The Three Whys
Getting to the truth in an unknowable market
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In the 1930s, Sakichi Toyoda, the founder of Toyota, developed a straightforward method to uncover the root cause of a problem. His approach involved defining the issue and asking “why” to dig deeper into the chain of events that led to it. Each “why” brought more clarity, peeling back the layers to reveal the core cause.
So, to use this technique to understand some of the market movements this year, the process might look like this.
Why has Tesla gained 82% this year while it’s earnings estimates hvae gone down?
Because Elon is friends with Trump.
Why does Elon being friends with Trump matter?
Because Trump is going to be President.
Why does Trump being President matter?
Because it’s the Golden Age of Grift and Elon is about to be in the most griftable position any man on earth has ever been in.
Lately, I feel a bit like Mr. Toyoda, looking around the market and struggling to go enough “whys” deep to understand what’s happening.
Tesla, Fartcoin, and Froth
Over the last month, TLT has fallen around 7%, while Fartcoin, a meme coin, has risen 240%.
What does it say about a market when people would rather buy Fartcoin than government bonds?
Is that froth?
This suggests a substantial lack of faith in the value of money, yet the Dollar Index is at its yearly high.
That dichotomy reminds me of a Churchill quote.
Democracy is the worst form of Government except for all those other forms that have been tried from time to time.
I guess the dollar is the worst form of fiat currency, except for all the other ones.
But among the non-fiat currencies, Fartcoin is one of the best?
Furthermore, why did Fartcoin bounce off its 20-day moving average? Are there algos watching the fartcoin technicals and trading the chop? I have no idea, but it did, and now I’m long it.
I’m long it.
Bitcoin Breakdown?
Saylor seems to be absent from the Bitcoin market, as I predicted last week.
However, it’s starting to seem that the Bitcoin price might not fall quite as dramatically as I expected.
Bitcoin is about 15% off the highs today and skittering along the 50-day moving average. It has tested that support level a few times in the last couple of weeks, and it has held every time.
News of Saylor’s blackout period is pretty widespread at this point. Although not widespread enough to prevent a sell-off on Saylor’s cryptic tweet this morning.
I’ve closed out my Bitcoin shorts here.
I think there is a decent chance we hold $90k through January, which makes the risk/reward of shorting here pretty ugly. You've picked up a few points if you put the short on when I announced my own last week.
Nothing wrong with that.
I’m not particularly bullish on Bitcoin in the short term, but I’m also not particularly bearish. Holders might have a time preference that doesn’t match a month free of Saylor buying, and we could head lower. But the Saylor Gap's front running is probably over.
Bear is in the Air
The market doesn’t need a crash to remind us that gravity exists. Lately, it feels like the music is fading, and the party is getting late. I’m not saying it’s time to run for the exits, but the vibe has changed. The easy, euphoric rallies are slowing, and what’s left feels choppy and uncertain.
This isn’t the moment to chase every move or take reckless bets. It’s a time to “dance near the door”—stay nimble, keep your risk in check, and be ready if things turn. The bear isn’t roaring, but there’s a chill in the air. Whether it’s nothing or everything, I’d rather be prepared.
I’m holding NQ, ES, and IBIT puts at a variety of expirations/strikes. I don’t think there’s any alpha in copying my setup, so I won’t bother sharing it.
The real point is just that I’m relatively hedged and cautious. I have about 1% of my book in January hedges going into tomorrow.
I intend to profit from some of the IBIT puts but not all of them. I expect to end tomorrow with around 60-75bps in hedges.
If you absolutely must hear a strike and expiration, I’m liking my Jan 10, 5900 ES puts the most.
P.S. A Random Crypto Punt
You'll want to skip this one if you don’t do any on-chain crypto.
I’m out of $STNK, my previous meme coin call, for about a 100% gain.
Last week, I bought a coin called $VAPOR. Since I first heard of it a few days ago, its market cap has risen about 100% to $100m.
It’s a tool for launching on-chain AI agents. Whether you believe in that use case or not, the AI Agent narrative has been an enduring one in the crypto community.
It trades on HyperLiquid, which is an on-chain CEX.
As of this writing, it is valued at about $100m, and the closest comp coins are in the $1b+ range.
It’s certainly a gamble, but you should look at it if you mess with on-chain stuff. It’s currently my second most significant crypto position, next to $Fartcoin.
*Insert Existential Crisis Here*
P.P.S. 2025
Keep an eye out for my “year ahead” post coming soon.
Good luck out there.
Disclaimer: The information provided here is for general informational purposes only. It is not intended as financial advice. I am not a financial advisor, nor am I qualified to provide financial guidance. Please consult with a professional financial advisor before making any investment decisions. This content is shared from my personal perspective and experience only, and should not be considered professional financial investment advice. Make your own informed decisions and do not rely solely on the information presented here. The information is presented for educational reasons only. Investment positions listed in the newsletter may be exited or adjusted without notice.