August Investment Plan
Leopold's liquidation might sign the bottom, my expectations for what's next and favorite assets.
What a week… What a month, even; historic, as we talked about earlier.
We finally have some answers on what happened, I’ll go over them today. The positive is this drawdown allowed us to identify strength and weakness in the market, and we now can focus only on the former for the rest of the year.
I’ve learned a lot over the last weeks; some things were well done, others weren’t… Looking at my portfolio, there was more wrong than good, and while some could argue that this sell-off wasn’t organic - as in it makes it acceptable to have such a drawdown, I won’t; the “why” doesn’t matter. Manipulation is always present, whether you see it or not. Complaining about something you can’t change is a waste of energy, and using it as an excuse is hypocritical.
What isn’t a waste of energy is improving, so that you can perform during this kind of inorganic sell-offs.
Portfolio, Gift & Lessons
My portfolio is now up “only” 21.7% YTD. I should be happy; being up after such a drawdown while holding growth names with leverage is something. But going from +195% to +21.7% in two months is unacceptable.
I knew the breather was coming and still had such poor risk and margin management that I almost gave up all my performance. I also shared content I’m not satisfied with. And I won't hold on to a paid subscription while not being satisfied with my content and performance.
For these reasons, I extend all current paid sub by two months. If I don’t perform according to the standard I set for myself, you guys have no reason to pay for it.
Some things were well done and I hope useful. I cut lots of weak names, which ended up falling much lower - despite lots of criticism, and still trade largely below my selling price. I found great opportunities at great prices, notably with Amazon, and shared great entry prices for Founding Members’ on Nebius (~$155) while holding on names like Arista, Soitec, and Silicom which were clearly strong.
Everything wasn’t a disaster. My portfolio is still green, the stock-picking portfolio is up 46.42% YTD; strong, considering most of the social media sphere, but having my own performance below it means I did something really wrong.
The year isn’t over, but I hold myself to a higher standard.
As for the learnings, I already shared a few of them. This kind of drawdown won’t happen every year as manipulation to this extent requires specific conditions. But harsher rules on how and when to scale margin are now in place, with much stricter risk control. Margin scales only on clear uptrends, not before.
Overall, things could have been worse. They have been for many. I haven’t done perfectly, not even well, but enough to stay alive and remain green YTD. I now have a great watchlist of strong assets, an improved system, and an even stronger resolve to make a killing.
These weren’t easy weeks. But chances are we’ve seen the worst.
Leopold’s Degenerate Gambling
Talking about staying alive, here’s one who got a margin call and lost all of his clients’ money - despite what you can read around.
I will only go briefly over the story and market’s mechanism; what happened briefly, and why it impacted us so harshly. If you want a punchier and more detailed version - also more complex, Irrational’s your guy.
Leopold - the social-media-praised and famous AI investor, was on 4×1 margin and got a bank call on Wednesday as his assets no longer covered his margin requirement. Before that happened, he tried its best to cover himself and sold his assets to reduce margin, crushing prices until the inevitable happened. Citadel ended up buying what was left on his book at a great discount when he had no other solution but to get out; this is why the market bounced on Thursday and Friday.
That’s the overall story. But the speculation goes further.
Leopold’s problem was that he let in some people he probably shouldn’t have. Those had regular and unrestricted views of his assets and margin levels and saw the risks he was taking.
A logical assumption would be that most of the drawdown we saw was an organized attempt to trigger Leopold’s margin call: shorting, selling, and no buying. This dip was too violent to be organic, with no bounces at all or extremely small ones as Leopold kept selling while others kept putting pressure on his positions. When he finally blew up, Citadel got a great discount, closed its shorts alongside everyone else, the market ripped again. Some of that sell-off was organic, but the violence of it probably came from this mechanism.
Wall Street isn’t for the weak.
This could be the scenario of a movie - might be one day: the fallen prodigy. Even if this is only speculation, make no mistake, this is how Wall Street works. If one can make billions and destroy two or three others on the way, he’ll do with a large smile on his face. People at Citadel must be drinking some pretty expensive champagne this weekend.
I’ll send my script to Netflix; what matters is that this explains the violence of the late drawdown and why no bounce held at all despite positive news (col CPI/PPI, no rate hikes, great earnings…). The only thing that matters in the market is liquidity. Narrative second. Fundamentals only third.
And liquidity was focused on destroying Leopold.
Bottom or Bubble?
Talking about market mechanisms, chances are we’ve seen the bottom. This doesn’t mean we’re back in an uptrend, but means we’re good to buy again. And I believe the next few days will be key to the rest of our year’s performance.
Most of the selling pressure is behind us. Leopold has nothing left to sell, Citadel is now holding the chips and might - should, sell some, but not everything considering Leopold’s portfolio quality and latest earnings. The portfolio might be a bit outdated, as he had to sell some holdings, but its quality is undeniable.
At this point, I see two major liquidity pressure points left:
Citadel and traders offloading some positions on pumps, which could put some pressure on these names - and the global growth market.
Retails and funds now buying back great fundamentals on great earnings and a healthy environment - except for Iran, cleared of most leverage and risk now that valuations have taken a large dump.
I’d expect the second to be the strongest, but I’d also expect the first to give buyers a a hard time short term.
We should be moving from a downtrend to a fight between sellers and buyers - a range. I struggle to see sellers being stronger now considering the environment, but we shouldn’t rule it out. And I struggle to see buyers overwhelming sellers right away, but that is more likely than the contrary.
My expectation remains a range, as it has for weeks. But I am now more confident about the outcome direction of that range - higher, and its length - few weeks.
We are going to see a bubble, but this isn’t it. A bubble is built on endless optimism, and blowing up a leveraged fund by selling amazing earnings showing clear ROI from AI, revenue acceleration, and margin expansion isn’t really what endless optimism looks like.
Factually, yes, the AI build-out will slow down, models will evolve, and DeepSeek- or Kimi-like improvements to models and inference will reduce compute needs, and we will find a balance. Nothing points to it being found yet; everything points to the contrary, and the market is clearly not overly optimistic here.
Not every company is cheap, even today. But most fundamentals are improving so fast that it’s impossible to know what tomorrow will bring, especially considering the technological transformation we’re going through. And as the market isn’t pricing endless optimism here, I don’t understand why anyone would call this a bubble. I call it a perfect environment to focus on strength and hope for this bubble to form, for real.
The rest of this write-up will go over my current portfolio, stock picks, and how I’d play each name now that we have more clarity. I will also go over my curated watchlist now that we can clearly identify strength and weakness, and again detail how I’d play each name from here. Some extremely attractive risk reward are showing up on the market on very healthy companies.
This is the time to refocus, forget about the last few weeks, and get ready for the next.
