3/28/24
Post #1
Going into today with the following positions:
Long ETH
Long BTC
Short TLT (hedging my bonds in my savings)
Long VKTX
It’s quarterly opex so will be interesting to see what happens.
Reading an interesting report today on how MSTR is being dramatically overvalued compared to the underlying business fundamentals + it’s bitcoin holdings. There seems to be a good pair trade there to short MSTR and long BTC, which I’m investigating. The report is compelling, but the trade might be a touch early.
Report here:
Separately, I’m expecting crypto to rise today. We may be poised to make runs above all time highs again from here. I’m increasing my leverage a bit.
After I finished writing this it looks like the MSTR trade started to work…
Cheap Puts
I’ve been reading for months now how QQQ puts are at historic levels of cheapness. Every time I read it I think to myself “that’s something to file away for later.” Well, later is getting closer, and one day soon it will be something worth paying attention to.
The world is chaotic, and it feels like we are overdue for a market-shock of some kind. Generally, these market shocks come from something that is impossible to anticipate (or impossible for markets to anticipate at least). I think that’s the situation we are in. SOMETHING will happen soon, no one can say what it is, and it will lead a big correction. Maybe from there we will simply resume up only. But maybe not.
Therefore buying some out of the money QQQ puts is becoming a better and better idea each day. I will put that trade on 🔜.
TLT
I put the TLT short on because I’ve been reading Paulo Macro’s wonderful substack where he has been harping on higher yields for a while. In fact, a lot of very sharp people have been harping on about that trade for a while, while the trade hasn’t had much success. Just like with the Cheap Puts, I think we are getting to a place where that will soon be a good trade. Judging from the PA the last few days however, I’ve possibly put it on too soon.
Broad Thoughts
Broadly, I think we are just in a high-beta regime and don’t want to try to stand in the way of any freight trains. You can get too fancy in these situations. It’s fairly likely we get a second wave of inflation, even if it’s short lived, and that may well spook markets. If we do, I am counting on some early indications to give us clues that will allow us to get proper positioning.
For now, I’m just watching and longing. This isn’t an environment where I want to be heroically out the risk curve chasing Beta (It’s not 2021, though you wouldn’t know it from the charts). I largely missed the “generational buying opportunity” that I knew was coming in 2022 because I was being a dirty bear, but at least I got my shorts in.
Everything is rigged to go up so let’s not fight it. Buy something with your dollars.
🤣Not many would admit to missing generational buying opportunities but it’s so much fun, so I’ll share!
My track record:
2020: Missed. Predicted the scale of Covid, Cassandra style. Got depressed when people wouldn’t listen & was too disgusted to trade anything.
2022: Missed. Had a bear bias (probably still do), because ‘08 was my first impression of the market growing up, and I was the Covid Cassandra. Was busy being a newbie bear shorting the hole & was incredibly lucky just to dig myself out.
2023: Missed. 1H: basically the same as ‘22. Got lucky with the March banking crisis (I had no edge; it just happened while I had some brainless puts for no reason). Didn’t take profit & had to work hard just to barely round trip. 2H: Had a strong conviction in the Santa Rally & could’ve caught it if I just invested on my own, but went with a fraud of a manager instead. Basically round tripped.
Exception to the rule (?):
2024: Finally decided to start trusting my own work and sticking with it. Established the majority of my portfolio by going long the S&P (hedged), one day after the April bottom. Nice and easy. Other fun-sized punts along the way as opportunities show up. Otherwise I just kick back and enjoy life. Long only! No more shorts for me 🤣
Hopefully this is unironically another generational buying opportunity, instead of a bull trap near the melt up top, 1929 style! 🤣 I mean, even someone with my track record went long, so it very well could be!