Matein Khalid
Had Warren Buffett, oracle of Omaha, been born North Indian, he would have summarized Wall Street’s temper tantrum since last Friday with his famous observation “only when the tide goes out do you discover who’s been swimming nanga punga (naked)”. When history’s most iconic value investor ran up $300 billion in cash, I knew that the tide had run out for this deliciously profitable but utterly loony-tune money making carnival of greed on Wall Street. Yet the biggest stock market bubble on the planet was not the US but India, where the Sensex had risen from its 7000 low in the post-Lehman ice age of 2009 to 85000 at its highs.
While a 12X return in 15-years has made Dalal Street’s Sensex perma-bulls into the (literal) Brahma bulls, whose herds still roam the cattle ranches of the Texas Panhandle, in Asia the tide ran out for the Indiabulls in October as I had chronicled ad infinitum. The Indian bull market has now been fatally gored by both money flow and momentum. Small caps, the playthings of scamster promoters are in the twilight zone. The Sensex is down 14% in the past 4-months and the 100 million poor Indians who had never seen a bear market will now have the privilege of witnessing an epic, 2008 scale meltdown. Afterall, even the Roaring Twenties bull market that culminated in the Great Crash of October 1929, was only up 7X in 8-years. Yet the S&P rose almost 9X from its biblical low of 666 in early 2009 to 6144 top.
Parabolic speculative manias always end in tears, as the world learnt the hard way with Tulips in Rembrandt’s Amsterdam circa 1635, US equities (1929, 1974, 2000, 2008), Tokyo 1990, Saudi/GCC 2005 and India in 2008, when the Sensex was shredded from 21000 to 7000. As Jim Morrison so rightly said “riders on the storm, into this house we are born, into this world we are thrown, like a dog without a bone”. The 6X rally in the Nikkei Dow since Shinzo Abe unveiled his three arrows in 2012 is also now over.
My critics assert that AI is a fundamental technology that will change the world and thus $50 billion valuations for scam startups like Elon Musk’s xAI is totally rational. My response is to remind them about the Fermi Paradox which postulates that the lack of evidence for advanced extraterrestrial life in the Milky Way or the Andromeda galaxy is probably proof that thousands of civilizations discovered AI until its malign superintelligence exterminated them. Yet a Persian poet who lived in 12th century Isfahan while the Mongols ravaged his world with their mass equine terror taught me this lesson in his exquisite ghazal, “do not want anything too badly, you may just get it”, as America got Elon and DOGE. This also holds true for the rituals of American courtship, passion, love, marriage, divorce and utter lifelong hatred of the first wives club after trophy Wify 2.0 enters our man caves, hopefully with a prenup.
Dr. Marc Faber, my Swiss mentor, calls the savage sell off on Nasdaq since last week the Trump Dump but dumps, unless lubricated by dollops of central bank money printing, morph into something much more sinister when Mommy Fed turns a desperate suckling infant away as Jay Powell has done. He wants sweet revenge on the President who tormented, taunted and bullied him in his first term. Powell will make sure that if the stock market is Trump’s scorecard, DonnyT and his MAGA high priest are all awarded a triple F by history. Omar Khayyam was so right. The song remains the same but who is still listening.
I see at least another 40% fall in the Indian stock market. I would not touch Japan with a barge pole as the Nikkei Dow bubble deflates in Marunouchi and my target for Palantir is now 50 while the NASDAQ oozes blood and not hot air. The animal spirits that once enriched us are now the evil spirits that now haunt us since the wicked witch of Wall Street has cast a malign spell on risk assets. It is as dangerous to run with the bulls with high octane leverage on Nasdaq as it is to run with the bulls without bottom padding in the streets of Pamplona.
Also published on Medium.
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