Random Ramblings #14 Liquidation Cascades
BTC bottomed just below 58k, a bit higher above 57k and showed a violent rally in August. Missed it, it is what it is. Atleast I am confident I have my mojo when it comes to BTC still. Oil upside I highlighted played out too well. SPX ended higher, avoiding duration was smart as we have seen relentless spike in yields. HL rallied harder to ATHs so that is another boat I missed but as with BTC, mojo still there as I expected upside.
The biggest disappointed of course, was India. I had highlighted limited upside & "vindication", but we've had 8 weeks of losing streak that has wiped the equities out. It has been a total capitulation with no end in sight, traders have lost hope. I am not surprised though. Valuations are reasonable, but still historically elevated and the geopol doesn't favor India. Rant Incoming: This is of course the info/psyop war I have highlighted. Since Ram Mandir inauguration, the jihadi psyop has been in full force trying to damage Indian reputation and encouraging hate. The playbook is simple, try to malign everything, overwhelm internet. They are a united cause these jihadis (and CCP psyops, though to a lesser extent). To their credit, they do this well. They are incapable of having anything worthwhile and want to sabotage Indians & take them down. It helps that India has enough rats inside who do their bidding. Wicked, pathetic people, India is in fact doomed because of such people. They vote and outnumber rational people, brainwash naive idiots (who are themselves to blame) and ruin India's potential. FAFO again I guess, too bad I will be caught in this too. This is also one of the reasons for the Indian sell off, people just don't want to be associated with India and the FII selling is part of this. Indian citizens are too lost in their own world to counter these psyops.
Of course there are other reasons for the sell off too - Oil prices leading to pressure on Indian deficits and inflation, global yields which are a derivative of the war related inflation of course, an expected food shortage and I am sure other good reasons too. But the main culprit is the psyop. Sure Indian equities were overvalued by a huge margin in 2024 when markets peaked, but since then it should have stabilized. Of course, markets don't move rationally.
Which brings me to what I think is actually a great opportunity: Time to load up on Indian equities with size and a huge allocation. Just looking at Indices, Sensex offers one of the best, most asymmetric trade in years. I don't know when it will rally, but it will probably outperform Nifty at these levels. Amazing risk to reward. Yes, the psyops and war are obviously still here, but eventually the war will subside and the market will spark. Ukraine Russia war has also put pressure especially recently on energy prices and potential tariffs/sanctions on India. That is all of course a risk and I take these into account. But for the next 3-5 years, Sensex is primed for prime time. Valuations are good, and it is my hope that India can rise above psyop with the good work and the momentum. One hopes and dreams. This is not a quarterly forecast, even though my YE Nifty target is still 25100. I am thinking 3-5 years, Sensex is an amazing investment. Like an Index fund or an ETF. Or if you can go stock picking, even better. Not my domain.
SPX - I talked about a leash earlier, which keeps pulling the market down while it wants to rally like crazy. Like 2021. The leash is getting, looser. I still believe SPX ends around 7900 and on a looser leash (AKA Bull market) it goes to 8100. Maintain longs, we are not in the cutting allocation phase yet. I don't know when it will happen, but it is not there yet. The looser leash is still a leash, it keeps pulling the market back. Yes, I am not an idiot I know there's the whole AI valuation scare and yields thing which may be holding it back and I do not disagree. The leash is a metaphor for all these things since I don't have an exact model to allow attribution (no one does, not that I know of) of returns from war or yields or whatever.
INR - RBI has been desperate and fighting like hell with things like FCNR and FX forwards and restricitons. I don't blame them. They know inside INR won't appreciate, they just have to hold the line. I sympathize with them. My assertion remains same - INR sideways for some years, lots of trading opportunities if you can.
I am neutral on Gold and Silver. Just can't read them at the moment. Just trade them. People think Gold will rally when real rates come down and/or fiscal spending and that might happen as a trade sure, but I don't see huge upside and think it won't matter that much in the medium term, Gold can still wreck you since it is too expensive right now and has had this monster run in 2025.
Oil - Neutral again now. I expected sideways violent action and structurally higher prices from now. Not $90 or 100 a barrel, but the days of cheap gas are probably behind us. This is the time for inflation and energy vol. Maybe the decade. This war with Iran may drag out like Ukraine.
BTC - I am a bit bullish. Well not bit, but quite a bit. Offered good upside in 60s, now too decent upside. It is just too beaten up to not pick up, albeit recovered now from August. Good opportunity for a few years. Its days of insane returns are over though.
HYPE/ZEC - It is funny that HL & ZEC are up so much and I had owned them way before since they were these cool coins and sold them earlier. Just traded, missed generational wealth. For now, I lean bearish on them tbh, more on ZEC than HYPE. Risky, HYPE may outperform ZEC though. It has more "upside" though I will just trade it like before cuz both these coins are insanely risky at the moment, even by crypto standards.
BONDS - ok so everyone been fearmongering about rising yields. I am not worried, it is what it is and higher inflation and higher AI led growth/concerns means higher rates. Duh. I really like the yields at these levels, it is time to load up duration if you want. Not a lot of risk in owning some US Treasuries paying you 5.2% a year for however long you want: 10 or 20 or 30 or whatever. I thought the same at 5% though. Not a bad trade. Sec Bessent will win! Or you can get investment grade debt too if you want. Great opportunity, load up is my thought.
I am fairly confident in my write up above, more than I have been in a long time. It is time to stay the course, not get brainwashed. Let's see what the year end brings. Hopefully hope in India. It will eventually get taken over by jihadis, outnumber the good people, but till then we got time to build something.
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