Mechelany Advisors' US TECH SHORT PORTFOLIO was created on February 23rd 2021 to capture alpha by playing the short side of what we see as an INVESTMENT BUBBLE OF HISTORICAL PROPORTIOn in the US mega cap technology stocks and the FANGS. The Portfolio was constituted with an initial capital of US$ 4'000'000 and the proceeds of the short sales are entirely committed as margin to the stock brokers from which we borrow the shares. It is constituted of 8 positions equally weighted
At Mechelany Advisors, we are value investors and we focus on fundamentals.
We have developed the theme of the END OF TECH since February 2018 based on our analysis of the fundamental valuation of the underlying companies and the growing regulatory pressure that will ultimately reduce the reach of corporations that are now bigger than nations and cater for billions of individuals with significant political influence.
Nobody should get us wrong. We are great admirers and actually users of the technologies and products offered by these superb corporations. HOWEVER, even great companies can become overvalued, and in this case, they have been way overvalued since 2018.
In 2019 and 2020, what was merely an overvaluation concern has become a bubble inflation concern as Donald Trump’s tax cuts handed these companies unexpected cash to buy back their own shares at extreme valuations, and the change of FED monetary policy in December 2018 and the explosion of monetary stimulus due to COVID-19 in 2020 sent those stocks flying with months of them gaining 100 % in the past 12 months.
Tesla did even more, rising by 800 % in 2020, a sure sign that the bubble would soon burst when taken together with the speculative rise of Cryptocurrencies, the development of SPACs and the massive entry into the financial markets of a new breed of investors trading without knowledge or reason through online brokerage platforms and the option. markets as if investing in equities was like video games.
The seeds for a major collapse have been sawn, and a drastic bear market is at hand, whether it starts now or in 12 months time.
This week, we had significant technical breakdowns in the leading stocks such as Apple Inc and Tesla and we have therefore decided to create our US TECH SHORT PORTFOLIO Today.
For the fundamental rationale of the companies see our various posts on the END OF TECH theme and in particular TECH BREAKDOWN posted today.
We shall be launching an index certificate on this portfolio very soon to enable our readers to build exposure t the short side easily.
US TECH SHORT PORTFOLIO
We have used the close as at 22nd February 2021 for the reference price of our short positions
These long term charts give a true sense of the magnitude of the downside once the turning point will have been confirmed.
Apple Inc. AAPL US
Microsoft Corp. MSFT US
Alphabet Inc. GOOGL US
Facebook Inc. FB US
Amazon.com AMZN US
Netflix Inc. NFLX US
Advanced Micro Devices AMD US
Tesla Inc. TSLA US
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