened again in early 2021, just before the massive COVID collapse.
Bull markets build market concentration. And sooner or later, the entire market is only being held up by a few stocks – usually trading on completely unrealistic expectations. When the selloff comes, it will come hard. And drive the S&P down 30% to 50% in a matter of weeks
I believe that time is here. I believe so, not only because of the market breadth issue that Jason so wisely notes, but because there’s a chorus of other signs. Oren’s demise chief among them in my mind. Oren was created by the great inflation of the last decade. He’s going to jail – probably for a long, long time. Reality is striking back
Who else is begging for mean reversion? Michael Saylor.
After Microsoft’s (MSFT) shareholders voted against holding Bitcoin in Microsoft’s treasury, Saylor said it was only a matter of time before MicroStrategy (MSTR) surpassed Microsoft’s market capitalization.
What? Microsoft is the world’s leading software company. It sells $250 billion or more of software every year and is, by far, the dominant provider of business software. Saylor’s MicroStrategy, on the other hand, is borrowing money and selling shares to buy Bitcoin.
I believe Bitcoin is a wonderful innovation. I believe it works better than gold, in many ways, as a store of value. But borrowing money to buy a speculative asset that’s completely unproductive can easily be fatal. Just ask the Hunt brothers, who tried to corner silver in 1980 at $50 per ounce. Or Warren Buffett, who made a similar mistake in 1997 – only to watch silver crash in 2000.
I suspect that Saylor’s prediction about Microsoft was the top in Bitcoin for this cycle.
What should you do with all of this information? Just remember to follow the trailing stops we recommended on our tech-stock portfolio. Raise at least 25% of your portfolio in cash. And, if any of these “tea leaves” ends up being right, be prepared to buy high-quality businesses (see our subscribers-only recommended list) when stocks fall below our buy-up to prices.
Good investing,
Porter Stansberry
Stevenson, MD
Get Porter in your inbox… Every Monday, Wednesday, and Friday, Porter Stansberry will deliver his Porter & Co. Daily Journal directly to your inbox. He puts his 25+ years of investment knowledge into every punchy, fresh, and insightful issue… that’s free, with no strings attached. Everything is uncensored, and nothing is off limits. To get the Daily Journal, click here.
