-Jevons Paradox, Schrodinger’s Cat, Occam’s Razor and Trump’s Tariffs walk into a bar. Who pays the bill?
-Trump’s Tariffs, because Jevons Paradox got margin-called.
That’s the best joke I could come up with, since the real joke is seeing Jevons Paradox* thrown around by future bag-holders to justify holding on to NVDA, following the Deepseek scare (*Jevons Paradox states that as technological progress makes the use of a resource more efficient and cheaper, the demand for the resource goes up).
As a trader, I have only this observation to share:
NVDA’s share price has gone nowhere since June 2024! (which is when we first shorted it and gave thanks when it puked to $100. And then it gave us another chance to short it last week at $148 and we gave thanks again).
…Yet all we hear about is “NVDA this, NVDA that” while the stock is down -10% YTD! Get over it. Move on. You can make money from other stocks too, you know!
Shrub’s Paradox
This week, the Monkeys used Jevons Paradox as an excuse to buy back higher all the stocks that they sold on Monday’s lows, only to get body-bagged on Friday afternoon by headlines on Trump’s Tariffs (25% on Canada and Mexico, 10% on China, with threats for more).
I can’t wait to see what narrative they will come up with next week to paint Trade Wars as bullish. Maybe dig up another paradox from an obscure 18th century economist? Meanwhile, people should pay attention to what Trump said:
*TRUMP: “NOT CONCERNED ABOUT MARKET REACTION AROUND TARIFFS”
That’s a change of attitude right there and it’s important. Remember this, because price action and narratives are becoming even dumber as we go along. For example:
This week, TSLA’s results were outright horrendous, with big misses across the board, downgrading guidance from "20-30% growth" to just "return to growth". But the stock was UP because, as one analyst said (I kid you not): “Q4 results weren’t great, but who cares? Elon has never sounded so bullish."
In the week that OpenAi faced existential crisis from Deepseek, OpenAI is trying to raise $40bn at a $340bn valuation, UP from $157bn back in October … as if Deepseek made OpenAI MORE valuable! Utter nonsense. It reminds me a bit of the WeWork failed IPO of 2019, which went from hero to zero pretty quickly (Another Softbank special!)
Makes you really wonder who buys into all this nonsense…
Which brings us to Shrub’s Paradox™️:
“AS AI BECOMES SMARTER, THE MONKEYS BECOME DUMBER”
- Le Shrub
I can’t really complain though, because we get to do this week in, week out and give thanks!
The Capital Cycle
I recommend that people read Ed Chancellor’s must-own book “Capital Returns”. As I’ve said in the past, this is the only book that sits on my desk. Below is the chart summary of the Capital Cycle:
The Capital Cycle doesn’t only apply to GPUs and AI. It also applies to Money, Stupidity and Grift, of which we have ample of, during the Golden Age of Grift™️ (aka GAG).
So when someone confronts you with Javons Paradox, hit them back this Meme. Tell them that a shrub made it…
Things You may have Missed this Week that Matter
With all the noise on Deepseek and Tariffs, there were quite a few interesting developments that went unnoticed. I’ll summarize them for “Traders with ADHD”: