| Ripple Effect — October 24, 2025
Investors, so accustomed to buying any tiny market selloff, have run out of ready capital.
A constraint? Not at all. One can borrow and buy stocks on margin.
It’s a feature of late-stage bull markets, as we described in yesterday’s Grey Swan Live! : Anatomy of A Stock Market Bubble.
While margin requirements are tighter now than they were a hundred years ago in the roaring ‘20s (when a trader could leverage 2X their capital) today’s margin levels are approaching the peak of the dotcom era:  Only during the dotcom peak have traders been more leveraged in the last 30 years. (Source: Cypress Capital) Leverage is a two-way street. Investors get a tailwind on the way up. But small drops become a considerable problem – leading to “margin calls” when an investor is forced to settle the debt for a loss.
Forced sales are a downside feature of stock market bubbles. The forced sale of stocks and hard assets like gold push prices lower even if the participants don’t want to sell.
Even the market’s post-Liberation Day selloff – which briefly took markets to bear market territory – wasn’t as leveraged as stocks are now, a mere six months later.
For now, the trend is up. But beware, markets don’t move in a straight line in any direction.
~ Addison | 
Under the surface of the U.S. financial system…
One of the biggest stock market events in 25 years is rapidly unfolding…
The economist who predicted the 2008 Financial Crisis says it will be: "The Biggest Crash of Our Lifetime."
Starting November 19th — your favorite tech stocks like Nvidia, Apple, Microsoft, Google, and hundreds more could come crashing down… 
| P.S. If you missed part one of our Anatomy of a Stock Market Bubble Grey Swan Live!, the replay will be up on site later this morning. We reviewed several charts and indicators, including this one on margin debt.  If you’re a paid-up annual member of the Grey Swan Investment Fraternity, join us today for part II of this week’s two-fer: a quarterly review of our asset allocation strategy and our model portfolio, including a 3-part AI Bubble Plunge Protection Strategy.
We’ll be going live at 2pm EST/11am PST. Stay tuned!
There's still time to attend if you're not an annual subscriber. Click here for details.
If you have any questions for us about the market, send them our way now to: feedback@greyswanfraternity.com.
How did we get here? Find out in these riveting reads: Demise of the Dollar, Financial Reckoning Day, and Empire of Debt — all three books are now available in their third post-pandemic editions. You might enjoy one or all three. 
(Or… simply pre-order Empire of Debt: We Came, We Saw, We Borrowed, now available at Amazon and Barnes & Noble or if you prefer one of these sites: Bookshop.org, Books-A-Million or Target.)
Please send your comments, reactions, opprobrium, vitriol and praise to: feedback@greyswanfraternity.com |
Post a Comment
Post a Comment