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Puru Saxena

@saxena_puru

3 Dec

No crystal ball here but am familiar with the monetary cycle and stock market history.

Suspect the selling in high growth stocks likely to continue until multiples revert to around pre-COVID levels and when $NDX $SPX have completed their flush, it'll probably be the time to buy.

As long as the Fed is draining liquidity and reducing asset purchases, risk assets are likely to stay under pressure.

At some point in Q1/Q2, we'll probably get a deflationary event/slowdown/crack in inflation and that should prompt the Fed to reverse course + ignite rally.

For the next few weeks/months, safe havens are likely to be US$ cash and 30-Year USTs.

During asset liquidation/post-bubble contractions, capital usually flows to the safety of the senior currency and sovereign debt market, but obviously anything can happen. Time will tell.

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Puru Saxena

@saxena_puru

2 Dec

The COVID-crash was highly unusual.

Due to extreme fear, stocks declined without any bounce whatsoever.

Bear-markets are usually interrupted by periodic counter-trend rallies which suck in the "buy the dip" crowd. The primary trend for high growth stocks is currently DOWN.

If history is any guide, high growth stocks will bottom around the end of the QE program when the main indices are also ~15-20% below their ATHs.

When the final flush comes, high growth stocks are not likely to buck the general trend.

Next few months likely to be tricky.

With inflation running super-hot and Congress on the Fed's case, highly likely the central bank will taper and end its QE program by spring/early summer.

After unprecedented stimulus for 18 months, this abrupt monetary tightening (= 200bps of hikes) likely to jolt risk assets.

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Puru Saxena

@saxena_puru

1 Dec

1)Portfolio Nov-end -

$ADYEY $AFRM $CRWD $DLO $GLBE $LILM $LSPD $MELI $MNDY $MQ $OKTA $PATH $SE $SHOP $SNOW $TOST $TWLO $U $UPST $ZI #DXY

Short - ARK, $NET

Return since 1 Sept '16 -

Portfolio +714.41% (49.11%pa)
$ACWI +74.08% (11.14%pa)
$SPX +110.40% (15.22%pa)

Contd..

2) YTD return -

Portfolio +28.05%
$ACWI +12.42%
$SPX +21.59%

Biggest positions -

1) $SE 2) $GLBE 3) $MELI 4) $SNOW 5) $TWLO

Contd....

3) Commentary -

November was a brutal month for growth stocks; once the strong CPI print was announced and the Fed began tapering its QE program, ARK ETFs declined by ~20% within 3 weeks!

Fortunately, due to my hedges and shorts in $ARKG and $RIVN, my drawdown...

Read 11 tweets

Puru Saxena

@saxena_puru

26 Nov

The COVID variant getting the blame for the sell-off in risk assets.

Pundits seem to be forgetting that risk assets peaked in early November (after strong CPI print) and the selling has intensified since Fed's taper announcement.

Market has been deteriorating for weeks.

Thanks to unprecedented QE, ecommerce + payments + software + video games and streaming stocks benefited tremendously during the pandemic (their valuations were a lot lower then).

Conditions are very different now - Fed is tightening and valuations are also a lot higher.

Important to ignore the hype + think critically.

Over past year, we learnt about a few COVID-variants but the financial markets largely ignored them because of the Fed's QE program ($120b/month).

Now, a new COVID-variant is rocking risk assets. Why? The Fed is now tapering.

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Puru Saxena

@saxena_puru

22 Nov

The major indices are still near their ATHs and many large caps + mega caps haven't cracked yet.

This suggests that the liquidation isn't over.

Bear-market rallies might take place in the high growth names but for most names, the primary trend is currently down.

Over the following weeks, the contraction is likely to get worse and the stronger US Dollar should cause commodities/inflation to roll over.

Global PMIs also likely to roll over and this will cause an economic slowdown.

Sell-off only likely to end when the Fed becomes dovish.

This sell off is not unexpected, neither is it a 'black swan' event.

The ongoing selling is a rational response to tightening monetary conditions.

The Fed's QE unleashed animal spirits and pushed prices/valuations to an extreme and the market is now discounting its end.

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Puru Saxena

@saxena_puru

15 Nov

Message to socialists -

"Fair share" of tax means a flat tax (same %) for all taxpayers who pay tax. It does NOT mean fleecing the super wealthy by confiscating their wealth.

After income tax/capital gains tax/wealth tax and inheritance tax, some nations take 65-70% of wealth.

Basic maths - (20% flat tax)

A person who makes $100K pays $20K in tax
A person who makes $1m pays $200K in tax
A person who makes $10m pays $2m in tax
A person who makes $100m pays $20m in tax

Wealthy do pay more tax, even with a flat tax regime.

Penalising the wealthy because they have more money is immoral and wrong.

Inheritance tax is the biggest form of legal theft that exists ---> that capital has already been taxed once or even more than once.

Being ambitious, working hard, saving and investing isn't a crime.

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