print-icon
print-icon

Stop Trying To Call The Top

Portfolio Armor's Photo
by Portfolio Armor
Tuesday, May 26, 2026 - 11:29

An anthropomorphic bull and bear looking out over a city while trying to call the top.

Stop Trying To Call The Top

In a post last week, we pushed back against Goldman’s warning that euphoria about AI and momentum stocks was cracking.

Our point was that the AI buildout still looked rooted in real demand, real revenues, and real physical bottlenecks—not just narrative demand.

The Thesis Was Intact

Then last week happened. Space X filed its S-1, Nvidia ( NVDA 0.00%↑) reported record earnings, and some of our less-obvious names in space…

And less-obvious AI names soared.

Navitas Semiconductor (NVTS 0.00%↑) wasn’t the only less-obvious AI name moving last week. The broader point was that the AI trade is still spreading through the physical supply chain: memory, power, photonics, cooling, sensing, storage, logistics, and semiconductor equipment.

Bubble Calls Are Easy

Over the weekend, Zero Hedge highlighted a note by Bank of America CIO Michael Hartnett calling the AI buildout “the biggest bubble since the railroads”. That calls to mind a point we made in our Trading Spaces post on Saturday.

From our post:

There are two main ways to make money while writing about finance. The first is to preach doom. Say America’s debt is unsustainable, the “petrodollar” is about to collapse, Iran is about to replace the U.S. as a superpower, etc. There seems to be an insatiable demand for that sort of content, and maybe you can sell ads for precious metals if you get enough traffic.

The other way is to generate alpha. That’s what you see above. You can see more examples of it in this weeks Exits post.

Hartnett surely gets a generous salary from BofA, but the general point holds: you can get a lot of attention by calling tops and predicting doom. Back to our post:

One prerequisite for this is to have an open mind. The second prerequisite is to react to what is actually happening, not to your own hobbyhorses. Space and the AI buildout have been obvious themes for a while. We were writing about space names a year and a half ago, and we have objective sources of alpha, including Portfolio Armor’s Top Names, that keep us in these themes.

It’s been more profitable than waiting for the sky to fall.

What’s Actually Happening

What’s actually happening now is an enormous infrastructure buildout driven by real demand and real revenues. That doesn’t mean buying every AI-related stock at any price. It means looking for places where the theme is still working, the technical setup is constructive, and the options market gives us a defined-risk way to participate.

That brings us to today’s trades.

Adding, Not Chasing

We’re making one exception to our usual rule of not mentioning current trade ideas in the free section, because it helps illustrate the point. We already have an open trade on iShares MSCI South Korea ETF (EWY 0.00%↑), tied to the AI memory theme. That trade is now deep-in-the-money and capped well below EWY’s current price.

So we’re not chasing EWY here. We’re adding another farther-out trade because the thesis is still intact, Korean memory stocks are still crushing it, and EWY now passes our technical screens again. As for the FUD about China flooding the market with memory chips, see the X post by one of our Market Watcher accounts below.

That’s the difference between trying to call the top and trying to make money.

We have three trades teed up for later today, one on EWY, along with two less-obvious trades on names tied to the AI buildout. 

If you want a heads up when we place those trades, you can subscribe to our trading Substack/occasional email list below.

 

If you're waiting for the sky to fall, click below here. 

 

 

Contributor posts published on Zero Hedge do not necessarily represent the views and opinions of Zero Hedge, and are not selected, edited or screened by Zero Hedge editors.
0
Loading...