GS Prime: "On a trailing 20-day basis, the recent pace of selling of global AI stocks by HFs is the largest in more than five years."
Source: GS trading desk
Source: GS trading desk
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GS's Vol Panic Index surging to 9.57 out of 10, making the third-largest daily jump on record.
Source: GS
Source: GS
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6,327
L/S gross leverage saw its largest weekly decline since Covid. Net leverage is now at five-year lows.
Source: GS
Source: GS
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Connor Bates retweeted
Stan Druckenmiller: Knowing When to Stop Analyzing Is the Biggest Mistake We Make
I think it's the biggest mistake in our business. At some point, the analysis becomes counterproductive. That's one thing I've learned, and it's greatly to my advantage. Speed matters now. With AI g else, if you sit around and analyze a company for four months and you're not willing to operate with 15% or 20% of information, you'll often miss just a big move and then you're afraid to buy it because it has moved.
That to me is a core belief. Sometimes when the opportunity is so big and you just kind of know it, you've just got to plunge in without the proper information, do the work, and if it doesn't work out, it doesn't matter whether you're a profit or loss.
I think it's the biggest mistake in our business. At some point, the analysis becomes counterproductive. That's one thing I've learned, and it's greatly to my advantage. Speed matters now. With AI g else, if you sit around and analyze a company for four months and you're not willing to operate with 15% or 20% of information, you'll often miss just a big move and then you're afraid to buy it because it has moved.
That to me is a core belief. Sometimes when the opportunity is so big and you just kind of know it, you've just got to plunge in without the proper information, do the work, and if it doesn't work out, it doesn't matter whether you're a profit or loss.
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Connor Bates retweeted
Goldman: Our vol panic index surged to 9.57 out of 10 (back in the panic zone of 9.5+). This move registered as the 3rd largest daily jump ever, which followed Wednesday’s huge decline (4th largest drop). The combined two-day swing was the largest on record, which shows how from relief to outright panic.
Clients had aggressively taken off protection into Wednesday’s post-midterm relief rally, leaving the market underhedged heading into Thursday’s reversal. As equities unwound and forced liquidations emerged across the HF community, we saw a scramble to buy back protection that was just sold.
Clients had aggressively taken off protection into Wednesday’s post-midterm relief rally, leaving the market underhedged heading into Thursday’s reversal. As equities unwound and forced liquidations emerged across the HF community, we saw a scramble to buy back protection that was just sold.
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Connor Bates retweeted
Goldman notes in that regard (the 6-month relative underperformance of AI) that last week "Info Tech was by far the most $ net sold global (and US) sector ... net sold across all regions, driven by long-and-short sales (2.2 to 1).
"In % terms, [the] week’s selling in global with what we saw in mid-October and Sep ‘24 as the largest net selling weeks on our record (since 2016). Also worth noting that 4 the top 5 net selling weeks in global Info Tech on our record have occurred within the past five months.
"Semis & Semi Equip and to a lesser extent Tech Hardware were the most net sold global subsectors within Info Tech, while Software was the most net bought. US Info Tech net allocation (as % of total US net MV) now stands at 14.4%, approaching multi-year lows in the 1st/1st/3rd percentiles on a 1-year/3-year/5-year lookback."
"In % terms, [the] week’s selling in global with what we saw in mid-October and Sep ‘24 as the largest net selling weeks on our record (since 2016). Also worth noting that 4 the top 5 net selling weeks in global Info Tech on our record have occurred within the past five months.
"Semis & Semi Equip and to a lesser extent Tech Hardware were the most net sold global subsectors within Info Tech, while Software was the most net bought. US Info Tech net allocation (as % of total US net MV) now stands at 14.4%, approaching multi-year lows in the 1st/1st/3rd percentiles on a 1-year/3-year/5-year lookback."
While the election was the most recent catalyst, as @sonusvarghese notes (via @dailychartbook’s nightly email), the rotation out of AI has been going on for a while now, with the six-month return gap between Goldman’s Broad AI index and its S&P 500 ex-AI index plunging to around -35 at’s the worst reading of the four-year bull market by a wide margin. It’s nearly three times as bad as the roughly -10-point trough after the DeepSeek shock and the tariff selloff in early 2025, and the roughly -12-point low during the summer 2024 rotation and yen carry-trade unwind. It’s also a swing of roughly 100 points from the +67 peak in September 2025.
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Another example of how “the signs were there” all along.
Again, let me emphasize that this is MUCH easier to recognize in hindsight.
But there's always something to learn from looking back, studying the clues, and figuring out how to better recognize them in real time.
And that's really the message I'm trying to get across with some of these tweets today, both for myself and for others.
It's not about pretending we could have predicted everything. It's about learning from what happened, our market awareness, and improving our ability to recognize these signs the next time around.
The goal is continuous improvement.
Again, let me emphasize that this is MUCH easier to recognize in hindsight.
But there's always something to learn from looking back, studying the clues, and figuring out how to better recognize them in real time.
And that's really the message I'm trying to get across with some of these tweets today, both for myself and for others.
It's not about pretending we could have predicted everything. It's about learning from what happened, our market awareness, and improving our ability to recognize these signs the next time around.
The goal is continuous improvement.
Momentum Exposure.
GS Prime: "Exposure to ‘momentum’ within our global Prime book is at record all-time highs, 50% greater than the prior highs set in 2021"
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The story of 2026. Extreme to extreme.
From a 5-sigma overshoot in Momentum relative to Low Volatility in June... to the absolute carnage we've seen in Momentum stocks... one of the worst drawdowns on RECORD for Momo basket now.
Remarkable how quickly the pendulum can swing from one extreme to the other.
From a 5-sigma overshoot in Momentum relative to Low Volatility in June... to the absolute carnage we've seen in Momentum stocks... one of the worst drawdowns on RECORD for Momo basket now.
Remarkable how quickly the pendulum can swing from one extreme to the other.
Momentum Stocks vs Low Volatility Stocks: A 5 Sigma Deviation.
Extreme Divergence.
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The ability to remain objective and rational during periods of extreme greed and fear is what separates good traders from world class traders.
When emotions are running highest the ability to think independently and stay disciplined becomes your greatest edge.
When emotions are running highest the ability to think independently and stay disciplined becomes your greatest edge.
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And playing devil’s advocate, I wouldn’t be surprised if the launch of the “Serenity AI Bottleneck ETF” ends up marking a short-term low for many of these beaten down names
Now I’m just wondering how long before they roll out the 2x and 3x leveraged versions. LOL
Now I’m just wondering how long before they roll out the 2x and 3x leveraged versions. LOL
I mean, we’re talking about an 85% drawdown here.
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12,642
Put that into perspective:
$1,000 → $46,020 → $6,940
That's $39,080 in gains gone
And now it takes a 563% rally just to get back to the highs
$1,000 → $46,020 → $6,940
That's $39,080 in gains gone
And now it takes a 563% rally just to get back to the highs
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412
40,334
Looks like the biggest bubble of our lifetimes
Berkshire Hathaway is now outperforming the Nasdaq by 789bps YTD
Berkshire Hathaway is now outperforming the Nasdaq by 789bps YTD
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21,692
Connor Bates retweeted
Here's a look at stocks with $1+ billion market caps down 50%+ over the last month:
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Connor Bates retweeted
BREAKING: The US economy adds +165,000 jobs in October, well above expectations of +64,000.
The unemployment rate fell to 4.1%, below expectations of 4.2%.
September's job number was also revised higher by +31,000 jobs.
Expectations for a December rate hike are rising on the news.
The unemployment rate fell to 4.1%, below expectations of 4.2%.
September's job number was also revised higher by +31,000 jobs.
Expectations for a December rate hike are rising on the news.
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Expect this market regime to be EXTREMELY volatile
VIX Rule of 16:
Current VIX: ~ 27.3
Divide the VIX by 16 to estimate the market's expected daily volatility
27.3 / 16 = 1.7%
Market is pricing in daily moves of roughly 1.7%
What used to feel like an unusually large daily move is now becoming the expectation
And this elevated volatility in the broader market only amplifies volatility in individual stocks
VIX Rule of 16:
Current VIX: ~ 27.3
Divide the VIX by 16 to estimate the market's expected daily volatility
27.3 / 16 = 1.7%
Market is pricing in daily moves of roughly 1.7%
What used to feel like an unusually large daily move is now becoming the expectation
And this elevated volatility in the broader market only amplifies volatility in individual stocks
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Connor Bates retweeted
I have covered hedge funds for nearly 16 years, and I can't remember a day like today. Here's what happened in the space of about ten hours:
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