It's about options, specifically on gold, silver, and bond ETFs. Not the type of story that generates headlines.

And you may think it sounds boring at first — but I promise you the implications are monumental.

Before I get ahead of myself, let’s back up for a second. The more liquid a stock is, the more options expirations it gets.

With the least liquid, you get the standard monthly close. A bit more liquid, weekly Fridays. More than that, Wednesday and Friday too. Even more, Monday, Wednesday, and Friday.

Or, of course, we can have options that expire every single day.

As a refresher, an option is a contract that gives you the right (not the obligation) to buy or sell something at a set price (the "strike") by a set date. A call is the right to buy at that price. A put is the right to sell at that price. The price you pay for that right is the premium.

Now, those options expiring every day is something you've probably heard about already. It’s the territory of those "0DTE" (zero days to expiration) degenerates you hear about on the news. Those young gamblers.

The broad indexes and ETFs have options expiring every day. The names you’d expect, like SPX (the S&P 500), SPY (the S&P 500 ETF proxy), QQQ (the tech-heavy Nasdaq ETF proxy), and IWM (the small-cap index ETF proxy) are all there.

You can open a position in the morning for the same day, betting the level or price will move to a certain place, and it’ll disappear in the afternoon.

Who cares? Well, we all do. Or at least we all should.

An option expiring every day isn't just business for 0DTE traders or options experts. 0DTE wags the underlying's tail a lot of the time, and increasingly so since 2022.

It's one of the dark arts, which can get super complicated, very math-heavy, and quite grueling — so I love it.

But I'll get to what I mean by that in a second.

On August 12, the SEC approved a rule letting GLD, SLV, and TLT join the daily-expiration complex. Gold, silver, and long bonds, all cleared for the full five-day treatment.

We can now hang out together and day trade gold until we grow old together. (Kidding! But we could.)

GLD's already there. Its new Thursday expiration is trading right now, today, with real volume behind it. SLV and TLT are cleared for the exact same thing; they just haven't been listed yet.

The exchange just has to actually list the series. And at this point, that's closer to paperwork than policy. Could happen any day.

So here's how I want to do this…

First, I’ll tell you everything that I think happens once SLV and TLT actually catch up to GLD, along with why I think that.

Then we’ll dig into the overall shift that this is part of — because this is just the newest chapter of a much bigger story.

Why This Matters

SPX went through this exact transition back in 2022, when Cboe finished rolling out the daily complex on the index. It kicked off an argument that still hasn't fully settled: Does trading options that expire in hours, instead of weeks, make the underlying more volatile or less?

You've probably heard the "more" case, because it's the one that makes for better headlines. Retail gamblers, a market getting more casino-like by the day, dealers scrambling to hedge and dragging the tape around behind them.

There's good research behind this version too, not just vibes. A jump in 0DTE trading volume has been tied to measurably higher realized volatility.

But there's also a growing pile of research on the other side, and I fall into this camp personally because it’s nuanced in the correct ways.

Researchers looking at S&P 500 options found that on days with 0DTE trading, realized volatility actually came in lower, not higher — a modest but real dampening effect. Cboe's own research group has run this analysis more than once and keeps landing on the same thing…

0DTE flow tends to run fairly balanced between puts and calls, dealer net gamma stays small most of the time, and the mechanism people assume is destabilizing spends most of its life doing the opposite.

In plain English: Trading more means the people selling and buying the options have more reason to buy and sell regularly, which creates a stabilizing effect.

But truthfully, both camps are right, just about different days. When 0DTE positioning is roughly balanced, dealer hedging calms the tape down. When it's lopsided — everyone piling into puts on a selloff, say — the same mechanism flips and starts amplifying instead.

Average it across a big enough sample, and it looks stabilizing. The tail days look like something else.

Now, all of that research is about the S&P 500. GLD, SLV, and TLT are smaller ecosystems, with a different user base — more macro hedgers, fewer retail degenerates — and a different hedging mix. There's no guarantee the SPX balance holds here.

That's not a reason to ignore the mechanism, though. It's a reason to actually watch what happens instead of assuming it.

Dealers, Makers, and Gamma

Okay, now for the dark arts part, or the reason I think any of the above.

When you buy an option, someone sold it to you. Usually a market maker or dealer, whoever's on the other side of that trade professionally.

That dealer doesn't want directional risk. They want to collect the spread and go home flat, so they hedge: buy or sell the actual underlying to offset the option they just sold.

How much they need to hold shifts as price moves. And that sensitivity, or how fast the hedge has to change, is gamma. Acceleration by any other name.

It's biggest right at the money, when the strike price (the price you're locked into if you exercise the option) sits near where the stock, ETF, or index is actually trading — and right before expiration, which is exactly why 0DTE gets treated as a different animal, even though structurally it's the same contract on its last day alive.

Gamma's the one everybody already half-knows. And it’s the thing professional floor traders know inside out and use because it’s been so powerful since options were introduced in the ‘70s. 

But the two that actually define the 0DTE world are charm and vanna, the new guys on the block.

Delta is how much an option's price moves for every $1 move in the underlying. A 0.50 delta option gains or loses about $0.50 for every dollar the stock, ETF, or index moves. Charm and vanna are both just ways delta changes.

Charm is delta decay, or how much an option's delta shifts purely because time passed, with price sitting completely still.

Every option has some charm, but it's a footnote on something with a month left to live.

Compress that same option down to hours and charm stops being a footnote: a 0.50-delta option can be halfway to zero by the afternoon on time alone, no price move required. And the dealer on the other side has to keep buying or selling the underlying just to stay flat with it.

That's why "unexplained" drift tends to show up like clockwork in the final hour or two of a heavy 0DTE session. It's really just an hourglass flipped upside down.

Vanna is the other one, or how delta shifts when implied vol moves, not price.

It's why a single sentence out of the Fed can move a hedge book before the underlying's even reacted.

Vanna isn't unique to 0DTE the way that charm is. But 0DTE is where it does the most damage, because there's no runway left to absorb the shock. A volatility spike on an option with three weeks to expiry gets smoothed out over three weeks. A vol spike on an option with three hours to expiry gets hedged in three hours, all at once.

Put those two together, and that's the real case behind everything I predicted above. It’s not that gamma exists; gamma always existed. It’s that charm and vanna — the greeks that decide how fast a dealer has to move — both get sharper the closer you are to zero days.

Every extra expiration day is another day where some slice of the book is living inside that window.

A New Mechanical Layer

Now, for a long time, gold, silver, and long bonds moved for one reason: whatever was actually happening in the world.

Inflation prints, Fed decisions, dollar strength, geopolitical fear. Slow assets, moved by slow, fundamental forces, with options sitting quietly on top of the price action rather than inside it.

SPX stopped being that kind of market first.

Once it had options expiring every single day, the index picked up a second, mechanical layer underneath the fundamental one — a layer where the size of the move on any given day depends not just on the news, but on where dealer gamma, charm, and vanna happen to be sitting that morning.

Same headline, different day, different-sized reaction, because the plumbing underneath it is different.

That's the reality daily expirations are dragging gold, silver, and long bonds into.

On top of the macro story.

The Fed will still be the reason TLT moves. But increasingly, how fast it moves, how sharp the reversal is, and whether it pins near a round number into the close…

That's going to depend on this second, mechanical layer that almost nobody trading these three funds has had to think about before, because it barely existed for them until this month.

Now for the actual numbers. And since only GLD is actually live, I'm treating it differently than TLT and SLV.

GLD's numbers are today's real evidence. TLT's and SLV's numbers are the "before" picture — what their books look like right now, heading into a change that hasn't happened yet, so there's something to compare against once it does.

Start with gross exposure — call-side plus put-side, ignoring sign — because that tells you how much machinery each fund is carrying, regardless of which way it leans.

TLT's gross gamma is around $62 million. SLV's is about $13 million. GLD's is about $3 million. TLT is carrying by far the biggest gross machine of the three, and it's the one still waiting on its Tuesday and Thursday.

Gross isn't net, though, and net is what a dealer actually has to hedge.

TLT's calls and puts nearly cancel out — $32 million against $30 million. So despite the biggest gross book, its net gamma is only about $2 million. SLV's gamma is smaller in gross terms but less balanced, landing around $4.6 million net. GLD, the live one, sits small and balanced too, around $1.5 million net.

Charm has a similar shape. TLT's net charm is the steepest of the three — around negative $116 million. SLV isn't far behind, around negative $100 million. GLD's charm is nearly flat, around negative $2 million, because its call-side and put-side charm largely cancel out — worth noting, since GLD is the one actually running the daily complex right now and its charm still isn't dramatic. That's evidence against the loudest version of this story, not really for it.

Vanna is where SLV stands out. Its net vanna is running north of $162 million — bigger than TLT's $89 million, bigger than GLD's $24 million — and built differently too. In GLD and TLT, put-side vanna pulls hard against the calls and knocks the net number down. In SLV, the puts barely register, so almost the whole $162 million comes through net.

Everything above — the gamma, the charm, the vanna — is what’s called open-interest-based exposure. It's a snapshot of where positioning sits, updated on a schedule, and built on modeling assumptions about who's short what.

It's not a live read of any dealer's actual book, and it doesn't predict that price has to move a certain way. It tells you where hedging pressure can matter, not that it must. Very important distinction.

Even GLD's numbers today are still mostly the ordinary September and January listings, not the new Thursday specifically, which is hours old.

The real signal, for all three, is what happens to these numbers over the coming weeks as volume actually finds its way into the new dates.

What I Think Happens

When SLV and TLT actually get their Tuesday and Thursday listed, here's what I expect…

TLT gets mechanical

It's already carrying the biggest gross gamma of the three (around $62 million) and the steepest charm drain (around negative $116 million).

Once that's resetting five days a week instead of three, expect more "why did this drift for no reason into the close" behavior… more pinning near big open-interest strikes on expiration days… and Fed-day moves that show up faster and snap back harder, because there's more often a fresh, at-the-money options book sitting there to catch the shock.

SLV is the one that squeezes

Smaller gross machine than TLT, but by far the most lopsided positioning. Its $162 million of net vanna is almost entirely on the call side with nothing offsetting it. And it has the highest implied vol of the three by a wide margin, around 51% at two days out. (Implied vol is the market's forecast of how much a stock is likely to swing, annualized. The higher the number, the more movement is priced in.)

That combination produces fast, ugly, out-of-nowhere moves.

If one of these three has a real gamma squeeze in the next few months, my money's on SLV. (Hint: starting mid-2025 into January of this year, it already did.)

GLD keeps being boring, and that's the point

It's already running the full daily complex today, and its charm and vanna numbers are still small and balanced.

If "more expirations equals more chaos" were simply true on its face, GLD should already be showing it. But it isn't.

That's evidence that a balanced book stays balanced, and it's the baseline TLT and SLV get measured against if they don't behave the way I'm predicting.

Zoom out, and expect this to keep happening

This is the same walk SPX took in 2022, just smaller and in a different asset class.

Once a fund joins the daily complex, more of its trading activity migrates toward same-day and next-day contracts. Closing-hour volume becomes a bigger share of the day. And the options market stops sitting quietly on top of the "real" price and starts becoming part of how that price actually gets discovered.

I'd expect that to show up in TLT and SLV gradually, not on day one, but over the weeks and months after positioning actually migrates into the new days.

That leaves the question…

What Do I Do Now?

Nothing. Absolutely nothing.

I'm not being cute. There's no trade here today… no “this-changes-everything” portfolio move… no reason to touch your gold, silver, or bond position over a rule that's still finishing its rollout.

What I am saying is that this is a story to check back on. I’ll also be covering it extensively.

But just watch GLD if you feel so inclined, since it's the one actually live. If it keeps behaving like a small, balanced book, that's the theory holding.

Watch SLV and TLT's listing calendars for when Tuesday and Thursday actually show up, not when the rule says they're allowed to.

Once they do, I’ll come back to these same numbers — gross gamma, net gamma, net charm, net vanna — and see whether TLT starts drifting into closes the way I'm predicting, and whether SLV's already-lopsided vanna book turns into an actual squeeze.

And keep the causality straight while you wait.

Rates move because macro reprices, and the options market can amplify or smooth that move, not manufacture it from nothing.

Same for gold and silver.

When TLT eventually gets twitchy around an FOMC statement, the Fed will have caused that. The options complex will just decide how fast the twitch propagates — once it's actually plugged in.

The best opportunities in the private market were reserved for venture funds, large institutions, and wealthy investors who met strict income or net worth rules.

But Robinhood wants to change that.

It launched Robinhood Ventures Fund I (RVI) earlier this year and followed with Robinhood Ventures Fund II (RVII) just last week.

These two funds, although very different, both use their capital to invest in privately held companies.

You can buy and sell them just like you would any stock or ETF, which means just about anyone can invest like a venture capitalist now.

Today, I want to talk to you about why these funds deserve your attention.

RVI: Private Companies You Already Know

RVI began trading in March and focuses on more mature private companies. Its portfolio includes names like OpenAI, Databricks, and Stripe.

Those aren’t tiny startups operating out of someone’s garage. Several are already among the most valuable private companies in the world.

That makes the appeal of RVI easy to understand.

Investors who wanted exposure to companies like OpenAI or SpaceX traditionally had very few options before they went public.

But this fund provides another route, and investors have certainly noticed.

RVI began trading around $21 in March. It later surged above $70 before giving back much of those gains.

However, it’s important to understand that its stock price and the value of its investments are not necessarily the same thing.

That brings me to the term “net asset value” (or NAV).

NAV is the estimated value of everything a fund owns, minus what it owes, divided by its number of shares.

Imagine a fund owns $100 million in investments and has 4 million shares. Its NAV would be about $25 per share.

But a closed-end fund trades on an exchange. That means investors determine its market price.

If investors are willing to pay $30 for a fund with a $25 NAV, it trades at a 20% premium to NAV. If they will only pay $20, it trades at a 20% discount.

RVI reported an NAV of $25.02 per share as of June 30. Yet its market price has at times moved far above that level.

That distinction is important.

Buying RVI isn’t just a bet on OpenAI, Stripe, or the other companies it owns. The price you pay for that exposure matters too.

RVII: Investing Before Anyone Knows the Names

If RVI gives you access to private companies you already know, RVII is trying to do something very different.

That makes RVII a bit more interesting.

The fund focuses on early-stage companies tied to Y Combinator, one of Silicon Valley’s most famous startup programs.

If you don’t know Y Combinator, you probably know some of its graduates. The list includes Airbnb, Coinbase, DoorDash, Reddit, Stripe, and OpenAI.

Of course, nobody knew those companies would become giants when they were getting started. That’s the entire point of venture capital.

Invest early, accept that many companies won't work, and hope that a few enormous winners more than make up for the failures.

RVII has already invested in roughly 80 startups working in areas like AI, robotics, healthcare, financial technology, and other fast-growing fields.

The fund raised about $225 million in its IPO and began trading on the NYSE last week.

Before you think about buying, there is an important trade-off to acknowledge.

RVI owns stakes in private companies that have already proven a lot. They could still become far more valuable, but they are already worth enormous sums.

RVII, on the other hand, is entering much earlier. That means the potential gains from a future superstar could be much larger.

It also means the risks are higher.

Some of these startups will probably fail. Others may survive but never become very valuable.

And because the companies are private, figuring out exactly what each investment is worth can be difficult.

RVII also has a more expensive fee structure than RVI, including performance-based fees, which is worth knowing before putting money into the fund.

None of this means RVI or RVII is a good or bad investment today. In fact, I’m not recommending that you buy either one.

What interests me is what they represent.

Wall Street’s Velvet Rope Is Coming Down

For generations, venture capital operated behind a velvet rope.

If you were a large pension fund, endowment, venture capitalist, or wealthy accredited investor, you could get access. If you were an ordinary investor, you generally waited for an IPO.

Robinhood is chipping away at that barrier.

RVI offers public-market access to some of today’s best-known private companies.

RVII goes a step further by giving investors exposure to dozens of startups at a much earlier stage.

There are risks and fees. And with closed-end funds, there is always the question of how much you are paying compared with NAV.

But something important is happening here.

You no longer need to be rich or connected to gain some access to the world of venture capital.

That doesn’t mean you should rush out and buy these funds today. You should still know that they exist, though.

One of my main goals with Truth & Trends is to find new investment trends and opportunities and put them on your radar.

RVI and RVII are exactly that kind of development.

Robinhood helped open stock trading to a new generation of investors. Now it’s trying to open another door.

This time, the door leads to venture capital.

No leaked information or insider tips. It’s public information, available to anyone who knows to look for it.

I'm talking about corporate spinoffs and separations, which are when a large company splits off one of its businesses as a separate public company.

Corporate spinoffs, especially the blockbuster versions, have a way of capturing Wall Street’s imagination.

What would Amazon Web Services be worth if it split off from Amazon? Or what about Waymo if Alphabet set it free?

For now, those are just fantasies.

But there are real multibillion-dollar businesses that are preparing to enter the public markets with far less attention.

And knowing about them early helps you decide whether the opportunity lies in the parent, the new company, both, or neither — before everyone else.

One of the biggest spinoffs of the year just showed us how this works.

A Business Hiding Inside a Business

Until recently, FedEx Freight was simply one division inside FedEx. It's a less-than-truckload (LTL) carrier, similar to publicly traded Old Dominion Freight Line.

It was an attractive operation hidden inside a much larger transportation company.

On June 1, FedEx completed the spinoff of FedEx Freight into an independent public company trading under the ticker FDXF.

FedEx shareholders received one FDXF share for every two FedEx shares they owned. FedEx kept a 19.9% stake.

There was nothing secret about this deal. FedEx announced it well in advance.

But how many individual investors were tracking it? That's the point.

Spinoffs have long attracted savvy investors because they can create gaps between a stock's price and its true value.

There are good reasons why.

A new company gets its own management team, financial statements, and business strategy. Investors can finally see what they're buying, rather than trying to value a single division buried within a huge company.

Spinoffs can also create forced selling.

Some large funds may receive shares in a smaller company they aren't allowed to own or don't want to own. Other funds may have to rebalance.

Wall Street analysts may not cover the new stock right away.

For a time, the new company can become an orphan. That's where savvy investors may gain an edge.

Knowledge is power, and knowing these situations exist costs us nothing. We can study them ahead of time, wait for the right price, or pass.

Here are three situations I'm watching now.

1. Nuclear's Next Giant?

Westinghouse Electric Company filed private paperwork for a U.S. IPO on July 31.

That puts one of the world's most important nuclear companies on a path toward becoming publicly traded.

Its expected value and exact IPO date haven't been announced.

Westinghouse is owned 49% by uranium giant Cameco and 51% by Brookfield. The two bought the company in 2023 for roughly $7.9 billion.

Today, Westinghouse sits at the center of the nuclear comeback.

The company designs reactors, supplies nuclear fuel, and provides key services to plants around the world. Its AP1000 is one of the industry's most important reactor designs.

The U.S. government also reached an agreement with Cameco and Brookfield last year to support at least $80 billion in new Westinghouse reactor projects in the U.S.

That makes this IPO even more interesting as AI data centers drive huge power demand. Meanwhile, governments are turning back to nuclear energy as a reliable source of electricity.

But here's the key point: Cameco shareholders aren't currently being promised Westinghouse shares.

This is an IPO, not the type of spinoff FedEx just completed.

So like with any other IPO, investors will need to judge Westinghouse on its own once we know the price, financials, and final deal terms.

That's why I'm watching now instead of waiting for IPO day.

2. Invest Alongside Uncle Sam

L3Harris created Missile Solutions by bringing together several missile businesses, including the former Aerojet Rocketdyne operations.

The unit produces propulsion systems for the PAC-3, THAAD, Tomahawk, and Standard Missile programs.

The U.S. government invested $1 billion directly into Missile Solutions, which will turn into common shares when the company goes public. L3Harris plans to pursue an IPO in mid-2027.

Again, this isn't FedEx Freight.

L3Harris plans to remain in control, owning more than 80% of Missile Solutions after the IPO.

Current L3Harris shareholders shouldn't expect shares of the new company to simply appear in their accounts.

Instead, investors could soon gain access to a publicly traded missile business just as the U.S. and its allies are spending heavily to rebuild weapons stockpiles and boost production.

That's something I want to know about before Wall Street starts telling everyone else the story.

3. A Global Coffee Giant

Keurig Dr Pepper bought JDE Peet's earlier this year. It now plans to split into two public companies. One will focus on North American beverages.

The other, for now called Global Coffee Co., will focus on coffee. KDP is targeting early 2027 for the separation.

This could be especially interesting because investors don't have many simple ways to invest in the global coffee theme.

Starbucks offers exposure, but it's primarily a coffee shop business. Luckin Coffee is another option, but its business is focused on China.

Global Coffee Co. would be different.

Keurig is already a household name. Add JDE Peet's, and the new company is expected to have about $16 billion in annual sales and operations in more than 100 countries.

Its brands will include Keurig, Peet's, Jacobs, and L'OR.

Source: Keurig Dr. Pepper

KDP says it would be the world's largest pure-play coffee company.

That could give investors a rare way to invest directly in global coffee demand.

KDP currently plans to create Global Coffee through a tax-free spinoff.

But the deal still needs final board approval, and other conditions must be met.

Investors should study those final terms rather than assume this deal will work exactly like FedEx's.

Use Spinoffs to Build Your Watchlist

Not all spinoffs are created equal.

Some create strong companies with focused managers, cleaner finances and more freedom to grow. Others let a parent company unload debt, weak businesses or unwanted assets.

Sometimes the new company is the better investment. Other times, the parent looks better after the split. And sometimes neither is worth buying.

The deals can also work in very different ways. FedEx shareholders received FDXF shares.

Westinghouse is pursuing an IPO. L3Harris plans to take Missile Solutions public while keeping control. KDP currently plans a tax-free spinoff of Global Coffee.

Different deals, risks, and opportunities. But they share one thing: we know they're coming.

You don't have to invest in any of them. That's the beauty of it.

Knowing what's ahead gives you time to do your homework before most investors start paying attention. Then you can make your own choice.

Of course, knowing where to look is the hard part.

So I'll be tracking these deals — and the next ones most investors haven't noticed yet — for you.

Because sometimes the best investment opportunities aren't hiding in obscure companies.

They're hiding inside companies you already know.

For the first time in over 25 years, the stock market is getting ready to enter a period of maximum euphoria.

I’m talking about a maddeningly perfect environment that only comes along once in a generation.

Imagine a stock market where every dip is bought.

When shares do retreat, there’s a feeding frenzy as every investor in the world fights over shares before the next big rally.

Market news leaps from the financial networks to the evening news. All anyone can talk about is how much the stock market is up every week.

It’s a melt-up in its purest form.

The closest analog we have to this kind of environment is the final phase of the 1990s dot-com boom. Only this time, the AI buildout is fueling the speculation.

It’s going to be one hell of a spectacle.

After all, a melt-up of this proportion comes with a cacophony of noise from the financial talking heads and hordes of unwashed speculators scrambling to mint their own personal fortunes.

This leaves you with an important choice to make as this melt-up unfolds… 

You can either whine about the euphoria and pray for the market gods to dump a cold bucket of water on a red-hot market.

Or, you can lock in and trade like your life depends on it over the next 12 months.

So it’s time to buckle up and embrace the madness, because you're about to go on the ride of your life.

The 1999 Playbook

If there’s one thing you need to know about market cycles, it's that the final stage of a major innovation boom is the most violent.

When the Nasdaq made its final push in 1999, the table was already set for what became a 250% rally off the October 1998 lows.

Now, we’re barreling closer to another potentially massive liftoff moment for the market.

Bespoke Investment Group has done a fantastic job tracking the current AI bull market alongside the 1990s boom.

Both begin with breakthrough ideas that changed investors’ view of the market landscape: the October 1994 debut of the Netscape browser, and ChatGPT's release in November 2022.

ChatGPT hit right at the very end of the grinding 2022 bear market. This was AI's "Netscape Moment," a reference point that will define the next decade of market behavior.

We've seen similar patterns play out as the bull has grown. Quantum computing stocks having their moment in the sun as the basic technology took important steps forward. Drone manufacturers attracting massive valuations. AI infrastructure companies raising billions at unprecedented multiples. Memory stock madness leading the semiconductors to new highs…

But it all comes back to that first spark. ChatGPT’s significance is just like Netscape; it made a lynchpin technology relevant to the masses.

Here’s an updated view showing just how close we are to liftoff.

Source: Bespoke Investment Group

Bespoke’s roadmap has us smack in the middle of the 1998 Long-Term Capital Management blowup that preceded one of the most powerful rallies in history. 

Now, we’re beginning to see signs of another leg higher in some of the frothier AI themes.

The memory stocks are defying gravity, firming up, and moving higher following a swift July correction. The gains are trickling down to other areas in the market.

Software stocks are off and running. Small-caps are breaking out to new all-time highs. Biotechs are on fire. Even the forgotten quantum names are threatening to run in this environment.

If you thought the past couple of years were wild, just wait until what happens next…

The Most Important 12 Months of Your Trading Career

As of today, the Nasdaq Composite is less than 2% from posting new all-time highs.

If it continues to break out with the speed we’ve seen since it bounced off its late July lows, we are likely entering the beginnings of a "blow-off" phase similar to the final year of the 1990s dot-com boom.

This is not an event that should send you running to get defensive. Quite the opposite… 

You need to embrace the chaos and make the most of this environment while it lasts.

This is the type of market where we have the potential to make generational wealth, so take full advantage!

Maybe you’ve been hesitant to trade because you’re worried about potential rate hikes, market valuations, or that some of these AI plays have already run too far, too fast.

You need to push these concerns out of your mind. It’s not going to be easy, but the game plan is simple: buy high, sell higher.

During liftoff, breakouts will extend higher than anyone thought was possible. Overextended stocks will keep running. Most of your trades have the potential to work better than expected.

In these conditions, you can trade more often and risk more. For a brief moment in time, we’ll enjoy a trading paradise.

We’re sprinting into a full-on mania. You can feel it in the air, that specific brand of nervous excitement that can precede a vertical move in the markets.

Don’t get left behind.

But the early warning signs that this bull market is running into trouble may not show in the places most people expect.

Instead, it could be in an area of the financial markets that often gets overlooked…

Private capital.

I'm talking about the enormous world of private equity and private credit that’s exploded outside of traditional public markets and banks.

Now, you might hear “private credit” and think of the last financial crisis or a house of cards waiting to fall.

So I want to be clear up front. I'm not predicting another financial crisis.

But some of what I see today is familiar enough that I think you should be paying attention.

The Early Signs of Financial Stress

I saw an article in The New York Times this week with a remarkable statistic that caught my attention.

As of June 30, private equity firms were sitting on 33,575 unsold companies, according to PitchBook. That's up from 32,451 at the end of last year and just 15,923 a decade ago.

What's remarkable is the environment in which this is happening.

Public stocks remain strong.

The first half of 2026 was the second-busiest period for IPOs in more than a decade. Major acquisitions are getting done.

Yet private equity firms are struggling to find buyers willing to pay the prices they want for thousands of companies.

The performance gap is equally striking.

From July 2022 through March 2026, U.S. private equity generated annualized returns of just 6.4%, according to MSCI, compared with 15.2% for the S&P 500 and 19.3% for the Nasdaq.

Higher interest rates are a big reason why. Private equity firms spent years buying companies using cheap borrowed money.

Today's buyers have to finance those acquisitions at much higher rates, making yesterday's valuations difficult to justify.

So instead of selling, many private equity owners are waiting.

They are refinancing debt, extending maturities and hoping that lower interest rates, stronger markets or improved business conditions eventually allow them to exit at better prices.

None of this means those companies are failing.

But when tens of thousands of private businesses are stuck in portfolios while owners and lenders push their exit dates and debt maturities further into the future, it's worth watching.

To understand why, let’s go back about 20 years.

Lessons From the Housing Bubble

Most investors remember the 2008 Global Financial Crisis as a housing crash.

While that's true, it misses an important part of what transformed falling home prices into a global financial catastrophe.

You see, housing was the bubble, but securitization is what helped spread the risk.

For years, lenders issued increasingly risky mortgages that were bundled into mortgage-backed securities, or MBS.

Those securities could then be sliced, repackaged and combined into collateralized debt obligations, or CDOs.

The financial system took risk that originated with individual mortgages and distributed it across banks, hedge funds, investment firms and investors around the world.

Leverage magnified the consequences. And the first warnings didn't come from stocks.

By the first half of 2007, subprime delinquencies were climbing, and mortgage securities were deteriorating.

Source: Federal Reserve August 2007 FOMC Presentation

Two Bear Stearns hedge funds heavily exposed to mortgage debt collapsed that summer. Yet stocks kept rising.

The S&P 500 didn't reach its pre-crisis peak until Oct. 9, 2007, months after credit markets had begun flashing warning signs.

That's the history I keep thinking about today.

If AI and the zero-interest-rate era helped inflate today's asset boom, could private capital be a mechanism through which some of those excesses are exposed and spread?

We can’t know for sure, but there are enough similarities that I want to watch this closely.

Private Credit's $1.4 Trillion Experiment

Private credit has exploded since the Global Financial Crisis, partly because tighter regulation pushed traditional banks away from some forms of risky corporate lending.

Nonbank lenders stepped in.

Source: Federal Reserve

According to the Federal Reserve, private credit now represents roughly $1.4 trillion of U.S. corporate debt.

Unlike publicly traded bonds, much of this lending occurs in private markets where prices, valuations and borrower health can be considerably less transparent.

And we're beginning to see signs of stress.

One of the most interesting is the growing use of payment-in-kind, or PIK, interest. The concept is actually quite simple.

Imagine that I owe you $100 but can't comfortably make my interest payment. Instead of requiring cash today, you allow me to add the interest to the loan balance.

Don't have the cash to pay me today?

Fine. I'll add the interest to what you owe me tomorrow.

That can buy a healthy company valuable time. But when its use begins rising among highly leveraged borrowers, it's something worth watching.

The same is true of the amend-and-extend transactions we're seeing.

Rather than force a borrower to refinance, sell or recognize a loss, lenders can change the terms and push the maturity farther into the future.

As evidence that this may be occurring at a larger level than the market imagines, in February, S&P Global Ratings reported that conventional defaults among the private companies it tracks were just 1.13% at the end of 2025.

But include “selective defaults,” which can involve things like converting cash interest to PIK or extending maturities, and the default rate rises to 4.5%.

Again, none of this means a crisis is underway.

But extend the loan. Amend the terms. Capitalize the interest. Delay the sale. Eventually, somebody has to determine what these assets are actually worth.

This is where the story circles back to the AI bubble everyone is talking about.

The AI Connection

Software became one of private equity's favorite targets during the era of near-zero interest rates.

Many of those acquisitions were made around 2021, when software valuations were near historic highs.

Then the AI boom arrived.

Suddenly, investors had to consider whether AI could disrupt the future economics of some of the businesses private equity firms had purchased at premium valuations.

The Times specifically identifies software as one of the most troubled areas of today's private-equity pipeline.

Rather than sell some of those companies and potentially recognize painful losses, owners are waiting.

AI doesn't have to be what ultimately exposes problems in private capital. Rates could stay higher. The economy could weaken. Credit conditions could deteriorate. Valuations could reset.

Or nothing severe may happen at all.

The point is that while everyone is watching AI stocks for signs that the bubble is bursting, stress may be accumulating somewhere else entirely.

There are important differences between today and 2008, so I want to state this clearly.

Private credit is NOT subprime mortgage debt.

Banks are better capitalized. Mortgage underwriting is dramatically different.

And many private-credit funds are financed with long-term investor capital rather than the fragile short-term funding structures that helped turn mortgage losses into a systemic crisis.

What’s more, private capital's lack of daily liquidity can actually be a strength.

A fund that doesn't have to sell assets during a temporary panic may be able to wait for conditions to improve.

That's why I'm not predicting another 2008. But the similarities still deserve your attention.

Years of cheap money encouraged leverage and elevated valuations. Credit migrated into less transparent parts of the financial system.

Some borrowers are extending maturities, restructuring obligations and capitalizing interest rather than resolving their debts. Private-equity owners are delaying exits because buyers won't meet their prices.

Meanwhile, public stocks remain strong.

Watch the Credit Markets Closely

There’s one more lesson from history that I don't want to overlook.

We may not know exactly what ultimately causes a bubble to burst. But we have a pretty good idea when the risks become greatest…

When the Fed tightens financial conditions.

We saw it when the Fed raised rates beginning in 1999, helping bring the excesses of the dot-com era to an end.

We saw it again when rates climbed in 2004 and continued higher through 2006, tightening the credit conditions that eventually exposed the weaknesses in housing and subprime mortgages.

And we saw another version beginning in 2022, when the fastest Fed tightening cycle in decades helped puncture speculative excesses across technology, crypto and other risk assets.

It’s crucial that we remember these two key points.

• Easy money helps inflate bubbles.
• Tighter money has a way of revealing what was hiding inside them.

That's particularly important today because many of the private-equity deals and private-credit loans we're discussing were created when money was extraordinarily cheap.

Higher rates didn't create those risks. They changed the economics and began exposing them.

The lesson of 2007 isn't that every crack in the credit market becomes 2008. It's that investors shouldn't wait for the stock market to tell them something is wrong.

Now, let me be clear, I'm not telling you to sell your stocks or abandon this bull market.

But to identify risks that could threaten it, we need to look beyond Nvidia, AI valuations, and the major market averages.

Right now, one of the places I'm watching most closely is private capital.

I'll be monitoring private-credit defaults, PIK usage, refinancing activity, private-equity exits and signs that stress is beginning to migrate into banks or public credit markets.

Maybe these signal fires burn themselves out. I hope they do.

But if they start spreading, I'll stay on top of them and make sure you understand what they're telling us.

Unitree Robotics debuted on the Shanghai Stock Exchange after pricing an initial public offering that sought to raise roughly $900 million and values the company at about $9 billion.

Normally, the IPO of a relatively small Chinese technology company shouldn't warrant much attention from American investors.

But this one does, so I’m here to explain it to you.

Unitree makes humanoid robots, and its arrival on the public markets comes as several important developments are beginning to converge.

China is rapidly scaling humanoid production, Tesla is building dedicated manufacturing capacity for Optimus, new investment vehicles are giving investors exposure to physical AI, and the U.S. government is already treating advanced robotics as a matter of national security.

Put those pieces together, and I think we're witnessing an important transition.

After decades of prototypes, science fiction, and promises about the robots of tomorrow, the industry is beginning to scale today.

And for investors, robotics is becoming a real, investable theme.

The Business Behind Backflipping Robots

We've spent the past several years watching AI learn to write, code, create images, analyze data, and answer complicated questions.

But almost all of that intelligence has remained behind a screen.

The next phase is about taking that intelligence into the physical world. It's commonly called "embodied AI" or "physical AI."

Rather than learning primarily from digital information, these systems learn by interacting with actual objects, people, and environments.

Self-driving vehicles are an early example.

Humanoid robots potentially take the concept much further because they're designed to operate in the same environments humans do: factories, warehouses, stores, offices, and, eventually, our homes.

Source: Unitree Robotics

Nvidia CEO Jensen Huang has called physical AI the “next frontier” of AI, and his company is already positioning itself accordingly.

In June, Nvidia announced a partnership with Unitree to build a research robot. Unitree supplies the mechanical body. Nvidia supplies the digital brain.

That relationship offers a remarkably simple way of understanding what's happening.

The AI revolution is beginning to acquire a body.

If you've seen Unitree before, there's a decent chance it was on social media.

Its robots have become internet sensations by running, backflipping, scaling walls and performing elaborate kung fu routines.

They're extraordinary demonstrations of how quickly the technology has advanced.

Source: Unitree Robotics

But doing a backflip doesn't necessarily create a viable business.

That's why the numbers behind Unitree are more interesting to me than the videos.

The company generated roughly $250 million in revenue last year. Sales more than quadrupled, and unlike many emerging technology companies, Unitree is already profitable.

More importantly, China is moving aggressively toward production at scale.

According to research firm Omdia, Chinese manufacturers shipped roughly 18,500 humanoid robots during the first half of 2026. American companies shipped about 4,000.

That's more than a four-to-one advantage.

Unitree's products already range from less than $5,000 to more than $150,000, spanning industrial, educational and consumer markets.

Much of today's commercial activity still consists of pilot programs and research projects, and fully autonomous teams of humanoids working across factories remain years away.

But the nature of the challenge is changing.

For decades, the question was whether anyone could build robots capable of moving and operating like people.

The question now is whether companies can build enough of them, cheaply enough, to put them to work.

The Race to Build Millions of Them

China isn't alone in thinking about scale.

Tesla is building dedicated manufacturing capacity at its massive Giga Texas complex for Optimus, its humanoid robot.

Elon Musk has said Tesla eventually aims to produce as many as one million Optimus robots annually.

Source: Tesla

There are plenty of reasons to be skeptical of that timetable, but the precise forecast isn't the point.

By building dedicated manufacturing infrastructure, Tesla is putting physical capital behind the belief that humanoid robots can eventually be manufactured at enormous scale.

Meanwhile, Unitree competes with Chinese companies including Agibot and UBTech and American developers including Figure AI, Agility Robotics and Apptronik.

Moreover, Hyundai-owned Boston Dynamics has spent decades developing some of the world's most sophisticated robots.

This isn't simply a technology race anymore. It's becoming an industrial one.

I've seen versions of this progression before.

Transformative technologies typically begin expensive, with uncertain commercial applications and few obvious investment opportunities.

Then costs fall, manufacturing improves, infrastructure gets built, and capital begins pouring in.

It happened with automobiles, semiconductors, personal computers, and the internet. More recently, we've watched it happen with AI.

That's why I don't think I need to predict today whether Unitree, Tesla, Figure, Boston Dynamics or somebody I've barely heard of will eventually dominate humanoid robotics.

What's more important is recognizing when the underlying environment begins to change.

Several signals suggest that's happening now.

Governments certainly aren't waiting for the commercial winners to emerge.

Last month, the Federal Communications Commission announced plans to block new Chinese-made humanoid and quadruped robots from entering the U.S. market, citing national security concerns.

The concern is understandable.

Robots operating inside factories, businesses and eventually homes will contain cameras, sensors, microphones, connectivity and enormous amounts of software.

Those machines could collect extraordinarily sensitive commercial, government and personal information or potentially create new avenues for cyberattacks.

China has accused the U.S. of abusing national-security concerns and threatened retaliation.

But there's a larger industrial story here, too.

Washington has already watched China establish commanding manufacturing positions in solar panels, batteries and electric vehicles. It clearly doesn't want advanced robotics added to that list.

Think about what that means.

This is an industry whose largest commercial applications haven't even been established yet, and the world's two largest economies are already fighting over who will control it.

From Science Fiction to an Investable Theme

The long-term projections help explain some of that urgency.

Morgan Stanley estimates that the humanoid robot market could eventually exceed $5 trillion by 2050, with as many as one billion humanoids operating worldwide.

Those numbers should be treated with appropriate skepticism. Nobody can reliably predict what the robotics industry will look like nearly 25 years from now.

Fortunately, we don't need one billion robots for this to become an enormous industry.

And investors don't have to wait until 2050 to participate in the theme:

• Dedicated robotics and physical-AI ETFs are appearing and attracting investor attention.
• Unitree is entering the public markets.
• Tesla is building dedicated production capacity.
• China is already manufacturing thousands of humanoids.
• Nvidia is developing the computing platforms that can power them.
• And governments are beginning to treat robotics as strategically important technology.

That's why today's Unitree debut matters.

It isn't because I'm recommending Unitree. I'm not.

It matters because an industry that investors have spent years watching from a distance is beginning to look very different.

Robots are leaving research laboratories and entering factories. Companies are moving from prototypes toward production. Capital markets are providing new ways to finance and invest in the industry. Governments are already fighting over who gets to control it.

There will be setbacks, hype, and undoubtedly robotics companies that attract enormous amounts of money and ultimately go nowhere.

I don't know yet who the winners will be, and I don't need to pretend that I do.

What's important is recognizing what has changed.

The factories, products, public companies, and investment vehicles are beginning to arrive. Robotics and physical AI are becoming investable.

And from here, I'll be watching closely to see where this rapidly emerging industry takes us, and I'll keep you informed every step of the way.

Newspapers stacked on the desk. CNBC playing in the background. A stock market I was just beginning to understand.

That was me, fresh out of college, a slave to the news before I knew there was any other way to invest.

I thought information was my best friend. I'd spend hours scouring newspapers, watching CNBC, and reading analyst ratings and earnings reports. My logic was simple: the more words I crammed into my skull, the more money I would make with my investments.

If only the world worked this way…

Sure, a big part of any investor's market education is learning how to read the financials and digest all the news on stocks and analyst reports floating around out there. But the harsh truth is none of this information will give you an edge in the markets.

Like most young investors, I found this out the hard way.

No matter how much content I consumed, I wasn't able to beat the market. I was going insane.

Then, the Great Financial Crisis wiped away more than a decade of stock market progress. It also offered me my own personal reset.

While the world was turned upside down and wealth was getting obliterated every single month, I chose to find out what makes markets tick.

I was finished chasing breaking news, press releases, and other people's opinions. I dug into the heart of market mechanics — the hidden forces that shape trends and move prices.

Instead of chaining myself to the financial news, I found freedom in the charts. I learned to identify and take advantage of major market trends. And I began to understand the role sentiment plays in the stock market fluctuations that drive so many investors crazy.

You don't have to be a technical analyst or chart hound to make this information work for you.

Your ticket to choosing financial freedom begins with understanding how to better curate the endless streams of information available to you. Not only will your investments perform better, but you'll also have more time for the things in your life that really matter.

Here's how to get started…

Lose the News

TV news is designed to scare you so they can sell advertisements. Financial news is no different.

When the stock market is in freefall, CNBC likes to take advantage of the fear by airing its infamous "Markets in Turmoil" special reports, no doubt attracting a huge audience of scared investors.

Market strategist Charlie Bilello documented every "Markets in Turmoil" report air date going back to 2010. He found the S&P 500 posted a one-year forward return averaging 40% following each special, calling it "the only indicator with a perfect track record."

You're never going to gain any insight from watching financial news that will give you any edge in the markets whatsoever. After all, everyone else is watching the exact same programming as you. Mindlessly consuming media is not research. You're simply gathering information.

If you're worried about missing something important, just keep the TV on mute in the background. It's much more peaceful with the sound off.

Focus on Price

You won't see much chatter about stocks that are going nowhere on the news.

That's because the news is about what's already happened. You'll hear plenty about stocks that have already made big moves and attracted all the attention. But they'll never tell you what's about to happen next…

For this kind of insight, you have to focus on price.

Once a week, you should run three separate scans: One for stocks making new all-time highs, one for 52-week highs, and one for 50-day highs.

The first two will help you find stocks in long-term uptrends. These are your market leaders. When you scan for 50-day highs, you have the potential to find fresh names that are beginning to outperform.

Buying stocks that are going up may sound obvious. Yet many investors are dead set on catching falling knives and guessing at dramatic turnarounds that never materialize.

Don't fall for this trap. Narrow your research to stocks locked in uptrends and those that are beginning to catch positive momentum. In 18 months, they'll be the names the talking heads will be gushing about on TV.

Here's another fun tip: Stocks that double in price over the past 12 months are statistically likely to double again over the next year. Locate these "doublers" to find your next triple-digit winner.

Restrict Your Intake

The world is a noisy place. Social media has made it much noisier.

The crushing weight of social apps makes people feel like they need to have an opinion about every big (or little) event happening in the world.

But opinions are useless. In fact, they're more likely to hinder your investment process than help shape a constructive thesis.

There are thousands of stocks listed on U.S. exchanges. Most are junk. The average ones are, well… average. I only have strong views on a handful of names.

You don't need to drink from the firehose. Focus on the outperformers — the trends and investment themes that have the potential to make your year.

Ignore the rest.

It may not seem relevant at first, especially if you don’t own Korean stocks or follow the Korea Composite Stock Price Index (KOSPI).

But there's a very good reason why you should care about what just happened.

Over the past year, South Korea has become one of the world's biggest beneficiaries of the AI boom.

As enthusiasm surrounding AI accelerated, so did investor optimism.

Then after nearly a month of weakness in AI and semiconductor stocks, a wave of selling pressure hit last week.

It wiped billions of dollars from South Korea's technology sector and sent the KOSPI to one of its sharpest declines in years.

At one point Wednesday, the Korean index plunged nearly 13% to below 5,300 and triggered a circuit breaker for a second straight day.

The index managed to recover slightly and ended regular trading “only” down 6%.

Still, the index was down an astounding 44% at Wednesday's low from its all-time high just the previous month.

So, why should you care?

Because history has a way of reminding us that important changes in market behavior don't always begin on Wall Street.

Sometimes the first clues appear in places most investors aren't watching.

That doesn't mean every overseas selloff predicts trouble in the U.S. In fact, most don't.

But when speculation, borrowed money, and forced selling begin interacting in unusual ways, experienced investors pay attention — even if it's happening halfway around the world.

A Case Study in Market Psychology

South Korea has been one of the biggest beneficiaries of the global AI boom. Companies tied to advanced memory chips and AI became market darlings.

Meanwhile, newly launched leveraged ETFs gave retail investors an easy way to amplify their bets on those same stocks.

For a while, the strategy seemed almost unstoppable. Then sentiment changed.

AI and semiconductor stocks had already been selling off for several weeks, both in South Korea and here in the U.S.

Last Wednesday, however, that orderly pullback accelerated into something very different.

As prices fell, investors who had borrowed money to increase their exposure were forced to sell into an already declining market.

Those sales pushed prices even lower, triggering additional liquidation and creating the kind of self-reinforcing cycle that leverage often produces.

Notice what didn't change.

AI didn't suddenly become less important. Demand for advanced semiconductors didn't disappear overnight.

And the long-term outlook for many of these companies remained largely intact.

What changed was investor positioning.

When too many investors crowd into the same trade using borrowed money, even healthy corrections can become far more severe than fundamentals alone would justify.

This isn't the first time investors have been surprised by developments outside the U.S.

In 1997, the collapse of Thailand's currency exposed financial weaknesses that quickly spread throughout Asia and eventually rippled across global markets.

Source: Our World in Data

A year later, the failure of Long-Term Capital Management demonstrated how excessive leverage could transform manageable losses into a much broader financial crisis.

By 1999, new investment products, abundant optimism, and the belief that technology stocks could only continue rising had fueled one of the greatest speculative booms in market history.

Source: PwC

None of those episodes perfectly mirrors today's environment, and I’m not suggesting we're about to relive them.

But they all reinforce the same lesson: changes in investor behavior often become visible before they become obvious.

That's why professional investors pay attention when unusual things begin happening outside our own borders.

They're looking for evidence that the market's character may be changing.

Leverage Leads to Crises

There's an important difference between an ordinary market correction and one driven by forced selling.

Markets fluctuate every day as investors react to earnings, economic data, interest-rate expectations, and geopolitical events. It’s all a normal part of investing.

Borrowed money changes the equation.

Investors using leverage don't always have the luxury of waiting for markets to recover.

Once prices decline far enough, they're often required to reduce positions regardless of what they believe those investments are actually worth.

Selling becomes disconnected from fundamentals and begins feeding on itself.

That's precisely what unfolded in South Korea.

It's also important to remember that last Wednesday didn't occur in isolation. AI and semiconductor stocks had already been correcting in both South Korea and the U.S.

Looking back, last Wednesday may ultimately prove to have been the crescendo of that selling pressure as excessive speculation was flushed from the system.

Or it may simply become another chapter in a correction that hasn't yet run its course.

At this point, the evidence isn't conclusive.

Interestingly, the story didn't end on Wednesday.

The next day, U.S. AI and semiconductor stocks rebounded sharply, recovering a meaningful portion of their recent losses.

On Friday, Korea’s KOSPI staged a rally for the ages, rising almost 18% in a single trading session.

Propelled by Thursday's recovery and Korea's overnight surge, U.S. markets opened strong on Friday morning. Still, they were showing only modest gains by the afternoon.

Whether this rally ultimately proves to be the beginning of the next advance, or merely the kind of relief rally that often follows an intense wave of liquidation, is too early to know.

As if that wasn’t enough news, another major financial development was competing for headlines simultaneously.

On Thursday, a story broke that AI researcher Leopold Aschenbrenner's Situational Awareness hedge fund was forced to sell its publicly traded stock holdings after suffering steep losses.

While the circumstances differed from those in South Korea, the underlying dynamic was remarkably similar.

Whether it's an individual investor using leveraged ETFs or an institutional manager overseeing billions of dollars, borrowed money has a way of turning temporary declines into forced selling.

That doesn't mean we're witnessing another 1999 or that the long-term AI story has suddenly fallen apart.

It simply reminds us that periods of extraordinary optimism often attract extraordinary leverage. When that leverage begins to unwind, even temporarily, successful investors pay attention.

The Takeaway

Could last week's events ultimately prove to be nothing more than a healthy reset after one of the strongest AI-driven rallies in recent memory?

Absolutely.

In fact, the late-week rebound may eventually suggest that the market needed to flush out excessive speculation before moving higher.

It's equally possible that the rebound was only temporary and that the correction has further to run.

Right now, no one knows. That's why we won't rush to conclusions based on one dramatic week of trading.

Instead, we'll continue doing what we've always done.

Follow the evidence, separate meaningful signals from short-term market noise, and help you understand what matters and what doesn't as this story unfolds.

Because successful investing isn't about reacting to every headline.

It's about recognizing when the market begins telling a different story.

It is survived by one very expensive lesson about leverage.

For those who didn't know the deceased…

Situational Awareness was the $20 billion brainchild of Leopold Aschenbrenner, the 25-year-old AI wunderkind who walked out of OpenAI, published a manifesto, and convinced the smart money that he'd seen the future.

And for a while, he had.

His fund piled into chips, memory, and energy infrastructure — the picks and shovels of the AI gold rush — and rode them to gains that got him anointed the next Warren Buffett before he could legally rent a car without a surcharge.

Then July happened.

As the memory stocks cracked and the semis went into freefall, reports started trickling in Thursday that a huge institutional seller was dumping shares into the chaos.

Plot twist: it was our boy Leo, caught offsides with highly leveraged bets on the chips while simultaneously shorting the newly resurgent software names.

Double-wrong… on margin.

By midday, Ken Griffin's Citadel had swooped in to buy the fund's entire public book at fire-sale prices, and Leo quietly exited the public markets to go "spend time with his thesis."

Look, I'm a trader. Being wrong is part of the game.

I'm wrong all the time. It sucks, but you get used to it.

Being double-wrong is a bummer. And being double-wrong on leverage after the media crowned you the second coming of Buffett?

That's the kind of thing they put on your tombstone.

Don't shed too many tears, though. I'm sure Leo lands on his feet. His swift retreat just gives him time to lick his wounds and plot his next act.

The rest of us don't have a Citadel bid coming to bail us out.

So while the speculators are busy dancing on the grave — "the forced seller's gone, the bottom's in!" — let's do something more useful.

It’s time to figure out what the chip charts are actually telling us, so you don't end up writing your own portfolio's eulogy.

Start With the Big Picture

To understand what’s going on with the semiconductors, we need to acknowledge just how powerful this year’s rally has been and how unusual these moves really are.

Semiconductors (specifically the memory trade) have produced generational gains for investors over the past several months.

Micron Technology Inc. (MU) has gained nearly 700% over the past 12 months. Sandisk Corp. (SNDK) is up an eye-popping 2,700% over the same timeframe.

Korea’s KOSPI, which is disproportionately weighted toward just a handful of chip names, has more than doubled year-to-date, despite the fact that it has dropped as much as 40% from its June highs!

Next, we need to understand the emotional weight that comes with huge price moves.

Prices aren’t just numbers. There are emotions involved. SNDK ran from the $550s to over $2,300 in less than three months.

But hitting $1,200 on the way up back in early May feels a lot different than tumbling 50% from its highs to hit $1,200 this morning. Context matters!

Speculators are all hot and bothered over the Situational Awareness implosion. They’re hoping that the worst is over now that Leo liquidated. That’s one of the reasons why the chips enjoyed such a strong bounce yesterday.

But hope is not a strategy.

How Do I Know It’s Safe to Buy?

I’m not here to call a top or make any bold macroeconomic predictions. But I can tell you that I do not want to rush back to buy into these chip stocks following a volatile July session.

It’s clear from Thursday’s action that the speculators think they can bully these stocks back to their highs.

Their brains are stuck on the same program that was running earlier this year: buy these stocks at any price, and they will only go up.

But the damage is done for now. We have a short-term downtrend on our hands following the July swoon. And until we see a convincing breakout, we have to respect this series of lower highs and lower lows.

Using MU as an example, I’d want to see the stock convincingly retake $1,000 before even thinking about a trade on the long side.

It’s clear that the spring/early summer momentum move is over and needs to reset. That will take time.

Every stock that logs a sharp, multi-month rally needs time to digest the move when momentum finally fades. Don’t rush it!

Leave the Fundamentals At Home

Many speculators are going to attempt to lean on fundamentals as they convince themselves to immediately re-enter or double-down on their trades.

They aren’t wrong about the numbers, of course. These growth stories are impressive, and it’s easy to make an argument that many of these stocks remain cheap despite their huge rallies this year.

But these numbers aren’t what’s driving the market right now. 

I’m not saying that fundamentals don’t matter. They certainly are important for the long-term health of any business and, subsequently, its stock price.

But after a huge rally followed by a fast correction of 25%, 35% or even 50%, emotions and herd mentality are driving the price action.

Time is the cure for these runaway animal spirits.

These stocks will find a floor eventually. Then, they will chop along in wide ranges. The “hot money” will move to the next exciting play. Shareholder turnover will help bleed off the last bit of excess enthusiasm.

Eventually, the stocks will set back up again for another run.

You won’t catch the exact lows.

But you’ll be in a much better place than traders who will inevitably tie up their capital in a former momentum leader that goes nowhere but sideways to down for months, dreaming about fast profits that never materialize.

Stocks that were the best performers not long ago have quickly become the worst.

The “smart” money is telling you about how great these companies are at a fundamental level. And yet, your portfolio is showing losses.

It’s frustrating, to say the least.

So I want to help explain what exactly is happening and what to do about it.

Start with one of the most important rules of investing: we are buying stocks, not companies.

You’re technically buying an ownership stake in that business. But it’s very different from buying a private business.

When you buy a stock, you don’t have a say in how the company is run or have access to its cash flow.

In the long term, the value of a stock will track the economic success of the company.

In the short term, though, they can diverge tremendously — both to the upside and the downside.

The result is that stock prices are highly influenced by human emotion.

And few trades show that better right now than Micron, one of the hottest names in the market over the past few months.

Here's the best way to picture what's happening…

The Danger of Crowded Trades

Imagine you’re on a raft going down a river. As a native Arizonan, I’m picturing a whitewater raft going down the Colorado River in the Grand Canyon.

The river is flowing nicely, the raft is steady, and everyone’s having a great time.

The canyon walls make it so one side of the raft is shady and cold, while the other side is sunny and warm.

As the raft continues down the river, more folks move from the shady side to the sunny side. Eventually, most people are all on one side of the raft.

Now the raft is imbalanced, and hitting even a small rapid can cause problems — even throwing some folks into the water!

The conditions didn’t change at all. Instead, the issue is that too many people crowded onto one side of the boat.

That’s exactly how human psychology works with investing.

The river and the weather are like the stock market. A nice day is the bull market. The raft is your bets on companies.

Just like in the raft analogy, things can get dicey when too many investors crowd into a stock, even if the underlying conditions haven’t changed.

Let’s look at a real-world example.

One of the hottest areas of the stock market has been semiconductors, specifically companies that manufacture memory chips.

One of the most successful of the bunch has been Micron Technology Inc. (MU).

The stock’s recent rally coincided with rising earnings estimates. When Wall Street analysts raise estimates for a company, the stock usually follows.

Here’s the chart showing consensus estimates for fiscal year 2027 earnings per share (EPS) for Micron (in blue) and the stock price (in white).

Since the start of 2026, EPS estimates have gone from roughly $20 per share to over $150. That’s amazing!

The stock price followed right along. Shares exploded from $250 per share to over $1,200 per share in early June.

Look closely at the chart, and you’ll see the stock’s sharp pullback. Shares fell more than 40% in a month.

What happened? Well, nothing happened to the fundamentals.

Micron is still positioned as a global leader in memory chips. AI spending is robust and continues to grow. The company even reported blowout results at the end of June.

And the stock has been crushed anyway.

What to Do With Micron Now

Remember, we’re buying stocks, not companies. A stock’s move in the short term isn’t necessarily a reflection of the fundamentals.

In this case, the issue was that too many investors crowded onto one side of the raft. Micron reached overbought levels that it had never seen before.

How do we know that? There are two good indicators.

The first is a technical indicator called the relative strength index (RSI).

In simple terms, RSI measures speed and magnitude of a security's recent price changes. It can tell you when a stock is overbought or oversold.

When the RSI goes above 70, it means that a stock has been running hot and is now vulnerable to a pullback.

In other words, we know there are too many folks on the sunny side of the raft, and the journey could get rocky soon.

The second measure is the distance from the moving averages. I usually look at the 50-day, 100-day, and 200-day moving averages.

When the stock price is very extended from these moving averages, it shows a high-level enthusiasm. Again, a very crowded raft.

Here’s the chart of the stock price of MU over the past year along with the moving averages (the pink, green, and yellow lines) and the RSI on the bottom.

The red circle on the bottom shows when MU hit overbought levels, and the circle on top shows how extended MU was from its 200-day moving average.

If you looked back at the 30-year history of the stock’s price, that distance ranked in the 100^th percentile of distance from that average. That means it had never been higher.

You’ll also notice that RSI readings were high right around the same time.

Both were warning signs that the trade had become too crowded.

When it happened, I started cautioning readers to be very careful and to take profits while the stock was trading at extreme levels.

I also said to ignore what the “smart” money was saying about the fundamentals. Instead, focus on what the stock’s price is telling you.

Of course, that’s all in the past. So what do you do now?

My advice is to hold tight.

The great fundamentals are real. Micron is a great company, and AI spending will continue to increase.

Based on recent price levels, I think you’re likely to make money on the stock. But I wouldn’t go out an buy it today.

Getting the raft back to balance usually doesn’t happen quickly, especially when there are still a lot of folks on one side.

I think Micron could visit the levels from its breakout back in May. That’s $600 per share, or a 30% drop from where it’s at today.

My advice would be to wait until the stock has gone higher for at least a month before buying.

That’s your signal that the coast is clear and it’ll be a much smoother ride down the river.