Hey everyone! đź‘‹
This week, we're counting down the top 10 trades from a tumultuous 2022. In what was a historic bear market in almost all global asset classes - stocks, crypto, bonds, and just about everything else was down - the majority of these trades are on the short side.
Energy was one of the few sectors that actually had a good year. Another outperformer was the US Dollar. Let’s recap it all below including charts you have to see, stats about each trade, and key takeaways heading into 2023.
1.) Short Luna
When UST - the flawed stablecoin at the center of the Terra ecosystem - depegged in May this year, it led to a $60 billion wipe out and the complete collapse of one of the largest hedge funds in the crypto space: 3 Arrows Capital. Luna, the Layer 1 token at the center of the ecosystem ended up dropping from $86 to ~$0 in just under a week. This event had contagion effects that affected the whole industry, and led to hundreds of high profile bankruptcies, insolvencies, suspended withdrawals, and more.
CHART:
2.) Long ExxonMobil
ExxonMobil and other major oil companies benefited from higher oil prices in 2022, as chronic global underinvestment in extraction & processing facilities in the last few years led to a spike in prices as post-pandemic demand for energy recovered more quickly than many expected. The sanctions on Russia earlier this year have also exacerbated global supply shortages and led to soaring profits for ExxonMobil and its peers.
CHART:
3.) Long U.S. Dollars
The dollar saw one of its strongest years ever as the Fed was the first major central bank to begin tackling the pesky problem of persistent inflation. As the federal funds rate was hiked over the course of 2022, USD interest rates became more and more attractive vs. global counterparts, leading to a massive shift in global capital, and massive outperformance for USD holders.
USD/JPY CHART #1:
EUR/USD CHART #2:
GBP/USD CHART #3:
4.) Short FTT
FTT investors have had a rough year. Throughout most of 2022, the general crypto malaise hurt the token as reduced trading volumes and profits from FTX led to lower buy-and-burn numbers. Then, in early November, whispers began that FTX wouldn’t be able to back withdrawals for users. Over the course of the next week and a half, FTT dropped over 90% as it became clear that FTX had loaned out user deposits to other SBF related ventures, using FTT (its own token) to backstop user funds. As the price fell, the house of cards came tumbling down, rendering FTT ostensibly worthless.
CHART:
5.) Short ARKK
As monetary tightening continued throughout 2022, many growth stocks got hit as the present value of their future profits shrank inversely with increasing risk-free interest rates. This was doubly true for high growth companies that had no profits to speak of, like many of the holdings found within Cathie Wood’s flagship ARKK Innovation ETF. Her fund, famous for its early bet on Tesla and massive outperformance in 2020 and 2021, is currently sitting down over 60% on the year.
CHART:
6.) Long Natural Gas
Natural Gas has seen a similar supply and demand situation to oil, which was discussed earlier. Heightened demand coupled with stable supply led to gains for the commodity early in the year. However, with the advent of conflict in Ukraine and sanctions on Russia, shortages, especially in Europe, led to skyrocketing prices as members of the EU scrambled to figure out how they were going to provide energy to their citizens in the coming winter. The Nord Stream 2 pipeline shutdown and explosion also put further stress on supplies.
CHART:
7.) Short Meta
Meta, formerly known as Facebook, has had a transformational year. Late in 2021 the company announced its rebrand to Meta, meant to underscore its business shift to Augmented and Virtual Reality. This new focus meant billions of dollars into R&D, and an uphill fight convincing the public that the Metaverse really is the next big thing. Investors haven’t taken the news well, dumping the stock from more than $300 per share, to, at its lows, $88. Also hurting performance; declining user numbers for its legacy products, and rising interest rates.
CHART:
8.) Short Treasuries / Long Yield
As the Fed continued to raise rates in 2022, government bond yields rose in kind. And, as bond yields rise, bond prices fall. TLT, one of the biggest ETFs for long-dated government bonds, is down more than 28% on the year so far, underscoring one of the worst years for bonds on record.
2 YEAR RATES CHART:
TLT CHART:
9.) Short Coinbase
Coinbase IPO’d in April of 2021 at around $380 a share, making the premiere U.S.-based crypto exchange one of the most valuable financial companies in the world. Fast forward to 2022, and it’s been a completely different story. Crypto’s total market cap topped in November of 2021 as the Federal Reserve began hiking interest rates, and 2022 has been nothing short of disastrous for the asset class. The biggest crypto assets - Bitcoin and Ethereum - are sitting down more than 60% on the year, and the high trading volumes that defined the speculative frenzy in 2021 are nowhere to be seen. Not to mention the Luna & FTX blowups which had far reaching consequences across the ecosystem. Coinbase is still kicking, but with a stock that’s down more than 80% on the year.
CHART:
10.) Short Beyond Meat
Shares in Beyond Meat had a rough 2022, sitting down nearly 80% on the year. The fake meat behemoth’s losses have widened, and investors have questioned the basic unit economics of the company. As a result, the big brand’s market cap has suffered.
CHART:
And there you have it! The top 10 trades from this crazy and historical year. Did you manage to join in on any of these? Think we missed any? Let us know below in the comments.
Here's to a healthy, happy, prosperous 2023!
- Team TradingView ❤️❤️❤️
This week, we're counting down the top 10 trades from a tumultuous 2022. In what was a historic bear market in almost all global asset classes - stocks, crypto, bonds, and just about everything else was down - the majority of these trades are on the short side.
Energy was one of the few sectors that actually had a good year. Another outperformer was the US Dollar. Let’s recap it all below including charts you have to see, stats about each trade, and key takeaways heading into 2023.
1.) Short Luna
When UST - the flawed stablecoin at the center of the Terra ecosystem - depegged in May this year, it led to a $60 billion wipe out and the complete collapse of one of the largest hedge funds in the crypto space: 3 Arrows Capital. Luna, the Layer 1 token at the center of the ecosystem ended up dropping from $86 to ~$0 in just under a week. This event had contagion effects that affected the whole industry, and led to hundreds of high profile bankruptcies, insolvencies, suspended withdrawals, and more.
CHART:
2.) Long ExxonMobil
ExxonMobil and other major oil companies benefited from higher oil prices in 2022, as chronic global underinvestment in extraction & processing facilities in the last few years led to a spike in prices as post-pandemic demand for energy recovered more quickly than many expected. The sanctions on Russia earlier this year have also exacerbated global supply shortages and led to soaring profits for ExxonMobil and its peers.
CHART:
3.) Long U.S. Dollars
The dollar saw one of its strongest years ever as the Fed was the first major central bank to begin tackling the pesky problem of persistent inflation. As the federal funds rate was hiked over the course of 2022, USD interest rates became more and more attractive vs. global counterparts, leading to a massive shift in global capital, and massive outperformance for USD holders.
USD/JPY CHART #1:
4.) Short FTT
FTT investors have had a rough year. Throughout most of 2022, the general crypto malaise hurt the token as reduced trading volumes and profits from FTX led to lower buy-and-burn numbers. Then, in early November, whispers began that FTX wouldn’t be able to back withdrawals for users. Over the course of the next week and a half, FTT dropped over 90% as it became clear that FTX had loaned out user deposits to other SBF related ventures, using FTT (its own token) to backstop user funds. As the price fell, the house of cards came tumbling down, rendering FTT ostensibly worthless.
CHART:
5.) Short ARKK
As monetary tightening continued throughout 2022, many growth stocks got hit as the present value of their future profits shrank inversely with increasing risk-free interest rates. This was doubly true for high growth companies that had no profits to speak of, like many of the holdings found within Cathie Wood’s flagship ARKK Innovation ETF. Her fund, famous for its early bet on Tesla and massive outperformance in 2020 and 2021, is currently sitting down over 60% on the year.
CHART:
6.) Long Natural Gas
Natural Gas has seen a similar supply and demand situation to oil, which was discussed earlier. Heightened demand coupled with stable supply led to gains for the commodity early in the year. However, with the advent of conflict in Ukraine and sanctions on Russia, shortages, especially in Europe, led to skyrocketing prices as members of the EU scrambled to figure out how they were going to provide energy to their citizens in the coming winter. The Nord Stream 2 pipeline shutdown and explosion also put further stress on supplies.
CHART:
7.) Short Meta
Meta, formerly known as Facebook, has had a transformational year. Late in 2021 the company announced its rebrand to Meta, meant to underscore its business shift to Augmented and Virtual Reality. This new focus meant billions of dollars into R&D, and an uphill fight convincing the public that the Metaverse really is the next big thing. Investors haven’t taken the news well, dumping the stock from more than $300 per share, to, at its lows, $88. Also hurting performance; declining user numbers for its legacy products, and rising interest rates.
CHART:
8.) Short Treasuries / Long Yield
As the Fed continued to raise rates in 2022, government bond yields rose in kind. And, as bond yields rise, bond prices fall. TLT, one of the biggest ETFs for long-dated government bonds, is down more than 28% on the year so far, underscoring one of the worst years for bonds on record.
2 YEAR RATES CHART:
9.) Short Coinbase
Coinbase IPO’d in April of 2021 at around $380 a share, making the premiere U.S.-based crypto exchange one of the most valuable financial companies in the world. Fast forward to 2022, and it’s been a completely different story. Crypto’s total market cap topped in November of 2021 as the Federal Reserve began hiking interest rates, and 2022 has been nothing short of disastrous for the asset class. The biggest crypto assets - Bitcoin and Ethereum - are sitting down more than 60% on the year, and the high trading volumes that defined the speculative frenzy in 2021 are nowhere to be seen. Not to mention the Luna & FTX blowups which had far reaching consequences across the ecosystem. Coinbase is still kicking, but with a stock that’s down more than 80% on the year.
CHART:
10.) Short Beyond Meat
Shares in Beyond Meat had a rough 2022, sitting down nearly 80% on the year. The fake meat behemoth’s losses have widened, and investors have questioned the basic unit economics of the company. As a result, the big brand’s market cap has suffered.
CHART:
And there you have it! The top 10 trades from this crazy and historical year. Did you manage to join in on any of these? Think we missed any? Let us know below in the comments.
Here's to a healthy, happy, prosperous 2023!
- Team TradingView ❤️❤️❤️
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