Nasdaq crash and carry trade: how to stay calm

Friday night, we experienced the roughest trading session of the year. The Nasdaq plunged by 4.18%. Nearly $1 trillion vanished into thin air. In short, it’s total panic on social media! But is it really justified? Actually, this tremor has a perfectly logical explanation. Today, I’ll explain how I handle this with discipline. We’re going to look at the real stakes, far away from the hysteria.

Why the stock market drops when the economy is doing well

It’s the paradox of the stock market. The US economy is running red hot, and unemployment is falling. As a result, the markets take a nosedive instead of going up! Why this seemingly totally absurd reaction? Because of supply and demand. To keep a good engineer at Google, you have to pay top dollar. A 5% raise quickly adds up to millions. Inevitably, this cuts into corporate profit margins. In short, profit-taking like this is both logical and healthy. Nothing changes the massive potential of AI.

My approach to volatility

Frankly, the current panic always amuses me a little. The Nasdaq gained nearly 33% in two months. A 4% correction is just a normal day for me. You have to keep a solid and structured mental framework. For my part, I look at my charts and my monthly pivot points. Above all, I love scalping for its great serenity. Whether the market skyrockets or collapses, I make my day. I grab my points in a few seconds or minutes. It’s the ideal method to sleep soundly every single night.

The Yen and the real hidden threat

The real barometer to watch today is the Yen. It’s stagnating around 160 yen to the dollar. In Asia, Korea even triggered a circuit breaker. Basically, they halt the stock market when it drops too much. For 30 years, investors have loved the carry trade system. It’s fascinating and extremely simple to understand. You borrow yen at 1% to buy assets. You then invest this in the United States at 4% interest. So, you earn 3% without the slightest effort. But if the Yen suddenly shoots up, the system quickly jams. That’s exactly what caused the Nikkei to plummet in 2024.

Crypto and the illusion of easy money

Let’s do a quick update on Bitcoin. It recently lost another quarter of its value. It is currently hovering around $62,975. To me, it’s a Dutch tulip slowly deflating. Out of this price tag, there is at least $62,500 of pure speculation. The hope of getting rich doing nothing remains a real illusion. The day you can pay for your groceries in bitcoins… Sorry, we’ll talk about it when that exact moment arrives, not before.

Conclusion

To summarize, it’s urgent not to panic. The real deciding factor is Wednesday’s US inflation report. If it remains tame, the interest in AI will quickly bounce back. Otherwise, interest rates seriously risk hardening. Until then, we wait at our pre-identified levels. We apply our trading methods with great discipline. By the way, I’m launching new historical and economic channels tomorrow. Stay lucid, keep your cool, and stay curious!

By starting the video, you accept YouTube's cookies.