Bits + Bips Why Hedge Funds Are Deleveraging and Stocks Are Still Overvalued
10 snips
Mar 18, 2026 A heated debate on whether selling is orderly or driven by forced deleveraging among hedge funds. A claim that industrials have already popped as valuations look extreme. Discussion of Bitcoin and altcoin flows, MicroStrategy moves, and shifting correlations with commodities. A macro thread on dollar strength, energy shocks, and limits to easy monetary policy.
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Widespread Hedge Fund Deleveraging Is Pressuring Stocks
- Hedge funds across strategies are deleveraging, causing good names to be sold regardless of fundamentals.
- Ram Ahluwalia notes gross hedge fund leverage peaked about a month ago and many funds are reducing exposure, not selling for credit reasons but to cut overall risk.
Industrials Are A Right Shoulder Bubble
- Industrials look richly priced and form a bubble within the S&P, led by names like Caterpillar and Deere at ~30–35x PE.
- Ram argues we're on the 'right shoulder' of that bubble, implying limited upside and risk of a pop.
Trim Risk And Wait For Real Capitulation
- Reduce risk exposure and wait for a true capitulation before adding size to positions.
- Ram calls industrials a popped bubble at 30–35x PE and recommends getting smaller until value reappears.