A Market In Search of The Greatest Fool

July 24, 2025 • 1 minute, 21 second read

Q: What happens when you close down most public spaces, give everyone $1,200, and only leave the stock market open?

A: You turn Wall Street into a giant casino.

One of the fascinating cross-currents of the pandemic era was seeing that experiment play out in real time.

For millions who could work remotely, the extra $1,200 was like getting capital to buy lottery tickets.

That money went into stocks like GameStop, as well as many SPAC firms – shell companies looking to take small, high-growth opportunities public.

By the time the mania peaked in late 2021, margin debt was at an all-time high as institutional money raced to catch up with retail investors.

But new all-time high margin debt is back today:

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Margin debt is now back above its 2021 peak

We had a bear market in 2022, as rising interest rates sucked marginal capital out of the market.

Along the way, we saw that many investment opportunities of the time were simply one buyer getting in ahead of the next buyer…. in search of the “greatest fool” who bought last.

~ Addison

P.S. Given the resurgence in “meme stocks” the past few weeks – Opendoor, Kohl’s – it may be a sign of market froth. And it may take a 5-10% pullback to get some sanity back in the markets.

If you’re leveraged in this market. Don’t be. You’re in a crowded trade. When a trade is crowded, getting to the exit first is on everyone’s mind. Panic now and avoid the rush.

As always, your reader feedback is welcome: feedback@greyswanfraternity.com (We read all emails. Thanks in advance for your contribution.)

The Small Cap Breakout

September 19, 2025 • Addison Wiggin

The terrifying bull market broadened its base yesterday, driven by expectations of easy money.

Small caps tend to be more dependent on borrowing to finance operations than the cash-rich mega-cap players.

So it’s no surprise that as the Fed acquiesced to cutting interest rates Wednesday, small caps, as measured by the Russell 2000 Index (IWM) broke out of a four-year range.

DASH and LOW Stock Have One Key Thing In Common

September 18, 2025 • Adam O'Dell

Sometimes, a compelling market trend flashes like a neon sign on the Vegas strip.

We’ve seen that a lot with mega trends like artificial intelligence (AI) over the last few years. Just last week, Oracle was rewarded with a 40% post-earnings pop in its stock price after a strong earnings outlook for its AI cloud business.

Other times, you’ve got to do a little work to find out what’s driving a stock’s price higher. And my “New Bulls” list each week is a great place to start.

DASH and LOW Stock Have One Key Thing In Common

The Carrot and The Stick

September 18, 2025 • Addison Wiggin

Incentives grow markets. Regulation stunts their fragile bones.

The Fed’s rate cuts are carrots. Markets are feasting on them. Over in the Grey Swan Trading Fraternity, Portfolio Director Andrew Packer added a long trade in the commodity market – in a small-cap player, producing a commodity domestically.

As a cherry on top, it might be the next MP Materials or Intel and get explicit government backing, which could really cause shares to take off.

Trump’s threats to the Fed, or the FCC’s jawboning of broadcasters, are sticks. Investors must decide which matters more.

As one market veteran told The Wall Street Journal: “Cheaper money is a carrot. But the bigger question is whether trust in our institutions can hold. Without that, the carrots won’t matter.”

Nasdaq Enters Nosebleed Heights

September 18, 2025 • Addison Wiggin

If you follow technical indicators, the Nasdaq — a broad measure of tech stocks — is now “extremely overbought”… a level only seen in 0.4% of its history.

That’s less than half a percent, and it is likely the precursor to a correction when traders decide to take profits.

Our advice, “panic now, avoid the rush” and rotate your tech into hard assets such as gold , bitcoin, and commodities in general.