Going for 1000 Percent in 2020

The U.S. media establishment and incompetent bureucracy, both medical and government, provided a gift to speculators in 2020. The political and media branch didn't cover the coronavirus because they were too busy trying to impeach President Trump. They downplayed it at the start in order to call Trump racist again, and even "experts" said travel bans don't work and that the risk of the virus was low. Then they overreacted and enacted boneheaded and excessive lockdown policies. As a result, speculators had ample time to load up on short positions and made substantial gains as everyone was terrorized.

I lost money early on because stocks kept rising in Februrary. I wondered if the Fed's intervention was too much, if the virus might end up being less serious than it seemed, or if it was only a matter of time. I stayed in my positions and eventually came out very far ahead.

Another moment of asymmetry may, I stress may, be at hand with the presidential election. The mainstream media won't acknowledge any "evidence of voting irregularities" despite there being more evidence than existed for the competely fabricated Russiagate story that they pushed for 4 years. In both cases, all the media cares about is narrative. There is zero investigation going on. Social media is also working overtime "debunking' posts that have potential evidence of fraud. They are suspending and banning accounts. The "establishment" and their allies in the public are beyond ignorant. They are pushing a counter-narrative that Trump is the one trying to steal the election by asking that claims of voting fraud be investigated. In short, we are in the middle of an information war and the first casualty in war is the truth.

Are the Trump side's claims accurate? I don't know for sure, but the people I interact with and follow on social media are honest. They've gotten it right before when the media was wrong. There are data scientists putting their name to claims that there's enough smoke to warrant an investigation. I give them, and myself, the benefit of the doubt. That said, even if they are right about fraud, I don't know if the fraud was enough to overturn the election results. President Trump must prove substantial fraud in at least 3 states to overturn the result.

I can't put odds on an election overturn, but I believe this is a situation similar to the coronavirus in January. This is a major issue and the mainstream is totally ignoring it or actively putting out anti-information. Not simply mistaken information or false information, but a 180 degree opposite narrative. They are not simply wrong, they are perfectly wrong. They aren't in a position of skepticism or waiting for more information. The media is putting out pure narrative. Social media is banning people who question anything about the election. This opens the door for speculators to win on information asymmetry.

Trump can lose this election, but if in the process a single state reverses its result because of fraud, media credibility will be annihilated. None of the major media outlets you can name off the top of your head, including Fox News, will function as mediators in the national debate going forward. They will all be zero'd out by Trump supporters and many independents, neutering their ability to shape a common narrative. A loss of media credibility isn't really an investable event short-term, but the narrative shock will be. The vast majority of market participants believe the election is over. They know the final result isn't official, but they expect nothing will change. If at any moment there is a change, it will rock financial markets. There will be a sudden panic because the media will start pumping out the "Trump Hitler" "Trump stealing the election" narratives.

Where is the most likely area of profit opportunity? The key will be the U.S. dollar. Would the world react in shock and the dollar be a safe haven? Or do all roads lead to dollar depreciation and a shock would trigger a sell-off? I'm also not sure that the U.S. dollar is reacting to the election at all given the past week. There is also the matter of a large short position in 30-year treasury paper complicating the issue. Recent history says the dollar and government bonds will probably rise amid a sell-off in stocks, but it's possible that the dollar and bonds sell-off while investors bid up stocks on currency depreciation, or for all three to tumble in a flight-from-everything trade. Gold and Bitcoin are potential hedges against a nightmare market scenario. However, Occam's Razor says the dollar would rise and if it does, I'll more confidently press the bearish side.

Another complication: President Biden's team is talking about another draconian lockdown and small cap stocks have started looking weak after the virus surge. The small cap ETF IWM made a breakout thanks to dividends, but the Russell 2000 looks like it may have double topped.

Everything considered, macro looks rather messy for a Trump shock. Therefore, I'm looking at micro. The behavior of BigTech during the run-up and aftermath of the election has been atrocious. I think it is a safe bet that Google and Twitter could be targeted for precise political vengeance by President Trump in a second term. This whole post is in the realm of speculation and hypothesis, so let me hypothesize how Google might behave: I think it could experience an island reversal (gap down) and move back into its long-term uptrend if investors worried about Trump flipping the election result. This opens as much as 30 percent downside while still staying within the uptrend.

Twitter appears to have a nice basing pattern created over the stock's lifetime, but it recently broke uptrend from March and that former support line has provided resistance. It has been the most aggressive with censorship, exceeding Facebook's efforts. Facebook is probably due for a drop too in this scenario, but the chart has less bearish potential.

I'm already partially short Nasdaq via QQQ. It looks similar to Google and I think there are reasons entirely apart from election risk for being bearish.

Conclusion

Usually I discuss my ideas in various places, but I haven't really discussed this outside of a small social media account. People do not want to hear this thesis. The media has convinced people it's impossible, that it is the ravings of Trump supporters who cannot accept the loss. For the record, I accepted the results after Election Day and if I had to bet today, I'd bet that whoever wins the Presidency might destroy their party for a generation because the economy is in such a precarious state. Were Trump to run again as a more humbled, more "presidential" candidate in 2024, he might with with a majority so large in 2024 that Republicans can amend the Constitution. Or someone else running on Trump's platform will. Moreover, I suspect a Biden admin will be better for my gold miner holdings. Trump flipping one state, or three states to win, is only my preferred political scenario if indeed there was fraud because in that case it cannot be allowed to stand. I want all fraud exposed whether it changes the result or not. If there is not enough fraud to turn the result however, I do not at all want Trump to somehow flip the result with legal tricks if that were even a possibility, which it isn't.

I believe there is serious evidence of fraudulent voting. The pubic is anti-informed of the risk. They have a clue, but it is an anti-clue. They are more ignorant than they were of coronavirus lockdowns in February. The odds of something happening aren't approaching 100 percent like in February, but the asymmetry means it could cause a bigger shock in some parts of the market. Final point: at this moment I'm already bearishly positioned in tech, albeit lightly. As long as the charts tell me that's a hold or add, then election risk is a free kicker. If my short-term bearish outlook in the Nasdaq changed, the election risk thesis becomes a far more difficult trade because the odds of payoff are low.