I read this article over the weekend about how these hedge funds have been struggling with the volatility as of late. The word schadenfreude comes to mind, until I switch over and look at some of my retirement accounts. On the one hand it is a very difficult market to price effectively and a difficult one to take long positions in.

Everybody is looking for "edge" in a market defined by .. "Executive psychosis." I don't believe that markets are necessarily efficient, the over-valuation of many stocks in the "AI trade" is/was downright silly. However pricing is "mostly correct" when looking at longer time frames and it "mostly" relies on a backdrop of economic stability. Consider the poor saps at Nvidia (NVDA) whose stock price can literally drag the entire market in a positive or negative direction. They have done tons of R&D, poured literal billions into manufacturing chips that make spicy autocomplete faster. You build these cost models and forecasts expecting to the needs for these chips will continue to grow, especially in one of the largest markets on the planet: China. Then along comes some failed real estate developer who has the power to decide on a daily basis whether your products are cost-competitive in China, or allowed to be sold to China at all!

How on earth can any investor, let alone Nvidia figure out how to price anything more than 30 seconds ahead of time, much less months down the track?

Add wildly fluctuating bond yields, which are generally considered part of that "stable economic backdrop" needed to price anything effectively, and well, everything becomes tough.

Regardless, the schadenfreude of an overvalued Tesla crashing down does make up for some of the frustration in the market. I am looking forward to the President buying some more Teslas this week.

Log

• Nothing really inspiring, was expecting some more downward momentum based on the lack of positive information over the weekend.
• Some positive news popped AMD at the open which I expected to deflate faster than it actually did. Traded sideways around 105 for the first half of the day which was a little more challenging for my put positions. Ended up using some tactics to avoid taking too much of a loss on those particular positions.
• Found some small momentum trades on Tesla (TSLA) and Nvidia (NVDA), it seemed like the entire sector exhaled at once.
• My margin was occupied by my AMD positions which mean the deal sizes for TSLA and NVDA were smaller than I normally would use, and that meant the return was smaller, albeit positive.
• Good lesson in unnecessarily tying up margin in singular positions, being tied into AMD prevented me from doing more with TSLA and NVDA.