🦔A Bloomberg analysis out today shows leveraged ETFs have piled into a tiny group of AI chip stocks, and their forced daily trading now makes those stocks swing harder. These funds use borrowed money to double or triple a stock's daily move, so they buy more as it rises and sell as it falls. Bullish leveraged ETF exposure to AI names jumped from 26% to 58% since 2022. In Korea, funds tracking SK Hynix and Samsung helped drive the Kospi down about 35% in a month, and one popular SK Hynix fund fell more than 80% from its peak. My Take Most people reading this have never bought a leveraged ETF and never will. That's the problem. These funds now trade in enough size that their mechanical buying and selling moves the underlying stocks, and those stocks, Nvidia, Micron, SK Hynix, Broadcom, are the same names inside the index funds and 401ks that regular people do own. Nomura, the Japanese investment bank, figured that at the June peak, every 1% move in these stocks forced the funds to buy or sell around $10 billion to rebalance. The formula behind them buys as prices rise and sells as they fall, with no regard for what any company is worth. Korea already ran the experiment. Leveraged funds on two chip stocks came to dominate the market's daily volume, and when the mood turned, Goldman found the forced selling hit 62% of all local institutional selling on the worst day. That pressure reached well past the people who bought the funds. It hit ordinary investors who never placed the bet and hold the same chip stocks in their retirement accounts. I don't think this breaks the market by itself. But it makes the AI names more fragile than they look, and most people who hold that risk through a 401k don't know it exists. Hedgie🤗