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.

Margin debt recently climbed to an all-time high of $1.5 trillion, and it’s growing faster than nearly any other point on record.

If you know anything about Wall Street history, alarm bells are probably going off in your head right now.

From the crash of 1929 to the dot-com bubble bursting, major stock market crashes have often followed periods of heavy borrowing.

But here's the thing...

While the data about margin debt making the rounds lately is accurate, that doesn't mean the stories people tell about it are necessarily true.

That's why I started a news series here at Truth & Trends called "Lies, Damned Lies, and Statistics."

The goal isn't to prove statistics wrong. It's to help you become a better investor by learning how to separate meaningful data from misleading data.

And this margin debt story is a perfect fit for the next installment of our series.

Today's Case Study

Before we go any further, let’s quickly define what we’re actually talking about.

Margin debt is money investors borrow from their brokerage firms to purchase stocks. There's nothing unusual about it.

Investors have used margin for decades to increase their buying power. When used responsibly, it can be an effective financial tool.

But like any form of leverage, it also magnifies risk. It can amplify gains during bull markets. And when markets decline, it can accelerate losses.

That's why investors pay attention to margin debt in the first place. If borrowing becomes excessive, market declines can intensify as leveraged investors are forced to sell.

So far, there's nothing controversial about any of this.

One of the most common ways margin debt is presented is by comparing it to U.S. gross domestic product (GDP).

Last week, I read an article by JC Parets of our affiliate, TrendLabs, titled "This Chart Is Designed to Scare You."

The chart in question tracks margin debt, measured as a percentage of GDP, and compares it to stock market peaks.

The message is pretty clear. Take a look for yourself.

Source: InvesTech Research

Investors have borrowed too much money, and history suggests that a major market decline can't be far behind. Right?

If this were the only chart you saw, you might reasonably think that. But it’s not the right conclusion.

As JC pointed out, you need to ask whether margin debt is being compared to the right benchmark.

GDP measures the size of the U.S. economy. Margin debt measures money investors borrow to purchase stocks.

Both are legitimate statistics, but they're measuring two very different things.

If our goal is to understand whether investors have become excessively leveraged, wouldn't it make more sense to compare that borrowing to the value of the assets it's financing?

Let's see what happens when we do…

Viewed as a percentage of the U.S. stock market rather than the U.S. economy, the picture looks very different.

While investors are borrowing more dollars than ever before, the market itself has also grown dramatically over the past several decades.

Relative to the value of the assets being financed, margin debt remains well within its historical range and below several previous peaks.

So the statistic may not be wrong, but the benchmark is.

That's the central lesson here.

Why This Matters to You

You may think this is just a story about margin debt, but it isn't. It's about becoming a better consumer of information.

Every week, investors are presented with charts claiming stocks are overvalued, undervalued, expensive, cheap, euphoric, or dangerously overextended.

Some of those conclusions may ultimately prove correct. But before accepting any of them, we should first ask whether the comparison itself makes sense.

That lesson extends far beyond margin debt.

It applies to valuation metrics, inflation, housing prices, government debt, unemployment, productivity, and countless other statistics that shape investor sentiment.

So how can we separate meaningful data from misleading data?

Before making an investment decision based on a chart or statistic, ask yourself:

• What’s actually being measured?
• What’s it being compared against?
• Is that the most appropriate benchmark, or simply the most dramatic one?
• Would I reach the same conclusion if the data were presented differently?

Those questions won't predict the next bull market or bear market. But they can help you avoid making important decisions based on an incomplete story.

That's exactly what this series is about.

In future installments, we'll continue examining the charts, graphics, and eye-catching statistics that shape investor sentiment every day.

Some will reinforce conventional wisdom. Others may completely challenge it.

Either way, my objective remains the same: to help you cut through the noise, think more critically, and become a better investor.

Because at the end of the day, the best investors aren't the ones who memorize the most statistics.

They're the ones who know which statistics deserve to be trusted... and which ones deserve another look.

Earnings are kicking off, and it’s not looking good for these mega-cap names.

First, we had Google reporting on Wednesday night. The company gave investors exactly what they had been asking for: more capex spending.

Google raised its 2026 capex forecast to between $195 billion and $205 billion, up from previous guidance of $180 billion to $190 billion. And bigger numbers are coming in 2027.

But it didn't matter. The stock sold off.

Then came Tesla, which is also in full spending mode. The company expects to invest more than $25 billion in capex this year — a staggering 200% increase from last year.

What did the market have to say about it? Sell.

Tesla plunged roughly 14% on Thursday, an absolutely brutal move that dragged the rest of the Mag 7 lower with it.

So given these two ugly selloffs, I want to go through every single one of the Mag 7 stocks.

I’ll look at the charts and tell you which ones I think are buys, which ones are sells, and which ones are simply worth leaving alone for now.

Just click on the video below to check it out.

[wistia id="b347uzm1tb"]

I don't think this is the environment to force trades just because these names have pulled back.

There are a couple of charts that still look constructive. But for the most part, I'd rather wait for the market to tell us it's ready to move higher before getting aggressive.

Sometimes the best position is simply doing nothing. I think we're in one of those periods.

Thanks for tuning in. I'll catch you next time.

At this point, the U.S. has attempted just about every option that might bring this conflict to an end.

There have been negotiations, direct attacks, economic pressure, a naval blockade, and repeated efforts to work toward a peace deal.

And yet the conflict continues.

Source: CNBC

Shipping through the Strait remains disrupted, military strikes have only intensified, and the diplomatic process has broken down.

The market may seem unfazed by the war right now. But what happens next still has serious implications.

It influences energy prices, which ultimately affects inflation, interest rates, and even the broad stock market.

So there are two questions that I want to focus on today.

What happens when every obvious option has failed? And how will this affect our investments?

The answer may be hidden in a largely forgotten chapter of history.

Almost 40 years ago, the U.S. faced a similar problem in the same narrow stretch of water and against the same adversary.

What followed did not immediately end the fighting. But it helped change its direction and produced a surprisingly positive outcome for investors.

The Last Time the Strait Was Under Siege

The story begins during the Iran-Iraq War.

By 1984, the conflict had reached a brutal stalemate. Both sides turned to attacking each other's economic lifelines, oil exports, and commercial shipping.

Iran targeted tankers connected to Kuwait and Saudi Arabia, hoping to pressure nations supporting Iraq.

The conflict became known as the Tanker War. Before long, one of the world's most important energy corridors had become a battlefield.

Sound familiar?

IRGC Navy Speedboats In the Tanker War, 1987. Source: Ali Fereydooni, via Wikimedia Commons

Kuwait eventually asked the U.S. for protection.

The Reagan administration responded by reflagging 11 Kuwaiti tankers as American vessels, giving the U.S. a legal and strategic basis to escort them through the Gulf.

In July 1987, Operation Earnest Will began.

American warships accompanied commercial tankers through threatened waters while surveillance aircraft and helicopters monitored Iranian activity.

U.S. Warships Escort Tanker In Persian Gulf, October 1987. Source: PH2 Elliot, U.S. Navy, via Wikimedia Commons

Behind the scenes, U.S. special operations forces also hunted mine-laying ships and fast attack boats.

The objective was not to invade Iran or overthrow its government. It was to keep shipping moving.

Unable to challenge the U.S. Navy directly, Iran relied on the same asymmetric tactics that still define its strategy today. Mines, missiles, armed speedboats, and deniable attacks on commercial shipping.

In September 1987, American helicopters caught the Iranian vessel Iran Ajr laying mines in international waters.

U.S. forces attacked and boarded the ship, recovering mines and evidence connecting Iran directly to the campaign.

Still, the attacks continued.

Then, on April 14, 1988, the guided-missile frigate USS Samuel B. Roberts struck an Iranian mine while participating in Operation Earnest Will.

The explosion tore an enormous hole in the ship and injured 10 sailors. The frigate nearly sank, but extraordinary work by its crew kept it afloat.

Four days later, the U.S. responded.

On April 18, 1988, the U.S. Navy launched Operation Praying Mantis.

American forces attacked Iranian oil platforms being used for military surveillance and coordination.

Iranian Sassan Oil Platform Burns After U.S. Attack, April 1988. Source: Naval History and Heritage Command

When Iran responded, the operation expanded into the largest U.S. surface naval engagement since World War II.

By the end of the day, American forces had destroyed Iranian surveillance platforms, sunk or crippled much of Iran's operational navy, and demonstrated beyond doubt that the U.S. controlled the Gulf.

The Iranian frigate IRIS Sahand Burning After U.S. Naval Attack, April 1988. Source: Service Depicted: Navy, via Wikimedia Commons

Yet Washington also showed restraint. After crippling the Iranian frigate Sabalan, U.S. forces did not finish it off.

The message was clear: America was willing to impose overwhelming costs, but it was also offering Iran a way to stop the escalation.

Iran took it.

Operation Praying Mantis did not single-handedly end the Iran-Iraq War. Iran was already exhausted economically and militarily, and several other events followed.

But the operation demonstrated that Iran could not challenge the U.S. Navy, threaten international shipping, and avoid severe consequences.

Three months later, Iran accepted a United Nations ceasefire. The eight-year war formally ended in August 1988.

The Market Reaction Few Remember

Given the scale of the battle, you might assume Wall Street panicked. But it didn’t.

By April 1988, markets had largely recovered from the October 1987 crash, which had been driven primarily by financial, not geopolitical, forces.

On the day of Operation Praying Mantis, the Dow declined only slightly. Oil prices initially moved higher as traders feared a wider conflict.

Still, the reaction faded once it became clear that the fighting was limited and commercial shipping would continue.

The largest American naval engagement in decades did not produce a sustained selloff.

Why? Because markets do not automatically fear military action. They fear uncertainty, prolonged disruption, and economic damage with no apparent end.

Praying Mantis suggested that the U.S. controlled the escalation, that Iran could not shut down the Gulf without paying an enormous price, and that oil would continue to flow.

The operation increased military activity but reduced uncertainty.

If history is any guide, an Earnest Will-style operation could keep the Strait open while the conflict continues, leaving a persistent geopolitical risk premium in energy.

I would not be surprised to see crude oil remain in an $80–$100 range for months.

Higher oil would likely support energy stocks while weighing on much of the broader market by keeping inflation elevated and corporate costs under pressure.

A decisive operation like Praying Mantis, however, could remove that premium, allowing oil to fall and providing a tailwind for both businesses and the broader stock market.

Dusting Off a 40-Year-Old Playbook

No two conflicts are identical. Iran possesses far more advanced missiles, drones, cyber capabilities, and regional proxies today than it did in 1988.

History never repeats itself exactly. But it often rhymes.

Nearly 40 years ago, the U.S. faced many of the same challenges it faces today…

Protecting the Strait of Hormuz, preserving the free flow of global energy, and restoring deterrence without becoming trapped in another Middle Eastern ground war.

Will Washington ultimately follow a modern version of the Earnest Will and Praying Mantis playbook? No one can say for sure.

But what I do know is that we are often best served by studying history rather than reacting to headlines.

If this conflict continues to evolve along a similar path, the investment implications may unfold in stages.

An extended period of elevated energy prices could be followed by a sharp decline once markets become convinced the Strait is secure and the geopolitical risk premium is gone.

That's not a prediction.

It's simply a reminder that some of the best clues about tomorrow can often be found by looking at yesterday.

Nobody knows exactly how this conflict will unfold.

But by understanding the playbook history provides, I believe we can make better decisions than those simply reacting to the latest headline.

As always, I'll continue following these developments closely and keep you updated as the story evolves.

Many of the stocks that have fueled the AI boom suddenly found themselves under intense selling pressure.

Micron. Taiwan Semiconductor. Broadcom. Marvell. Vertiv.

Some gave back entire months of gains in just a few short trading sessions.

Meanwhile, the headlines coming out of South Korea — a country with deep ties to AI — are almost unbelievable.

The AI-fueled Korea Composite Stock Price Index (KOSPI) tumbled last week on what commentators have labeled "Black Thursday."

More than one million investors across the market reportedly received margin calls, and regulators stepped in to suspend new leveraged ETFs.

Now social media is flooded with predictions that this could be ground zero for the end of the AI boom.

This raises a few questions, namely…

What on earth just happened?

And perhaps more importantly...

What do I do now?

Allow me to answer both of those for you.

South Korea: A Canary in the Coal Mine

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

The country is home to SK Hynix and Samsung, two of the world's most important producers of advanced memory chips.

Those chips have become essential components inside the massive data centers powering today's AI revolution.

As enthusiasm surrounding AI accelerated, so did investor optimism.

New single-stock leveraged ETFs tied to companies like SK Hynix attracted enormous interest from retail investors, many of whom borrowed money to amplify their potential gains.

For a while, it seemed like a brilliant strategy.

As long as prices continued climbing, leverage magnified profits. But leverage is a double-edged sword. Once prices begin falling, the same mechanism starts working in reverse.

A modest decline triggers margin calls. Margin calls force investors to sell. That selling pushes prices even lower, triggering additional margin calls and another round of forced liquidations.

Within days, what began as an ordinary correction had snowballed into one of the largest leverage unwinds in recent memory.

So this isn’t really a South Korea story. It’s a leverage story.

Now here's where it gets a little more complicated. Did South Korea cause the selloff in U.S. technology stocks?

Not exactly.

South Korea simply exposed something that had quietly been building across the entire AI ecosystem.

Too much enthusiasm, too much leverage, and too many investors chasing the same winners.

Global investors don't buy technology stocks one country at a time. They buy themes, like AI, semiconductors, memory, networking, or data centers.

When one part of that trade begins to unwind, money often comes out of the entire group.

That's why companies like Micron, Taiwan Semiconductor, Broadcom, and Vertiv were all under pressure, even though very little had changed about their underlying businesses.

Importantly, the long-term investment thesis didn't suddenly disappear.

Demand for AI infrastructure remains enormous. Hyperscalers haven't abandoned their plans to build the next generation of data centers, and the need for advanced chips continues to grow.

The only thing that changed was investor positioning.

After one of the strongest runs we've seen in years, the market needed an opportunity to catch its breath.

Healthy Bull Markets Need Corrections

One of the biggest mistakes investors make is assuming every correction marks the beginning of a bear market.

History tells a very different story.

Many of the strongest bull markets on record experienced multiple corrections of 10%, 15% or even 20% before eventually reaching much higher highs.

In practice, these pullbacks were the mechanism that allowed the long-term trend to continue, rather than a sign of the end.

Think about what would have happened if stocks like Micron had continued climbing week after week without interruption.

Eventually, expectations become impossible to satisfy. Every earnings report has to be perfect while forecasts continue to rise. And every buyer who wants to own the stock already does.

That's not how sustainable bull markets work.

Instead, markets periodically remove excess optimism, flush out speculative leverage and reset expectations.

While those corrections are never pleasant, they often create a much healthier foundation for the next advance.

Throughout history, foreign markets have frequently acted as the canary in the coal mine.

They don't necessarily cause global corrections, but they often reveal where speculation has become excessive before the rest of the world notices.

This time, that messenger was South Korea.

Had this excess continued building for another six months, the eventual correction might have been far more severe than the one we've just experienced.

That answers the first “what just happened” question. Now let’s move on to the next one.

So... What Do You Do Now?

The answer is surprisingly simple. Don't panic or chase the first green day.

And don't convince yourself that every stock trading 50% or 70% below its highs is automatically a bargain.

This is especially important from an investing standpoint, rather than a trading one.

The best long-term opportunities usually emerge after buyers have regained control, not during the first bounce.

That's why I’m far more interested in evidence of a new trend than trying to catch the exact turning point.

As investors, that means looking for one — or ideally both — of two developments.

First, I'd like to see high-quality technology stocks begin trading between their 100-day and 200-day moving averages.

Historically, that's often where stronger foundations begin to develop after meaningful corrections.

Second, I'd like to see four weeks of steady, consistent gains.

Not explosive rallies that invite another round of speculation, but orderly price action that suggests institutional investors are quietly accumulating shares once again.

That's the kind of strength we can trust.

After a correction like this, many investors assume that the next winners will be the same as the last winners.

Sometimes they are. Often, they aren't.

That's why we're willing to wait. Rather than trying to predict where leadership will emerge next, we'll let the market tell us.

Even now, those new roots may be starting to form.

Many AI infrastructure companies continue working through their corrections, and some of the Mag 7 have shown relative strength.

Will they lead the market's next advance? Maybe, maybe not.

The market will always tell you where leadership is returning, which is exactly why I’m willing to wait.

For now, the best move is to stay patient and let the market come to you.

I’ll continue to watch earnings reports, monitor leadership, and wait for the kind of sustained strength that has historically marked the beginning of healthier advances.

When that evidence appears, we'll be ready to lean into it.

The Nasdaq is in the red once again, and the tech-heavy index is headed for a down week of roughly 3%.

Meanwhile, semiconductor stocks are taking a hit. The VanEck Semiconductor ETF is down almost 10% on the week.

So yes, we're getting a bit of a reset in tech, and it's rattling some investors. But you don't have to be scared.

In fact, I think this pullback is creating a lot of great opportunities.

The bulls may be ready to rotate out of those formerly red-hot semiconductor names and into other, less-loved areas of the market.

Earlier today, I ran a scan and found more than 150 large-cap stocks hitting new 50-day highs today.

That's right, there are plenty of stocks breaking out in this market. It’s just that many of them aren't in tech.

Today, I'm going to show you three of my favorite stocks outside the technology sector that are hitting new 50-day highs and could be worth a closer look.

We'll also take a look at what's happening in semiconductors, where this pullback could be headed, and what I'll be watching from here.

Just click on the video below to check it out.

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Remember, you don't have to force trades in the hottest names just because everyone else is watching them.

Some of the best setups are showing up in places most investors aren't even paying attention to yet — and that's exactly where I like to look.

Thanks for tuning in. I'll catch you next time.

I stop worrying about individual stocks, analyst price targets, or whether the Fed is about to cut interest rates.

Instead, I step back and ask myself one simple question…

What kind of market am I investing in?

It may sound simplistic. But after decades of investing, I've come to believe that answering this question correctly is one of the most important things an investor can do.

The reason is straightforward.

You can identify a wonderful business, buy it at a reasonable price, and still lose money if you've misjudged the broader market.

But when you've correctly identified the market's primary trend, investing is dramatically easier because you're working with the tide instead of swimming against it.

That's why, before I decide whether a stock is worth buying, I first determine whether the environment favors owning stocks.

Bull markets tend to be forgiving.

Strong companies usually outperform, good companies are rewarded for solid execution, and even mediocre businesses can rise simply because capital is flowing into equities.

Bear markets are different.

I've traded through several of them successfully, so I'm certainly not suggesting money can't be made.

But anyone who's lived through a bear market knows the environment changes dramatically.

Investors become defensive. Valuations compress. Good earnings often get ignored. Fear replaces optimism, and every investment decision becomes more difficult.

That's why I always start by identifying the market.

Only then do I decide how aggressive I want to be.

Now that we’re at the halfway point of 2026 and going into another earnings season, I think it's worth asking the question again.

Are we still in a bull market?

Everyone Is Asking the Wrong Question

I recently read an excellent article by Ryan Detrick and the team at Carson Group titled More Reasons to Be Bullish the Rest of 2026.

Their historical research made a compelling case that this bull market may still have room to run. And I agreed with many of their conclusions.

More importantly, the article reinforced something I've believed for a long time.

I think most investors are asking the wrong question.

Every time the market reaches a new high, the conversation immediately shifts to valuation.

"Aren't stocks too expensive?"

It's a fair question. I just don't think it's the most important one.

Instead of asking whether stocks are expensive, I think investors should be asking why they're expensive.

History is filled with companies that looked outrageously expensive before becoming some of the greatest investments of their generation. Amazon. Apple. Microsoft. Nvidia.

But those companies didn't become expensive because investors suddenly became irrational. They got there because their earnings power changed.

And bull markets usually keep going until the reasons investors are willing to pay those higher prices begin to disappear.

That brings me back to Ryan Detrick's research. One chart in particular immediately caught my attention.

Source: Ryan Detrick of Carson Group

Despite tariffs, geopolitical uncertainty, inflation concerns, and constant warnings of an AI bubble, the S&P 500 just completed one of its strongest second quarters since 1950.

Think about that for a moment.

Bull markets can keep going even during imperfect conditions. They just need reality to turn out better than investors expected.

This week's Consumer Price Index offered another good example.

Inflation continued moving in the right direction.

No, one report doesn't guarantee anything.

But taken together with resilient corporate earnings and a durable economy, the evidence still suggests an environment that supports higher stock prices.

Rotation Isn't the Same as Retreat

The market recently handed us a perfect case study.

Memory stocks, among the hottest investments on the planet just a few weeks ago, came under heavy selling pressure.

Semiconductor stocks followed suit, and South Korea's KOSPI Index, which had become one of the world's strongest equity markets, slipped into correction territory.

Source: Google Finance

If you only followed the headlines, you could easily conclude that the AI trade was beginning to unravel.

I don't think that's what happened.

In fact, I think the market was doing exactly what healthy bull markets often do: It was rotating.

Over the past several months, I've talked a lot about AI, semiconductor demand, and memory chips.

None of those long-term drivers suddenly disappeared. What changed was investor positioning.

Some of the market's most popular trades had become crowded. Expectations were elevated, momentum had become stretched, and investors began locking in profits.

That's not unusual. In many ways, it's healthy.

One statistic I came across this week reinforced something I've observed throughout my investing career.

Source: Citadel Securities

During the last 20 trading sessions in which the S&P 500 finished lower, an average of 239 companies in the index finished higher.

Think about what that means.

The headlines told us the market was falling. But the market itself told us money was simply moving elsewhere.

Healthy bull markets don't require every sector to rise together. Leadership rotates, and one group cools off while another takes the baton.

That's fundamentally different from investors abandoning equities altogether.

Understanding that difference can keep investors from making some very expensive mistakes.

Ryan Detrick's second chart reinforces that idea.

Source: Ryan Detrick of Carson Group

Historically, markets that produce exceptionally strong first halves have often gone on to deliver respectable second halves as well.

Notice I said often. Not always.

The point is that healthy bull markets generally remain healthy until something meaningful changes.

So, what would make me change my mind?

3 Things That Historically End Bull Markets

We all know that every bull market eventually ends. The challenge is recognizing why.

For me, there are three developments that deserve far more attention than the daily headlines.

The first is a meaningful deterioration in corporate earnings.

Again, bull markets don't usually die because stocks become expensive. They end because earnings stop justifying those valuations.

As we move through another earnings season, that's where my attention will be focused.

The second is a weakening economy that points toward recession.

So far, we've experienced something many economists believed was impossible: inflation has cooled while the economy has remained remarkably resilient.

If that relationship changes, my outlook will change with it.

And finally, I'll be watching for restrictive monetary policy.

If you study the major bear markets of recent history, this appears with surprising frequency.

The bursting of the dot-com bubble followed a tightening cycle.

The financial crisis unfolded after years of rising rates.

More recently, the 2022 bear market was driven largely by one of the fastest rate-hiking campaigns in modern history.

That's one reason this week's CPI report mattered. Cooling inflation reduces the likelihood that policymakers will need to tighten policy again.

The Truth

Every earnings season, Wall Street gives investors a new reason to panic. This time around, it was semiconductor stocks, memory stocks, and the latest fears surrounding AI.

However, the market told a much more nuanced story.

Inflation continues cooling…

Corporate earnings remain resilient…

Market participation is broadening…

And capital appears to be rotating rather than leaving equities.

Could that change? Absolutely.

And eventually, it will. Bull markets don't last forever.

But they also don't end because a handful of popular stocks correct 15%.

They end because the environment that supported them fundamentally changes.

That's the change I'll continue watching for.

Until then, I'll keep asking myself the same question I've asked before every major investment decision throughout my career.

What kind of market am I investing in?

After weighing the evidence — not the headlines — my answer hasn't changed.

I'll tune out the noise, focus on the fundamentals, and let the market tell me when the trend has truly shifted.

So far, it hasn't. And until the evidence tells me otherwise... I'm staying invested.

Even people with little interest in the stock market seemed to know that SpaceX was finally going public.

It was a cultural event and bigger than any IPO in history.

Just last week, another company completed a historically large public offering, second only to SpaceX.

That company is SK Hynix, one of the most important names in the future of AI.

But its IPO last week barely registered outside of Wall Street.

There were no countdowns. No viral X posts. No endless television coverage. Most people didn’t even realize that it happened. 

This raises an interesting question.

How could one of the biggest IPOs in history receive so little attention?

The answer reveals something important about the difference between the companies that capture our imagination and the companies that make those dreams possible.

A Blockbuster IPO Without All the Fanfare

SK Hynix was founded in South Korea more than 40 years ago.

It’s the world's second-largest memory chip manufacturer and one of the most important companies powering the AI revolution.

The name may not ring a bell to most people. But it started as Hyundai Electronics, which should sound familiar.

A Hyundai SRAM in a Seagate Hard Drive (ST351A-X), Circa Early 1990s. Source: Raimond Spekking / CC BY-SA 4.0 (via Wikimedia Commons)

Unlike Nvidia, which designs the graphics processors, SK Hynix manufactures the specialized memory chips that allow those processors to perform at their full potential.

It’s become the global leader in High Bandwidth Memory (HBM), an advanced form of memory capable of moving enormous amounts of data at incredible speeds.

That may not sound exciting at first.

But imagine building the world's fastest race car and then trying to feed the engine through a drinking straw.

No matter how powerful the engine is, it can never reach its full potential.

AI faces the same challenge.

For every ChatGPT answer, AI-generated image, and data center training the next generation of LLMs, staggering amounts of information must move between processors and memory almost instantaneously.

Traditional memory simply can't keep up.

That's where SK Hynix comes in.

Today, the company supplies much of the HBM used in Nvidia's most advanced AI accelerators, making it one of the most strategically important businesses in the AI ecosystem.

If Nvidia's GPUs are the engines driving artificial intelligence, HBM is the fuel system that keeps those engines running.

Without it, the AI revolution slows dramatically.

Ironically, despite the company sitting at the center of one of the fastest-growing industries in history, most people have never heard of it.

That obscurity makes what happened last week even more remarkable.

By most measurements, SK Hynix's Nasdaq listing became the largest foreign company ever to list shares on a U.S. exchange and the second-largest public offering in U.S. history, trailing only SpaceX.

Wall Street immediately recognized its significance.

Source: CNBC

The ADR was priced at $149 per share, but demand proved even stronger than expected.

When trading began on Friday, shares opened at around $170, roughly 14% above the offering price, and traded well above the IPO valuation throughout the session.

For a company that many Americans had never heard of just days earlier, it was an extraordinary debut.

Institutional investors understood exactly what they were buying: one of the world's most important suppliers to the AI economy.

Perhaps the most interesting part of the story, however, is that SK Hynix wasn't forced to come to Wall Street because it desperately needed cash.

Quite the opposite.

The company is already generating billions of dollars in annual profits while trading at a valuation that remains modest compared with many of today's AI leaders.

Management chose to list in the U.S. because it recognized an opportunity to broaden its shareholder base, improve liquidity, fund future expansion, and potentially reduce the long-standing "Korea discount" that has historically weighed on many Korean stocks.

In other words, this was a strategic decision made from a position of strength. Not a rescue mission.

Investing in Stories vs. Spreadsheets

One question kept nagging at me as I watched SK Hynix begin trading.

What if Elon Musk had been standing on the Nasdaq stage Friday morning instead of SK Hynix Chairman Chey Tae-won?

Would America have paid more attention?

We'll never know. But it's an interesting thought experiment.

Unlike Elon Musk, who has spent decades becoming one of the world's most recognizable entrepreneurs, Chey Tae-won had never appeared on CNBC before ringing the opening bell.

SK Hynix Chairman Chey Tae-won, Live on CNBC. Source: CNBC

Millions of investors know Elon Musk by face.

Very few could have identified Chey Tae-won walking through an airport.

Yet the company he leads sits at the very center of one of the fastest-growing industries in history.

That contrast says less about the two leaders than it does about us.

Human beings naturally connect with stories.

We remember personalities, and we celebrate visionaries. There's nothing wrong with that.

In fact, many of history's greatest companies were built by extraordinary founders capable of inspiring employees, customers, and investors alike.

Steve Jobs became Apple.

Jeff Bezos became Amazon.

Jensen Huang became Nvidia.

Elon Musk became SpaceX.

Visionary leaders transform incredibly complicated businesses into stories everyone can understand. Rockets, electric cars, AI, Mars.

Memory chips don't inspire quite the same emotional reaction.

Yet investing has never been a popularity contest. Wall Street often pays attention to very different things than the rest of us.

While the public naturally gravitates toward visionary founders and bold missions, professional investors spend their days studying earnings, competitive advantages, cash flows, and strategic bottlenecks.

Main Street often invests in stories. Wall Street invests in spreadsheets.

Neither approach is entirely right nor entirely wrong. Great companies often possess both compelling narratives and exceptional financial performance.

SpaceX has unquestionably earned the world's attention through extraordinary technological achievements that have fundamentally reshaped the aerospace industry.

But SK Hynix offers an equally valuable lesson.

Some of history's greatest businesses quietly build extraordinary economics long before they become household names.

Sometimes, the companies making the biggest difference are the ones doing the least talking.

The Bigger Lesson

Every technological revolution creates obvious winners.

It also creates quieter companies supplying the critical infrastructure that makes those headline-grabbing innovations possible.

During the Industrial Revolution, railroads captured the public's imagination. Still, steel producers, coal miners, and equipment manufacturers also built enormous fortunes.

The internet created household names like Google and Amazon. Companies providing fiber-optic networks, semiconductors, and data centers became indispensable.

AI appears to be following the same path.

We've talked before about companies benefiting from AI through electricity generation, data infrastructure, autonomous defense systems, and next-generation communications.

Memory belongs on that list as well. Without it, the AI revolution simply cannot reach its full potential.

That's why Wall Street paid such close attention to SK Hynix's IPO, even as much of the public barely noticed it.

There's nothing wrong with dreaming big.

In fact, some of the greatest investment opportunities in history have been led by visionary entrepreneurs who inspired millions to believe in an extraordinary future.

But every dream eventually collides with reality.

Rockets need fuel. Data centers need electricity. AI needs memory.

Perhaps that's the real lesson from the two biggest IPOs in modern history.

One captured the world's imagination.

The other quietly reminded investors that revolutions aren't built on vision alone. They're built by thousands of companies solving difficult engineering problems that most people never see.

At Truth & Trends, that's exactly the kind of story we're trying to uncover.

Because by the time everyone knows the CEO, understands the technology, and appreciates the opportunity, much of the easy money has often already been made.

The companies we dream about will always deserve our attention.

But the companies that quietly make those dreams possible may deserve even more.