Building a Thesis Before Building a Position
Trading well is less about picking individual winners than about constructing a thesis broad enough to make sense of the whole tape. Before placing capital, it pays to step back and ask what is actually being said by the market, by macro events, and by the largest allocators in the world. When the Warren Buffetts and Paul Tudor Joneses of the world begin to telegraph their stance, that signal deserves weight. Five or six weeks ago, the playbook was straightforward: lean into artificial intelligence, quantum computing, and the chip names that anchor both. While many were shorting and selling into weakness, that was precisely the moment to be a buyer. Names tied to defense and government contracts — particularly during an ongoing war — performed exactly as the thesis predicted, and a short position in oil delivered cleanly on the call.
But the same discipline that justifies buying weakness also demands taking profits into strength. After a violent run higher, the same names that printed gains demand a different question: is there enough remaining upside to justify the risk?
When the Path of Least Resistance Reverses
Markets travel along a path of least resistance, and right now that path is no longer pointing up. The NASDAQ 100 has just printed a fresh all-time high, dragging names like CoreWeave, Lockheed Martin, IBM, Palantir, and Hewlett Packard Enterprise to elevated valuations. That kind of vertical move is the hardest moment for a trader, because the temptation to ride it further is exactly when the cost of being wrong is greatest. The right response is to sell everything in the trading book — keep long-term holdings untouched, but clear the trading shelf. This is not the moment to be picking individual stocks.
Several signals reinforce the case. Volume has begun to thin out. The Coppock curve, a long-standing technical indicator dating back to 1962, is rolling over in a way that historically marks meaningful tops. The old market adage to "sell in May and go away" does not always apply, but this year it may finally be earning its reputation.
The 260% Problem
The clearest warning is structural rather than technical. The total market capitalization currently sits at roughly 260% of GDP. That is a number with no historical analog. The 2008 financial crisis, the COVID-era selloff, even 1929 — none of those tops printed anywhere near today's reading. A market this far above its underlying economy is not a stable equilibrium. The right posture in such an environment is to step back, raise cash, and short the index itself. Going long an inverse NASDAQ instrument like SQQQ functions as a leveraged expression of that view: roar, go bear, go be bear.
The Buyback Tell
When some of the largest companies in the country — including Apple and Berkshire Hathaway under its newer leadership — begin raising significant cash and deploying it into share buybacks rather than into new products, hardware, or organic investment, that itself is a signal. A company is supposed to know what to do with its own capital. When buybacks become the default use of cash, it suggests management has run out of higher-return options inside the business and is instead supporting the share price. With roughly $8 trillion in cash sitting on the sidelines across the system, the money is there — it simply is not finding a market it wants to deploy into. Even Buffett has been explicit: this is not his market.
Energy, War, and the Cost of Burning Fuel
Geopolitics keeps reasserting itself in price. Tensions surrounding Iran briefly drove oil into the $80s when it appeared the United States might pull back, only for prices to snap back toward $105 as the situation deteriorated. That kind of whipsaw makes oil itself unattractive to trade — the analysis collapses into reading social media posts every five minutes. But the second-order effects are durable and important. If a business burns energy, that business now has a structurally higher cost base. Cruise lines like Royal Caribbean and Norwegian feel it directly. Spirit Airlines effectively went under in part because of fuel costs. Anyone evaluating consumer travel and transportation names has to put the energy bill at the center of the model.
What Comes After AI
It is worth saying clearly: AI, in its current form, is no longer the future. After fifteen years of investing alongside its development, the technology has crossed from frontier into infrastructure. Every serious company is going to have AI in its system; that is no longer a differentiator. Even agentic AI, the current buzzword on every earnings call, already feels like a backward-looking story. The next layer of differentiation is being built around Web 3 and, more importantly, quantum computing. The companies worth owning into the next cycle are the ones supplying the picks and shovels: the chip suppliers, the cooling and infrastructure plays, and especially the energy producers and utilities. Energy is expensive and getting more so, and any company that helps solve that bottleneck has a structural tailwind.
Some traditional tech names have already sprinted out the gate. Intel and HP have run hard, and the marginal upside from here is limited. The hardest discipline for a trader is taking profits into a stock that feels like it can only go higher — but stocks rarely behave that way for long. Capitulation has not yet arrived, but when it does, the move down may be too fast to react to. The bottom of this market likely contains thinly stacked limit orders that could be sliced through like hot butter once the selling begins.
Where AI Itself Is Actually Winning
Stepping out of the trading lens, the AI ecosystem is more dynamic than the index level suggests. ChatGPT was the breakthrough product, but it is no longer the most innovative offering on the market. Perplexity, once a favorite, has seen its data quality slip. Apple's effort has been disappointing, though there are signs it may finally turn the corner. Microsoft's Copilot has been slow on the uptake and has not lived up to its marketing.
The real momentum is with Google's Gemini, which has visibly turned a corner and is now the most compelling consumer-facing model in active use. And not yet ready for prime time, but quietly setting the agenda for builders, is Anthropic. The Amodei family deserves significant credit: Claude has changed the conversation for the companies trying to construct the next generation of AI-native products. Expect to see a wave of businesses building on top of Claude with ambitions that go well beyond what current chat interfaces deliver. It is also worth noting that Google itself holds substantial investments in both Anthropic and SpaceX — a useful reminder that the surface-level competitive narrative often hides much deeper strategic alignment.
The Discipline of Sitting Out
The single hardest skill in trading is not finding the next entry; it is being willing to wait when there is no good entry to find. A 10% to 15% pullback would be entirely reasonable from current levels — not the 30% drawdown of a true crisis, because too much sidelined cash will rush in well before that. But a 10–15% reset would be enough to re-rate valuations, restore the path of least resistance to the upside, and create real entry points in the long-term tech names worth owning. Until then, patience, cash, and a measured short position do more work than another speculative buy. The tape will reward those who recognize that not every moment is a moment to act.