TrumpGrift Capital
Equity Investing Commentary
Semiconductors lack the buying firepower for another run now that Leo's giant leveraged, concentrated bets and the funds copying him are gone, and about 3.5% of Korea's population is being margin called. Traders took profits on yesterday's bounce at the open, so the market should be more balanced and less speculative from here. Macro pressure from oil and rates should also push stocks lower into year-end. x.comÂ
Semiconductor stocks may have lost their marginal buyers, leaving room for real price discovery. Those buyers may have been one leveraged whale, Leopold Aschenbrenner, his copycats and Korean retail investors now getting margin called. With oil and likely higher rates into year-end, it is unclear what will push semiconductors back to all-time highs. x.com x.comÂ
Semiconductors face more unwind risk because Korea's speculative trading is only the tip of the iceberg. There is probably even more high-volume leveraged trading in the US, through leveraged ETFs, margin and options, and no one knows when that will blow up in chips. @anandragn describes the AI trade unwind as 4-5 weeks of total destruction. x.comÂ
Semiconductors could capture scarce spot compute's value if its forward curve holds. Compute trades in deep contango, while chip stocks price in little of that value; near-term moves are unpredictable. That makes the sector very bullish. The earlier lab-funding risk looks less acute: Anthropic should hold nearly $200B cash after its IPO and is operating-cash-flow profitable. Even with 2029 capex cuts, chips look cheap if future buyers do not default. x.com x.com x.com x.com x.comÂ
Tech and semiconductor bounces are mainly driven by less urgent hedge-fund selling rather than fresh buying. Per Goldman Sachs, tech is still being sold amid very low activity; there is no sign risk has been added yet. The unwind may be nearing its end, especially as hyperscalers stick to capex plans and Q3 semiconductor earnings look likely to be positive. Less crowded positioning and more normal multiples leave a healthier base for a longer-term rebuild. x.comÂ
Semiconductors have fallen into a summer bear market driven by South Korean retail investors. Per @KobeissiLetter, South Korea's stock market collapsed 44% in 40 days, erasing $2 trillion of market cap, and the finance ministry plans to stabilize it. x.comÂ
Semiconductors look relatively cheap against the S&P 500, while their earnings are growing much faster, barring an EPS reset. The selloff looks overdone, though that does not mean it reverses tomorrow. x.comÂ
Semiconductors still look likely to lag on a risk-adjusted basis, even if Treasury intervention such as yield-curve control changes the broader picture. They should have been rallying hard this week and are not acting right for bulls, suggesting something is brewing, probably a capex disappointment. Hyperscalers may be closer to another leg up. x.com x.com x.comÂ
The semiconductor trade looks fragile because it now hinges on AI labs' growth. Semis sold off when Anthropic's month-over-month ARR growth decelerated, putting the market's fragility on full display, and that may be a sign of things to come. x.comÂ
Semiconductor earnings have outpaced prices, making the selloff look more like forced positioning than a broken growth case. Since January 2025, the SOX rose about 114% while reconstructed forward earnings rose about 198%; the estimate is approximate. Hedge funds sold global tech at a greater-than-three-standard-deviation pace in October 5-16, a pattern seen near earlier lows, though another sharp flush could come before a reversal. x.comÂ
Semiconductors' parabolic run is likely to end in a bear market, and record ETF inflows may be a contrarian warning. The sector's forward P/E was 12.8 at its 2022 low and 11.5 at its 2018 low, versus the 16.4 cited now in the quoted post. Past parabolic runs saw 43%-55% drawdowns; the previous record inflow came at a top. x.com x.com x.comÂ
