First off, I would like to preface this with saying my condolences to those who have incurred any losses lately. It has been a very volatile week, and I know many friends and family who have suffered heavy losses in their portfolio and are stressed/anxious for the future to come. With that, I would like to share my experience betting against the American economy by holding one of the most volatile stock for 6 months, UVIX.
As many of you may know, VIX is an index that grows rapidly when the market reverses from a peak. I personally witnessed this during Covid (when TVIX rose almost 2000%) and the recent "Yen Carry Trade" of August 5th (when UVIX rose 400%). I've always aspired to time the market successfully with UVIX.
Last year, I felt that the economy was overextended for many reasons. You guys may not agree that these are factors to what led us here, but these are why I ended up taking the biggest risk of my life with such high confidence that the market would crash short-term.
\- US National Debt: We've reached a staggering $36 trillion debt, a large increase of 8 trillion post-covid. To me, this was a huge red flag indicating a looming recession, especially since the market was still pumping.
\- AI Bubble: I think AI is heavily over-hyped, and the rise of NVDA/Tech stocks were not really warranted. I saw this as a bubble bound to pop, much like the dot-com and housing bubble of 2008.
\- Terrible job market: I think we've been experiencing a bad labor market across all sectors for a while now. Employers look to make lay-offs/cost cutting in order to artificially inflate profit margins to boost stock prices, which is not sustainable. I do not believe the numbers released by the Feds at all, they seem suspiciously low compared to real-world experiences of people struggling to find work. This article was one example:
[https://www.nbcnews.com/business/economy/us-added-818000-fewer-jobs-thought-adding-concerns-economy-rcna167555](https://www.nbcnews.com/business/economy/us-added-818000-fewer-jobs-thought-adding-concerns-economy-rcna167555)
\- Suicide rate is apparently one of the leading indicator of a struggling economy: In 2024, we reached one of the highest rate in the decade [https://www.usnews.com/news/health-news/articles/2024-09-26/u-s-suicide-rate-climbs-back-to-highest-in-decades](https://www.usnews.com/news/health-news/articles/2024-09-26/u-s-suicide-rate-climbs-back-to-highest-in-decades)
\- Trump winning the presidential election: I was aware of his tariff plans during his campaign, and I knew that if he actually did implement these, it would shock the market. It was only a question of if he would actually deliver on his campaign promise or not, which he did.
With all these reasonings in mind, I had a 90% confidence that the market would crash soon, so I YOLO'd my whole portfolio into UVIX after election.
https://preview.redd.it/ovma6m9vj3ue1.png?width=1093&format=png&auto=webp&s=dd719e0b6d0ff7892d07461aa3eae2312d52caea
Holding this ticker was mentally tough, the market kept rallying from 580 to 620 post-election, and my position was decaying and I was holding a -200k loss for the vast majority of the time. Many people discouraged my position, and some think I should cut my losses. I even isolated myself for a while because I was so sure of my bet. There were two moments when I could have sold to break even: Federal reserve announcing no future interest rate cuts and Trump's initial Canada/Mexico tariffs. But UVIX didn't rise as much as I anticipated, so I kept holding.
https://preview.redd.it/e5e6xfsxj3ue1.png?width=512&format=png&auto=webp&s=9f45917088fa769ca5123420f1fec427851fbb2f
Fast forward to last week, Trump announced a severe blanket tariff, which crashed the market as we know it. This was finally the moment I've been waiting for as UVIX went from $20 to $100 in the span of 4 days. I kept my eyes on the news, set my alarm to 6 am to watch the market open. UVIX could rapidly drop/rise in matter of seconds, and I did not want to sell too early/late, so I was shedding 1k shares a day to be safe. 1k at 70, 1k at 90, 2k at 100 on Tuesday. At this point, I had 3k remaining, and I was hoping that UVIX would maybe rise to 140, but then Trump sent out the tweet that he's basically cancelling the tariffs, which shot the market back up, and plummeted UVIX to 40, luckily I was able to salvage and sell at 56 on the way down. It wasn't quite the finish I was hoping for, but overall, I did get to gain roughly 250k off of my 400k bet.
https://preview.redd.it/k4bzie1sk3ue1.png?width=1093&format=png&auto=webp&s=f788c3fce00964a3a5e9f9202b6db85d3f5bda4a
Now that I've been able to cash out on the big -20% SPY crash I've anticipated, I am completely out of UVIX for now. Even if the market continues to fall, I have full confidence that we'll eventually recover back to our previous 620 ATH, so I'll be DCAing into SPXL/TQQQ from this point on until we reach that price.
https://preview.redd.it/8j48yvnul3ue1.png?width=1093&format=png&auto=webp&s=b68d62402c4fdc3ec905d7c036fcd3cee5ff37f1
In the end, I would not encourage anyone else to do what I did. Even with my conviction and accurate market reading, I had to hold UVIX for 6 months, which ended up being one of the most stressful thing I could do. I've lost sleep, became disillusioned with the economy/government, and absorbed more bad news than I could handle. I've internally cheered for bearish news, despite knowing it could mean hardship for many people.
I was somewhat lucky that Trump did indeed enact his tariffs, otherwise I may have been stuck holding a decaying position until it went to zero or was delisted.
In the end, I'm just relieved that I could finally exit my large UVIX positions, and I will never all-in again the way I did. I hoped you all enjoyed my perspective/story and I wish the best of you luck in navigating this volatile market.
