FaaC: FinTwit-as-a-Contra

During March we prepared readers for what was coming.
We caught the move thus far.
Let's see how it unfolds from here – and how we are FaaCing things up.

By the way, did you ever wonder why it's called a bear market? Because a bear strikes downward with its claws. A bull, on the other hand, drives upward with its horns.

The problem here is that everyone feels entitled to perpetual bull markets – and only short sell offs in between. With the latter always being an opportunity to buy the dip.

Teddy Bear 🧸 -Vs- Actual Bear 🐻

American Exceptionalism and recent experience has made investors cynical to major drawdowns. They can only make themselves believe in a Teddy Market!

Meanwhile, the market narrative has been constantly shifting. We went from:

• a Trump 2.0 rally with everything going up
• to an endless Big Tech/AI narrative with the war in Iran as a side show
• ...to now talking about a Bear Market RALLY

But where did the actual bear market part go?...

Investing in Preparation

With this tweet I raised attention to the abysmal risk/reward on Mag 7-type stocks. And by extension the broader equity indices and their passive boi relatives.

Goes without saying that the market wasn't ready for my tweet.

Because don't forget: narrative follows price.

Two months later I posted a go-to AI short basket – for when the tide turns. FinTwit was even less prepared to consider what I was saying!

Tsunami Finally Turning 🌊🫷

Sentiment was unapologetically bullish, now the tide is turning. Doubts are creeping up not only on the Tech-AI Cycle but also on the broader economy.

As of Friday night: the Houthis have entered the war. And they can choke off the Gulf of Aden, closing the only remaining route for the Saudis ti sell their crude. Unless they get Iranian permission that is!

• We elaborated on the game theory here 👇

Trump is Pot Committed

But soon he’ll go ALL IN

PhiloinvestorPhiloinvestor

• and the contagion on Tech/AI from the war in Iran here 👇

AI-ran 🧑🏻‍💻🇮🇷

energy chokepoint = compute chokepoint

PhiloinvestorPhiloinvestor

AI Short Basket: Performance

We initiated an AI short basket mid-February and since then expanded it – this is performance as of Friday close 👇

• NVDA: +7.5%
• AMD: -1%
• CRWV: +17.5%
• NBIS: +10.5%
• GOOGL (added last Friday): +10%
• MU (added March 25th): +9%

I also used the pseudo-TACO of March 25th to buy puts on NVDA with a $170 strike and expiry this Monday. The puts are now at a ~7X since I bought them. Praying for a flash crash 🤭🙏 

Knowing what we know and using collective FinTwit as our contra – what's the most likely scenario? And how do I plan to play it?

Sidenote: I fear the KITCHEN SINK TACO. Let me explain.