I did the exact opposite and leveraged into longs extremely hard. Yes the short gamma setup is primed for a sharp drop, but it can also result in a sharp rally. If volatility falls, all of the delta hedges for the new hedges that were put on come off, which results in buying pressure. The first key was that VIX had a historical spike that arguably overshot the magnitude of the market drop. The most important fact though, was the hedge funds were puking longs to cover shorts and cut gross exposure. They were selling quality names like Apple, which was down nearly 4% on the day, because those names have the most liquidity and the least volatility (so they can get back in near where they got out when this squeeze insanity ends). This presented a rare opportunity to buy best in breed companies at a true discount driven by forced selling. They don't want to sell AAPL. They're long AAPL. They were forced to sell. That presents a perfect buy the dip opportunity, which then kickstarts a vanna rally. The following week was more FAANG earnings and they looked primed to beat. Overall this was an incredibly strong long setup. And isn't it nice to be able to leverage long quality companies like AAPL? In such a situation there is no shortage of participants willing to buy these names at a discount.

any update on this risk? what about having a large cash position like 30-40% as a hedge and dry powder?

Any update on this?

Bought more TLT March call options just to diversify the portfolio.

I'm a week late on watching this, but I have to hand it to Raoul for making these calls, it doesn't matter if it plays out the way he said. What matters is he is concerned as a market professional and he is being honest about his concern. I'm always nervous so I'm always hedged some, but when I see things like this it makes me look at things a little closer. So thank you for going out on a limb to warn us.

stewards enquiry on this call?

stewards enquiry on this call?

Any thoughts about your thesis? Timeframe extended perhaps or change?

Thanks Raoul, just hedged my portfolio with UVXY long. Cheap way to sleep better at night.

Anyone keeping an eye on Taiwan ? Two US carrier groups and one from the UK in the south China Sea. Taiwan are issuing daily reports of multiple Chinese fighters & bombers in their airspace with US planes shadowing them.. Lots of threats of 'war' by Chinese officials if Taiwan publicly claims independence. Doesn't look good. Not much in the news about this. Would be good to hear an expert view. Then we have Burma. But North Korea have gone quiet for the time being, so at least there are no more missile tests, landing off the coast of Japan...... at the moment. It's difficult to see clearly with all those black swans flying about.

Keep up the good work. You are NOT the tan Gartman.

Sorry, Raoul your missing what a political, social, and ethnic, bombshell this story is. Citadel reportedly paid Jenet Yellen, the Democratic Treasury Secretary, $800,000 in speaking fees in the last 3 yrs. Robinhood was paid millions by Citadel and the high-frequency traders for pre-trade data so they could front-run the retail traders, the very rubes they've been shouting their contempt and disdain for. After the crash in 2007 for the first time since the Great Depression, no one went to jail for committing massive fraud. Maybe your not old enough to remember but the financial press printed emails from the rating agencies bragging about how much they could get for selling triple-A ratings and laughing about how stupid the investors buying from the likes of Goldman Sachs were. The chairman of Goldman Sachs stood before congress and stated it wasn't his job to protect investors from their own stupidity. Eric Holder refused to prosecute the rating agencies for fraud. His reasoning was that rating agencies were allowed to sell fraudulent ratings to corrupt investment firms as a form of free speech. stockholder paid vast amounts in fines that were never accounted for. None of the bankers incurring the fines paid a thing and none of them went to jail! Do you think no one noticed? Biden is wiping out high paying working-class jobs, $100,00 plus, and trying to pile on regressive taxes that don't touch his urban, Wall Street, Tech, constituency. And now the Democratic party is going to once again going to bail out the hated hedge funds and screw the little guys that are beating them? Do you really think Americans are going to put up with the regulators changing the rules to bail out these guys and crushing these small investors? I don't disagree with your technical analysis of what these losses can do to the market. But the real question is going to be where have the completely captured regulatory agencies and the NY bank-owned Fed been? In reality, these hedge funds produce nothing but income inequality and contributions for the Democratic party. If they pull the rug out from under the Reddit traders counting on the ability of the big tech firms to censor the unrest and anger this will create we are all going to be in for a very rough time.

Thanks Raoul, great update as always! But it leaves me with some questions. You are pointing your finger a bit to the retail investors causing this mess. But last week my broker for example cut off all margin for GME. This means that you can only buy GME if you have 100% of the funds in cash available. People who could not finance this in their account had to sell a portion of their shares. So in my mind; at this current point in time, all the retail long positions are unleveraged. The problem is at the other side; hedge funds who have the leveraged short side of this mess. So aren't they the only ones to blame then for this coming mess?

Dear Raoul, When you talk about the GMI crash pattern I know there is information on the internet showing one of 2010 in Taiwan market. However, we would’ve grateful if you could accompany with a chart in order for us to have a better overview of how does this pattern currently looks like for you. I hope you can explain this to us. Many thanks.

Jeremy Grantham agrees https://www.youtube.com/watch?v=RYfmRTyl56w

Perhaps an update on whether it safe to go back into the water? Given the strength of the warning?

We are a world of bunch of wimps with this ridiculous virus. God help us if we would have something like the Spanish flu...

Raoul seems to think this potential crisis would be bullish for BTC but last March when there was a crisis BTC lost 50% in an hour. Thoughts anyone?

Thank you Raoul! This was by far the clearest explanation to this saga I’ve head yet. Much appreciated.

I just received a call from my FEMA source 2/1/21 8:30PM The source is impeccable as I was informed several days before the reefer trucks showed up in NYC as temporary morgues on the national news and then I was informed several days before NYC started digging mass graves on the island in NY harbor. Approximately 5-7 days my informant said to get N 95 masks, double/triple mask if not available, and continue strict social distancing. Tonight my informant said a bulletin came out of Dr. Osterholm, Univ of Minn office, to immediately get a vaccine, no matter what the brand as the P1 mutation out of Brazil is worse than anyone expected. Osterholm was on Meet the Press yesterday and said there's a cat 5 hurricane off shore with this strain, massive wave, 6-14 weeks out. As Raoul pointed, the situation could become much, much worse.

Ouch indeed. Didn’t expect an epic rally after this.

Wow....1353 likes and only 60 dislikes....everyone is bearish....

More virus porn. Come on man! This isn't a measles or ebola outbreak. It's more contagious than the regular flu, and more deadly to older people and those with comorbidities...like any of the regular flus. This lockdown insanity is the real global killer. Plus the PCR cycle farce that's driving cases exponentially higher. A virus so deadly you have to get tested to find out if you have it. #insanity

Thank you Raoul. I started taking the actions you recommended.

Great piece agree with much of it, except that further lockdowns more bearish. Maybe real economic activity yes of course, but we are not yet in an environment where that matters at all. Ridiculous as it is. The longer people are at home with nothing to do the higher the markets go. Hundreds of millions of people around the world sitting at home trading stocks because they have nothing at all to do. IMO that was what has been the biggest thing we all missed over the last 9 months, how incredibly bearish the virus is for the real world, but how insanely bullish it as been on paper (stocks/bonds etc). It is an absurd time to be alive. Re-opening the world will probably be the most bearish event we have ever seen for the markets. Just my view could be totally wrong

Translation - "The legacy financial system is broken, and it worked for a long while because of the unwritten rule that the big boys cover each other's asses, and push any losses on to the taxpayer. Please trading degens, don't push it too hard because things will break -- and then there will be accountability and consequences." I say hammer on this gordian knot of centralized garbage services until the whole thing springs leaks. Back in 2008, now renamed to the cutesy acronym "GFC" (Not so funny and cute to the people who lost their jobs, careers and homes) the same plea was modified to allow entities that were "too big to fail". In my book, you get over-levered and naked on a bad trade -- you deserve to get hit. Don't trade if the total risk is beyond what you can handle. The apologists coming forward saying "well, it isn't so easy to hedge these positions" should turn inward and ask themselves why these hedge funds PUT THEM ON IN THE FIRST PLACE. As a Crypto Finalist -- someone who believes that crypto will eat legacy finance's lunch for them, I say hammer away and show all those regular people out there how broken it truly is. Once everyone realizes the emperor truly has no clothes, then we can move on and build something that will take care of this festering rot we call banking/finance.

Raoul, loved this. Can you say some more about where the short gamma is? Is it just two firms or are there lots more? If banks are no longer to warehouse risk (like interbank options traders used to), la this a factor in market instability?

So much for the liquidity event causing selling. Stimulus including Fed will provide any liquidity the markets need. If not they will change the rules.

@JL. Methinks thou doth protests too much...;) And it appears the GME and other Reddit corners are breaking. But it will make good reading like the Hunt silver corner, the Great Northern corner, and the Piggly Wiggly corner....;)

Hm, I agree with some of this, i.e. looks like we're overbought, HF's grossing down, but rest seems like noise/

Some stuff people might be seeking answers on: -- PROBLEMS WITH A GME CAPITAL RAISE THEORY In theory GME could do a capital raise. But they would likely slaughter the golden goose before they were able to monetize it, and possibly destroy GameStop's reputation forever if it was seen as a betrayal. Imagine a scenario like this: -- GME announces a very large capital raise -- Perception is that squeeze = broken by new shares -- Hedge funds are perceived to win via GME mgmt -- GME shares collapse before the raise is completed -- Reddit decides it hates GameStop forever -- GameStop as a company goes bankrupt So basically GME could destroy its share price AND enrage its fan base at the same time. GME's direction from here is probably binary. It either goes to the moon on forced covering, or it goes through the floor. If management did an ill-timed rise, they could collapse the shares, be perceived as helping the hedge funds, destroy their reputation with their own fan base, and not get the capital raise funds anyway (because the stock collapsed too fast). -- WHY SHORTS CAN BE MORE THAN 100% OF THE FLOAT Naked shorting is a different thing than having shorts be more than 100% of short float. I explained it elsewhere like this: The percentage of short float for a shorted company can legally expand beyond 100 percent because the shares, as a form of collateral, can be rehypothecated more than once by the share lending entity. Alice is long XYZ shares. They are lent to Bob so he can short XYZ. Chuck goes long XYZ and buys the shares from Bob, not knowing nor caring Bob borrowed them first from Alice (all these people are at Schwab, the computer is making assignments). Dave then goes short by borrowing shares from Chuck, and Ed goes long via buying the shares from Dave. If XYZ distributes a dividend, the actual payment goes to Ed. Then Dave, who is short, has to pay the dividend amount to Chuck, and Bob, who is short, has to pay the dividend amount to Alice. Alice (long) → Bob (short) → Chuck (long) → Dave (short) → Ed (long) Company dividend goes to Ed → Dave pays dividend proxy to Chuck → Bob pays dividend proxy to Alice In the manner above, the synthetic float can expand beyond 100% via matched up demand from longs and shorts, with the whole thing starting via rehypothecation of Alice's shares. This is legal and different from naked shorting (which is starting a short transaction before the borrow is confirmed). Rehypothecation of shares can expand the share float beyond 100% in the same way rehypothetication expands the money supply beyond 100% — whether it's done by a traditional entity or a shadow entity (I think). -- WHY THE SQUEEZE IS RATIONAL / HOW IT ENDS IF IT WORKS Some are talking about GME as being irrational because there is no way the company is worth its market cap. The fundamentals of the company don't matter. What matters is the squeezers' ability to force the hedge funds to cover. If the Reddit army can push share prices high enough, the hedge funds will be forced to cover. These funds are still more than 100% short, as evidenced by S3 partners and borrow rates of 30-50%. The way you win a squeeze is you EXIT with sell orders as your target is FORCED to buy. Something like this: -- the hedge funds' risk managers demand the positions be covered -- the funds' prime brokers demand the positions be covered -- the losses get so big the hedge funds buy to cover at market -- the only prices they can get are $1,000 to $3,000 per share Imagine a retail investor holding 10 GME shares. He has a sell limit order at $3,000 just in case. The squeeze is successful, the hedge funds go into margin call liquidation, and some poor bastard hedge fund manager has to buy back at a $3,000 print because he can't risk having to buy at a $6,000 print. In so doing that manager transfers $30,000 from his fund into the pockets of the retail investor who was long 10 shares. That is how it ends if the Reddit army wins. They force a cover at "infinity squeeze" prices, and the capitulating hedge funds buy back their shares at somewhere north of $1,000 or more. The blood of the hedge funds -- FORCED TO COVER BY THEIR BROKERS -- carries the price to that infinity level. -- HOW MUCH THE SQUEEZE COULD COST WALL STREET The cost of this squeeze to Wall Street could be anywhere from $50 to $100 billion. To get that number, just look at the open float of 50 million shares and imagine the share price goes past $1,000 per ounce. Then keep in mind that, if the price truly melts up, the funds will be forced to pay virtually ANY price to cover their shorts. They hit the bid on whatever sell orders the squeezers have put into the market. The reason they pay that $50 billion to $100 billion is because if they don't, it could become $100 billion to $200 billion. -- WHY REDDIT COULD REALLY DO THIS Global virality and increasing firepower. The WallStreetBets message board had 2.2 million users a week or two ago. They have been adding half a million to million users per DAY. At last check they were 7.5 million. And at the same time, it's the easiest thing in the world to participate in the GME squeeze, simply by purchasing shares. You have auto mechanics in New Zealand and students in India buying GME shares. This thing is global and the funds look dead in the water. Melvin Capital is reportedly down 53% for Jan. That could just be the beginning.

Another funny part of the GameStop situation is I've seen multiple people on various parts of the internet saying they sold a large chunk of their other stocks to buy GameStop. So that's another source of selling pressure if the gamestop trade continues tomorrow. I'm slightly doubtful they can do it as people have gotten burned in the past couple of days between dogecoin and the most recent GameStop selloff. My big concern is the consequences of this. Gamestop seems like its sparking a wave of pump and dump groups especially in crypto where it's far easier to create a pump due to low liquidity in the space. There is a risk the US cracks down hard on this type of stuff and crypto may be caught in the crossfire, unfortunately.

Well explained. Thanks..... I think :(

There's plenty of good content on RealVision - Ash (and his filing cabinet), Ed, Mike Green and so much more. But these 'heart-to-heart' cautionary warnings backed up by reasoned opinion that make RV worth paying for. Most grateful.

Timing is everything as they say!

Thank you for the flash update. As new investor this market is really tough to understand.

Thank you Raoul. I just sold all my non- gold and silver holdings. This NOT on you, but you made me realise just how vulnerable the system is right now. Some people don't enjoy what you say, but I understand that the system is far more complex than I can grasp, and hence I employ your wisdom, which I filter through my own lens of reality. That, in essence, is why I pay my subscription.

Panic!!!Covid...

Hello Raoul, Thank you for this video, it made me realize that I had way too much risk on. Thankfully a countertrend rally today so I could adjust my position.

I have been a subscriber of rv since day 1 and I heard a lot of times Raul saying... the most important peace I have ever written...rv is becoming zerohedge... operation fear ...call long bond and usd againt him in the last 8-10 months but here we go again...one day he will be right I imagine.. furthermore the quality of rv is lately going down a lot...the quality is going down proportionally to the increase in quantity...few video are worthy watching now

Although I bought some puts I would not be suprised if we make new highs soon.

Thank you for the heads-up, Raoul. Very in-depth and clear as always. I'll hold on to my long-term treasuries, gold and (irresponsibly outsized) crypto long positions. Not sure what to do with a small silver position I have, as well as some other small positions in the equity market (among them a cannabis ETF and a couple psychedelic stocks). I'll probably keep them open and ride the wave. What would you do?

You neglected the biggest risk of all. Wait for it. In 28 days from now, you will be sh*tting yourself that you missed it.

Dear RP, I agree with most of your statements and insight and truly appreciate your understanding and perspectives!! You're the man!! -(of course I always watch for advice from DLS in the comments as well!!!)- I would be interested in ONE quick piece of advice, on an honest question here. IS THERE any chance that another foreign power (ie China) could be watching all of this and think to themselves- "let's let the US self destruct by adding into stocks that bust hedge funds, destabilize the system, and then try to BUY up as much US stocks as we can while everyone is running for the exits?" ARE there any rules AGAINST this kind of thing happening?? Thank you in advance for all the Friday videos!! Love the new angle on your room as well, btw. God Bless, BT

Silver doing very well!

Please explain why GMI crash pattern is to be feared in stocks but ignored in Bitcoin which just fulfilled this exact pattern.

Thanks Raoul, appreciate that you essentially gave up a weekend to share your thoughtful insights into a potential train wreck and how to avoid getting crushed. A word to the wise is sufficient...

Darn #RVBets driving up TLT210319C170 while TLT is going down. :)

Thank you for this. I am a "waiting bull." I have been a fairly long subscriber and remember the Grant Williams expression, "Buy when everything is on sale." I did a little last March and am waiting for another "crash." I am a little cautious because, as Raoul said, the market can go down, up, and then crash. I am a CPA, not a virologist, but my understanding is that viruses "evolve to be less lethal and more contagious." It in its "Darwinian" interest to make sure that its host doesn't die, and that it spreads rapidly. The new variants may be evidence of this. I hope so. Since I received the coronavirus for Christmas, so I hope my immunity can handle South Africans and Brazilians. There is another "Steve R" making comments and he is the smarter person.

Started well.. then we progressed from RH/Primebrokers to South African variant of virus.....

Lost me with the COVID nonsense... the idea that COVID will again cause the same level of shock as we saw before is dumb. Lightning doesn't strike twice in markets. Also governments know how to react: Print money. Also like... Look at the numbers Raoul, it's not as bad as march as far as COVID goes. They also know how to react to the GME situation: Print money.

What about a position in the vix?

Can we have a video on how to buy puts?

Viruses are not living breathing things, alive yes

Here we go again...

Raoul: Great guidance. Always appreciate your passion to share. JJ

Raoul said Hedge funds and mutual funds are short of cash and need to raise cash for settlement with clearing houses. So they will sell their liquid assets like stocks and bonds. Hence both bonds and stocks should go down, Why will TLT go up when the big guys are selling their bonds to raise cash while we expect stocks to go down? Sorry not following the rationale on TLT buying as a a risk hedge.

Great read, 5 year Market Trends: https://survivalnomicsnow.com/great-reset-markets-trends-next-5-years/

Where is Herucles when we need him, who will be the hero to clean the Wall Street stables?

A lot of words, not a lot of data... CFTC data doesn’t agree with comments re positioning. The macro guys all say the market is super long reflation, but the sector data shows energy is an all time low % of the S&P500. Also regarding COVID data... in March it wasn’t priced in. Now everyone has seen every model and if it’s not already priced in I’d be very surprised.

Hi, this video cannot be powershared with friends. Any reason?

Thank you Raoul, this is batshit crazy! Complexity distilled into plain English, nice work.

That is a great analysis and exactly why I joined RealVision Pro. Thank you Raoul !! I am now only in Gold, Goldminers and Crypto. Would it be better to sell off and go to cash? At least partially? Would appreciate your view, I know it is really difficult to know exactly, but what would you do?

Make this shareable NOW, please

Fed will step in with liquidity and keep the shit show running instead of doing the hard but right thing to do and let the hedge funds fail.

In Asia markets much more focused on Chinese bringing down short term CNY rates. Maybe Complacency ?

Is it time to get out of equities to allow settling.

Hope I can get a bar like Raoul's someday.

Excellent summary thanks. Surely GME et al raises capital and the short pressure abates and the stocks weaken. The regulators have to nip this in the bud fast. I cant believe Biden's left wing leaning admin. wouldn't bail Robinhood, even if it helps the hedgies!. But with Cov 19 to boot, a systemic mkt situ would be "grit to the mill" , especially as they struggle to get their fiscal package through.

Awesome, cheers Raoul. Will be interesting to see when WSBs eventually cotton on to the fact they can participate in wealth creation outside of the current financial system via Bitcoin. Not sure why they haven't worked this out yet as many of them will likely have nothing left when all these current shenanigans have died down.

Sorry Raoul, all viable arguments... still f***ed up shit! ... how is it even POSSIBLE to short (read BORROW & SELL) >100% of shares outstanding/ float? While this was public knowledge... when is GME floating new shares? I hope EVERY market participant has learned a final lesson: DO NOT ACCEPT LIMITED UPSIDE FOR UNLIMITED DOWNSIDE RISK! Raoul, I appreciate your deep & thought provoking insights very much, Thx a million!

Why TLT? Can someone please elaborate on that for this newbie? Thank you!

Thanks for a great video, Raoul. I want to make an important point. When you said: "What they don't realize is their 401k is involved in this too." The WSB people who are holding GME with "diamond hands" don't have a 401k. As a generalization, they're not doing this to make money, but to pull down the system that has unfairly prevented them from building a 401k like everyone else. WSB isn't a strategy, it's a riot. A riot as in "the language of the unheard."

Is no one concerned interest rates jump if equities crack? pensions are gonna get 7% one way or another

RP - top of mind was counter party risk.

Thanks, Raoul - good stuff, and much appreciate this alert / warning. You have given these for a long time, and these (crazy) markets have defied all reasonable logic and expectation. And here we are, at record margin, record valuations, and record bullish sentiment. I took my chips off the table a long time ago now. No sleep lost here. Financially and morally, happy to not participate at this stage. Best regards, Jesse.

Thank u RP! These WSB gang does not care if they bring down the system. They make angry, misdirected (at hedge funds) & "to the moon" comments, only to realize later that they may be hurting their own 401k's and other people in the process. I hope this does not get too ugly. Isn't this what the exchanges are for -to prevent this type of rogue behavior & to prevent market crashes? I feel everyone has a right to trade but when u have all these hi profile people siding with WSB it stokes them to new heights. I am actually scared at what is occuring.

Raul is not only a good investor but also has a heart of gold. (or bitcoin as he would prefer) Wasting his weekend to make the video cause he genuinely cares about the RV community. With that, I agree with all the risk observations made but disagree on the outcome. 1- The liq. crunch may be felt, but you are forgetting an important pocket that is full with cash: private funds (private equity and credit) sitting on >$1.2 trillion. These guys will gladly inject SAC, Melvin, Maplelane with billions at %5. You know better than anyone how these guys butter each other up in Penthouses on Park ave. I am sure Scwartzman wont even wait for the ink on the contract to dry before wiring the goodies to buddy Cohen. 2-Similar situations with individual HF blowing up and threatening to bring down brokerages happened many times when I was at HSBC and I am sure you have seen the same at GS. These will be taken care of at the PB level, the big guys such as Morgan, Goldman, UBS and Saxo won't even break a sweat with all the excess recapitalization and also these guys are far less levered thanks to safer controls such as Regulation T. I appreciate the warning..

If there is a significant drop in markets will this not trip algos into selling positions at a time when there will be a paucity of buyers?

Why does the fact that the short position is larger than the market cap of GME mean that the funds are unable to cover their short positions, as Raoul said?

I was with you until The Virus. Covid is, as Covid does.... Res Ipsa Loquitur. Thank you; I do appreciate the weekend video.

Eurodollars yay or nay?