What He Actually Did After the Index Hit 50,000 — Notes on Gooaye EP703

Contents

1. The index just hit a record. Isn’t it early to talk about a decline?
2. He doesn’t want a stock-bond mix. So what cushions the fall?
3. The index is at a record and my holding isn’t moving. Cut it?
4. How do you know a trend has actually formed?
5. So what can I do with this?
6. The one thing to take away

Govern before disorder comes; secure the state before it is endangered.

—— Book of Documents, “Officers of Zhou” (pre-Qin, translated by the author)

In Gooaye EP703, released 7 October 2026, host Hsieh Meng-kung talks through what he is doing after the Taiwan index crossed 50,000 and pulled back to around 49,800 the same day: trimming the positions that failed to follow the index higher, pushing his leverage down a notch, and thinking about using volume-driven companies to hedge the shortage-and-price-hike names he already owns. He also notes the index is up roughly 70% this year, which is why he keeps paying the roll cost on futures trading at a premium. This is his own allocation thinking, and it rests on a premise — that this bull run is not finished. Change the premise and the whole approach has to change.

The index just hit a record. Isn’t it early to talk about a decline?

He says so himself — “this might be a bit early” — and then talks about it for a long stretch. The reason is sequencing: thinking about a crash while the tape is good and thinking about it after the crash are two different activities.

His arithmetic runs like this. Take the earnings you can reasonably project for TSMC over the next one to three years, use that as the anchor for the index, and 50,000 doesn’t look like the end point — even if there is froth in the AI build-out, the order book doesn’t vanish overnight, it corrects slowly. But history says every capex mania comes down roughly the way it went up, and the drop is larger than people picture. He gives a number: a 50% retracement from here puts the index in the 20,000s, and “that already buries a lot of people.” He also marks the boundary — it isn’t going back to the bargain levels people fantasise about.

What struck me is that his decline has no date attached. There is no “we correct in month X” anywhere in the segment, only “I’m not sure when it happens.” That is what makes the passage usable: no timing claim, so the action it implies is preparation rather than waiting for a signal.

He doesn’t want a stock-bond mix. So what cushions the fall?

He says a stock-bond allocation is reasonable for most people; he just thinks he isn’t old enough for it yet, and wants equities to stay the core. So the hedge he’s thinking about lives inside equities.

This is the part of the episode I care most about. He splits the supply chain into two groups. One is the beneficiaries of shortage and rising prices — the names running hottest right now. The other sells on volume: when memory and components get more expensive, their margins get squeezed and their customers hesitate. These are the companies that spent the past year complaining in the press about shortages and shrinking orders. Once the chain loosens and prices flatten or fall, that’s terrible news for the first group, while the second group finally ships and collects.

Both groups are equities — same asset class, opposite exposure. His idea is to move some money into the second group once it starts showing life, as a partial hedge. He names nothing on air, only notes that public news is enough to draw the two lists.

Worth flagging: the hedge assumes the selloff comes from the supply chain loosening. If the decline arrives from somewhere else — rates, geopolitics, demand falling across the board — both groups fall together and the protection isn’t there. He doesn’t say that outright, though his own wording is “some degree of… a chance it protects me.”

The index is at a record and my holding isn’t moving. Cut it?

His answer is blunt: trim it; if it’s still making new lows, get rid of it.

The test isn’t how far the price fell, it’s a comparison. The index is at an all-time high while some holdings can’t reclaim even a one-month high — money has voted and that name wasn’t on the ballot. At that point, he says, it doesn’t matter how much that position made him in the past, how good a future it promises, or whether it genuinely sits on the shortage narrative. What he wants to avoid is further damage, because in a real correction the names already near their lows tend to fall fastest.

Then there’s a second layer he spells out: liquidity. Getting in is easy — bid at the limit-up and the market hands you size. Getting out isn’t; there may be nobody on the other side. Pulling money out of weakening names early lowers total exposure before you need it lowered.

He doesn’t redeploy that cash into the fastest movers either. He holds a bit back, and for him more cash doesn’t mean a pile of cash — he carries pledged positions, so it amounts to taking leverage down one notch. Then he says something I found honest: he was talking with friends that morning and everyone agreed that the older you get, the less courage you have. Years ago, spotting a group turning strong, he’d lever up and chase it. Now he spots it and leaves it alone. And he turns that around — more people thinking this way is probably good news, because it means the bull run lasts longer. The dangerous phase is when everyone goes manic.

How do you know a trend has actually formed?

A listener asked whether he reads charts, and how many sessions it takes to confirm. His answer has three layers, and the first one surprised me: go buy some and find out.

Hit the key levels, take out the round numbers, and watch whether anyone follows you up. Nobody follows, the move isn’t there yet. He uses a day-trader friend as the parallel: lock up the limit and nobody piles in, no scramble, and the next morning it gaps up and fails — that trader knows the tape is weak. The tape gives feedback, and you pay for the feedback with a position.

The second layer takes apart an assumption. The listener had suggested that money has a high cost of faking its footprints. He rejects the frame: there is no invisible hand in large caps. A small cap genuinely can have an operator — a few million dollars moves the chart. But TSMC, MediaTek, the index itself, or even the mid-caps — no single player decides direction there. That’s collective will, closer to voting. This, he says, is where retail investors tie themselves in knots: they go on forums to accuse the operator of distributing stock, when much of the time the operator simply couldn’t push it up. Who wouldn’t push it up if they could? Long and winning pays more. From outside it looks like selling into the rally; from the inside it’s giving up because the day-traders front-run every bid. So the behaviour looks identical while the intent is nothing like what you assume. He adds one concession: if you insist someone is painting the chart, look at moving averages, which are harder for a few days of activity to drag around.

The third layer returns to fundamentals. Getting direction right was never the hard part, he says — you have to beat the index. Two stocks break out on the same day; froth can lift the weaker one first, but over time the trend in earnings per share is the trend in the price.

Another listener asked whether his single best trade counted as luck, since the company he bought later became an entirely different business. His answer stuck with me: he bought Nvidia for the graphics cards — who knew it would become an AI stock. But holding long-term isn’t buying and covering your eyes. Every single day you’re deciding: sell it, swap it, keep it. The company turned, and you chose to keep holding — that’s judgment. Real luck is something else: a friend’s colleague forgot he owned a stock at all, and remembered in time to retire on it.

So what can I do with this?

Start with the question that stops most readers: “I know I should trim, but the one I’m holding has the best fundamentals and the story is intact. How am I supposed to sell it?”

The episode answers that by swapping the test. His reason for cutting has nothing to do with the story and everything to do with relative position: index at a record, the holding can’t make a one-month high. You can write that as a check for yourself — for each position, how far is it from its own 52-week high, how far is the index from its high, and is that gap widening? The names where it widens are the ones money is telling you aren’t in this round. The nice thing about the check is that it asks nothing about the future; it only asks you to look at the present.

The second pain point is the mirror image: “shouldn’t I move that money into whatever is running hardest?” His answer is no. He parks it and takes leverage down instead, and the reasoning is liquidity — the scenario he fears is not being able to exit on the day it gaps down. Swapping weak names for crowded expensive ones doesn’t reduce exposure, it relocates it.

The third layer is the one I’d actually carry out of the episode, and it has little to do with stocks. He opens the show with a long stretch about tennis. Three or four months of lessons; practising serves with his coach, roughly 40% went in. Playing singles against a friend, seven or eight in ten. The day before recording, at a real match at the Taipei Tennis Center, better than nine in ten. He was startled by his own number. His explanation: in a real match your composure and your nerves get put on the table, so a setting with spectators and a scoreline cannot be substituted by more practice.

The same shape applies to investing. Paper trading, reading someone else’s statements, rehearsing in your head how you’d handle a drawdown — all of that is hitting with the coach. Your real number only appears once you hold something, it can hurt, and someone can see the outcome. His “go buy some and find out” is the same move: he doesn’t judge the trend by looking at it, he asks it with a position.

One more detail from that stretch I want to keep. He bought a road bike, looked up what the world champion rides and ordered the same model, and his wife went straight for him: spend that kind of money and it’ll be hanging on the wall inside a month. He agrees with her — high probability it ends up on the wall — so he set staged targets: a 10K on 1 November, then 21K, then 42K, with the bike sliced the same way. He didn’t argue with the jab. He treated it as a risk to be closed out.

The one thing to take away

Your practice number is not your number. Your number only shows up where someone is watching, where there’s a score, where it can hurt — and it may differ from the practice number by a factor of two, sometimes in the better direction. His serve went from four in ten to better than nine in ten without learning anything new; he walked from the practice court into a match.

Here’s a thing I’ve tried myself: pick something you’ve rehearsed in your head for a long time and never once done in front of a real person — the proposal for your manager, the sentence you want to say to a family member, the letter you keep not sending. Give it a setting with someone present this week, and do it once. It doesn’t need to be polished; the point is moving it from practice onto the table, and seeing what your real number is. The first time I tried, I expected to embarrass myself, and it came out better than practice.

Raw Markdown

This article is an educational discussion of investment method. It is not advice to buy or sell any individual security, offers no target prices, and does not analyze any current holding. Investing carries risk; make your own decisions or consult a qualified professional.