Wild Week

Been a wild week.

Both my longs and shorts have been working.  I've been taking profit:

• Took profit on some shorts as they kept going down (precious, cyclicals).  I cover a bit on the day they breakdown.  Then sell down to my min one or 2 days later when they breakdown more. 

• Covered 1/2 of my Russell short after it dipped slightly on Thurs & Fri - its an overcrowded short which isn't going down enough.
• Stopped out Big Tech longs.  Now only 2 of the original Mag 7 left.
• Software longs went up a lot, took profits, position down to min.
• Added some shorts in private equity - but they turned against me Thursday.  These are my only short positions at a loss.  Its at a max position.

• VIX up to 19.

Looking to reload both sides when I get a chance.  If I get a chance:

Hard to know when a particular trade - or the market overall - is oversold or crashing.

Got Shorter

Wed morning 21st Oct, before market close.  Woke up and my shorts were up (against me), added some more.

Now filled around 3/4 of my max short position.

Sold Japanese SAAS Companies

My Japanese SAAS stocks were 2 cloud accounting companies: Freee (4478) and Money Forward (3994).  Got these ideas from Asian Century Stocks.  Since I bought them in Feb, they've been pushed up by good results, a buoyant Japanese stock market, and a recovery in software stocks being hurt by AI.

Sold them today.  Average over 40% gain in 8 months.  Supposed to sell Friday but busy at work.

Why did I sell?

• Market share data is hard to come by.  There is a big private competitor (need Japanese VPN), Yayoi, that has a large market share in legacy (desktop) accounting software.  They claim to have 560,000 active contracts (one or more users per contract) which is more than either Money Forward and Freee, and probably more than both.
• Both Freee and Money Forward are still in early growth stage, where PEs are not meaningful.  Price to sales.  The story is that they will grow profitable by converting greenfield users.  They may - recent growth figures have been good.
• I think we're at the end of the economic cycle, the current AI boom is ending.  Like 2001.  Stocks probably get hit, especially growth stocks.  I don't want to hold "Price to sales" stonks into a downturn.
• One of Hedgeye's signals for Japanese equities turned negative. last week  It was on a day that everything fell (Oct 15th), so it could be a false alarm.  But given everything else, now's a decent time to sell.

I may be missing out in two multi-year compounders.  But I also may be missing out on a market correction.

Quick Update

Earlier this week, got stopped out of some shorts and longs on Thursday's wild ride.

Sat Oct 17th. Woke up late this morning after mkt close.

• Q's down - the index is no longer holding up.
• Nvdia down - the AI king. 
• VIX spiked from 16 to 19.99 - fear is spreading to the big names that form the index.

‌This is a change in market tone. I want to be short. I expect the the economic cycle to turn down in 1Q27. Was wondering if we would get a blowoff top in the big caps, especially NVDA, but its looking less likely.

‌The market is oversold here. It can bounce Monday. Or crash.

‌Took small short positions in AI (data centers, private equity) after market close. Its 1/4 of my full short position. I want to increase those positions if we bounce, or if we drift along a 1 to 3 more days to work off the oversold conditions.


I want to get shorter. Lets see if I get a chance to increase those positions.

This is a good video of why the Nasdaq bull may have ended last week, starts at 1:15:

Covered the Bond shorts

Market open 14th Oct.  Covered yesterday's bond shorts on market open after the CPI release.  Made a small profit.  Not bad for one night.

Looking to load up on Big Tech and software longs.  But probably not today.

Pressing Shorts

Market open 13th Oct.  Got really short.

• Entered large position in Interest rate shorts (ie: expecting rates to rise).  Short term trade.
• Reduced crypto over the last few days.  Its getting less bullish.

Lets see how it goes.

I need to learn to trade options.

Quick Update

 Small changes:

• Sold Gold.  Look to buy it back in the coming months.
• Bought a little crypto earlier this week.  
• Cut short exposure a little.  Added a tiny amount to precious metals.
• Bought Big Tech today, plus some software.

Still just aiming to be short stuff going down and long stuff going up.  Hope the bifurcated market continues.  Probably get a chance to buy more and cover more shorts early next week.  Before reloading on the short side.