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On Monday, Goldman Sachs said in its latest report that according to its brokerage data, hedge funds sold US stocks at the fastest pace in six weeks, continued to reduce their net long positions in individual stocks, and increased their short positions in ETFs at the fastest rate in a year. So far, hedge funds have sold US stocks for eight consecutive weeks.

Looking at the products, Goldman Sachs pointed out:

• Macro products, such as indexes and ETFs, accounted for about 40% of the net selling.This part of the sell-off was driven entirely by short sellingETF short positions recorded the largest increase since August 2023, with small-cap stocks, corporate bonds and industry ETFs being the most shorted.
• Individual stocks accounted for about 60% of the net selling, with the dominant selling force being long position selling exceeding short covering.

By industry:

• Information technology was the sector with the most net selling so far. Net selling in the sector was the largest in five weeks, and has been net selling in nine of the past 11 weeks. Software, semiconductors and semiconductor equipment were the sub-sectors with the largest net selling.
• Industrials, healthcare and materials were some of the other sectors with the largest nominal net selling.
• Meanwhile, consumer discretionary, communication services, financials and energy were the sectors with the largest net buying.

On the same day, Tony Pasquariello, head of Goldman Sachs' global hedge fund, said that as the decline in the US stock market widened, investors should hedge their risk exposure even if they own high-quality assets. "Sometimes you need to step on the gas, and sometimes you need to step on the brakes. I tend to reduce exposure and adjust the strike price of options."

Pasquariello also said that it is hard to imagine that August will be one of the months when investors should take significant portfolio risks. Currently, investors hold too many long positions, and Pasquariello said he is cautious about this. He will focus on systematic trading such as CTA.

On the other hand, Pasquariello believes that corporate buybacks should be meaningful in August. “I think the next month will be a balanced process with no significant deviations.”

Despite the warnings about the risks, if the choice is between going long on quality assets and hedging them, or further reducing risk in the core portfolio, Pasquariello said he prefers the former. “It’s a tricky call for me because I tend to view this as a pullback in a still-good environment as distinct from the beginning of something more severe and more prolonged.”

On Monday, driven by two negative news over the weekend, namely, Buffett's sharp cut of Apple's holdings and Nvidia's delay in the delivery of new chips, the U.S. stock market continued the sell-off trend of last week, and the market was in a deep panic. The three major U.S. stock indexes opened lower, with the Nasdaq falling 6.35% and the S&P 500 falling 4.09% at the beginning of the session. Nvidia fell 14% during the session, Apple fell more than 9%, and Tesla fell more than 10%.

Wall Street News website previously mentioned that Goldman Sachs agency brokerage data last week showed that "smart money" has been fleeing the US stock market and pouring into the stock markets of China and other emerging Asian markets. As of last Friday, hedge funds' purchases of Chinese stocks achieved net purchases for the first time in three weeks, and hit the largest net purchase scale in two months.