Puru Saxena Profile picture
Oct 1, 2020 4 tweets 1 min read Read on X
The naysayers now saying that "I got lucky this year"!

If 22 years of investing/living through prior cycles, learning from past mistakes, continuous learning and months of backtesting to fine-tune my hedging strategy can be described as 'luck' - then yes guilty as charged.
Haters before the crash -

"He is crazy for owning these bubble stocks which will crash hard during the next bear-market."

Haters after the crash -

"He just got lucky, just happened to hedge in time and somehow owned those stocks which benefited from COVID. He is clueless."
A no. of people have asked me why my portfolio didn't fare better between early '18 and early '20?

Short answer - my 45% allocation to China

Due to the 'Trade War', my China ADRs declined by ~50% in '18 and treaded water in '19. For 2 years, half my portfolio was dead money.
In early '20, I realised that the 'Trade War' was likely to persist, which is why I drastically cut my China exposure and invested in US businesses.

In hindsight, I should've cut my Chinese ADR exposure much sooner, but hindsight is always 20/20.

Lesson learnt.

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More from @saxena_puru

Jan 28
1/ - 🧵- Cutting out the "noise": Systematic hedging strategy

Nobody can consistently predict what the stock market will do but trend following allows one to exploit the trends in the markets.

Buy & hold works over long periods of time but this approach comes with...
2/ ...anxiety, gut-wrenching volatility, large drawdowns and secular bear-markets which can last for 10-14 years.

Fortunately, one can reduce the drawdowns and volatility of a long-term investment portfolio by utilising trend following which does not require any forecasts...
3/ ...or the use of predictive fundamental or technical indicators.

By adopting a systematic trend following hedging strategy (zero discretion), one can totally remove emotions from the investment business and significantly reduce drawdowns and volatility.

Hedging means...
Read 17 tweets
Dec 15, 2023
1/9) -- Setting the record straight ---

Lately, numerous trolls are incorrectly claiming I've been wrong about everything all year long, so this thread will set the record straight.

Yes, it is true that I've been discussing the prospects of a recession since late 2022...
2/9) ... and my expectation was that a downturn would start in 2023 and in this department, I have been proven wrong.

However, up until recently, I haven't traded off my macro views and have only recently liquidated my growth stock portfolio and started protecting my...
3/9)...capital from the elevated risk of a hard landing. Even now, I'm tactically trading index futures on both the long and short side (as stated in my Pinned Tweet).

In April, I posted the below which turned out to be correct.... Image
Read 9 tweets
Apr 23, 2023
The post-COVID bull market was the first cycle when stocks peaked several months *before* the end of QE.

Between '09 and '20, stocks peaked after the end of QE, but in '21 the speculative stuff peaked in Feb, junior growth stocks peaked in Aug/Sep, tech peaked in Nov...
...and $SPX peaked in Jan '22 whereas QE ended in Mar '22!

Interesting to note that the growth stocks ETF $IWO bottomed in Jun '22 (four months before lows in $NDX and $SPX) and many growth names bottomed between May and July.

At the end of the last bull-market in '21...
...the stock market clearly discounted the Fed's tightening several months before the event (end of QE in Mar '22) which is why stocks peaked whilst QE was ongoing (a first)!

Given the price action in $IWO and many growth stocks plus strength in $NDX and $SPX...
Read 4 tweets
Mar 30, 2023
Up until 11 March, the Fed was reducing the size of its balance-sheet and draining excess "liquidity" from the system. On 12 March, it suddenly decided to inject new "liquidity" into the banking system...an abrupt U-Turn.

Over the following two weeks, Fed's balance-sheet...
...expanded by ~$400 billion and this undid 8-months of liquidity drainage via QT!!!

Since the Fed's intervention, the financial markets have rallied sharply...bitcoin, silver, gold, tech stocks - the usual suspects have all benefited from the Fed's balance-sheet expansion...
So, whether one calls this "QE" or "NOT QE", this dollar creation is impacting the financial markets (similar to the "NOT QE" reverse repo operations in 2019)!

I'm aware that technically this isn't QE as the Fed is not buying assets, it is lending against banks' assets...
Read 6 tweets
Mar 28, 2023
Labour cycle and $SPX -- 🧵--

Many are convinced $SPX bottomed last October and we are now in a new bull-market. If this is a labour cycle and unemployment rate is set to rise, then history shows the bear-market low lies ahead...

1/ $SPX during 1969 and 1973/74 cycles -
2/ $SPX during 1980 and 1981/82 cycles -

$SPX declined when unemployment rate rose and only bottomed after rate cut(s) by the Fed (just before the peak in the unemployment rate)
3/ $SPX during 1990 cycle -

$SPX declined when unemployment rate rose and only bottomed after rate cut(s) by the Fed
Read 5 tweets
Mar 25, 2023
1/ Fed's balance-sheet expansion - 🧵

Over the past 2 weeks, the Fed has created $400b out of thin air and injected this new liquidity into the banking system...via loans.

These newly created dollars are neutralising the natural deflationary forces (preventing liquidation)...
2/...within the banking system and economy, therefore these operations are inflationary.

Granted, this new liquidity has not seeped into real spending yet (via loan creation by banks) but its affects are already showing up in the financial markets!...
3/ Since the Fed started expanding its balance-sheet (creating new dollars to lend to the banks), amidst the escalating banking crisis, asset prices have gone up (see below chart from @ycharts)!

This rally in asset prices is clearly due to the Fed's expanding balance-sheet...
Read 4 tweets

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