Sell, hedge, rotate: Victor Dergunov's strategy for a market correction

0:00Welcome back to investing experts, the financial profit himself, Victor Durganov. Always a pleasure to talk to you. Thanks for joining us again. The pleasure is all mine. Thank you, Rayna. I'm glad to be on your podcast and very much looking forward to our conversation, as always. Likewise, as always. So let's start us off. It's the end of March, 2026. Another unprecedented, let's say, for lack of a better term right now, year, a lot to note about the market, be it in energy or tech or out of tech or the broad market or gold or not angled. How, for those of you who have missed Victor's previous appearances, there are a slew to catch up on your investing strategy. But to share with investors today, how would you express how you're looking at and thinking about and analyzing the markets?

1:05So last time we spoke, I believe it was around late last year and already going into January, I was becoming more cautious. I actually wrote an article about this today. I don't think it's been published yet, but it probably should come out soon. Even back in January, I was becoming a lot more cautious on especially the riskier sides of the stock market. So I began basically taking profits. I actually put out an article with a five-step plan where it was outlined that number one reduced risk. So I took a lot of a lot of my riskier equity positions and basically just decreased a lot of them. I sold a lot of them for good profit that I've had over the last few years. Number two was to raise cash. So I actually went from using some margin to about,

2:09I believe, 20% cash at one point earlier this year. I've put some of that cash back to work, recently, into the badly beaten down gold miners and some other sectors that I find more attractive now like oil. Number three was rotation. So basically I rotated a lot out of the riskier assets, you know, tech, high alpha stocks, and got into more defensive sectors and especially I would say gold. And gold very recently, actually, I started getting back into it because I typically have a large gold position because it works very well in a diversified portfolio. So that's done really well over, you know, before it crashed, basically. But my point being is that I sold a lot of my gold and silver positions on the way up and around the peak. And I just recently started re-entering

3:14them after the the significant declines after like the 40 to 50% declines that many of the stocks have had in the sector. So I'm feeling a little bit more comfortable kind of putting my money in that, you know, in that segment, especially with, you know, with the, with the increase on certainty and the Iran situation. So that's got that, you know, basically has markets on edge and I was on edge already even before that. And it's very interesting because one of my favorite analysts and I don't really listen to a lot of, to a lot of people on Wall Street and one of the only guys that, that who's, whose opinion I, I really listened to is actually Tom Lee. And I remember Tom Lee was, was talking about also it was, I believe, on a podcast. It was either late last year or early this year. And he was saying how we were going to go through this period, you know, in this year, probably due to a policy shock that would feel like a bear market. And I was a little

4:20bit surprised to hear him to hear him say that because he's, he's typically a very bullish analyst. But I was actually feeling very similarly at the time. So it really hit home what I was, what I was hearing from, from Tom Lee then. So it even reinforced the, you know, my thinking that we were going to have this correction, this pullback ahead. So I started preparing it for it pretty early. I would say about about two months ago. And again, it was with the five step plan and the, and the final two steps being hedging, you know, we, we increased our hedges with whether it's covered calls or the cash secured put strategy or just some, some, some collars. And then also number five, I, you know, and that's more aggressive hedging and basically shorting some, some sectors and some even sector-specific ETFs, like going along as QQQ or something like that to not just to hedge, but to also make money when the market is, is going low as it is now in a downturn. If you would care to

5:28expand, expound on your reasons behind gold, we had George Noble on last week talking about how he's a fan of gold and especially gold miners. How are you looking at, how are you looking at that space? Like, who do you like more than others? And why is that? I would say same for energy. Okay. So the, the gold space, it's, it's always been an interesting, an interesting space for me. Like, especially, I would say, about like over the last one or two years, I started accumulating more gold because I realized that there was a very high probability that gold would go substantially higher. I've had, you know, various articles saying that gold would go to 5,000, even, even very recently, about five or six months ago, we had stocks like Hecla Mining, trading at four or five dollars, we had stocks like Newmont Mining, trading at like $40 or something like that. We had really, really low, just remarkably low valuation and price action and some of these extremely high

6:34quality gold and silver stocks that were likely to increase their profits considerably as the underlying assets increased in value, gold and silver primarily. So I was very much prepared for for this, for this golden silver rally and I decree, I naturally decreased a lot of my positions as, you know, as things were becoming parabolic in the market up to where I actually sold all of my golden silver positions aside from just my physical gold and part of my physical silver position. I was actually able to unload part of my physical silver position right around the, the top for about 114, 114.50 actually sold it at. So I got an excellent price on part of my physical silver position and the funny thing is is that I was trying to then sell more silver after, you know, the market crashed and then came back a little bit and all the dealers were just running for me. They were like, no, we are not buying any physical silver. They were so scared. So yeah,

7:41I couldn't sell anymore and that's okay, I'm fine. But some of the companies that I'm looking at now are, first of all, Berk mining because it's, it's become so, so cheap. It has like a four something dividend. So it's an incredibly solid company. It's, I believe it's the second most significant gold mine or globally. So I really like Berk a lot. New Monte is a decent play. Being the biggest gold miner globally. The best managed gold miner I like is Anglo-Eagle mines, which is ticker AEM. It's a Canadian company, but it's excellent. I think it's the best managed gold company. So on a big, on a bigger pullback, I would increase some of those shares. And also Kinro's gold I bought recently, which is another very solid company. I believe it's some international. It's not American, but it's, it's a very good gold company with, with bright

8:44prospects I had, I believe. And in the silver space, I continue to like Pan-American Silver and Hecla Mining as my primary place. And if we use an ETF, it's SLVP, I like GDX and GDXJ also. You also mentioned the energy sector. And these are these kind of, I was going to say, if I can just interrupt for a second, like before you, before you got to energy with, which I appreciate you getting to, what would you say because there's so many detractors, especially with, you know, the sell-off recently in gold and what's happening in energy and, but also people's belief that the gold bullishness that we have seen in the past year to two years to few years is not something that's sustainable long-term or not something that's even worth getting into. What would you say is the most compelling, bearish note of, to gold and the miners and how would you counter it? Or would you say there's anything even that compelling for you? Yeah, well, it's not as compelling as it was, of course, when gold was at like 1500 or 1800, right? So obviously,

9:48it being at over 4000 is not as compelling as it was back then price-wise. However, I do believe that gold does have more upside potential. So really, what's weighing on the gold market aside from the parabolic move that we had, that we need to have a some sort of period of consolidation, pullback, maybe a further correction phase, but I don't think that the bull market is over because there are fundamental elements that should support, you know, higher gold prices long-term. Now, the thing that that's really impacting gold prices the most right now, it's that the Fed interest rate cut probabilities have essentially disappeared for 2026. So, for instance, about two months ago, right? There was roughly, I believe, an 80% probability that we would see at least 125 basis point rate cut by 20, by September of this year, right? About an 80% probability.

10:54Now, if you look at the rate cut probabilities, there is a 0% chance that we will see a rate cut by September, but instead, there's about a 20% probability that we could see a rate cut. So, we've seen basically the rate interest rate, I'm sorry, that we will see a rate hike, there's now about a 20% probability. So, the market has basically flipped from expecting rate cuts to potentially seeing rate hikes. Now, this is what really weighs on gold and silver the most because this essentially is telling us that the Fed will be pulling liquidity out of the market instead of injecting liquidity into the market with lower interest rates and quantitative easing. So, the way basically this is how the chain goes, okay? So, we have the war, right? It kind of came

11:55out of, you know, maybe nowhere, I guess. The war is causing oil prices to increase. Oil prices are causing inflation to rise and inflation expectations to increase. Inflation expectations increasing are causing the Fed or at least the market to project that the Federal Reserve will no longer be looking to cut interest rates this year. Instead, it may look to hike, okay? And that is a big problem for risk assets. That's why we're seeing, you know, downside in major market averages now in my view. I mean, there are other reasons why, but that's the primary reason. And also, that weighs on gold and silver prices the most in my view is that temporary, in my view, flip in the interest rate trajectory. First of all, you know,

12:59lower interest rates, they basically create more demand for gold because people don't really want to invest in bonds, especially if inflation could be rising. They don't want to be getting a really low yield on, you know, with bonds of gold becomes that alternative asset class that should experience more demand. Then, of course, there is the increasing of the money supply. When the Fed cuts interest rates and when, and especially when the Fed does quantitative easing, it's essentially just creating money out of nothing. That's all the Federal Reserve is doing. It's, I don't want to, I don't want it to sound like a conspiracy there, but in reality, it is, it is a very sophisticated Ponzi scheme, basically, the way that the Federal Reserve system works relative to the Treasury Department. So, I mean, the Fed just, you know, punches numbers on the keyboard,

14:02creates, let's say, $2 trillion, then takes that $2 trillion and buys bonds from the Treasury, which artificially then causes interest rates to go down, okay? That's basically what would happen if the Fed went out and bought 30-year treasuries. We would have much lower mortgage rates in America. So, that dynamic of creating, you know, increasing the money supply is what actually drives gold prices before we get to energy, before you get to energy. If you got the nomination over a wash, what would you say? What would you want to do? How would you want the Fed to act? So, that's a great question and to be honest with you, it's a bit of a tough job to be in right now because the Fed is really caught in a bit of a, you know, between a rock and a hard place,

15:03in the sense that, you know, the labor market is weakening, but we are seeing higher inflation. However, I would look through that inflation as being transitory. And I know the Fed is now scared and afraid to use that word because they kept using it back in, after the coronavirus, they kept saying that, you know, inflation was transitory, they used it a million times, and we find out that it wasn't. But at this time, I really do, this is not the coronavirus. The, you know, a temporary oil shock is transitory. A temporary increase in tariffs, it is temporary, it is transitory. So, it's not this prolonged type of inflation. It is a temporary uptick in inflation. That's how I would look at it more. So, I would actually be more for easier monetary policy. And first of all, I would focus the most on the

16:07on the mortgage market because we just had really negative data where the sellers outnumbered the buyers by like a record amount. So, that's a big issue. Now, if I were, you know, the Fed chair, I would focus more on improving the housing market, improving the labor market, and making sure that our economy was doing well. You know, if we have to go through a transitory phase of slightly higher inflation, whether it be 3% or 3.5%, I don't think that that's as bad as, you know, having a collapse in the housing market, potentially, or, you know, possibly facing a recession from, you know, a worsening labor market and decreased consumer spending, or, you know, just having rates too high on credit cards and mortgages and having a potential

17:08slowdown or a recession from that. So, I would certainly be focusing more on that side of the equation rather to the transitory inflation point. So, I would certainly be a lot more dovish. And I believe that the Fed will be. That's the thing that I think the market is mispricing here. It's, you know, it's like when the pendulum swings too far in one direction right now because of all the panic and the, you know, temporary threat of higher oil prices, I think that way too much emphasis is being placed on the long term negative possible ramifications of the conflict, rather than discussing the positive impacts in which should occur intermediate and longer term. So, energy, what are your thoughts? What names do you like? Why? What are your thoughts on the price of oil? Yeah. So, energy energy is very, is very interesting. And I've actually been paying attention to energy for a while now. And it goes back to my, a big part of my investment

18:10philosophy is where I look for sectors that have been underperforming for some time that have been overlooked by the market that, you know, are rationally cheap. And that's where energy has been for a while. Basically, where we're looking at price earnings ratios of like seven or eight in high quality companies like Devon Energy, Apache Corp and many, many others. We were looking at at basically rock bottom multiples. And many of these stocks have rocked from like, I think Apache's up from like $14 or $15 when it bottomed in April to about like $45 or something like that now. And many other stocks in that, in that oil segment, oil and gas segment have done really, really well. So, that's, that's been a sector that I've been focusing on. I've been talking about about it a lot in my investment group. I've been, I've had really good profits

19:11in my portfolio with these stocks, of course. And I've also been focusing not only on the, you know, not only on the oil majors and the, I'd like to independent producers, but also I've been focusing a lot on the oil services segment, which is, you know, like ETF OAH. And it has, it has companies like SlumberJ, Haliburton, Baker Hughes. These are some of my favorite companies to own here. And that's because they're going to have a lot of business ahead. When it's time to rebuild the Middle East, there's no one better than these top, you know, high quality companies, especially SlumberJ, and Haliburton in my view. So I think that those two, and Baker Hughes, those three should, should benefit a lot going forward and not just them, some of the smaller players should do well too. So I've been, I've been very keen on these companies and I own these stocks as well as the XLE ETF, which is basically Exxon and Chevron,

20:15and, you know, other majors. And then I own some independent companies like Devon, and also I like SlumberJ and OAH ETF, like I said. SlumberJ was another stock that George Noble was talking about if you're going to own anything and energy on that one. Yeah, I think it's the best. And that's, and that's because they're positioning themselves as a technological leader in the space, even like, and they're rebranding themselves as like an AI company. It's, it's pretty interesting, but they're actually putting a lot of money into R&D and they're developing an AI system that should give them an edge against their competitors. So yeah, I certainly agree with you with your prior guess. And anything else to add about the energy sector at large or the oil price? Yeah, I mean, it's just, it's a very fluid situation and there's a lot of uncertainty here. So I mean, this could go several ways. They could try to take a car, Ireland. That's, you know, that's kind of like the noise of the

21:20moment here. And if that occurs, I mean, that's of course, that's going to require some sort of boots on the ground. And then that introduces a lot of uncertainty to the market because we don't know, you know, could some of our troops be potentially hurt? You know, of course, there's a lot of backup in the region, but still there's still many uncertain factors when you're dealing with with ground forces on the ground. So I'm a little bit cautious of this scenario, which, which could, of course, occur if they don't come to some sort of concrete agreement within the next several days. I've seen a lot of hardware, a lot of Marines moving out there. So it does look like that the administration is preparing for some sort of land, you know, I don't want to call it an invasion, but maybe an encroachment on partial Iranian territory like Carg Island would actually make a lot of statistical sense. And from there, we could potentially then control the

22:27state of Hormuz, which would be an extremely net positive intermediate and long term, and that could actually then knock oil prices down a lot once that occurs. And I believe that that's probably the base case scenario that, you know, since several weeks from now, the situation is going to probably look much different. And I certainly think that the control of the, you know, of the state will ultimately be controlled by, you know, by a competent U.S. president. Now, if you were president, no, just kidding. I would do some things. I would certainly do some things. Outside the purview of this humble podcast. Next question. But I bet we could get together a vector and have and get some ideas going. Speaking of which, did you see I just was listening to Wall Street lunch today and Kim was talking about the president's council on science and technology.

23:31Any thoughts about where technology is at? I know you were one of the first, you were one of the first people I heard talking so bullishly about Palantir, you know, years ago. Anything to say about the tech space these days? Yeah, I missed that presentation, unfortunately. But yeah, we got we got into Palantir at an ideal moment. I believe I made it the most significant portfolio holding when the stock was around six or seven dollars. And I kept pounding the table on it, writing articles saying, oh, this is the company that's going to dominate. It's a monopoly. I mean, it was an obvious monopoly. So yeah, we made a lot of money on Palantir. We wrote it all the way up to about 150. And then I said, well, now it looks kind of just too expensive for me. And then I actually went ahead and I shorted the stock at 207 right before it reported earnings just because I realized that no matter how good earnings were going to be, the stock would probably decline

24:36from a $600 billion valuation when, you know, it was supposed to be report about, I think, six billion dollars in sales the following year. So yeah, the valuation aspect just got completely out of hand in Palantir. Now, the way I'm looking at tech here is that, of course, we're not in such a lucrative period as we were back in late 2022 and early 2023, you know, because back then we were getting into a lot of NVIDIA stock made a, you know, Google, you name it AI, it was in the portfolio of Palantir, of course. But here we're going through a bit of an AI scare as well in this sort of, you know, correction process because it's just that stage of the cycle where, you know, we're getting the circular financing concerns, we're getting some, you know,

25:41some back walk from NVIDIA. First, we're going to invest $100 billion in open AI, now it's 30 billion. You know, and that puts into question, like, how is open AI going to pay for their, I think it's something like 1.4 trillion in obligations over the next, I don't know, like fiber or so years, how are they going to pay for all these, you know, when they're not actually being funded as much as, as they would like, although there are probably certain channels that take a tap to, you know, raise a lot of debt and they're going, you know, they're going to IPO most likely within the next year, maybe sooner. So I am still bullish on a lot of tech and I think we're getting, we're getting opportunities, opportunities here, but we certainly have to be more selective now and I think we need to be a little bit more patient in this drawdown period because some of the tech, some of the tech charts have become more negative, like, even if looking at something like NVIDIA, basically,

26:44even, you know, like the broader tech market is below its 200-day moving average now. So we have to remember that, you know, in the near term, the technicals and the sentiment, they're going to trump the fundamentals, you know, even though we were very confident that AMD is going to do extremely well in the future and, you know, it's not going to go to four or five hundred dollars within the next one or two years, potentially, right? And like a base to a bullish case scenario. But we can't forget that the near term also matters to a lot of people and this kind of uncertain atmosphere that we're in right because of the war, because of what the Fed could do, what the Fed may not do, there's a lot of uncertainty there. This sort of period could last a bit longer, meaning that we could have a continued drawdown, we could have a more significant correction, you know, so far we've had about, I think, an 8% correction and an SB500 and

27:49Lake about exactly a 10% correction in the NASDAQ. So, or in the NASDAQ 100. So I think that these could potentially go a little bit deeper, again, if things escalate more on, you know, like we have a some sort of ground in, in, in, in Cursion. If maybe there's not an agreement within the next several days, I believe that the market could view this as, as a negative near term signal. And again, technically and sentiment wise, we're not in the best place right now, which again, it tells us that we just need to be a little bit more patient. The buying opportunities will come to us. And, you know, we should, we should see a very solid buying opportunity most likely in the near term that could then turn into a very lucrative intermediate and longer term, you know, opportunity

28:51as we advance. What else would you say about the names that you're shorting? I'm actually not shorting anything at the moment because there's so much uncertainty in the market, but some of the names that I, that I have shorted recently, again, Palantir, it wasn't, it wasn't that reason, but Palantir 207 was like a short, short for me. And I went right ahead and shorted right before earnings, too, which probably a lot of people wouldn't do, but I just realized that no matter how good earnings were going to be, the stock was going to go down, was going to be a sell the news event. In my mind, it was like at least an 80% probability of that. So that's why I did, I did that trade. I shorted Z-scaler right around the highs at like 330. I shorted a lot of the silver stocks right at their peak and gold stocks as well, heckle mining around 30 above 30. I was shorting first majestic above 30. I was shorting and then we actually had a really nice second opportunity

29:54with first majestic to short that on a, you know, on a second move higher, the stock had this really irrational move. So I went ahead and shorted that. Oak low was one of my most successful shorts, actually. I caught that one right at the peak, right at around 190 dollars. So that was, that was one of the, probably one of the best shorts, you know, over the last few months, because it went from like 190 down to 100 very, very quickly. And then when it jumped back to like 150, it basically formed a second shoulder, you know, in a negative head and shoulders pattern. So I went ahead and shorted it again. And now it's like 55 bucks. Of course, I didn't hold that my short this long. It's typically more of a shorter term sort of just strategy. I implement to capitalize on the, you know, on the downside in the market. It's not something that

30:58I do continuously like right now. There's just too much uncertainty where where things can go, you know, things can go up or down on a, on a single tweet. Like we saw the the other day, you know, the market was down. I look like it was heading lower than one truth, truth, truth, a social post later. And the market was 4% higher within minutes. So that was, that's the kind of world that that we live in. So we have to be very careful short. Yeah, I think that's good advice. Why is, why is council? Victor, what else would you add to this conversation? What else do you feel like is note worthy newsworthy of value for investors to be keeping in mind these days? I think again, in the near term, the situation here, there's, there's a lot of uncertainty. So you want to be, you know, you want to have some cash, you want to be well diversified, you want to have, you know, that, that sort of dry powder to implement when the market does finally reach, reach

32:03a low point because to be perfectly honest with you, I don't think that we're there yet. I think that we may be close, maybe, you know, I don't want to put a person like percentage terms on there, but we maybe we're 75 or 80% of the way there, but still with this level of uncertainty and the technical image. Again, we're seeing like all, all the three analyses sort of aligning here, you know, the technical image isn't, isn't great right now. The sentiment, it's really bad, but it's not, it's, it's not as low as it can go. And fundamentally, there's a lot, a lot of uncertainty. And there, and there are, I would say, probably more negative near term fundamental catalysts, then there are potential positive ones. Okay. And once we have a convergence of these three analyses, the path of least resistance remains, remains lower until we really see maybe some sort

33:03of a wash out process, possibly something similar to what we saw in maybe August of 2024, some sort of, you know, a bit more, a bit more of a significant pullback because I believe that the market still has a lot of, you know, a lot of things to kind of digest here. Just because we talked about it last episode, as we wind down this conversation and reminding listeners that you run the financial profit and investing group on seeking alpha have run it for many, many years to great acclaim and success. Two of the names that you were talking about last episode back in November was AMD and Tesla were AMD and Tesla. What would you, anything to update listeners with there? Yeah. So these are still two of my, two of my core positions. I still have significant positions in both companies. I've recently hedged part of my, a significant part of

34:09my, of my Tesla position. So I don't, I don't get a big, a bigger drawdown on that if, you know, if this correction process continues. What does that mean exactly, hedging in this case? How are you hedging exactly? So I'm basically hedging Tesla via covered call options. I sold covered call options with, I believe it's the 15th of May expiry with a $420 strike price. And I sold those a while back. So I got, I got really nice premiums out for them. I think something like 20 or or actually even more, I think I got like a $25 premium for them or possibly even higher. But the thing is, is that these options are now a lot cheaper. So I could potentially buy them back. But I'm still holding on to them. Just because I believe that, that there could still be more

35:14volatility in Tesla and it could potentially go lower. So I could possibly repurchase them at a lower level. And I've also considered a collar strategy on Tesla where I would then use some of that premium from the covered calls to potentially buy some put options to further protect my, my downside in Tesla. And I have actually a similar strategy with AMD where I sold covered calls against part of my AMD position. And I'm just kind of waiting right now to see what happens in the near term, whether I will buy those covered calls back or I may just, you know, let them expire if the stock goes higher. It really doesn't matter that much to me because I got a really good premium form. And I have a very significant AMD position. And even if those, you know, options get exercised and those shares get pulled, then I still have a significant AMD position. And I have,

36:14I have, you know, considerably higher, higher price targets for these stocks. For instance, AMD, I have a price target of about 350, you know, for the next, for the next 12 months. And my Tesla price target is around, is around 550. So I have substantially higher price targets or actually 550 to 600. I have a range. Thank you, Victor. I always appreciate you coming on. Again, you were in the financial profit. Any final thoughts for listeners? Please be careful, be cautious in this sort of market environment. But don't be afraid to make the big move when the time is right. Okay. You will get signals again from the fundamental, from the technical and from the sentiment based analyses, when they converge correctly, you will get a comprehensive buy signal for when, you know, you could really enter, reenter the market or increase your positions in the market for,

37:16again, to really capitalize and increase your overall returns. Victor, out of curiosity, do you have a motto that you live by? Let me think. I do have some, I do have several. This one that I really like is, it's not about what other people really think of me. It's mostly about what I think about myself. And I believe that that kind of like detaching myself from, from anyone else's sort of influence. So not being really influenced by anyone's opinions, you know, kind of detaching from that aspect really helps me kind of focus on my, you know, investment strategy. And it really helps me stay calm in periods when people panic, which is very important because that's when I can, you know, take that big step forward and when everyone is

38:19panicking, I'll go in and buy. And on the flip side, you know, it helps me detach from my emotions. So I stay away from the FOMO. And yes, maybe I'll sell a stock too early sometimes, but it's much better than, you know, riding a wave up and then riding it, you know, like on a roller coaster down again. So I think that that sort of mentality and that sort of, you know, thinking really, really helps me with, with investing a lot. And that's also a motto that I live by, you know, that I don't really let people influence me as much as possible. And I like to have my own, my own opinions. I like to formulate my own investment decisions, basically formulate my own investment decisions based on my own research and my own opinions, being your own man or being your own person really, really helps with that. Just to remind you, anything you hear on this podcast should not be considered investment advice. This is for entertainment purposes only,

39:20and you should seek advice from a licensed professional before investing. If you enjoyed the episode, leave a rating review on your favorite podcasting app. And we'll see you soon with a new episode.