Last week I wrote:
Item 2#: Bitcoin falls below $104K. I was also right about Bitcoin lagging stocks, as it has done for the past few weeks. I have greatly profited by shorting Bitcoin while being long tech stocks. My account balances keep making new highs on a daily or weekly basis due to the hedging properties of shorting Bitcoin combined with the leveraged tech positions.
Finally my method has hit paydirt, with BTC crashing 5% in an otherwise flat market.
The recent divergence between QQQ and BTC has become especially pronounced in recent weeks. When I say I am the best money manager, trader, and investor, it’s all backed by results and evidence (or as they say on social media “receipts”). It may be a 2-way tie between me and Warren Buffett. James Harris Simons could arguably claim the title as greatest, but he died last year.
Although I was wrong about the Elon-Trump bromance, with the two trading barbs on social media over the deficit and the ‘big beautiful spending bill’, I still came out ahead by shorting BTC. Despite Tesla stock dropping 15%, I still made money with the BTC short. The Tesla position is about 10% of overall tech portfolio, so the overall loss is much smaller, and this is negated by recent winners like Avago and Meta. Thus, even when my prediction is wrong, I have everything covered. I still don’t lose money.
Elon dug up some 2011-2012 tweets about how Trump used to be a fiscal conservative. Trump responded that Elon had already approved of the bill. I am going to side with Trump here. The bill had been in the news for at least a month. Elon had abundant time and forewarning it would be big, but only over the last 24 hours suddenly became vocal about the deficit and spending? This makes no sense and suggests some ulterior motive than concerns over the deficit.
It does not matter. The bill will be passed, it will be massive, and the national debt will surge. As I said, nothing bad will happen, although inflation may rise a bit. There will be be no debt crisis or dollar collapse. The treasury market has already fallen in anticipation of the bill’s passage and a consequent rise of inflation. Bitcoin will continue to be a useless hedge against inflation compared to gold and stocks, which are much better. Yes, the US is paying more relative to GDP to service its debt compared to the past 50 years, but this has not hurt asset returns.
It reminds me of fears over a housing bubble or a tech bubble. Even if you accept the premise that debt situation is bad, doing nothing and sitting in cash imposes an opportunity cost, which also grows exponentially. People who sat out of the housing market during Covid watched as prices rocketed after brief dip in 2020. Same for home prices from 2010-2020. Those who sat on the sidelines waiting for a repeat of the 2006-2011 crash were either forced to rent or to buy at a much higher price. The opportunity cost of doing nothing means being made much worse off than taking the risk of buying now. Even if the market dips, you will still come out ahead than had you done nothing.
Likewise, some people are hesitant to work in tech, such as AI, for fear of a bubble. If you’re an employee, who cares. You’re getting paid for every day you show up. If the market crashes, you still keep all your accumulated earnings (although ESOs will be toast). Every year that passes in which nothing happens is time and money wasted with inaction.