Hi Again,
Even though we did not have a 10% correction in a long time, certain sectors and stocks went through 10%+ corrections. This is the best of all worlds! Some good stocks had very meaningful corrections giving us buying opportunities. “Memory’ stocks were the best performing for more than a year. South Korean market did very well because of 2 memory stocks. Sandisk was the best in the US market. Om 9/22/25 it was at $102 and on 6/15/26 it was at $2,195! Then began the correction.
Now it is at $1219. Many people were buying on margin, and they got slaughtered. On 7/31/26 alone, in 10 minutes, Sandisk was down by $888!. Markets fluctuate.
In late July 2026, the AI-focused hedge fund Situational Awareness, managed by 24-year-old former OpenAI researcher Leopold Aschenbrenner, suffered a near-collapse. Plunging semiconductor and AI infrastructure stocks combined with heavy leverage (reportedly up to 4:1 or higher) triggered massive margin calls, forcing the fund to slash its assets from roughly $45 billion down to $10 billion and execute a fire sale of its public equity portfolio to Ken Griffin’s Citadel.
Will this AI Data Centers pay off? Some believe that this is like the over investment in the dot com bubble of the 1990s. On 8/4/26, Amazon stated that when they build a data center, they recover the total cost in a mere 3 years!
Did you notice what happened to Bitcoins? Let us take the ETF, “IBIT” which tracks Bitcoins. On 1/26/24 it was at $24. Then it peaked at $68 on 9/22/25 but it has been going down ever since then. Now it is at $36.80. It is said that with the growth of quantum computing, it is a major threat to Bitcoins and cryptos as quantum computing would be able to decode Bitcoins/Cryptos. IBM is the leader of Quantum Computing world and with their recent work done with the academic world, on 7/30/26, the CEO of IBM stated that he is confident that within the next 4 years, they will be able to crack these codes. This is not a small matter. Here is an idea for traders. Now you can trade options on IBIT options that expire December 2028. In 2 years you would be able to buy options that expire December 2030. We can put a little bit of money in to put options (to short sell) that expire 2028 to 2030, and when Bitcoins crash, we can make a lot of money!
In technical analysis when the market goes up and at the same time, the VIX index (known as the fear gauge) goes down it is normal. On 8/5/26, the market went up but the VIX also went up too! That could mean that we are close to a correction.
On 7/29/26, the Federal Reserve made another interest rate decision and held rates unchanged. There were 3 dissenters. It was a 9 to 3 decision.
At the news conference, Fed Chair Walsh made the following remarks:
• There is solid economic growth, and the unemployment rate is stable.
• The inflation target is 2% and not above it.
• Yields have moved higher since his last meeting.
• Stated, “We will not hesitate to act”.
• “We are not interfering with the markets, but we are mere observers”.
• “We had a good family fight within the committee”.
• “What we did was not a pause”
• The economy is showing resilience.
• “We will establish 5 task forces”.
• (From my perspective, it seems like Warsh does not believe in the Phillips Curve- an economic model that shows an inverse link between unemployment and inflation)
Jeffrey Edward Gundlach is a billionaire investor, philanthropist, and the CEO of DoubleLine Capital, a mutual fund company he co-founded. He's known as the "Bond King" and a leading bond expert. Gundlach made the following comments on 7/29/26:
• Warsh is keen on bringing inflation to 2%.
• Commodity index went up since his last meeting.
• During Warsh’s conference, the yield curve steepened- a sign of no confidence.
• Inflation will not go down to 2% without a rate increase.
• Getting to 2% will take many years.
• The bond market is saying, “If you want 2% inflation, raise rates”.
• “I do not believe in task forces”. Committees is the problem; someone has to make the hard decisions.
• Stocks like slow increases in rates but not the bond market.
• With the last Warsh meeting, yields flattened but this time the opposite happened.
• On 7/29, at 12.40 (PCT) the 30 year yield went up to 5.20%-highest since 2007.
• Stay away from long end bonds.
• Get in to equal weighted stock ETFs.
• Have no leverage. Problems are becoming visible.
• The dollar will go down.