Week ended October 3, 2025: everything higher again, feeling more vulnerable

Another strong quarter for investors has come and gone, with the third quarter “buy any and everything” rally carrying on as we start the final quarter of the year.  Not even the shutdown of the U.S. government due to Congressional ineptitude, along with rather weak employment data from private sector sources (see ADP numbers for September), could derail the one-way march higher.   You don’t have to be particularly clever either – you just need to be invested in something.  Even havens did well this past week, including US Treasuries which seem to be getting ahead of the anticipated reduction in the  Fed Funds rate at the upcoming FOMC meeting.  Gold added to its YtD gains (47.3% YoY), hitting another record high.  Bitcoin also started to move up again, gaining 11.5% on the week reflecting the benchmark cryptocurrencies’ usual high volatility.  As for stocks, European and emerging markets equities had the best performance last week, although all of the important U.S. indices were also firmly in positive territory.

I don’t want to sound like I am all doom and gloom, but this ongoing rally is increasingly making me squirm.  It is certainly driving me to grit my teeth and pay up for partial market hedges so that I can stay fully invested in equities.  I added to my market hedges last week through some longer-dated QQQ puts, complementing an array of SPY puts running through the end of January (2026).  I am also not afraid to lighten in select individual positions at or near record highs, especially stocks that have the AI-narrative pushing them higher and higher.  NVDA at $190/share?  ASML at $1,040/share?  It seems silly not to take a bit of money off the table at these levels on these high flying AI-driven tech names, even though I consider both to be core holdings in my portfolio.  When I lighten in core positions like this, it is mainly because I think I can buy the shares back later at a lower price.  History has proven that this is not always the case – I was certainly wrong for example when I unloaded most of my CRWD position a few months back at $425/share (at least so far).  I also took an ill-advised punt again on TSLA a week or so ago by buying November out-of-the-money puts, because the valuation is so stupid I simply couldn’t resist.  Well, wrong again – I took the loss and covered the position a few days later because the stock (as I well know) has a life of its own, completely detached from fundamental value.  I still haven’t learned not to play with fire every now and then.

Although it looks like making money by being long stocks in this environment is as easy as shooting fish in a barrel, it seems a bit too good to me to continue indefinitely.  The pending FOMC decision (meeting October 29^th) is already factored into stock prices.  Since investors seem to care little about the damage to U.S. economic growth from a government shutdown and gradually worsening U.S. jobs market, the focus will soon turn to 3^rd quarter earnings.  JPM kicks things off for S&P 500 companies this coming Friday (Oct 11th), followed by a diversified list of companies in the weeks to follow. There will certainly be a lot of focus on the Mag 7 companies, six of which will report earnings the final week of October.  There is no indication that earnings will disappoint, but it wouldn’t take much to rattle investors at these heady valuation levels.  I also think the bankruptcies of First Brands and Tricolor Holdings – both private companies tied to the automotive industry (latter a deep subprime lender) – are not necessarily isolated, and might lead to higher credit spreads in the public high yield market, normally a precursor to a decline in stocks.  Should investors seek cover, I would expect US Treasuries to catch a bid, but the difficulty seems to be pressure at the intermediate- and long-end of the curve from growing U.S. budget deficits and a desire by global investors to diversify away from U.S. Treasuries (meaning flows are a driver).  Even so, I still can’t convince myself to strap on duration.   I suspect October is going to be a choppy month.

Below are updated tables for the week ended October 3, 2025.

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