What's A Market 'Top' Feel Like...And Does It Matter?

Good morning.

Before I dive into the headline of today’s newsletter, I wanted to refresh readers that I do not make market ‘top’ or ‘bottom’ calls, but a few times a year the market screams be careful and/or take some extra risk.

One or twice a year I perk up here when the $VIX spikes to 30. During those times I am looking to add stocks, not sell them. Three times since 2008, the $VIX has spiked over 60 (the GFC in 2008, March 2020 Covid and Tariffs of April 2025). I of course got nervous but also bought stocks. My newsletter can be searched for what I was doing during the extreme spike dates.

Today, the $VIX hovers around 14.

On it’s own a $VIX 14 means little. If you added stocks when the $VIX was 60, you have been greatly rewarded as the $VIX calmed back down the last four months. A low $VIX does not mean I want to sell stocks, but it is the reward for buying the spike in March and a much better moment to ‘panic’ if you must sell.

As I always say, if you must panic…panic first.

So here we are at $VIX 14 and a lot of things you would not see at $VIX 60 are happening. I will list the out for you now.

Back in June I write ‘Supply is Coming’ and today that supply is accelerating.

There are now 100 Bitcoin Treasuries …I guess Bitcoin ETF’s are just not complicated enough for the degenerate economy…

For some reason people are chasing/piling into Cathie Woods ETF’s again at record pace…

It’s not just that degenerates still trust Cathie after years of awful returns…but penny stock trading has been accounting for 30 percent of volume some days this summer. Summers may just be the new season for extra degeneracy as the institutions vacay.

Next up…Chamath is floating another SPAC. He thinks it’s ok because he calls the market a ‘casino’(never mind his pitiful track record).

My point about Chamath is that HE KNOWS that YOU KNOW that he is a grifter and he can still do this and the SEC does not care.

This is the darkside of the degenerate economy. Do not expect guardrails or a bailout.

So yes the signs of a ‘top’ are lining up.

Lastly, let’s take one quick look at the mechanics of growth and expectations one should consider. Robinhood has had the run of a lifetime. Based on the numbers, it has made total sense. But, can the background that helped them post these numbers continue?

I hope so of course. I would just caution that once supply dwarfs demand and that supply is coming fast, volume will dry up and these numbers will be hard to beat let alone match.

In the headline of today’s newsletter I added that even if a ‘top’ was happening now does it even matter?

That is because if you had invested in the S&P on the eve of the 2008 GFC, and suffered through a 55 percent drawdown on your investment, you still would have had long-term market beating returns if you held until today.

This is why I mostly index and do so with the added tax benefit boost of ‘direct indexing’ using frec.com (a portfolio company).

Have a great Friday.