Jakub Rochlitz @TheDividendFund: "Understanding the Pullback With a..."

Slovakia

Understanding the Pullback With a Calm Mindset 💡 I said the market was getting wobbly and I didn’t like the setup ( etoro.tw/48kY3Xk ). $NVDA (NVIDIA Corporation) had the power to bury the market if earnings disappointed. Instead, it smashed expectations, yet even that wasn’t enough to save sentiment. That alone tells you how heavy positioning and psychology had become. While the overall market still looks healthy to me, it never moves in a straight line. There's pockets of weakness, and a few of them have reached our portfolio, though only marginally. I want to walk you through what’s happening, why the reaction was predictable, and why the current moves remain within a normal and acceptable range. 1. Rheinmetall $RHM.DE (Rheinmetall AG) and the Ukraine Peace Deal Narrative $RHM.DE is down roughly 11% this week. The catalyst is the peace plan being pushed onto Ukraine: www.bbc.com/news/articles/cde6yld78d6o www.theguardian.com/world/2025/nov/22/ukraine-zelenskyy-peace-deal-us-nato-meeting www.axios.com/2025/11/20/trump-ukraine-peace-plan-28-points-russia Investors see headlines hinting at “peace,” and their immediate reaction is to sell defense names. The logic is shallow: peace = no need for weapons = sell defense stocks. This reaction is predictable, but when you understand the geopolitical situation, its easy to see how it's very wrong, and the opposite is much more likely. A forced peace deal would effectively: - Freeze borders along current front lines - Hand Russia a de facto strategic victory - Allow Moscow to rebuild its military - Strengthen Putin’s political leverage - Severely weaken Ukraine’s long-term defense capabilities - Signal to European allies that US security guarantees (including Article 5 reliability) may not be as solid as assumed If you connect the dots, this is not a moment when Europe cuts defense spending. It’s a moment when countries bordering Russia, like Finland, the Baltics, and Poland, receive the strongest possible signal that they must accelerate rearmament and modernize rapidly. This aligns with the true investment thesis: Rheinmetall has always been about structural European defense modernization, not the existence or absence of active conflict. Europe is years behind in capabilities, and that gap cannot remain unaddressed in the current geopolitical climate. I am patiently waiting for a further discount on $RHM.DE, at which point I’m likely to increase our position. 2. Nvidia ($NVDA), AI Infrastructure, and the “AI Bubble” Debate $NVDA and its AI-infrastructure peers ($VST, $GEV (GE Vernova LLC)) are being thrown into the same bucket and sold off. Some call it an AI bubble bursting. I don’t believe that’s the case. There was an AI "bubble", but it wasn’t in the infrastructure layer. It was hidden in pockets where optimism overtook fundamentals: $PLTR (Palantir Technologies Inc.), $CRWV (CoreWeave Inc), $ORCL (Oracle Corporation), and many others where investors assumed endless dominance and flawless execution. That bubble has already popped. What’s dragging $NVDA down right now is a different force: cross-asset correlation with crypto. Just like Bitcoin, Nvidia is a well-liked, well-known stock. That means many investors own both. $BTC is undergoing a sharp 30%+ drawdown. When that happens: - Investors rotate capital to buy the dip - Others exit markets altogether - Some take profits - Margin calls force selling across unrelated assets - Risk clusters merge, pulling strong names down with weak ones Currently, $BTC shows a 79% correlation with $NVDA. Bitcoin broke support below 90k first, then equities followed. Equity markets, especially tech, follow Bitcoin with a lag on the way down this year. In moments of panic, investors sell what they can, not what they want. This has little to do with Nvidia’s fundamentals. Nvidia delivered strong results, and the structural tailwinds: data centers, AI compute, hyperscaler capex - remain firmly intact. Nevertheless, I anticipated this, and reduced our tech exposure in the past weeks to lower our volatility and correlation to the tech sector. I continue to hold some cash on hand to take advantage of incoming opportunities. Bottom Line The portfolio remains diversified, balanced, and prepared for this environment. Many of the stocks on my watchlist are already approaching attractive levels. Despite the noise, we continue to significantly outperform the market at +29% year-to-date. Please feel free to ask me anything. Jakub Rochlitz, Elite Popular Investor