Here’s a preview of what we’ll cover this week: 

Each time I hit ‘send’ on the newsletter these past few weeks, I think to myself, ‘Gee, maybe that was too bearish’.

Then next week rolls by and I think ‘Not bearish enough.’

What makes this particular moment more pernicious than others is when the S&P was at all time highs, essentially everyone was in the market.

Only now are you seeing a resetting in sentiment surveys. But, those resets in sentiment surveys and ‘fear and greed’ meters won’t help you here… because positioning is still elevated.

This is why the ‘dip keeps dipping’ and people that successfully made money over the last few years on those sentiment readings are likely to be disappointed now.

The issue is that people find themselves holding too many risk assets and have higher expectations that the market, Sam Altman, the Federal Reserve, or Trump and the IRGC, or Blackstone are able to deliver.

So, they want to get out.

And they are doing that by selling rips. We continue to see this pattern of breakouts failing after earnings. After the opex, we saw heightened downside volatility due to the diminishing of ‘vanna and charm’ flows (and we previewed this possibility last week).

The way to think about asset prices is this…

In the long-run, asset prices are driven by earnings growth, inflation, interest rates, and productivity growth. Fiscal dominance helps too.

In the short-run, asset prices are driven by ‘positioning’ - who owns what and with what intensity of crowding. That positioning interacts with incoming news flow. If expectations are missed and markets are crowded, you can get unusually strong downside moves as markets start to ‘price in’.

Pricing in is not an instantaneous phenomenon as believers in the Efficient Market Hypothesis would like you to believes. It takes time.

A committee needs to get together, and change their allocations. VWAP orders need to kick off, etc.

On March 1st, immediately after the outbreak of hostilities I noted on X that shorting airlines via JETS would be a good idea:

It’s been 3 weeks and even now airlines have not fully priced in the negative shock.

Here’s a chart of the JETS airline ETF.

Incidentally, those red lines are we initiated shorts and the green line is where we covered.

As you can see, we covered too soon and should have let this idea play out more.

Over the last three years, it really hasn’t made sense to focus on short strategies. But, we’re getting better and always examining our decisions each week to and turning that into a feedback cycle.

On the topic of learnings, the other is this…

When you have a conflict between the strategic view and the tactical view, maintain a bias towards the strategic view — especially if it is non-consensus and markets have crowded positioning.

There were a few times where we detected markets were extremely oversold and poised to bounce.

Those bounces did take place, but they weren’t enduring enough, they came 1 or 2 days later (characteristic of corrections), and they created whipsaw risk.

Those tactical setups were mostly honey traps.

I share to say that even if you have the big picture view correct, it can still be difficult to navigate the currents.

The market will tempt you with tactical setups. Until you have a marked shift in regime type, you should be cautious in chasing thsoe.

Here’s another learning…

In last weekends newsletter, I wrote about ‘The Great De-Grossing’. This describes the deleveraging we see taking place across hedge funds, institutions, retail traders, and private credit.

This is why ‘good names’ like Nubank that are trading at all time low valuations with strong EPS growth continue to sell off.

If you are a portfolio manager and you are at an institution, and you are deleveraging, you are forced to sell these good names. And, who doesn’t own good names?

This is why even names like GM are selling off. (We are short GM too… remember we were bullish on GM the last few years).

When something doesn’t make sense - in this case ‘quality names selling off’ - we ask ourselves ‘why?’ and keep going back to higher level principles to understand.

In that context, what is the optimal positioning?

Well, you certainly can’t own small caps.

These names have weaker balance sheets, and more sensitive to tightening financial conditions (e.g, rates up, dollar up, tariffs, up). I believe that category - which we are significantly overweight after Tarifmageddon last year - will significantly underperform.

So, junk won’t work.

But, quality won’t work either - especially if it is overpriced. Costco, one of the highest quality businesses in the world, is not a safe haven. Take a look at the Consumer Staples ETF. It’s not a safe haven if it’s crowded and expensive.

I could cycle thru each category - international vs US, small vs large, etc. — but the basic conclusion is that in a crowded market with elevated valuations your best strategy is simply to (i) short or (ii) have significant cash.

There’s really no point in trying to find optimal positioning.

Even bonds won’t work here. The 10-year is selling off. Utilities and bond proxies are selling off also - we also noted this last few weeks and are net short this sector (and industrials).

Looking back, based on what I know now, the optimal strategy would have been to simply raised more cash. It’s not enough to lower net exposures, or market beta, or have hedges (we certainly had all of that too) but could have done even better.

Cash is often a terrible asset allocation since it returns a negative inflation return. But, this is one of those markets, where it actually makes sense since there is no optimal positioning.

We noted on the Angelo Robles podcast that Gold was a crowded momentum category about a month ago. Take a look at Gold now.

Good luck hiding out there, or in the commodity complex more generally.

There’s really been no safe haven except cash. Here’s another funny thing…

These fund manager surveys, including the ones we have published the last few weeks, showed that managers had extremely low cash levels.

The contrarian move was the right move. At extremes, fade the crowd.

I share what we got right and what we got wrong to show you that:

(i) skillful investors that read the room correctly can still make mistakes and learn from them

(ii) a non-consensus approach is powerful

(iii) you should have a framework around when to overweight cash.

(iv) Write down your wins and misses and be honest about what you could have done better. Don’t let your ego justify your mistakes, or seek others to blame.

You have a responsibility, the buck stops with you. Take accountability, stay humble, and go back to first principles.

(v) You don’t need to ‘solve for positioning’ every time. When you can’t find optimal positioning, the optimal positioning is ‘cash’.

Are We There Yet?

My kids ask this question whenever I’m on a long drive.

The answer to this question turns on one question: the price of oil. That turns on how many tankers are moving thru the Strait of Hormuz.

That turns on whether insurance companies will insure the tankers. That turns on whether the IRGC remote field commanders will continue to strike tankers.

We saw this weekend that the IRGC successfully volleyed missiles at Tel Aviv.

We are week three in the conflict. Hegseth is saying 8,000 targets per day for the last few days… It’s week 3… Are we talking 50,000 to 100,000 targets hit then?

Then, why are we still seeing missile and drone volleys?

The market is saying ‘this conflict will continue for longer’

I have a post called ‘It Takes Two to TACO’ which shows how this is different from Tariffmageddon.

I also outline what I believe Trump’s optimal strategy looks like to get a de-escalation. You may want to give it a read here.

In short, it’s a type of parlay bet where any one actor can rupture a ceasefire. War is messy. In the mid-term, everyone wants a de-escalation and survival and low oil prices.

In the near-term, however, Iran simply needs to deter tankers. Even if there were no longer any rockets aimed at the Strait of Hormuz, there is some deterrence effect already due to the continued launch of these missiles despite the significant degradation in Iran’s capabilities.

What happened after the Iran-Israel conflict last summer is that Iran ramped up and replaced the destroyed rocket launchers. Their production exceeded the number of missiles destroyed. They also took steps to secure these launchers in anticipation of future conflict.

Tactically, the United States and Israel have an overwhelming advantage and all sorts of tactical wins.

But, Iran just needs to deter tankers from moving to keep oil prices high. Their goal is to inflict this to deter any future aggression.

It’s not easy to unwind that.

There’s also the question of whether decentralized IRGC field commanders will behave like WWII Japanese soldiers after their Emperror and spirital leader surrendered.

If they don’t, then the deterrence is in effect even if state level actors want a cease fire.

All to say is, this is a genuniely unique situation with no clear equilibirum.

What I do feel good saying is:

(i) The U.S. economy is far less sensitive to energy due to greater fuel efficiency, energy independence, and energy diversification (when can we have nuclear please?)

(ii) if the S&P gets to the 6200 level, you should be buying

(iii) As Aristotle noted, ‘the end of war is peace’. It will happen, and we’ll probably bottom sometime in the next couple of weeks.

(iv) a 10 to 15% correction is possible if oil prices remain $85+

There's been discussion floating around about whether the US should take Kharg Island. I did an FSD stream, titled Kharg Island, Inflation, Gold Oh My, talking about how US’s attempt to take over Kharg might pan out.

The short answer: No.

Let me give you the bull case first, then tell you why it's a bad idea.

The bull case: 90% of Iranian oil exports touch Kharg Island.

If you make it a strategic outpost — like Guam — you now have a toll booth on the Strait of Hormuz and you've got China exactly where you want them. 

But, here's the problem.

You have to invest massive ongoing fixed costs to secure and defend it. You're sitting inside a hostile regime. Kharg is 150 miles away from the Fifth Fleet, it’s not logistically secure like Guam.

The IRGC can shoot cheap rockets at you from the high ground.

One hits a tanker, insurance companies pull out, and that's it — the asymmetry wins.

Former CIA Director Leon Panetta made the point well: you're talking 50,000 square miles”

The massive continuous air surveillance to defend Kharg are enormous.

And here's the deeper issue.

If you're attacked on Kharg Island, you're the hegemon. You must escalate. You're locked into a high fixed cost structure where your response is pre-programmed.

A much better approach: variable costs, not fixed. Impose costs when there's bad behavior. You have room to maneuver. You're not obligated to escalate.

A decision to send marines into Kharg would be negative for asset prices.

The Setup After Resolution

The signal to watch for is tankers moving through the Strait of Hormuz.

That will be the moment of reversal.

When that moment comes, markets will rip - We saw a demo of it on Friday 20th when SPY gained 1.8% from lows.

The rally might continue from there up until S&P 7,000 and I expect you'll hit resistance again as bigger background issues come to the fore.

Private credit liquidity risk. AI capital markets dependency — OpenAI's balance sheet, the RPO chain, the datacenter capex bubble. SpaceX is filing an S-1 to go public. They need capital too.

(If you’d like details on the strategic problems, check out this newsletter.)

The rally gets you back up. The pre-existing conditions suggest limited upside beyond 7,000 until inflation gets under control.

A good proxy to time the larger market for a tactical bounce is to watch when Berkshire Hathway gets to an attractive technical level near the lows on this chart:

We are a couple percentage points away from that which suggest the S&P could go to a 10% correction.

Even when markets start to work, some ideas are better than the rest. 

Where do you find them?

One strategy we use is to see where smart hedge funds are acting in concert

The strategy also helped us this week in finding a world-leading insurance brokerage at all time low valuations. 

We bought Marsh Mclennan (MRSH) this week after we saw Voloridge, Two Sigma, and AQR buying them simultaneously in their 13Fs.

Then we did our own underwrite and concluded this has attractive value. And, we get to buy in at even cheaper prices then those guys.

The stock rose 3% on Friday while markets were down ~1.5%.

This is a screenshot from the www.lumidainvest.com app which you should get if are an investor. I’m a tough customer, if I like it, you will too!

The Lumida Invest App – it lets you analyze all institutional buys and sells for any stocks, so you see exactly where smart money is flowing (or getting out of).

We built Lumida Invest App to be your one-stop solution to investing. You can use the app for idea generation, and see what themes are working or not working, and get real-time news… even a trader agentic AI that stays on top of your watchlist.

Try the app here.

Also, you can now be a part of Lumida’s future.

We are preparing for an equity crowdfunding raise in the coming weeks.

Everything we've built has come from the strength of our community. 

We want you to own a piece of what comes next. Consider getting on the waist list at Lumida Tribe. We have 130 people on there already, and have not offered this on X, so I know it will be over-subscribed.

The diligence is simple. Download the app. See that it works.

Then ask yourself whether Lumida is an asymmetric bet to capture share from Robinhood.

More details coming soon. 

Let me give you the data points.

1) Bond market yields have backed up to 4.4%.

2) Commodity prices of all kinds are higher. Oil is the biggest, but take your pick — it's broad-based.

3) Memory prices are rising.

SK Hynix and Micron have so much demand that the cost of an iPhone is likely to go up by $250. Apple sells tens of millions of iPhones per year. That's not nothing. PC stocks have already been hammered by higher memory costs.

4) Lumber prices are going higher. Home builders are driving demand, and lumber is a meaningful input to construction costs.

5) Healthcare costs are going higher. Education services going higher.

These are inflationary pressures across the board.

Inflationary regimes are qualitatively different from normal market environments.

In a normal environment, when stocks fall, bonds rally. That's your hedge.

In an inflationary regime, both fall together.

You don't get the diversification benefit.

Portfolios built on the 60/40 assumption are exposed right now.

Fertilizer, wheat, corn — look at the prices. (WEAT- Wheat Fund- has gained 21% since Feb.)

Airlines are not hedged; most stopped years ago because oil kept grinding lower through the 2000s energy production boom. That era is over.

Gas in California is $8.50. New York is $4.

That crimps consumer spending. It crimps retail. It crimps airline demand.

The risk isn't just oil prices. It's what oil at $100+ does to the inflation calculus across the entire input cost stack

Cem Karsen has posted a nice puzzle.

Here's my take.

1) Who is the US war in Iran actually against?

China. Iran is the last major oil exporter outside the US financial and military cordon

Contain Iran = strangle China's energy artery

2) The US's #1 and #2 sources of leverage?

#1: Dollar hegemony — the US controls global settlement rails, SWIFT, and correspondent banking; secondary sanctions weaponize this against anyone touching Iranian oil

#2: Hormuz — 5th Fleet sits 150 miles away; ~20% of global seaborne oil transits a 21-mile chokepoint the US can threaten or close on demand

No other power has both a financial WMD and a physical WMD aimed at the same target simultaneously

3) Are those two levers connected?

Yes — they're two halves of the same vice: dollar controls the financial layer, Hormuz controls the physical layer

Route around the dollar via yuan settlement? You still can't route around Hormuz at scale

Close both simultaneously and you have the closest thing to a modern stranglehold on a major power's energy supply that exists

4) Why is Hormuz the most critical front?

No viable bypass — Russian pipeline capacity into China is insufficient

China's energy-intensive manufacturing economy gets hit hardest

5) Why won't this be "complete" for many years?

The actual war is about energy dependency architecture, which airstrikes can't fix

Both sides are operating on decade-long time horizons.

We've been long utilities since last year. 

Remember we wrote about The Southern company (SO) in Feb. The stock continued working, and peaked at 19% YTD before breaking down this week.

Southern company was a good trade.

However, we are on the opposite end of the utilities trade now.

Utilities have run hard on the back of market anxiety and the datacenter energy demand thesis.

But, the thesis is now weakening.

Let me give you the important distinction first.

Here's the problem for both categories right now:

Energy will not actually be the bottleneck the market is pricing in.

Why?

First: new compute architectures are becoming dramatically more energy efficient. The Vera Rubin and Feynman series chips will deliver substantially better performance-per-watt. The AI industry is solving its own energy problem through better silicon.

Second: energy sources are proliferating. It's not just IPPs. It's utilities, solar, fuel cells, nuclear. Supply is expanding from multiple directions simultaneously.

On top of that: rates are moving higher. Regulated utilities are bond proxies. Rising rates compress their multiples mechanically.

The utility trade worked. We took our gains. We are not re-entering at current valuations.

There's risk of over-capex investment in the regulated utility category as well.

We deployed shorts on NRG and AEE this week.

MRSH is down 23% over the last year.

It was up 3% on Friday — one of the few green names in a sea of red.

I flagged this on X this week after noticing every major quant hedge fund buying it simultaneously. We bought alongside them. 

Here's why the thesis makes sense.

Every valuation multiple on MRSH is sitting at the lowest of its three-year history. 

That green "2" showing up across P/E, P/Sales, P/Book, P/FCF, and EV/EBITDA is telling you one thing: this stock has been indiscriminately sold down to levels it almost never trades at.

Free cash flow yield is at ~6% – highest of the 3Y history. Shareholder yield is also at highs of ~5% with dividend yield of 2%.

In a market where quality businesses that are resilient to economic stress are what you want to own, MRSH is offering cash flows at a discount the stock has almost never seen.

Insurance stocks were hurt by private credit exposure fears and AI apocalypse… but that doesn’t apply to Marsh which is a regulated intermediary. They don’t take credit risk.

Marsh McLennan is not a cyclical bet. It's a 155-year-old professional services firm that gets paid to navigate exactly the kind of environment we are in right now.

When complexity rises, demand for risk advisory rises with it.

The numbers back this up.

2025 revenue grew 10% to $27B.

Adjusted operating income grew 11% to $7.3B — on top of 11% growth in 2024. 

Free cash flow grew 25% to $5B. Eighteen consecutive years of operating margin expansion.

The growth driver most people are missing: Marsh US had the leading market share of the $205 billion in data center construction insurance packages in 2025. 

Martin South (CEO - Marsh Risk) noted the company expects between 2,000 and 3,000 data centers to be constructed worldwide over the next five years, representing roughly $3 trillion in global digital infrastructure investment. 

This week, their Nimbus facility — purpose-built for digital infrastructure risk — doubled its capacity to $2.7 billion.

That is not a company losing relevance to AI. That is a company that has made itself indispensable to the AI buildout.

The risks are real but known. Property catastrophe reinsurance pricing is declining — down 9% globally — a headwind to the reinsurance brokerage unit. 

Fiduciary interest income is also falling. But both were already embedded in guidance, and already reflected in a stock that's down 23%. 

Management guided for similar underlying growth to 2025 and continued margin expansion despite those headwinds.

MRSH has no meaningful private credit exposure. No AI capex obligation. It doesn't need rates to fall. It generates $5B in free cash flow annually from a business that becomes more valuable the more uncertain the world gets.

In a week where everything correlated to leverage and growth sold off hard, MRSH held and bounced.

That's what quality looks like in a risk-off tape.

Asset prices are a discounted claim on future cash flows, which means if markets expects earnings to increase in future, assets prices rise, and vice versa

Look at the following chart. 

S&P 500 forward operating earnings per share are sitting at $328.80 — near record highs. Midcaps at $212.30. Smallcaps at $181.05. 

All three have been rising in recent weeks despite the war and rapidly rising oil prices.

Here's the catch. This happened before. 

In 2022, forward estimates were elevated going into the oil spike. But, then analysts started revising estimates down as it became clear that soaring energy prices would compress margins across the economy. 

Estimates dipped. The market followed. GDP turned negative. Stocks entered a bear market.

The sequence matters:

Oil goes up → input costs rise → profit margin assumptions get revised → analysts cut forward estimates → asset prices reprice to reflect lower future cash flows.

We are at step one right now. Steps two through five have not happened yet.

That's the risk hiding in plain sight. 

The estimates haven't moved. The market is still pricing in a relatively benign earnings trajectory. 

If the Strait of Hormuz stays choked and oil remains at $100+, those estimates will come down. And when estimates come down, prices follow.

See the following Bespoke chart, notice how every time oil peaks, we see a bear market in equity markets.

Microsoft is not happy with OpenAI's contract with Amazon.

It looks like Microsoft was OpenAI's exclusive cloud provider.

Now, Amazon has an exclusive on OpenAI's next frontier model.

My guess is Microsoft has good lawyers and their read is correct.

Also, this isn't the first time Sam Altman deceived investors.

What this tells you is OpenAI is desperate for raising capital to fund its $1 Tn in obligations.

Recall Brad Gerstner did not participate in the round...

And I got an email that JP Morgan is pushing or 'offering' the stock to its wealth management base at a higher valuation in an "extension" round.

The distribution is already happening...

Here's the question...

Can Amazon walk out of their investment into OpenAI? 

Amazon would not have seen the contract between OpenAI and Microsoft.

Amazon's investment in OpenAI is contingent on using AWS for services.

So, does the OpenAI funding round come undone? 

What a mess. How can one trust Sam Altman?

Bloom Energy (BE) hasn't gone anywhere since the year started.

The reason?

Insiders are selling into strength. 

The Chairman and CEO Kr Sridhar alone sold 200,000 shares on February 24th at $170 — a $34 million sale. 

The Chief Commercial Officer, Chief Operations Officer, and multiple other executives have been selling consistently since November.

When insiders sell once, it can be noise. 

But, when the CEO, COO, and CCO are all selling repeatedly across multiple months — that is a signal.

The stock was up almost 500% in the last 1Y, but has moved nowhere since 2026 started. 

This is a stock the FinTwit crowd has been excited about for months. Clean energy, AI power demand, fuel cells. The narrative sounds compelling.

But the people who know the business best are not buying the narrative. They are selling into it.

This shows the road ahead might be rocky for BE.

We regularly use the insider trades feature on Lumida Invest App to drive our idea generation. 

If the management is selling a stock in massive quantities, this means either the stock has rocketed beyond its fundamental value, or there are problems which the public doesn’t know yet.

If we see the opposite, it is an even stronger signal

You can login to the Lumida Invest App on your iPhone or Android here, and see if any of your investments have alarming insider sales. 

Jensen Huang’s core message is that NVIDIA is no longer just selling GPUs — it is building the full-stack infrastructure that helps companies generate more output from AI.

View Curation

As AI lowers the cost of building software, the winners will be the businesses with real durability — distribution, workflow depth, ecosystem strength, and other moats that are hard to replicate.

View Curation

The key risk is not today’s tariff level but what happens if countries fail to reach deals within the 150-day Section 122 window and tariffs snap higher on a legal framework markets are barely pricing in.

View Curation

Not Subscribed Yet? Don’t miss out on future insights—subscribe to the newsletter now!

For real-time updates, follow us on: 

X | Telegram | Youtube | TikTok | News | Ram’s X | Lumida Health | Lumida Tax

As Featured In

Disclaimer: Lumida Wealth Management LLC (‘Lumida”) is located in New York, NY, and is an SEC registered investment adviser. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the adviser has attained a particular level of skill or ability. Lumida only transact business in those states in which it is registered, or qualifies for an exemption or exclusion from registration requirements. Any direct communication by Lumida with a prospective client will be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides.

The information in this material has been obtained from sources believed to be reliable. While all reasonable care has been taken to ensure that the facts stated in this material are accurate and that the forecasts, opinions and expectations contained herein are fair and reasonable, Lumida, Inc. and Lumida Wealth Management LLC (collectively Lumida) make no representations or warranties whatsoever the completeness or accuracy of the material provided, except with respect to any disclosures relative to Lumida. Accordingly, no reliance should be placed on the accuracy, fairness or completeness of the information contained in this material. Any data discrepancies in this material could be the result of different calculations and/or adjustments. Lumida accepts no liability whatsoever for any loss arising from any use of this material or its contents, and neither Lumida nor any of its respective directors, officers or employees, shall be in any way responsible for the contents hereof, apart from the liabilities and responsibilities that may be imposed on them by the relevant regulatory authority in the jurisdiction in question, or the regulatory regime thereunder. Opinions,forecasts or projections contained in this material represent Lumida’s current opinions or judgment as of the day of the material only and are therefore subject to change without notice. Periodic updates may be provided on companies/industries based on company-specific developments or announcements, market conditions or any other publicly available information. There can be no assurance that future results or events will be consistent with any such opinions, forecasts or projections, which represent only one possible outcome. Furthermore, such opinions, forecasts or projections are subject to certain risks, uncertainties and assumptions that have not been verified, and future actual results or events could differ materially. The value of, or income from, any investments referred to in this material may fluctuate and/or be affected by changes in exchange rates. All pricing is indicative as of the close of market for the securities discussed, unless otherwise stated. Past performance is not indicative of future results. Accordingly, investors may receive back less than originally invested. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The opinions and recommendations herein do not take into account individual client circumstances, objectives, or needs and are not intended as recommendations of particular securities, financial instruments or strategies to particular clients. The recipients of this material must make their own independent decisions regarding any securities or financial instruments mentioned herein and should seek advice from such independent financial, legal, tax or other adviser as they deem necessary. Lumida may trade as a principal on the basis of its views and research, and it may also engage in transactions for its own account or for its clients’ accounts in a manner inconsistent with the views taken in this material, and Lumida is under no obligation to ensure that such other communication is brought to the attention of any recipient of this material. Others within Lumida may take views that are inconsistent with those taken in this material. Employees of Lumida not involved in the preparation of this material may have investments in the financial instruments or securities (or derivatives of such financial instruments or securities) mentioned in this material and may trade them in ways different from those discussed in this material. This material is not an advertisement for or marketing of any issuer, its products or services, or its securities in any jurisdiction.