My Market Thoughts
I will remind everyone that the apogee of any powered or fueled objects’ flight occurs AFTER the fuel runs out and the second derivative of direction (and speed) first turns negative.
Investors and traders need to avoid getting killed by the afterflight following the fuel exhaustion.
In other words, buying too early on the rollover can get expensive just as being too early in shorting on a turn up.
For emphasis, from Friday:
Our Arguments Are Starting to Play Out
We have argued that:
* With everyone on the same side of the bullish boat (in a market dominated by passive products and strategies) and with an increasingly casino-like backdrop of momentum-based buying (as a template see “The CNBC Panelist Said What?” (specifically, the poster child Jim Lebenthal’s “FOMO” buy of Micron at $1,200 recently), including the proliferation and popularity of leveraged ETFs and 0DTE options) — equities remain vulnerable to a market structure event.
* At the very least, we anticipated a wild setting of dramatic rotation in sector form factors and that is what we have gotten in the last week. Stocks are moving in integers — in the sort of volatility market participants are not accustomed to.
* Specifically, we expected the heady swing back into hyperscalers was likely to reverse. (Google’s (GOOGL) announcement of technical problems with Gemini served as a catalyst yesterday.)
* We thought a correction in hyperscalers coupled with a large correction in the over-hyped leadership in memory and semis could contribute to a substantial fall in the Nasdaq. This is what we have been seeing in the last three trading session.
* We warned that the IPO market’s heady activity would backfire on investors. Yesterday SpaceX (SPCX) (one of our shorts) broke its IPO price. Standard Nuclear (STDN) and Csquare (CSQR) joined SpaceX by breaking below their IPO prices on Thursday.
Again, this is a great environment for dispassionate and opportunistic traders but a lousy setting for the buy-and-hold crowd.
BY Doug Kass · Jul 17, 2026, 7:30 AM EDT
From last Monday:
I Remain Bearish as Investors Are Mispricing Risk
* Risks now dwarfs rewards…
Stated simply, my ursine market view continues to be influenced by:
• The lack of fiscal discipline in Washington, D.C., which has resulted in ever increasing annual deficits and a burgeoning national debt load.
• Improvisational fiscal and foreign policy could lead to adverse economic and market outcomes.
• The domestic economy and 2026-07 S&P earnings growth are heavily reliant on AI capital spending.
• We are skeptical whether the AI spend will translate into adequate returns on capital.
• Persistently high inflation.
• The likelihood that interest rates will be higher for longer.
• In today’s uneven K-shaped economy, many consumers are spent up and not pent up.
• An equity risk premium which has now morphed into an equity risk discount.
• Extended valuations in the 95%-tile (Cape Shiller Ratio, Buffett Indicator and other traditional metrics).
• We are in a Bull Market in Complacency with institutional cash allocations near record lows and the buy the dip mentality (too) firmly entrenched.
• Market structure risks are expanding materially. With the popularity of leveraged ETFs and ODTE options (zero days till expiration on indexes and, now even on INDIVIDUAL stocks) the markets have become gamified. Investor timeframes have been reduced as they behave more as gamblers in a casino than long term investors.
BY Doug Kass · Jul 13, 2026, 11:45 AM EDT
Position: Long GOOGL (S), AMZN (S); Short SPCX (S)
