Vigilantes and Villains.

Sunday July 5, 2026

I am not a psychologist but it has always appeared to me that people who are inclined to short stocks tend to fall into a very narrow collection of psychopathological buckets.

People who see the world in very black and white terms and think it’s their job to “fix” stuff. Intractable vigilantes.

I can’t argue with Michael Burry’s charts. There are red circles on them. Who can argue with red circles?

But I do wonder if it is possible that maybe other charts are more relevant? The good thing about LLMs is you can just ask one “How is my theory wrong?” And it will happily tell you. Or you can just ask it even simpler questions and see what conclusions it comes up with.

I didn’t prompt ChatGPT to figure that out. It figured it out on its own.

Now, market participation changes doesn’t mean the market isn’t a bubble. The question is not whether or not stocks are over priced. Public stocks are always over priced. Always.

If a stock is ever under priced a group or individual will try and take it private. If your company is not in a proxy fight or similar to be taken private you know that the market cap is too expensive. This is a reality you have to accept. If you are buying ANY public stock you are paying too much.

There is no stock that is listed in the US that has priced its entire share count at the market.

The question is whether or not there are more sellers than buyers and that is question that can not be answered by comparing to charts from 2008 or 2000 or 1929.

On the other end of the spectrum (pun) is the tech perma-bull. I can’t argue with him either. He used bold. So it must be true.

Personally, I am already leaning heavily into hedging with PUTS against the QQQ as well as the IWM which has been my go-to since January. So even though I am not short I am in the market for a cowl and cape myself. I am betting that Fed can’t lower rates and that the NASDAQ has run out of fuel.

From my perspective in the Sun, predicting doom is not a lifestyle choice I want to make. It also is not financially smart. Even if the market crashes (from financial concerns not the plague) what we do know from history is there is always volatility before the crash so options are expensive. And it always goes back up. So do you want to light money on fire trying to time the first leg of the crash or just go to cash and ride the market back up?

Satan himself is just waiting to buy the bottom as is Santa Claus.

I do not know for how long market participants can keep up the stock prices of AI/tech companies. Mormonism is still alive and kicking and AI/tech is definitely a religion at this point.

My plan, such as I have one, is to just hedge event risk. The market may not crash but it isn’t going up significantly from new capital buying. I am not at the point I was in 2007-2010 when I literally spent more than a year living on the beach.

Here are my previous attempts to think about this topic. I feel both of these estimates are still pretty accurate and we’re somewhere near mid to late 1928.

Just watch share repurchase agreements. And remember the election is coming and it’s going be as retarded an occurrence as you can imagine.

-AJ