Random Ramblings #12 Citrini and Iran nuke markets

I have not been able to get these out monthly but in my defence it has been an insane quarter and quite busy. Will be doing these quarterly now (try to) to cut noise and focus on signal (look at me trying to sound cool). Anyways, lets dive into it:

1. For starters, I have been wrong more than right re 2026. Equities muted as I expected but down way more, though of course I did not see the Iran war coming and the subsequent supply chain disruptions. Which of course means I was completely wrong re oil. But I was right that this is an active market, you cannot sit on your hands. So yes, I anticipated the USDINR sell off and the equities sell off in India when Iran started attacking infrastructure and disrupted energy supply. Got the dollar thing right and the precious metals rally, though the subsequent crash was not expected by me. I expected it to go even more vertical but I understand that this war caused a sell off.

2. Citrini published a very interesting piece before all of this, a hypothetical future. It drew so much attention and counterpoints and it was all good to read. Honestly, I still don't know or have an opinion on how AI shapes the world. I am fine with it, ready to find out. But props to Citrini for such a though provoking piece. Don't have to agree with it, but it takes a really good writer/researches to lay out a scenario like this. Hell, Citadel and Prof Damodaran were talking about it. Apparently it also caused a sell off but I am wary of these claims to be honest.

3. Now, coming to what I think will happen, which means nothing much these days considering how badly I am doing with these "predictions".

   1. The Iranian regime won't fall. I am not going to buy into this. Unless we see lots of boots on the ground. Which no one wants. Even someone like President Trump. I don't know how the war will conclude, but for now the regime stays. They've played it smart, taking down everything they can to survive. Smart or desperate, whatever you want to call it. It is working. All the world is somewhat feeling the pressure with rising costs across the board. Inflation surged, energy infra will take time to repair.

   2. Equities are in fact at decent valuation. If I have cash, I'd be averaging in to Indian Equities (I am Indian after all there's always local bias) and US. Long term valuations are fine. Short term yes we will see Equities going haywire, SPX probably will touch 6200 and might even give us 6000, where you absolutely forget everything and go all in. I am not worried about long term directions here for equities. For India, the time correction is done along with Price. We are like SPX, around fair value. This is the time to accumulate Nifty if you are an Indian investor.

   3. Indian IT: lots of good bear cases. I have no opinion on stock price but the business should be fine. You still need engineers to build good AI models and apps that don't break underneath.

   4. USDINR: This is the level I expected end of 2026, not Q1. I know RBI is intervening heavily to support INR but lets be real, they can't do much here. India has to import everything at any price and I think the govt has done a great job so far. I do expect INR to hit 96 soon but RBI will be doing all it can do ensure it stays levelled at 96 or 97 by 2027. They can't let it get that bad.

   5. Gold: The best bull case I have read is that once this over we are going to see lots of spending from govts on energy and defence infrastructure so the debasement trade is back on and now you accumulate. To me it makes sense.

   6. So yes, probably see where governments will logically try to secure energy and commodity supplies and invest there. Push into renewables. No sane politician should be looking at this and thinking they cannot afford to secure their supply lines.

   7. There's also a good case for building water infra, like desalination plants, water supply lines. China has been scraping fish off oceans from everything to that theme is also in play.

   8. BTC/Hype: HYPE is really building a good product but I am not sure about the price. Especially now with on chain tokenised commodity trading 24/7. Maybe the next bull market will take it even higher. For now, I want to own BTC only if I get it for 57k or less for long term investing. It was holding well into the war but it has been selling off now.

   9. Bonds: Nice sell off. More sell offs and we are in a good place to buy. I am not sure about what yield levels I would want, but we are getting there. I can feel it.