Performance Update
Quick check-in on the portfolio as of today. Up 39% year to date, the lion’s share of that still coming from the short positions. I want to cover three things in this update:
The macro backdrop and why I remain short the NASDAQ,
The vol-harvesting strategy and how it’s tracking,
A new speculation I’m putting on which I think has a credible 24X return profile by January 2028.
Let’s get into it.
Macro Backdrop: Why I’m Short the NASDAQ
The world is precarious right now. I don’t think that’s a controversial statement.
The QQQ closed at around $585. Structurally, the 200-day moving average remains in an uptrend over the past five years — but zoom in and the picture gets more interesting. The 50-day has already crossed below the 100-day and is heading toward the 200-day. If that completes, you’ve got a death cross and the algo-driven trading systems that monitor these signals will respond with mechanical selling. It has nothing to do with valuation; it’s purely technical. But valuation matters too, and the two are starting to converge.
The fundamental case for a NASDAQ derate is straightforward:
Tech has historically thrived in an environment of low interest rates, low inflation, and cheap energy. That tailwind is increasingly in question. More importantly, the narrative that these are capital-light businesses has quietly died. The hyper-scalers are now spending hundreds of billions per year on data centre capex. They have cash flows but they’re consuming those cash flows in maintenance and growth capex. The market has been pricing them like perpetual compounding machines. That premium, in my view, is at risk.
So I am short the NASDAQ and S&P 500 via conservative instruments — structured so that a 7.5% drop gets me to breakeven and an 8.4% drop maxes out the profit. The payoff profile from there is 2–4X on the capital deployed. With 290 days for that move to play out, I think the odds are attractive.
Premium members are aware of this trade + an identical one on the SPY.
Vol Harvesting: How The Shorts Are Tracking
This is the engine of the portfolio right now, and it continues to perform.
The core idea: Certain publicly traded vehicles are arithmetically guaranteed to decay over time due to volatility drag. The longer the timeframe, the more brutal the decay. If you pull up a 5-year chart on almost any of these instruments, you’ll find most have lost 99–100% of their starting value. I’m harvesting that decay by maintaining short positions.
Current P&L from this strategy: $4,168 in unrealised profit for the year, against a liability of $35,111, or 12% return on capital for the quarter and only $640 in borrowing fees. Borrowing fees are just 1.82% of capital deployed for the quarter — an exceptionally low cost of carry for this type of trade.
One note of caution I’d offer anyone considering this approach: bond ETFs can occasionally resist the decay dynamic even over multi-year periods. I don’t touch them for this reason.
