When Every Trade Is A Crowded Trade

When Every Trade Is A Crowded Trade

When the headlines start to get repetitive, it usually means everyone's on the same side of the boat. And unbalanced boats are prone to capsizing. The problem right now is that although various trades associated with a rotation away from perennial secular growth winners look crowded, mega-cap tech remains one of the most crowded trades on the planet. On a quick stroll through the "Markets" section of Bloomberg's public website Wednesday, I was subjected to a trio of headlines touting a tight o
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5 thoughts on “When Every Trade Is A Crowded Trade

    1. I think we’re just getting notification that a storm might form. I’m girding for a long term (5+ years akin to the 2000s) asset devaluation. With the double punch of monetary and fiscal tightening, we’re overshooting into recession territory. Given we’ve learned from previous tightening errors, it might take longer for a crisis to trigger easing again.

      1. There’s no way to know that. For all you know, The Fed may backtrack and pivot hard again, like Jay Pow’s infamous volte-face in Q42018. But they may allow markets to experience some more pain before then – as harrowing as it has been, the drawdown has not been steep enough to invoke the Fed put.

  1. Energy was identified as a growth opportunity right around the time inflation was being dismissed as transitory. As it began to rise, the US responded with tapping reserves and prices abated, temporarily and everyone went back to congratulating themselves on being smarter than the analysis. Fast forward 3 months and the predictive data sets for both inflation and energy prove to be correct.

    Knowing the catalyst for inflation (The CPI bad kind not all the great kinds people want to keep seeing) I don’t really see how Fed policy will alter the trajectory we are on. Covid simply won’t go away, it keeps mutating and infecting people. Maybe not killing them but maybe leaving them with permanent long Covid. We are not the masters of our own universe, we are learning the harsh reality of our ancestors. That disease can dominate the most dominant species on the planet. It is unironic to me that how we were able to so easily invade the Americas is because of the very thing we’re trying to pretend like isn’t a problem. It is projected that the flu, measles, black plague, and dysentery wiped out millions of indigenous people in the America’s after Columbus arrived and before colonists started showing up.

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