How Excessive Leverage brought down Wall Street’s Golden Boy

📈 Download the full Portfolio Performance Slides: https://drive.google.com/file/d/162IiQCjWtyiVJE8dxfMoYYn_sT_MSI26/view?usp=sharing 📧 Get in touch: [email protected] 📱 Behind the scenes: @_theartofinvesting on TikTok | @theartofinvestingpod on Instagram 🎧 Listen on Apple: https://podcasts.apple.com/gb/podcast/the-art-of-investing/id1825201965 🎧 Listen on Spotify: https://open.spotify.com/show/4bmvfbDz2kniwxCL66sVjH This week on The Art of Investing, after a sharp reversal across AI-linked stocks, the team explain how Leopold Aschenbrenner’s highly leveraged AI trade became one of the biggest stories in markets, why crowded positioning matters, and how forced selling helped shape the latest moves across tech, software, commodities and emerging markets. They also look at the parallels with previous market excesses, including 1929, ask whether AI could be disinflationary, and debate whether markets can keep running into Jackson Hole before investors need to think about taking risk down. This Week’s Highlights: 📈 Portfolio Jumps +4.2% A strong week takes the portfolio to +25.5% since inception, with no changes made this week. ⚠️ Leopold and Leverage The team unpack how leverage works, why margin calls can force selling, and why a “one big trade” portfolio can unravel quickly. ⚒️ Miners Lead the Way BlackRock World Mining Trust tops the portfolio, up +10.4% on the week as gold, silver and copper strength feed through to mining shares. 🇯🇵 Japan Bounces Hard The Nikkei position rises +9.5%, helped by currency intervention and a stronger week for Japanese equities. 🌏 Emerging Markets Rally MSCI Emerging Markets gains +6.5%, supported by Korea’s sharp rebound, a weaker US dollar and renewed appetite for growth. 🤖 Nasdaq Reverses Higher The Nasdaq position rises +5.9% as money flows back into AI and tech after weeks of pressure. 📉 1929 Lessons Chris draws on Andrew Ross Sorkin’s 1929 to compare today’s market risks: leverage, speculative new technology, retail risk-taking and policy error. 🏦 Jackson Hole in Focus The team debate whether the Fed is “running the economy hot” and why late August could be important for market direction. Portfolio Snapshot – Week 51: 📊 Weekly portfolio performance: +4.2% 📈 Total return since inception: +25.5% 📅 2026 year-to-date return: +13.0% Top Performers: 📈 BlackRock World Mining Trust PLC: +10.4% WoW 📈 iShares Nikkei 225 ETF: +9.5% WoW 📈 iShares Core MSCI EM IMI ETF: +6.5% WoW 📈 Invesco EQQQ Nasdaq 100 UCITS ETF: +5.9% WoW 📈 XLI SPDR US Industrials ETF: +5.3% WoW Underperformers: 📉 iShares Core FTSE 100 ETF: -0.1% WoW 📈 Cash: +0.1% WoW 📈 iShares UK Gilts 0-5yr ETF: +0.5% WoW 📈 iShares MSCI India ETF: +1.3% WoW Portfolio Decision: No changes were made to the portfolio this week. The team remain positioned for the current market rally, while noting they may look to reduce some risk later in August if markets continue to run strongly. Big Questions This Week: • What is leverage, and why can it be so dangerous? • How can a hedge fund lose control of a winning trade? • Are AI stocks back in charge, or is this just a relief rally? • Why does a weaker dollar help commodities and emerging markets? • Are there real parallels between today’s market and 1929? • Could AI improve margins without reigniting inflation? • Should investors enjoy the August rally, or prepare to reduce risk before September? What You’ll Learn: ✔️ How leverage magnifies gains and losses ✔️ What margin calls mean in real market conditions ✔️ Why crowded trades can reverse violently ✔️ How AI is affecting earnings, margins and market leadership ✔️ Why commodities, Japan and emerging markets performed strongly this week ✔️ Why the team are watching Jackson Hole before making the next portfolio move Disclaimer: This podcast is provided for educational and informational purposes only. The content presented is not intended as personal investment advice or a recommendation to buy, sell, or hold any particular securities or investments. All discussions regarding the model portfolio are illustrative and for educational purposes. Your capital is at risk. The value of shares, ETFs and ETCs can fall as well as rise, which could mean getting back less than you originally put in. Tags: The Art of Investing, IG, investing, markets, stock market, portfolio, model portfolio, AI stocks, leverage, hedge funds, Nasdaq, emerging markets, Japan stocks, commodities, FTSE 250, Federal Reserve, Jackson Hole, investor education, market update, financial education