Key Takeaways
- • Thierry Borgeat of The Market (Themarket.ch) argues that hedge-fund de-grossing has produced a 1998-style forced-selling washout in technology, with the momentum factor for US TMT falling about 62% below its 12-month high, deeper than the 52% low after the 2001 dot-com bust.
- • Morgan Stanley prime brokerage data, recreated by Steno Research, shows hedge fund gross exposure down about 7.8% from its peak by late October, the deepest de-grossing since the series began in 2016.
- • Citadel Securities data put CTA positioning in US equities 3.3 standard deviations below its norm in early November, while the VIX jumped 70% in one day on November 5, from 16.6 to 28.2.
- • The technology sector trades at about 18.4 times forward earnings versus a ten-year average of 23.0, and the five largest AI infrastructure buyers spent about $231 billion on capex in their latest quarter.
- • The author frames the selloff as a classic A-B-C correction inside an intact bull market, citing Michael Riesner's arvy Macro Cycles, and flags that the bear case depends on whether falling yields reflect easing oil and inflation or an economic break.
Summary
A column by Thierry Borgeat published on The Market (themarket.ch) on November 10, 2026 argues that the technology sector is experiencing a forced-selling episode comparable to the 1998 Long-Term Capital Management crisis, and that investors with time and cash should buy tech. The author recalls that in September 1998 fourteen banks put $3.6 billion into LTCM, after which the Federal Reserve cut rates three times within seven weeks and the Nasdaq more than tripled over the following 17 months, while noting that the rally ended in the dot-com bubble.
According to the column, the current de-grossing is the deepest since data began in 2016. Morgan Stanley prime brokerage data, recreated by Steno Research, shows hedge fund gross exposure down about 7.8% from its running peak by late October. The author cites several high-profile casualties: Situational Awareness, the AI-focused fund of former OpenAI researcher Leopold Aschenbrenner, reportedly lost about two-thirds of its value in July after using as much as 400% leverage, and sold most of its public stock portfolio to Citadel per press reports. Lone Pine Capital gave back a 44% first-half gain within one quarter, and Bloomberg reported on November 5 that Walleye Capital, a $17 billion multi-strategy fund, is returning capital after its worst month since March 2020. A Breakingviews analysis is cited as finding that ten of the largest hedge funds hold about $2.2 trillion of assets on $360 billion of investor capital.
The column reports that the momentum factor for US technology, media and telecom fell about 62% below its 12-month high, according to Morgan Stanley, versus a bottom near 52% after the 2001 dot-com crash. Citadel Securities data show CTA positioning in US equities 3.3 standard deviations below its norm in early November. The VIX rose from 16.6 to 28.2 on November 5, a 70% one-day jump that the author says has been exceeded only twice since 1990. Historically, the author notes, the S&P 500 returned an average of 17% in the year after the 20 largest VIX jumps, against 12% in other periods, but also cautions that the February 2007 spike preceded a 45% decline two years later.
The author attributes the washout to converging pressures: an oil shock, a 10-year Treasury yield that overshot to about 5.36% in October before retreating to around 4.9%, midterm elections, and trend-following funds flipping short. He cites Michael Riesner of arvy Macro Cycles, who describes the decline as an A-B-C correction within an intact bull market and reports that about 70% of corrections follow a three-wave pattern. Riesner judges that Brent has broken its rising trend line, that US 10-year yields have very likely topped, and that the dollar's major top is behind it, with a corrective rebound still possible.
Valuation is central to the argument. The technology sector trades at about 18.4 times expected earnings, against five- and ten-year averages of 25.3 and 23.0, and a return to the ten-year average would imply a 25% rise without earnings growth. The five largest AI infrastructure spenders invested about $231 billion in capex in their latest quarter, more than double a year earlier, though part is now debt-funded. Nvidia is cited at 14 times earnings among the Magnificent Seven. The author concedes the bear case: if yields fall because the economy weakens, as in 2001 and 2008, technology could fall further, and that distinction will appear in earnings reports rather than in yield charts.
According to the column, the current de-grossing is the deepest since data began in 2016. Morgan Stanley prime brokerage data, recreated by Steno Research, shows hedge fund gross exposure down about 7.8% from its running peak by late October. The author cites several high-profile casualties: Situational Awareness, the AI-focused fund of former OpenAI researcher Leopold Aschenbrenner, reportedly lost about two-thirds of its value in July after using as much as 400% leverage, and sold most of its public stock portfolio to Citadel per press reports. Lone Pine Capital gave back a 44% first-half gain within one quarter, and Bloomberg reported on November 5 that Walleye Capital, a $17 billion multi-strategy fund, is returning capital after its worst month since March 2020. A Breakingviews analysis is cited as finding that ten of the largest hedge funds hold about $2.2 trillion of assets on $360 billion of investor capital.
The column reports that the momentum factor for US technology, media and telecom fell about 62% below its 12-month high, according to Morgan Stanley, versus a bottom near 52% after the 2001 dot-com crash. Citadel Securities data show CTA positioning in US equities 3.3 standard deviations below its norm in early November. The VIX rose from 16.6 to 28.2 on November 5, a 70% one-day jump that the author says has been exceeded only twice since 1990. Historically, the author notes, the S&P 500 returned an average of 17% in the year after the 20 largest VIX jumps, against 12% in other periods, but also cautions that the February 2007 spike preceded a 45% decline two years later.
The author attributes the washout to converging pressures: an oil shock, a 10-year Treasury yield that overshot to about 5.36% in October before retreating to around 4.9%, midterm elections, and trend-following funds flipping short. He cites Michael Riesner of arvy Macro Cycles, who describes the decline as an A-B-C correction within an intact bull market and reports that about 70% of corrections follow a three-wave pattern. Riesner judges that Brent has broken its rising trend line, that US 10-year yields have very likely topped, and that the dollar's major top is behind it, with a corrective rebound still possible.
Valuation is central to the argument. The technology sector trades at about 18.4 times expected earnings, against five- and ten-year averages of 25.3 and 23.0, and a return to the ten-year average would imply a 25% rise without earnings growth. The five largest AI infrastructure spenders invested about $231 billion in capex in their latest quarter, more than double a year earlier, though part is now debt-funded. Nvidia is cited at 14 times earnings among the Magnificent Seven. The author concedes the bear case: if yields fall because the economy weakens, as in 2001 and 2008, technology could fall further, and that distinction will appear in earnings reports rather than in yield charts.
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