Jakub Rochlitz @TheDividendFund: "𝗢𝗻 𝗠𝗮𝗿𝗸𝗲𝘁 𝗪𝗼𝗯𝗯𝗹𝗲𝘀 👇🫧 Volatility and..."

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𝗢𝗻 𝗠𝗮𝗿𝗸𝗲𝘁 𝗪𝗼𝗯𝗯𝗹𝗲𝘀 👇🫧 Volatility and fear are picking up in the markets. The CNN Fear & Greed index is at levels last seen in April, showing extreme fear ( edition.cnn.com/markets/fear-and-greed ). Market breadth is disappearing, and the VIX volatility index is up 33% in the past month. I'm not going to talk about news. We all know that Michael Burry, Peter Thiel, Buffett and others are bearish, that big tech CEOs are talking about an AI bubble, etc. Let's look at fundamentals 👀 There's no doubt that the market as a whole is expensive. The Shiller PE ratio stands at ~40. It uses the price of the S&P 500 Index divided by the average of the last 10 years of inflation-adjusted earnings. So smoothing out valuation over long-term earnings potential. That's 43% above its long-term average. ( www.gurufocus.com/shiller-PE.php?search=shiller ). The Buffett indicator, which measures the total value of the U.S. stock markets and compares it to GDP, is at 217%, way above the long-term average and above 2021 levels ( www.gurufocus.com/economic_indicators/60/buffett-indicator ). But the market has been expensive for quite a while. So, what gives? Why is it falling now? $NVDA (NVIDIA Corporation) reports earnings tomorrow. After a long time, Nvidia is in a unique position to save, or bury, the tech rally. Why is that? The AI spending boom is slowly running out of money. Hyperscalers are running down their massive cash reserves and turning to debt markets (a logical move) to finance their spending. $ORCL (Oracle Corporation), $META (Meta Platforms Inc) and recently also $AMZN (Amazon.com Inc) and $GOOG (Alphabet) all raised debt financing to pursue AI investments. The market clearly doesn't like financing something unproven and not yet profitable with debt. And now, it's also worried about depreciation. Nvidia is rapidly increasing the power of its chips. Therefore, companies with all of their investments loaded in older or current chips, such as $CRWV (CoreWeave Inc) have been punished. Another reason for the fall is the Fed rate cut expectatiions. Right now, Wall Street is placing just a 49% chance of a december rate cut ( www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html ). While I think it's unjustified, and the fundamentals point to a need to cut rates, the market is quickly repricing risk - hitting tech first. And of course, the big one, $BTC. Bitcoin is now in a bear market, near a very key support below 90 000. Equity markets are lagging Bitcoin on the way down this year, as we've also seen in April. Bitcoin losses not only pressure investor sentiment, but might also force investors to liquidate their equity positions to cover margin calls. So are we in a correction? Depends where you look. Retail AI favorites such as $CRWV, $ORCL or $OKLO (Oklo Inc) are down tens of percent already! No question there. Even $META is down over 20% now. But the rest of the market keeps holding on. At this point, everything depends on how Nvidia reports tomorrow. Even a good earnings report may not be enough to satisfy the bulls, and with how many investors are anxiously waiting for the report, bad news might spread fast and hit the whole market. I don't like this. The portfolio is always safety first, returns later. In anticipation of such an event after seeing the market movements over the past month, I have been taking profits. Right now, about 8% of the portfolio is in cash, I have reduced our tech holdings significantly and almost no single stock has more than 5% exposure. Nvidia continues to dominate the portfolio, and I continue to be very bullish on the long term potential of AI. But for the short-term, we are positioned defensively, ready to jump at opportunities that might present themselves. The portfolio is at 32% profit YTD, significantly outperforming the $SPX500 , and I prefer to defend our profits now rather than chase the few percentage points that might be left in growth stocks. Careful diversification is always key in investing, and the name of the game now is avoid places where panic might develop, and keep them on your eyes to take advantage. That's how I made over 100% on most tech stocks in April! Ask me anything!