We’re In A Bear Market, And Stocks Have Further To Fall

That’s been our basic thesis since early this month. Big market participants (such as Bill Ackman) thought Trump’s tariffs were a negotiating tack or a bluff. Ergo, the extent of them wasn’t priced in, and when it was, we would go lower. 

Whether it makes sense to balance trade is a separate question. We think it does, as does Warren Buffett and as did the late Intel CEO, Andy Grove. But even if it’s a good policy, there is going to be a period of painful adjustment. 

Trading That Thesis 

It’s a bearish thesis, so we’ve mainly focused on adding short exposure, with some exceptions. If something looks cheap–and likely to appreciate, we go long. And we do so on a day when the market is down. We did just that last Monday, placing long term, bullish bets on two Bitcoin-related names. 

We explained our logic there: 

Why Bitcoin?

Because Bitcoin is starting to behave like its own asset class, instead of like a more volatile version of the Nasdaq. While the NASDAQ 100-tracking Invesco QQQ Trust (QQQ) is down about 3% as I type this, Bitcoin is up about 2.5%.

Why These Two Stocks?

Because they are both profitable and cheap, with most of their market caps backed by cash and crypto:

Company A

• Bitcoin Holdings: 742.1 BTC, valued at approximately $69.3 million
• Ethereum Holdings: 27,623.9 ETH, valued at approximately $92.1 million
• Cash and Cash Equivalents: Approximately $98.6 million
• Total Market Capitalization: Approximately $325 million

Asset Composition Relative to Market Cap:

• Bitcoin and Ethereum: ~50%
• Cash: ~30%
• Combined Liquidity (BTC + ETH + Cash): ~80%

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Company B

• Bitcoin Holdings: 2,298 BTC, valued at approximately $214.6 million
• Cash and Cash Equivalents: Approximately $8.9 million
• Total Market Capitalization: Approximately $295 million

Asset Composition Relative to Market Cap:

• Bitcoin: ~73%
• Cash: ~3%
• Combined (BTC + Cash): ~76%

Company B was Semler Scientific, Inc. (SMLR), and it finished the week up more than 15%. 

Mostly Bearish Bets The Rest Of The Week

The rest of the week, we mainly added short exposure on market rallies. Specifically, we placed bets against: 

• High yield bonds, via the iShares iBoxx $ High Yield Corporate Bond ETF (HYG)
• Trucking companies serving our ports. 
• Freight forwarders serving American small businesses importing from China. 
• Other vendors serving those small business. 

We wrapped up the week with another bet against Nvidia Corporation NVDA as it bounced above $110. 

Balancing Fear And Greed 

We ended the week with three profitable exits, two on bearish trades (including an earlier bet against Nvidia), and one on a bullish put spread on Celestica, Inc. CLS. 

Options

1. Puts on Apple, Inc. AAPL. Bought for $1.81 on 4//14/2025; sold for $2.71 on 4/21/2025. Profit: 50%.
2. Put spread on Celestica (CLS 0.61%↑). Entered at a net credit of $3.12 on 3/27/2025; exited at a net debit of $2 on 4/25/2025. Profit: 59.6%.
3. Puts on Nvidia (NVDA -2.83%↓). Bought for $1.56 on 4/9/2025; sold for $4.02 on 4/21/2025. Profit: 158%.

Although we were bearish on Monday, we nevertheless decided to take profits on Apple and Nvidia again, as those options were expiring on Friday. In that case, our fear outweighed our greed, and enabled us to have three profitable exits this week instead of just one. We post our trade exits at the end of each week, including our losses. This week, we didn’t have any exits for losses, which was a welcome change from the previous week. 

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