$ZIM - Are You Long Enough? A very important article for understanding market behavior: The supply of new vessels has increased by 6.5% annually over the past five and a half years. Almost no vessels have been scrapped. Only 300,000 TEU, less than 1% of the fleet, was scrapped during this period. Under normal conditions, at least 11% should have been scrapped. Supply grew by approximately 5% more than average demand each year, yet the shortage only became more severe. Approximately 15% of the fleet is more than 20 years old, historically the point at which vessels are scrapped. The Suez Canal is beginning to reopen. More than 50% of the traffic has already returned and has been absorbed by the shortage. A full reopening is expected to release another 3%–4% of capacity, which we believe will also be absorbed relatively easily. Conclusions: Our theory is that the need for vessels is significantly higher than the historical average of 5%. Our estimate it is closer to 8% annually because growth is not evenly distributed, requiring more vessels on the routes where demand is concentrated. Port congestion continues to worsen, creating a need for even more vessels. The physical market correctly understood the real demand for capacity, despite what the “smart” analysts were saying. Those who listened to them paid a heavy price. Hapag-Lloyd and Maersk are managed by bureaucrats rather than businesspeople capable of conducting their own independent analysis. We are probably approaching a golden age for shipping. Every available bit of capacity has been absorbed, and there is nowhere left to find additional vessels. The industry must begin scrapping more ships. P.S. Notice that ZIM’s vessels chartered under long-term agreements are effectively owned by the company. Here is why: ZIM has an option to purchase them at the end of the charter period at a bargain price, say approximately $20 million per vessel. Discounted to today, with roughly 12 years remaining, the present value of that purchase option is only around $5–7 million per vessel. Therefore, these vessels can effectively be treated as owned. And if an unforeseen catastrophe occurs, the right not to exercise the purchase option would itself be worth several million dollars, meaning the effective exercise price is close to zero.

𝗜𝗳 𝗛𝗮𝗽𝗮𝗴-𝗟𝗹𝗼𝘆𝗱’𝘀 𝗯𝘂𝘆𝗼𝘂𝘁 𝗼𝗳 $ZIM 𝗴𝗼𝗲𝘀 𝘁𝗵𝗿𝗼𝘂𝗴𝗵, 𝘀𝗵𝗮𝗿𝗲𝗵𝗼𝗹𝗱𝗲𝗿𝘀 𝘀𝗵𝗼𝘂𝗹𝗱 𝗿𝗲𝗰𝗲𝗶𝘃𝗲 𝗮𝘁 𝗹𝗲𝗮𝘀𝘁 $𝟰𝟬 𝗽𝗲𝗿 𝘀𝗵𝗮𝗿𝗲, 𝗿𝗲𝗽𝗿𝗲𝘀𝗲𝗻𝘁𝗶𝗻𝗴 𝟰𝟬.𝟰% 𝘂𝗽𝘀𝗶𝗱𝗲. We do not expect the transaction to close before next year. Therefore, current shareholders should receive approximately $5 per share in dividends before the deal closes. A $35 buyout price plus $5 in dividends gives shareholders a total value of $40 per share. With $ZIM currently trading at $28.50, that represents approximately 40.4% upside. Our bull-case scenario is $42 per share. In Q3 2023, $ZIM recorded a $2.1 billion impairment charge due to the declining value of its ships and containers. At the time, HARPEX was around 800. Today, it is approximately 2,450. After accounting for the ships’ use and depreciation since then, we calculate that approximately $4 per share of underlying impairment value remains. The buyer would receive this additional value, so we expect the new management negotiating the final transaction to recover at least $2 per share for shareholders. $35 buyout + $5 dividends + $2 recovered impairment value = $42 per share. From $28.50, our bull case represents approximately 47.4% upside.

🚨 BREAKING NEWS: HAPAG-LLOYD AND FIMI ARE PUSHING HARD FOR APPROVAL OF THE $ZIM DEAL A new article reports that they received another 30 days to improve the offer and address the Israeli government’s concerns. The revised structure would give Israel greater control over $ZIM Israel, direct access to 16 new ships, and stronger protection of strategic shipping routes. OUR TAKE: The stated buyout price is $35 per share, valuing $ZIM at approximately $4.2 billion. However, once you include employee compensation, the assets and part of the business being transferred to FIMI, and other expenses, Hapag-Lloyd is effectively paying around $45 per share. This means its models likely valued $ZIM at at least $60 per share when they made the offer. And that valuation was calculated before the “golden swan” event we are now witnessing in shipping rates, which is nothing short of historic and re rating the entire industry. Why would Hapag-Lloyd pay so much? Because it understands that $ZIM is worth much more. Take a pen and paper and add up all of $ZIM’s assets, cash, vessels, and long-term charter contracts. You can easily reach a sum-of-the-parts valuation of more than $100 per share. But even that calculation understates the real value because many of these assets cannot simply be bought today, regardless of how much money you have. The average delivery time for a new container ship is more than three years, while many large LNG dual-fuel ships ordered today will not be delivered until 2029 or 2030. Recreating $ZIM’s fleet, contracts, routes, and operating network would take years. That scarcity makes the whole company worth considerably more than the simple sum of its parts. The original $35 bid was made when shipping rates were far lower. It is like bidding for an oil company when oil is at $60, while oil is now trading at $90. At current rates, $ZIM will have more than $30 per share in cash by year-end, more than its entire current public market value ($28.5). With aggressive buybacks and dividends, it is easy to see $ZIM doubling from here within the next few years while continuing to offer one of the highest dividend yields in the market.

$BTDR 𝗦𝗼𝗺𝗲𝘁𝗶𝗺𝗲𝘀 𝗜𝘁’𝘀 𝗕𝗲𝘁𝘁𝗲𝗿 𝘁𝗼 𝗠𝗼𝘃𝗲 𝗪𝗶𝘁𝗵 𝗖𝗮𝘂𝘁𝗶𝗼𝗻 𝗧𝗵𝗮𝗻 𝘁𝗼 𝗠𝗼𝘃𝗲 𝗙𝗶𝗿𝘀𝘁 $BTDR is now the world’s largest publicly listed $BTC miner by self-mining hash rate, yet the market is giving it almost no credit for that business because investors believe $BTC recent rally may not be sustainable. I don’t believe $BTC is going to crash. I believe it will remain around these levels or move higher. Once the market realizes that, $BTDR’s mining operation should be rerated. Jihan Wu is the smartest CEO in this group in my view. What I like most about him is that he is not in a rush. While everyone else raced to convert electricity into AI data centers and announce enormous contracts, he remained patient. $CRWV rushed into a low-priced deal with $MSFT that looked impressive in the headlines but required enormous debt and financial commitments. $CIFR also committed its electricity at substantially worse headline economics than the contract $BTDR eventually secured. In this race, whoever moves first risks locking themselves into the worst economics. $BTDR currently has approximately 1.75 GW of electricity already online and nearly 3 GW including its development pipeline. That is substantially more operational power today than $IREN. $IREN has assembled a larger future pipeline, but much of it still needs to be developed. There is an enormous difference between electricity that may become available in the future and electricity that is already online today. $BTDR is choosing to use much of that power for $BTC mining instead of rushing to convert everything into AI data centers. That makes perfect sense. At current $BTC prices and July’s production rate, $BTDR’s mining operation could generate more than $1 billion in annual revenue and approximately $600–700 million in annual cash profit before corporate expenses, interest and capital expenditure. Why rush to give up that business and commit the electricity for the next 10 or 15 years unless the AI contract is exceptionally attractive? AI data centers are potentially far more profitable, but $BTDR does not need to convert everything immediately. It can continue mining $BTC, producing cash and waiting until someone offers economics attractive enough to justify surrendering that electricity for the next 10 or 15 years. That patience is already paying off. $BTDR’s 121 MW Tydal agreement is worth approximately $4.7 billion over 16 years. Its annual headline revenue per MW is roughly 36% higher than $CIFR ’s original Barber Lake agreement. Its 9.5 MW Malaysia facility is also fully committed, representing more than $800 million in expected contracted revenue. $BTDR also designs and manufactures its own SEALMINER machines. It controls almost the entire chain: electricity, data centers, chips, machines and mining. That allows it to deploy newer and more efficient equipment without depending entirely on outside suppliers. This is why $BTDR is so compelling. You get the world’s largest publicly listed $BTC mining operation, nearly 3 GW of power, proprietary mining technology and an enormous option on AI data centers. If $BTC remains around current levels, the mining business deserves a rerating. If $BTC rises, the upside becomes much larger. Meanwhile, Jihan can gradually convert selected sites into AI infrastructure, but only when the economics are clearly superior to mining. There is no reason to rush. The electricity is not going anywhere. $BTDR is currently my largest investment in the space at approximately 13% of my portfolio.

𝗣𝗢𝗦𝗜𝗧𝗜𝗢𝗡𝗜𝗡𝗚: 𝗧𝗛𝗘 𝗠𝗢𝗦𝗧 𝗜𝗠𝗣𝗢𝗥𝗧𝗔𝗡𝗧 𝗧𝗛𝗜𝗡𝗚 𝗬𝗢𝗨 𝗡𝗘𝗘𝗗 𝗧𝗢 𝗨𝗡𝗗𝗘𝗥𝗦𝗧𝗔𝗡𝗗 The most important thing to understand about a stock, an event, or the entire market is positioning. Where are all the players already positioned? This does not mean the event isn’t real. It doesn’t mean the macro situation isn’t bad or that the war with Iran isn’t dangerous. It means markets do not move based only on whether the news is good or bad. Markets move based on whether there are still buyers or sellers left to act on that news. We saw it at peak fear during the war with Iran. We saw it during the financial crisis. And we see it every day in individual stocks. You don’t even have to go that far. Look at the current obsession with a 10% drawdown. Everyone keeps repeating that every midterm-election year had a 10% drawdown. That fear has already pushed hedge-fund exposure to extremely low levels. That positioning is more important than the prediction itself. If positioning is already extremely bearish, much of the fear is already reflected in the market. This does not mean the market cannot fall another 2%, 3%, or 4%. It means many potential sellers have already sold. The supply of new sellers is becoming exhausted. At the end of the day, markets fall because people sell and rise because people buy. If almost everyone who wanted to sell has already sold, even terrible news may struggle to push the market much lower. You need new sellers, not another person on television repeating the same bearish argument. The opposite is equally important. If everyone is optimistic and already positioned max long, who is left to buy? $TSLA is a great example. Tesla may be a great company, and we have been hearing that robotics are coming for the past four years, yet the stock has gone nowhere. Why? Because everyone who loves Tesla is already in the stock. Everyone who believes in robotics is already in the stock. The story may eventually be right, but if everyone is already positioned for it, there are very few new buyers left to push the stock higher. The entire market cycle can be explained through positioning: 𝗕𝘂𝗹𝗹 𝗺𝗮𝗿𝗸𝗲𝘁𝘀 𝗮𝗿𝗲 𝗯𝗼𝗿𝗻 𝗶𝗻 𝗽𝗲𝘀𝘀𝗶𝗺𝗶𝘀𝗺, when almost everyone has already sold. 𝗧𝗵𝗲𝘆 𝗴𝗿𝗼𝘄 𝗼𝗻 𝘀𝗸𝗲𝗽𝘁𝗶𝗰𝗶𝘀𝗺, as cautious investors slowly begin buying. 𝗧𝗵𝗲𝘆 𝗺𝗮𝘁𝘂𝗿𝗲 𝗼𝗻 𝗼𝗽𝘁𝗶𝗺𝗶𝘀𝗺, when the majority is already invested. 𝗔𝗻𝗱 𝘁𝗵𝗲𝘆 𝗱𝗶𝗲 𝗶𝗻 𝗲𝘂𝗽𝗵𝗼𝗿𝗶𝗮, when everyone is positioned max long and there is nobody left to buy. So, if there is one thing you should learn to understand, it is this: 𝗣𝗢𝗦𝗜𝗧𝗜𝗢𝗡𝗜𝗡𝗚. 𝗡𝗢𝗧 𝗝𝗨𝗦𝗧 𝗪𝗛𝗔𝗧 𝗜𝗦 𝗛𝗔𝗣𝗣𝗘𝗡𝗜𝗡𝗚, 𝗕𝗨𝗧 𝗪𝗛𝗢 𝗛𝗔𝗦 𝗔𝗟𝗥𝗘𝗔𝗗𝗬 𝗔𝗖𝗧𝗘𝗗 𝗢𝗡 𝗜𝗧.

Just as Jim Cramer told his followers to get out of the data-center trade, Berkshire Hathaway and Z are telling you to get in: My picks: $BTDR and $IREN. Berkshire Hathaway CEO Greg Abel recently said the firm sees a significant opportunity in powering AI data centers. He believes access to power will be the AI boom’s next major bottleneck. Power. Sites. Permission. I repeat what I said last week: after a 50% drawdown across the data-center names, now is the time to get in. Peak pessimism. Maximum opportunity. The demand for energy is not an opinion. It is a fact. I have heard all the bear cases, and they are fair. The economics are not fully known. The financing is complicated. The competition is not fully known. There are real risks. But where else can you find such a clear opportunity to potentially 5X your money over the next five years? And if things do not work out as expected, I do not believe these companies are going to zero. That does not make this risk-free. It makes it asymmetric. Right now, this is the most asymmetric bet I see anywhere in the market, and it is not even close. Portfolio allocation after last week’s 20% move: 17%.

Over the weekend I watched an interview with David Einhorn, who is undoubtedly far more intelligent than I am. He explained that performance had been poor over the last couple of years because the type of investing they do simply hasn’t been working. It is very interesting to watch how many great investors struggle to adapt when the market changes. What worked for ten years becomes part of who they are, and changing it feels almost like admitting they were wrong. But markets change. And if you cannot change with them, eventually your old edge becomes your biggest weakness. And to me, that is the entire lesson. Markets do not reward you for being loyal to a strategy. They reward you for adapting. Last year I told the story of my favorite client, Oscar. In 2022, when the market was down around 20%, Oscar was up around 20%. A big reason was the way I used the $VIX. If you look at the comments below that story, someone told me that you cannot compare Oscar’s performance with someone who doesn’t know how to use the $VIX. But we are in the business of making money. How can you afford to know only one way to make money? Only know how to be long stocks. Only know value investing. Only know technical analysis. Only know momentum. Only know volatility. A strategy is just a tool. The goal is not to prove that your favorite tool works. The goal is to make money. Around the same period, I was also consulting for a hedge fund that had started operating in 2021. Luckily for the fund manager, the environment at the time was almost perfectly suited to the strategy we were using. We were using primarily VIX-related trades, and between 2021 and 2022 the returns looked extraordinary. The fund was still small because it had just started, but on a percentage basis it was outperforming its peers by a very large margin. By the time the market was down around 20%, the fund was still up around 10%. That was exactly when I believed the opportunity had shifted. Equities had become significantly more attractive, while the $VIX trades that had worked so well for us were becoming increasingly dangerous. I told the hedge fund manager it was time to change. Reduce the volatility trades and start buying stocks. He had no interest in buying equities. His reasoning was simple: the $VIX trades had worked incredibly well. Why stop doing what was working? But that is exactly the trap. I disagreed strongly enough that I issued a formal letter. Always put things in writing, even with friends. When people look back at the past, they have a convenient habit of forgetting exactly how things happened and avoiding responsibility for the decisions they made. In the letter, I explained the risks I saw in continuing with those volatility trades and why I believed the volatility landscape had changed. He decided to continue anyway. The following months were catastrophic. Meanwhile, Oscar and the portfolios I directly managed rotated into stocks and were up substantially. There is no strategy that deserves your loyalty. Sometimes the right tool is VIX. Sometimes it is equities. Sometimes it is value. Sometimes it is momentum. Sometimes it is cash. Your job is not to become emotionally attached to what made you money yesterday. Your job is to recognize what environment you are in today. It is not necessarily the smartest that survives. It is the one that adapts. Markets are not much different. Your edge is not VIX. Your edge is not value investing. Your edge is not understanding tech. Your edge is not mastering macro. Your edge is being able to change when the market changes.

𝗚𝗜𝗩𝗘 𝗜𝗧 𝗧𝗜𝗠𝗘: $BTDR 𝗖𝗢𝗨𝗟𝗗 𝟱𝗫 𝗙𝗥𝗢𝗠 𝗛𝗘𝗥𝗘 My investment case for Bitdeer ( $BTDR ) rests on three main pillars: Bitcoin does not need another major move higher for the mining business to work, Asia is becoming an increasingly important part of the global AI buildout and Bitdeer has a meaningful regional advantage, and building large new data centers in the United States is becoming progressively harder. 𝗣𝗜𝗟𝗟𝗔𝗥 𝟭: 𝗕𝗜𝗧𝗖𝗢𝗜𝗡 𝗔𝗥𝗢𝗨𝗡𝗗 $𝟳𝟱,𝟬𝟬𝟬 𝗜𝗦 𝗘𝗡𝗢𝗨𝗚𝗛 My base case is not that Bitcoin goes to $150,000 or $200,000. I am not particularly bullish or bearish on Bitcoin from here. I simply believe it can remain roughly around the $75,000 level. At that price, Bitdeer’s greatly expanded mining operation should be capable of generating substantial cash flow. The company is now producing close to 1,200 Bitcoin per month. At $75,000 Bitcoin, that represents roughly $90 million of Bitcoin production per month, or more than $1 billion annualized at the current production rate. This is not equivalent to profit because electricity, network difficulty, depreciation and other operating expenses remain significant, but it demonstrates the scale of the earnings engine that is already in place. The important point is that Bitcoin does not need another spectacular bull market for the mining business to work. Among IREN ( $IREN ), CoreWeave ( $CRWV ), Nebius ( $NBIS ), and Bitdeer ( $BTDR ), Bitdeer is currently the most exposed to Bitcoin prices (I believe bitcoin has bottomed), that gives it more downside risk if Bitcoin falls, but also more operating leverage if Bitcoin remains strong while the AI infrastructure business continues to scale. Part 1/4

Jim Cramer has already made every investor run away from data-center stocks, while politicians on both sides are now bashing data centers and shouting that they are bad for the environment. It seems to me that we’re at, or very close to, peak fear. But at the end of the day, data centers are essential to America’s future and its ability to remain the global leader in AI. After a 50% drawdown in many of these stocks, I think this represents a fantastic opportunity for investors willing to look beyond the current fear. My two favorites right now are $BTDR and $IREN. They offer some of the most asymmetric upside I have seen in any stocks recently. The risk is high. The potential reward is much higher.

$ZIM - Are You Long Enough? A very important article for understanding market behavior: The supply of new vessels has increased by 6.5% annually over the past five and a half years. Almost no vessels have been scrapped. Only 300,000 TEU, less than 1% of the fleet, was scrapped during this period. Under normal conditions, at least 11% should have been scrapped. Supply grew by approximately 5% more than average demand each year, yet the shortage only became more severe. Approximately 15% of the fleet is more than 20 years old, historically the point at which vessels are scrapped. The Suez Canal is beginning to reopen. More than 50% of the traffic has already returned and has been absorbed by the shortage. A full reopening is expected to release another 3%–4% of capacity, which we believe will also be absorbed relatively easily. Conclusions: Our theory is that the need for vessels is significantly higher than the historical average of 5%. Our estimate it is closer to 8% annually because growth is not evenly distributed, requiring more vessels on the routes where demand is concentrated. Port congestion continues to worsen, creating a need for even more vessels. The physical market correctly understood the real demand for capacity, despite what the “smart” analysts were saying. Those who listened to them paid a heavy price. Hapag-Lloyd and Maersk are managed by bureaucrats rather than businesspeople capable of conducting their own independent analysis. We are probably approaching a golden age for shipping. Every available bit of capacity has been absorbed, and there is nowhere left to find additional vessels. The industry must begin scrapping more ships. P.S. Notice that ZIM’s vessels chartered under long-term agreements are effectively owned by the company. Here is why: ZIM has an option to purchase them at the end of the charter period at a bargain price, say approximately $20 million per vessel. Discounted to today, with roughly 12 years remaining, the present value of that purchase option is only around $5–7 million per vessel. Therefore, these vessels can effectively be treated as owned. And if an unforeseen catastrophe occurs, the right not to exercise the purchase option would itself be worth several million dollars, meaning the effective exercise price is close to zero.

Like Buddhism says, the market of last year is not the market we have today. It’s not completely different, but it’s not the same either. That’s also why strategies used to work for much longer periods 10 or 20 years ago. Today, the speed of change in markets is substantially faster, and the variables that move markets change with it. The past can be a reference point, but it can’t be treated as a fixed formula for the future. That’s why backtesting that looks back three, five, or ten years is absolutely meaningless. You’re testing a strategy against a market that no longer exists.

Over the past month, we heard that the data-center trade was about to implode because AI is a fraud. We heard that $NVDA ’s earnings would expose circular financing and reveal that the entire AI boom was one giant fraud. We saw hedge funds deleverage at a record pace and cut exposure to its lowest level. And we kept hearing about the inevitable 10% drawdown that has occurred before every midterm election. Yet amid all the noise, only one got it right. Not me, the $VIX . It fell almost every single day. When something is truly wrong, the $VIX usually rises or at least stops falling, signaling that smart money is hedging. That never happened. It’s no wonder your intuition can’t guide you. It’s clouded by the constant noise from X, the news, and everything you read everywhere. Most of it is garbage, and all of it is already priced in. The $VIX shows you what matters: whether people are actually hedging right now. You can see the change in real time. Always follow the $VIX first.

Think like a contrarian. CNBC says a 10% correction is coming because “that’s what always happens” before midterms. Goldman says hedge funds are the most deleveraged they’ve been all year. Sounds bearish. But then ask: who is left to sell? You need sellers for a 10% drawdown.

$BTDR 𝗦𝗼𝗺𝗲𝘁𝗶𝗺𝗲𝘀 𝗜𝘁’𝘀 𝗕𝗲𝘁𝘁𝗲𝗿 𝘁𝗼 𝗠𝗼𝘃𝗲 𝗪𝗶𝘁𝗵 𝗖𝗮𝘂𝘁𝗶𝗼𝗻 𝗧𝗵𝗮𝗻 𝘁𝗼 𝗠𝗼𝘃𝗲 𝗙𝗶𝗿𝘀𝘁 $BTDR is now the world’s largest publicly listed $BTC miner by self-mining hash rate, yet the market is giving it almost no credit for that business because investors believe $BTC recent rally may not be sustainable. I don’t believe $BTC is going to crash. I believe it will remain around these levels or move higher. Once the market realizes that, $BTDR’s mining operation should be rerated. Jihan Wu is the smartest CEO in this group in my view. What I like most about him is that he is not in a rush. While everyone else raced to convert electricity into AI data centers and announce enormous contracts, he remained patient. $CRWV rushed into a low-priced deal with $MSFT that looked impressive in the headlines but required enormous debt and financial commitments. $CIFR also committed its electricity at substantially worse headline economics than the contract $BTDR eventually secured. In this race, whoever moves first risks locking themselves into the worst economics. $BTDR currently has approximately 1.75 GW of electricity already online and nearly 3 GW including its development pipeline. That is substantially more operational power today than $IREN. $IREN has assembled a larger future pipeline, but much of it still needs to be developed. There is an enormous difference between electricity that may become available in the future and electricity that is already online today. $BTDR is choosing to use much of that power for $BTC mining instead of rushing to convert everything into AI data centers. That makes perfect sense. At current $BTC prices and July’s production rate, $BTDR’s mining operation could generate more than $1 billion in annual revenue and approximately $600–700 million in annual cash profit before corporate expenses, interest and capital expenditure. Why rush to give up that business and commit the electricity for the next 10 or 15 years unless the AI contract is exceptionally attractive? AI data centers are potentially far more profitable, but $BTDR does not need to convert everything immediately. It can continue mining $BTC, producing cash and waiting until someone offers economics attractive enough to justify surrendering that electricity for the next 10 or 15 years. That patience is already paying off. $BTDR’s 121 MW Tydal agreement is worth approximately $4.7 billion over 16 years. Its annual headline revenue per MW is roughly 36% higher than $CIFR ’s original Barber Lake agreement. Its 9.5 MW Malaysia facility is also fully committed, representing more than $800 million in expected contracted revenue. $BTDR also designs and manufactures its own SEALMINER machines. It controls almost the entire chain: electricity, data centers, chips, machines and mining. That allows it to deploy newer and more efficient equipment without depending entirely on outside suppliers. This is why $BTDR is so compelling. You get the world’s largest publicly listed $BTC mining operation, nearly 3 GW of power, proprietary mining technology and an enormous option on AI data centers. If $BTC remains around current levels, the mining business deserves a rerating. If $BTC rises, the upside becomes much larger. Meanwhile, Jihan can gradually convert selected sites into AI infrastructure, but only when the economics are clearly superior to mining. There is no reason to rush. The electricity is not going anywhere. $BTDR is currently my largest investment in the space at approximately 13% of my portfolio.

𝗣𝗢𝗦𝗜𝗧𝗜𝗢𝗡𝗜𝗡𝗚: 𝗧𝗛𝗘 𝗠𝗢𝗦𝗧 𝗜𝗠𝗣𝗢𝗥𝗧𝗔𝗡𝗧 𝗧𝗛𝗜𝗡𝗚 𝗬𝗢𝗨 𝗡𝗘𝗘𝗗 𝗧𝗢 𝗨𝗡𝗗𝗘𝗥𝗦𝗧𝗔𝗡𝗗 The most important thing to understand about a stock, an event, or the entire market is positioning. Where are all the players already positioned? This does not mean the event isn’t real. It doesn’t mean the macro situation isn’t bad or that the war with Iran isn’t dangerous. It means markets do not move based only on whether the news is good or bad. Markets move based on whether there are still buyers or sellers left to act on that news. We saw it at peak fear during the war with Iran. We saw it during the financial crisis. And we see it every day in individual stocks. You don’t even have to go that far. Look at the current obsession with a 10% drawdown. Everyone keeps repeating that every midterm-election year had a 10% drawdown. That fear has already pushed hedge-fund exposure to extremely low levels. That positioning is more important than the prediction itself. If positioning is already extremely bearish, much of the fear is already reflected in the market. This does not mean the market cannot fall another 2%, 3%, or 4%. It means many potential sellers have already sold. The supply of new sellers is becoming exhausted. At the end of the day, markets fall because people sell and rise because people buy. If almost everyone who wanted to sell has already sold, even terrible news may struggle to push the market much lower. You need new sellers, not another person on television repeating the same bearish argument. The opposite is equally important. If everyone is optimistic and already positioned max long, who is left to buy? $TSLA is a great example. Tesla may be a great company, and we have been hearing that robotics are coming for the past four years, yet the stock has gone nowhere. Why? Because everyone who loves Tesla is already in the stock. Everyone who believes in robotics is already in the stock. The story may eventually be right, but if everyone is already positioned for it, there are very few new buyers left to push the stock higher. The entire market cycle can be explained through positioning: 𝗕𝘂𝗹𝗹 𝗺𝗮𝗿𝗸𝗲𝘁𝘀 𝗮𝗿𝗲 𝗯𝗼𝗿𝗻 𝗶𝗻 𝗽𝗲𝘀𝘀𝗶𝗺𝗶𝘀𝗺, when almost everyone has already sold. 𝗧𝗵𝗲𝘆 𝗴𝗿𝗼𝘄 𝗼𝗻 𝘀𝗸𝗲𝗽𝘁𝗶𝗰𝗶𝘀𝗺, as cautious investors slowly begin buying. 𝗧𝗵𝗲𝘆 𝗺𝗮𝘁𝘂𝗿𝗲 𝗼𝗻 𝗼𝗽𝘁𝗶𝗺𝗶𝘀𝗺, when the majority is already invested. 𝗔𝗻𝗱 𝘁𝗵𝗲𝘆 𝗱𝗶𝗲 𝗶𝗻 𝗲𝘂𝗽𝗵𝗼𝗿𝗶𝗮, when everyone is positioned max long and there is nobody left to buy. So, if there is one thing you should learn to understand, it is this: 𝗣𝗢𝗦𝗜𝗧𝗜𝗢𝗡𝗜𝗡𝗚. 𝗡𝗢𝗧 𝗝𝗨𝗦𝗧 𝗪𝗛𝗔𝗧 𝗜𝗦 𝗛𝗔𝗣𝗣𝗘𝗡𝗜𝗡𝗚, 𝗕𝗨𝗧 𝗪𝗛𝗢 𝗛𝗔𝗦 𝗔𝗟𝗥𝗘𝗔𝗗𝗬 𝗔𝗖𝗧𝗘𝗗 𝗢𝗡 𝗜𝗧.

$SNAP The past is a fact. The future is unknown. I read many of the comments on my recent Snap posts, and almost all of them relate to the company’s past performance. I won’t argue with any of it. A lot of people also lost money along the way, so naturally, there is emotion attached to the name. But past judgments and past pain can prevent you from seeing what is happening in the present. And the present is where change first appears. Green shoots do not guarantee a big tree. The future is still unknown. Google has to work incredibly hard just to remain amazing. Snap does not need to become amazing. It only needs to go from badly managed to decent. If Snap becomes merely decent, the stock can double.

Jim Cramer has already made every investor run away from data-center stocks, while politicians on both sides are now bashing data centers and shouting that they are bad for the environment. It seems to me that we’re at, or very close to, peak fear. But at the end of the day, data centers are essential to America’s future and its ability to remain the global leader in AI. After a 50% drawdown in many of these stocks, I think this represents a fantastic opportunity for investors willing to look beyond the current fear. My two favorites right now are $BTDR and $IREN. They offer some of the most asymmetric upside I have seen in any stocks recently. The risk is high. The potential reward is much higher.

Like Buddhism says, the market of last year is not the market we have today. It’s not completely different, but it’s not the same either. That’s also why strategies used to work for much longer periods 10 or 20 years ago. Today, the speed of change in markets is substantially faster, and the variables that move markets change with it. The past can be a reference point, but it can’t be treated as a fixed formula for the future. That’s why backtesting that looks back three, five, or ten years is absolutely meaningless. You’re testing a strategy against a market that no longer exists.

Think like a contrarian. CNBC says a 10% correction is coming because “that’s what always happens” before midterms. Goldman says hedge funds are the most deleveraged they’ve been all year. Sounds bearish. But then ask: who is left to sell? You need sellers for a 10% drawdown.