To The Moon

I've been reading a lot of comments about the "panic selling" in the market this November. But something isn't adding up.

We're seeing high-growth tech and AI stocks (the darlings of 2023-2024) getting absolutely hammered. Yet, when we look at the market's "Fear Gauge," the VIX (S&P 500 Volatility Index), it's hovering around 20.

This is the central puzzle. A VIX at 20 is elevated, it's "anxiety"—it is not the "blind panic" (think 40, 60, or 80+) that we see during a true market-wide crash.

So, if it's not a panic, what is it?

I believe what we're witnessing is not a panic-driven stampede, but a rational, structural "liquidation" of the market's most expensive assets. And the key piece of evidence is the VIX's cousin.

It is quite possibly the most orderly, professional, cold-blooded sector rotation in modern market history.

The "Smoking Gun": VIX vs. VXN

The VIX is lying to us because it's too broad. It tracks the S&P 500, which is diversified across all sectors.

VIX

VXN

The real story is in the VXN (Nasdaq-100 Volatility Index).

• VIX (S&P 500): ~20

• VXN (Nasdaq-100): ~26

This divergence is everything. It tells us that the "fear" is not spread evenly. The pain is surgically concentrated in the tech-heavy Nasdaq.

What this means is that while investors are dumping Nvidia, AMD, and speculative AI software stocks, they aren't necessarily selling everything. They may be rotating into defensive sectors like healthcare, utilities, or value-oriented financials—sectors that are heavily weighted in the S&P 500.

This rotation is acting as ballast, keeping the S&P 500 (and thus the VIX) relatively stable while the Nasdaq (and the VXN) is signalling a much deeper crisis. This isn't a retail investor "get me out at any cost" event. This is a deliberate, orderly "smart money" repricing.

What Actually Happened in the First Two Weeks of November

• S&P 500 down ~8.5% from the October 31 peak

• Nasdaq 100 down ~12%

• Semiconductors (SOXX) down 18-20%

• Nvidia, Meta, Microsoft, Broadcom, ARM, ASML all down 15-30%

• A-share A-shares tech/new-energy basket down 15-25%

If this had happened in any other cycle, VIX would be comfortably north of 30 and we would be seeing margin calls, retail capitulation, crypto bleeding, gold ripping — the whole disaster movie package.

Instead:

• VIX peaked for about 45 minutes at ~28 on the worst tariff rumour day, then immediately collapsed back to the low 20s and kept falling

• Dow Jones is basically flat for the month

• Russell 2000 (small caps) +5% in November

• Equal-weight S&P 500 (RSP) is making new all-time highs literally this week

• Financials, energy, utilities, staples, REITs, European value stocks — all up double digits since October

• High-yield spreads are tightening, not blowing out

• Put/Call ratio averaging 0.85 (people are selling puts, not buying them)

• AAII bearish sentiment is only 28% (historically low for an 8-10% pullback)

Translation: The money never left the market. It just quietly executed the biggest growth-to-value rotation since 2000, with zero drama.

Why This Rotation Is Happening Exactly Now

1. AI Capex ROI Anxiety Finally Hit Critical Mass. Institutions spent 2024 front-running the AI build-out. By October, Nvidia was trading at 70× forward earnings while simultaneously guiding for slightly lower gross margins ahead. The math simply stopped working. Bridgewater dumped 65% of its Nvidia in Q3. Everybody else is now following.

2. Trump's "Reciprocal Tariff" Threat Was the Perfect Catalyst. The tariff tweets in early November gave institutions the perfect narrative cover to dump everything China/Taiwan supply-chain related (Apple, Nvidia, Tesla, luxury, casinos, semis) and rotate into "Trump-proof" domestic Old Economy winners (banks, energy, small caps, utilities).

3. Rates Stopped Falling → Growth Multiple Compression Became Inevitable 10-year yield bounced from 4.0% to 4.6% and then settled at ~4.4%. That's enough to crush 60-70× P/E stocks while making 8-12× P/E banks look suddenly attractive again.

4. China's "No Big Stimulus" Reality Sank In. October data was awful, and Beijing's response was... another Politburo meeting with no numbers. The market gave up the reflation trade.

All four triggers hit within the same two-week window → perfect rotation setup.

What Happens Next (My Updated Base Case – Nov 15)

80% probability we are in the final overshoot phase of the rotation.

The last remaining growth/momentum funds are still being forced to sell their AI holdings to chase the new leaders (XLF, XLE, IWM all at new highs while QQQ is -12%). Once that flow exhausts itself — probably in the next 5-15 trading days — the market will either:

A) Grind sideways-to-up into year-end as value keeps working and AI stabilises, or B) Get one last sharp dip when Nvidia reports (Nov 19-20) if the guide is merely "in-line", triggering the final capitulation flush everyone has been waiting for — but with VIX still sub-25 because it's only 7-8 names.

Either way, the character of the market has permanently changed. 2026 will be the mirror image of 2023-2025: low-vol, value-led, carry-friendly, with tech growing earnings but not multiples.

Positioning Thoughts (What I'm Actually Doing)

• Cash level at multi-year low — this is not a bear market

• Overweight: banks, energy, small-caps, European value, Japanese banks, gold miners

• Underweight: long-duration growth, China tech, private credit

• Will start nibbling AI leaders again only after they are down 30-40% from peak and the growth-to-value performance gap exceeds 25-30% (we're at ~22% today)

Bottom line: We just lived through the most civilised regime change in decades. No blood in the streets, no screaming headlines, no retail panic — just institutions very calmly ringing the register on the easiest trade of their lives (AI 2023-2025) and redeploying into the next one.

Respect the rotation. Don't fight it. And definitely don't wait for VIX 40 to "buy the dip" — because this dip doesn't want to give you that satisfaction.

See you all at S&P 7000 in 2026, led by JPMorgan and Exxon, not Nvidia and Meta.

Stay rational out there.

@TigerWire