| Long Silver/Short Bitcoin Money is being printed, the US (and everyone else) is going deeper into debt, and Washington seemed to regard the dollar's status as a reserve currency as a problem, not a great benefit. Trump 2.0 entered office amid talk of charging foreigners to buy Treasury bonds. In such circumstances, it made sense to bet on dollar debasement. The way to do that, Hindsight Capital's managers saw, was through precious metals, and particularly silver, which had been overlooked. Crypto was set up as an alternative to the dollar, and the White House intended to get behind it. But it's driven by risk appetite, and benefits from greed while precious metals are helped by fear. And it entered the year massively expensive. Once the turmoil started, Hindsight could see that silver and gold would begin to look much safer, while Bitcoin would be perceived as far more risky. So the fund shorted Bitcoin and put the money into silver. By the start of December, the metal had doubled. Then it went ballistic, leaving silver up 152% for the year, while Bitcoin was down 7.5%, yielding a total gain of 178%. Duration, Duration, Duration | Long Two-Year Treasury/Short Austrian Century Bond Trump 2.0 is bent on growth, while other countries, led by Germany, are opening the fiscal pumps. In such circumstances, longer-term interest rates will rise. The longer the term of the bond, the bigger the impact this will have on its price — what's known in bond math as its duration. Austria's century bond, launched six years ago with 94 more to go until it matures, was the perfect way to play this. Meanwhile, the incoming administration was all about forcing the Fed to reduce interest rates, which would lower shorter-term bond yields (and therefore, push their prices up). So to make its big bet against duration, Hindsight shorted the Austrian century bond (which fell 31%), and put the proceeds into the two-year Treasury. That earned 51% by year-end. Long Ruble/Short Turkish Lira Hindsight Capital understands the power of money illusion. Denominate your investments in a weak currency, and automatically all your returns will look better. To give an idea of how this works, here's the S&P 500 this year, as measured in very weak Turkish lira, underperforming US dollars, and very strong euros. Currency effects swamp all else: For this reason, Hindsight Capital tries to move office each year to place itself in a weak-currency jurisdiction. I have banned them from returning to Buenos Aires, so this year they settled in Istanbul, and poured money into the Russian ruble, which is staging a recovery on the rather ineffective sanctions imposed since the Ukraine invasion. The return in lira terms from buying rubles at the beginning of the year has been 75.5%. You just needed to choose the right autocrat: The Monetary Intervention Trade | Long Gold/Short the MOVE Index One part of the debasement trade was clear. Trump 2.0 knew the risks that the bond market could pose, and set out deliberately to curb bond volatility. As the year continued, bonds steadily went to sleep, with the MOVE index of volatility steadily falling. But while the supply of bonds could be altered to keep prices stable, the same doesn't apply to gold: The difficulty in making new gold is its chief appeal.
To capture the administration's clever (and so far successful) strategy to expand while doing everything it could to keep the bond market calm, Hindsight Capital's response was to buy gold, which hit a succession of all-time records this year to gain almost 65% by year's end, while shorting the MOVE (which dropped 38.5%). They made a total profit of 169%. The Trump World for Trade | Long Baltic Dry/Short S&P 1500 Airlines When 2025 dawned, it was evident that the new US president was intent on disrupting global trade, and other countries were planning their responses. Hindsight Capital saw accurately that China would respond by cranking up its exports machine even further and expanding trade in bulk commodities with countries other than the US. That it did with dramatic effect, and its partners began to complain that they were being dumped on. Meanwhile, Trump 2.0 was hostile to immigration, and determined to make it harder to visit the US even for tourists or students. So the logical impact of the MAGA Fortress America approach was to boost shipping rates while making life much harder for US airlines. A long investment in the Baltic Dry shipping index while shorting the S&P 1,500 US logistics and air freight index almost trebled at one point. After a tough December as shipping rates declined Hindsight Capital is still sitting on a gain of almost 74%: Long Korean Kospi/Short Danish OMX Copenhagen The increasing concentration of markets has allowed Hindsight to find a way around the prohibition on trading individual stocks. Around the world, some indexes are almost totally dominated by one or two stocks. So, the best play on the frantic spending to build out AI wasn't the S&P 500 or even the Magnificent Seven index, but the Korean KOSPI where the chipmakers Samsung Electronics and SK Hynix jointly make up 31.6%. At the same time, the vogue for anti-obesity drugs was plainly due for a road bump. By June 2024, Ozempic manufacturer Novo Nordisk A/S had gained 450% for the decade, slightly better than the Magnificent Seven. At that point, it accounted for 68.8% of the OMX Copenhagen 20 index. Then came the inevitable fall. It's now only 40.0%. Long Korean stocks and short Danish stocks was in reality a way to make money from AI spending and the decline of weight-loss stocks. And it was a successful one, with Hindsight doubling its money. Long European Defense Stocks/Short 30-Year German Bund After the Global Financial Crisis, Germany changed its constitution to make it harder for the government to expand fiscally. Alone among major economies, it has managed its debt frugally, helping keep bund yields lower than their peers. They achieved that in part by continuing a long policy of underinvesting in defense. Donald Trump made it loudly clear that he wanted that to end; Germany and the European Union grasped that they could no longer rely on US military support. The conclusion was obvious. In March, as Hindsight Capital had expected, Germany amended its constitution and embarked on a massive rearmament effort. Hindsight had shorted 30-year German bunds, and put the proceeds into the STOXX European Aerospace & Defense index, and they more than doubled their money. Long Clean Energy/Short Oil AI sent energy demand through the roof this year, as was wholly predictable. No matter how it was produced, data centers wanted more electricity. But the new administration was determined to keep the oil price down, a critical factor in limiting inflation. With the aid of increasingly friendly leaders in the Middle East, it did so. Meanwhile, clean energy stocks had tanked in advance of new management at the White House. The administration didn't like wind or solar energy and made no secret that it would withdraw aid for the sector. That made shares there cheap, while demand for energy kept rising. So Hindsight shorted West Texas Intermediate crude oil (down 18.5% for the year), and poured the money into the S&P Global Clean Energy index (up 44.8%). That made 80%. Long European Banks/Short DeFi This one was easy. When any investor has just enjoyed an infeasible gain, there's money to be made by betting against it. In the month following the US presidential election, the Bloomberg Galaxy DeFi index tracking "the largest decentralized finance (DeFi) protocols and apps that use smart contracts on blockchains" rose by 156%. Shorting it at the beginning of this year and profiting as it fell 60.7% was an easy call. Less obvious, perhaps, was that TradFi, as younger crypto bros call it, would score a big win. Reducing interest rates and a steepening yield curve, both predictable, directly help banks, who make their money from the difference in the rates at which they borrow and lend. Economic buoyancy helps them. And in Europe, so did the fact that the sector had been through a brutal decade after the euro-zone crisis left banks dirt cheap but at last in good shape. Hindsight Capital bought the FTSE Eurozone Banks index, which rose 106% in dollar terms, and paid for that by shorting the DeFi index. That quadrupled their money: | 
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