Portfolio Update: SQQQ, SARK, and TLT

Hey everyone,

Since I started shorting using SQQQ/SARK this week, they’re up nicely while the SPY and QQQ are down. It has paid off so far.

The portfolio is up 3.5% over the last week which is nice considering the weakness in the stocks I previously owned and the overall market.

I’m confident the broader market will be fine long-term and DCA style investing will work just fine, but I’d expect overall market returns to be 3% - 5% for the next 5 - 10 years instead of the 8% - 9% that people have come to expect.

I’m not trying to scare anyone and I fully admit trading like I’m doing is usually foolish. But I’m just trying to preserve/grow my own capital.

I want to share some context as to why I’m making such drastic changes to my portfolio and investing style. My thesis is essentially this.

Although the QQQ is down 23% from highs and the SPY is down 18% from highs, I don’t think the stock market is priced as if we are in a bear market.

Why do I say that?

Howard Marks laid it out very well in Oaktree’s latest quarterly letter. The S&P 500 is trading at the high end of its historical average P/E.

Where I disagree with Howard is that I think now IS the time to make a “market call”. This is where I could be way wrong… but.

The Fed just told us they don’t plan to cut interest rates this year, but the market believes there will be 1 - 2 rate cuts this year. However, the stock market is acting as if rate cuts are a bullish thing (yay easy money/QE).

However, I think the fed will end up cutting rates but it will be because of some bad event (banking stuff) or because the economy weakens significantly.

Either of those scenarios would be bad for stocks.

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