Avalanche

 A fragile system.

It looks like thats where we are.

Pvt credit using insurance subsidiaries to raise capital, and magically have no NPAs to speak of.

Cryptogeeks justifying 'underlying' whatever and using leverage from lenders who like 8-10%. Apparently there is an entire market where lending is happening to crypto stuff that is disguised as treasuries or other currencies. And this is lending is outside of the banking channels almost like the private credit mania. 

Companies getting equity capital and pre-IPO capital to keep bankrolling their acquisitions or ventures, while keeping negative ROE (something a lender would definitely not like)

The everything bubble is scary.

My wife asked me when I doubted a particular crypto: "But if its going up, and has gone up for 5 years or even 10 years, doesnt it mean that you are wrong or plain envious?"

I said: "Yes, it means that I have been wrong until now."

Akshay Khanna from Taal said it well : "Aaawaaz unchi karne se, ya chillane se, aapka jooth sachh nahi ban jaata"

But beyond whether i am right or wrong (I am right of course), the big factor is the interconnectedness of things.

The wealth effect, and the leverage effect is probably the most I have seen even if I count the IT bubble of 1990s.

I asked chatgpt this:

Here’s the “Magnificent 7” + Oracle + Broadcom market caps at 2019-12-31 vs 2025-09-17 (USD, billions). Sources are shown per row.

Company	2019-12-31	2025-09-17 (yesterday)
Apple	1,304.76	3,550.00. (StockAnalysis)
Microsoft	1,203.06	3,791.06. (StockAnalysis)
Alphabet (Google)	923.77	3,017.82. (StockAnalysis)
Amazon	916.15	2,470.21. (StockAnalysis)
NVIDIA	144.02	4,138.05. (StockAnalysis)
Meta Platforms	585.32	1,948.71. (StockAnalysis)
Tesla	75.40	1,420.00. (StockAnalysis)
Oracle	169.94	856.52. (StockAnalysis)
Broadcom	125.71	1,634.74. (StockAnalysis)

Group totals (Mag7 + Oracle + Broadcom)

• 2019-12-31: 5,448.13

• 2025-09-17: 22,827.11

• Absolute change: +17,378.98

• Multiple vs 2019: 4.19× (≈ +318.99%)

(Arithmetic shown using exact figures above.)

Notes on sources & dates

• All figures are end-of-day market caps from StockAnalysis pages that list both historical (Dec-31-2019) and current values for Sep-17-2025; Apple and Amazon pages explicitly show “as of Sep 17, 2025.” Tesla’s page shows Sep-17-2025 in the header (“Market Cap … as of September 17, 2025”) and the 2019 figure in the history table. (StockAnalysis)

So; basically, even from pre-covid highs, we have $17 T of wealth sloshing around the world economy just from these 9 companies.

I am quite scared of a 1987 crash kind of scenario...

A fat finger, or a Meta saying that capex will drop from the guided 70 B to only 35 B would lead to quite the avalanche. 

Again - I highlight the interconnectedness risk, and the euphoric wealth effect where social media is full of people who got the right stock, and right portfolio, etc.

"We may not know where we are going, but we sure as hell ought to know where we are" - Howard Marks

Where we are is close to the summit. 

And just like the 1989 Japan, or the 1999 IT bubble, the narrative is: "dude, the world is going to change around this new epicenter, and all we have to do is sit tight."

 

Fragile Markets

There is something really fragile about the top companies' makeup.

Oracle just moved to almost 1 T, Broadcom is at 1.7 T...

There are 4 big hyperscalers now; they all buy most of their stuff from 1 supplier - NVIDIA.

NVIDIA makes all of its stuff from 1 supplier - TSMC

TSMC buys most of its stuff from 1 supplier such as ASML, and the Japanese companies...

The hyperscalers are deeply entwined with particular companies.

OCI depends on OpenAI and Meta, and NVIDIA (as customers)

Azure depends on OpenAI

Google depends on itself and Anthropic

AWS has many customers?

All of them need nutty amounts of power.

If claude, or chatgpt begin losing customers (switching costs are super low now) - what happens?

__________

Then there is the pvt credit market which is also depending on steady inflows because the round robins seem to have started. Banks like JP M are simply stepping back...

___

And then, gold, bitcoin and crypto treasury companies.

____

Looks like a weird pack of cards

Something's off

Nov 2024: I wrote: "Boom, boom boom, and I fired those people, emptied the whole building, but not a whine... its like those people had never existed."

Somethings gotta give

And here we are in August 2025

• The China real estate bubble burst - and nothing happened? Nobody's upset, people havent lost their life savings? Normally, when RE is a big chunk of the economy, and if RE bubbles burst, there is degrowth - how has China continued to grow?
  This makes me believe that similar to how nobody expected degrwoth and stagnation in Japan in 1985; this time too, there is degrowth and its like the 4th dimension that nobody can see.
• Israel attacked Iran, and the nuke facilities got bombed and no retaliation?
• Nobody cares about Gaza
• People are bugged with Putin, but he just isnt backing down
• Trump announces tariffs on everybody and the US economy still grows?
• The Mag 7 turn from FCF to low FCF and yet they add trillions in market cap?
• The Pvt Credit bubble continues unabated, and nobody cares about NPAs?
• Crypto assets are now mainstream? I mean, it says "Crypto".

Its all very fishy.

Reminds me of when I read this book in 2015; and it took until 2022 or so for the bubble to burst.

Bad!

Include me out

 Something just feels off.

The private equity and private credit market are just too big man. 

And then, that the NVIDIA GPUs are a fast depreciating asset of not more than 2-3 years of real life + I think its a bit like quantum physics (nobody really gets it), which is why Deepseek did what??

Scenarios:

NVIDIA falls to $1.5 T

That small island is scared because the ships came too close? Wait, they make 90% of all chips?

All those AI factories are kind of obsolete, because AI figured out how to make its own reasoning and inferencing more efficient

50% Depreciation of the currency

Something weird about gold going up 40% in a year ?

Hmmm; 4% NPAs on private credit. Of course, there is no hidden borrowings and cross collateralisations

Whats up with Elon + Trump? What if they have a fall out?

Things just feel odd. 

Old Man Buffett is ready.

Boredom

A bored mind can wander and wonder.

NVIDIA is a chip company, but does CUDA and 'locking' effects make it an OS for accelerated computing?

Also, cash spewing tech companies needed to put their cash to use; the NVIDIA GPUs is a great forced bet for so many of these companies.

Funnily, that doesnt mean its a good investment by the hyperscalers or newbies ; nor does it mean that NVIDIA cant go to $10 T from the curent $3.5 T

_______

Google had a search/ advtg monopoly; along came FB and took away a good chunk via the website facebook.com

And then, the app culture, has taken away more of Google's business.

And now, will chatgpt-esque competition change the nature of search? But does Youtube stay intact?

Also - have you noticed how whatsapp is now the primary 'mailing' app for personal, B2C and small businesses? I know people who kind of dont see their emails anymore.

______

Why did the Fed reduce the overnight rate target from 5.5% to 4.75% (4.5-4.75) in the last 60 days?

Was it an egoistic imperative to have a 'soft landing'? Because there didnt seem like any reason:

"The Federal Reserve's mandate, also known as its dual mandate, is to promote maximum employment, stable prices, and moderate long-term interest rates".

None of these seem to have been triggered.

_____

I have a folder going back to 2011 chronicling the building China bubble, and the logical fallacy of capex/ infra spending and genuine growth. I kept making new folders for every year. 

And after 10+ years of everyone praising the growth model, it looks like there were no clothes.

It's a good lesson in the gumption and humility in seeing the truth.

Similarly, what I see today is:

Below is the Fed Funds rate; 

And it reminds me of an Icahn anecdote: "Boom, boom boom, and I fired those people, emptied the whole building, but not a whine... its like those people had never existed."

From 2022 to 2024; nothing monumentally negative has happened; with rising rates, there were no crazy commercial defaults, gold kept going up, Bitcoin kept going up, stocks up, no spike in junk bond defaults.

It feels like China. 

And my sense is that Private funds have a lot to do with this; there is a chance that they have evergreened some assets/ loans; that the ETFization of Bitcoin has had consequences, and the underlying defaults of these private funds are hidden because of steady growth (similar to how high bank asset growth can hide default rates because of base effects)
"Private markets assets under management totaled $13.1 trillion as of June 30, 2023, and have grown nearly 20 percent per annum since 2018." 

I guess I am a skeptic at heart who believes that there is no free lunch.

And Reflexivity says that so many years of (since 2008 almost) continuous rise in asset prices has dulled rationality. 

'Stocks tend to go up', 'gold tends to go up', 'crypto is the future'. These maxims have taken a strong hold, not only in the US; but more so in Japan and India too. 

I wonder what Turkish, Sri Lankan, Chinese, South Americans, Ukrainians etc are saying to these things. 

My conclusion is: We are precariously poised. Similar to 2006-2007 where the world was oblivious to the tail of CDS and CDOs wagging the dog of the economy; and when the tail got infected, the dog could not do much... 

The music is playing and we are dancing. 

______

And dont get me started on what the political effects of a recession of world leading economy could be. One spark is all that is needed. 

Addendum: History shows that pegs dont tend to last. Wondering if there will be a cataclysmic 7.19 going to 10 someday soon. 

_______  

Boredom is a wonderful thing.  

Bad!

My 4 year old daughter says this: "Bad!" 

She says it for anything she doesnt like or appreciate. It could be me sitting on the sofa, me holding her right hand instead of her left, her chonda coming slightly loose, her 1 year old sister walking away... 

I say 'Bad!' to 2 things nowadays:

1. The frenzy in the market

ZIRP ended, Ukraine got attacked (and has now invaded Russian territory - :|), Gaza has been attacked, China's 12 year Real estate and GDP pumping bubble has burst, some crytos and SPACs have been declared frauds, there are zombie CRE loans in the US market, Bangladesh's PM has fled the country, US 30 yr mortgage at 6.7% v/s 8.6% floating in India

And yet, we have Bitcoin at highs, Gold at USD 2700, Nvidia at $3T, Mazgaon at 90000 Cr, Suzy at 1 L Cr, Tent at 2.5 L Cr, Tomato for 2.2 L Cr, Dixy for 75k Cr, RE projects in India getting sold out in hours and days;

Of 900 Indian companies of more than 100 Cr mcap within 10% of alltime highs , 
550 are above 30 PE, 400 above 40 PE, and 264 above 60 PE and 119 above 100 PE!

There is a flurry of IPOs, QIPs, OFS with a lot of dodgy entities buying in, a lot of big funds and promoters selling, and weird small investors getting QIPs and Pre-IPO allotments.

After 2 years of being cautious, I guess I will say it again: Somebody's gonna get a hurt real bad.

And this time, it looks like a lot of retail investors have already gotten clobbered in the F&O mania, but many are still holding onto 120 PE good companies, and 30 PE rubbish companies... I see a lot of companies falling 80-100 %.

Of course, my portfolio is pristine!

 

2. We are forever elsewhere.

An episode in Seinfeld, where Elaine goes to a store to rent a video cassette of a movie recommended by ' Vincent '. She plans a trip to the store, browses through the wares, speaks to a friend, rents a cassette and puts it in her bag. At the end of the day, she plans to curl up in bed, and watch the movie - not knowing if it is bad or good - and surprise, its a good movie! The only disturbance through the movie was a phone call on a landline - she picks up the call and it is always a surprise as to who the mystery caller might be.

The paradox of choice and leisure means that we are often at rest - so, browsing in a store is no more leisurely than munching on chips at our bigger homes with big TVs and a choice of 500 movies and 200 TV shows to choose from. We know what we want to watch, because we already know the good reviews from the bad. 

We are not disappointed anymore... We know the best dish from the best restaurant comes to us within 30 minutes. If you want a coca cola, it is at your doorstep in 9 minutes flat. 

We can send a toothy guffaw smiley to a friend on whatsapp to convey that we are smiling even though we might not want to really meet this person.

When was the last time that someone was surprised to see you? Or you were surprised to hear from a friend? Or you pick up a book and oh! it turns out to be amazing! 

And all of the above is without mentioning the horror that is social media. 

Why am I looking at a 25 second video of 2 random people dancing? Am I not supposed to hold my baby by her arms? Microplastics in my salt? They/ Them - who is this person who is offended in a small town in the US... wait, do I care? Oh, so this is how my glutes are supposed to look...

Bad!

We were looking for leisure, comfort and entertainment.

We got it - and with that we got poor mental health, attention deficit, restlessness and dissatisfaction (because this was rated 97% on Rotten Tomatoes but it wasnt that good), alone-ness, distance from real connections and real conversations.

So, did we win?

Bad!!

There seems to be too much stimuli.

No longer do we wait to get back home to figure out who wanted or needed us today, 

Our phones are now hyper-connected computers that throw too much information at us,

No longer do we walk for walking or read for reading?

Music is heard becuase there is a run, gym or commute involved,

We define ourselves by our work [ what do you do? I run a business in exports with my brother…]

If money can be made in the waiting, the operators of these businesses need to have some focus; may be they need to focus on Roce, or on employee happiness or on building a culture and doing lesser with their decision making abilities,

Is it poor to make 15% compounded over 30 years? Who is watching?