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Ripple Effect

Leveraged to the Hilt

Loading ...Addison Wiggin

October 24, 2025 • 1 minute, 45 second read


Margin

Leveraged to the Hilt

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:

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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

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.

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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.


Inflation Episodes, Act III: When the Fire Brigade Brings Kerosene

December 4, 2025 • Addison Wiggin

Today, the top 10% of earners account for half of all U.S. consumer spending. Rate cuts that boost stock prices inflate the purchasing power of the wealthy while widening the gulf for everyone else.

How does fattening the brokerage accounts of the top decile fix affordability?

It doesn’t.

But the Fed must cut because the bottom half of America is already showing signs of breaking. If the Fed doesn’t relieve debt pressure, the consumer cracks. If it does relieve it, inflation cracks upward instead.

Inflation Episodes, Act III: When the Fire Brigade Brings Kerosene
Credit Markets Price in AI Buildout Risk

December 4, 2025 • Addison Wiggin

Oracle shares managed to pop higher on their AI investment plans over the summer – but quickly gave back those gains as investors digested the total debt the company was taking on.

The AI buildout and its rising costs are raising more questions than answers right now. The CDS market is heating up as a sign of trouble ahead. Keep your eyes peeled!

Credit Markets Price in AI Buildout Risk
Dan Denning: The 2026 Battle Royale

December 3, 2025 • Addison Wiggin

Altman’s claim is that not only will people get more done with less with AI, they will be happier because their work is easier and…more fun. This follows a report from Anthropic, responsible for the Claude AI, that said AI increases productivity.

I will say I’m skeptical. But we’ve been told the nature of exponential change is that it comes at you faster than you can measure or observe. And if that is true, it will have consequences in 2026 for employees and investors. Big ones.

For employees–those who are not replaced by automated processes and robots–it will mean secure employment and higher wages. A small number of winners getting richer.

Dan Denning: The 2026 Battle Royale
The Inflation Episodes — Act II, Featuring Silver, Gold and Dollar 2.0

December 3, 2025 • Addison Wiggin

American consumers don’t feel – or are at least unaware of – monetary nuance. They’re just getting the bill.

Trump declared last night that “affordability doesn’t mean anything to anybody,” dismissing the term as a “Democrat scam”— this despite recently proclaiming
himself the “Affordability President” on Truth Social.

That’s the current state of political messaging on cost-of-living: part whiplash, part vaudeville. But voters aren’t confused. Grocery prices are still 30% higher than 2020. Tariffs add daily friction. Utilities, rent, houses, tuition, healthcare continue their daily grind upward.

The Inflation Episodes — Act II, Featuring Silver, Gold and Dollar 2.0