One of my more painful memories as a trader was from many years ago, in which I had been aggressively bearish against the Chinese market. I forget the precise circumstance, but after a long while of the Chinese market just refusing to go lower, I finally surrendered and took my loss. At the time, I had been speaking about this position openly, so my friends knew about it.
Anyway, I went on a ski vacation, and during that vacation the Chinese market got absolutely nuked, and a close friend of mine sent me a congratulatory note, stating how happy I must be that everything had worked out. I was so humiliated, I didn’t have the heart to tell him that the wonderful wipeout in China didn’t do me one bit of good. It felt awful to be the cause of my own misfortune.
I was reminded of that feeling this week, because as so many sectors, semiconductors in particular, have been absolutely destroyed, the vast majority of my bearish bet was in Utilities, of all things, which have been a robust and steady safe haven, particularly on Friday. It’s been absolutely maddening to me, and I wanted to explore this trade more deeply and why I’m still in it.
As you can see in the chart below, price have not broken the descending trendline, but it is still maddening to see stuff like SMCI lose 35% of its value yet have XLU just smile and keep pushing higher.
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