Reminiscences of Xmas 2021
This is the time of the year when investors try to second-guess how 2025 will pan out. Thanks to Recency Bias, investors will gravitate to the most recent parallel, which in this case is December 2021, when things were looking quite silly aka Max Stupid.
I’ve been reminiscing on my 2021 trading. It was a great year. But around Xmas 2021, I started positioning my portfolio “Long Energy & Commodities vs Short Ponzi”, exemplified by the pair trade of long ARCH / short ARKK, because it was just too funny for it not to work: Long Coal / Short Innovation? It almost qualifies as Max Stupid too!
That spread ended up returning +110% in 2022. Parody beat Reality once again…
Back to 2025
While trying to contain my Recency Bias, I do have my concerns for downside in 2025. But I just don’t feel the same way for 2025 as I did for 2022.
Lets keep it simple:
2021 was the “Year of the Ponzi”
2022 was the “Revenge of Real Assets”, where Real Assets made a comeback against Ponzi. The Ukraine War was a major trigger for the acceleration of this Rotation
2024 was the “Year of Tamagotchi”, where Yellen pumped the Markets to get her guy / gal re-elected
On the other hand, 2025 is the Golden Age of Grift
This means we have to be selectively bullish, but on high alert, because things can turn to poo faster than Chamath could launch a new SPAC in 2021…
So I want to start thinking about Short Setups for 2025…