The Market Is Topping Out | Cem Karsan

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Today's guest is the perfect expert to discuss a year as volatile as 2025 has been so far.

Cem Karsan is Founder, CIO, and Managing Principal of Kai Volatility Advisors & Kai Wealth. He's widely known as @jam_croissant on X/Twitter.

Heading into 2025, Cem warned us that he predicted it would be a year of heightened volatility. And that certainly proved true in the first half of the year. And again over the past two months.

But what about the road ahead?

Are we through the worst of the bumps, twists and turns the market will throw at us this year?

Or is the ride about to get rocky again?

Let's hear straight from the man himself.

#volatility #marketcorrection #diversification

0:00 – The 40-year regime is over – we’ve entered a 15–20 year period that looks like 1962–1982
3:41 – Lost decade ahead: nominal flat, real losses for traditional portfolios
5:03 – Why buy-and-hold growth worked for 40 years… and why it will destroy wealth now
6:24 – 2025 = final stage of the topping process
7:44 – Presidential election years in populist eras average +21.5% (2024 delivered +25%)
9:29 – The shocking 1962–1982 data almost nobody knows
10:48 – Midterm years in populist eras: all 5 had 23–49% drawdowns
12:20 – 2026 midterm outlook: “The pitchforks are already turning on Trump”
15:10 – Stagflation is here – Black Friday data proves it
17:21 – Why the administration is struggling to hide bad data (CPI, jobs numbers disappearing)
19:53 – Markets now bigger than Fed + Treasury combined – liquidity is reflexive
20:56 – “This is a sumo-wrestler market” – fat tails on BOTH sides
22:59 – Are investors sleepwalking? “After 40 years of one playbook, nobody wants to hear it’s over”
24:47 – The S&P 500 has only a 0.35 Sharpe over 125 years – 60/40 is no diversification
30:55 – Tool #1: Stock replacement with long OTM calls (25–30 delta)
34:39 – Why calls are structurally cheap right now (everyone sells calls, buys puts)
35:54 – Tool #2: True diversification – 15–20 genuinely uncorrelated strategies
39:07 – The magic of diversification: 10% average return, Sharpe 2.0, max drawdown ~4%
44:46 – Tool #3: Long volatility = “brakes on a race car” – 5% allocation dramatically improves returns
47:51 – Tool #4: Value + quality investing (Buffett style) – same return, half the volatility
50:00 – Moneyball investing: combining all four tools can 4x+ risk-adjusted performance
53:05 – “You never know who’s swimming naked till the tide goes out” – 2026 odds are rising fast
54:02 – Cem: “Risk management is the highest calling right now… and the biggest business opportunity on earth”
56:02 – How to follow Cem: kaiwealth.com + @Jam_Croissant on X
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