📉 Don't Follow the Crowd 📈

It's no secret that the most crowded trade is often the wrong trade. Just take a look at history: in October 2017 and April 2021, everyone was going long on Bitcoin, only for it to experience its highest highs during those periods. And let's not forget about July 2021, when everyone was jumping on the long commodities bandwagon, right before commodities took a dive.

Personally, I learned this lesson the hard way in January 2023. Long China equities seemed like a no-brainer at the time, but I ended up losing big money when China's stock market failed to perform compared to India or Japan.

Fast forward to March 2024, and we're seeing a similar trend. The 'magnificent 7' (Alphabet, Amazon, Apple, Meta Platforms, Microsoft, NVIDIA, and Tesla), Japan, and Bitcoin are the most crowded trades, while bearish bets on Chinese equities is the second most crowded trade.

Now, I'm not saying you should necessarily take the opposite side of these trades. But it's worth noting that the price of options on the opposite side is very cheap, and the risk-reward ratio makes sense.

In a market where everyone is going one way, sometimes it pays to go the other. After all, the most profitable opportunities often lie in the places others aren't looking.