There’s evidence with pictures—proving we’re not just doing post-hoc hindsight!
A month ago, when US stocks were at their hottest, a friend asked me whether they should chase it. My advice back then was simple: when the hype is too high, for small-capital investors, avoid FOMO as much as possible—the risk-reward ratio is no longer as attractive.
Looking back now, many people should have started to feel the pressure from this round of adjustment.
On July 17, the Nikkei index fell by about 4%. The Korean KOSDAQ index has already pulled back by more than 20% from its mid-June peak. Although the decline in the three major US stock indexes was relatively limited, what’s truly under pressure is the AI industry chain. Sectors such as chips, memory, and optical communications have generally weakened. Micron fell by more than 5%, Nvidia fell by more than 2%, SanDisk fell by nearly 9%, and related stocks such as SK Hynix have also shown clear adjustments.
The most profound takeaway from this drop is this: global capital markets’ reliance on the AI narrative is even higher than many people expect. Once expectations cool off, the speed at which capital leaves can be extremely fast.
At the same time, discussions about global economic slowdown and financial risks have been increasing in recent times. On the other side, Berkshire Hathaway, led by Buffett, has continued to raise cash reserves and reduce some equity assets in recent years. This defensive-style allocation is also worth the market’s attention.
Looking at the US fiscal situation, the pressure has actually been there all along. For fiscal year 2026, net interest expense on US Treasury debt is expected to be close to $1 trillion, while total fiscal revenue for the year is about $5.5 trillion—meaning nearly one-fifth of fiscal revenue will be used to pay interest. If the debt scale continues to expand, interest spending over the next decade could rise further, which will undoubtedly keep increasing fiscal pressure.
Whether a financial crisis will erupt in the future is something nobody can be certain about. But what can be certain is that in a market environment where high valuations, high leverage, and high expectations coexist, risks are continuously accumulating.
For ordinary investors, more important than guessing the top and bottom is controlling position size, diversifying allocations, not blindly chasing hot themes, and always leaving yourself enough room to deal with extreme market conditions.
The market will always have opportunities, but the prerequisite is: you’re still sitting at the table.
A month ago, when US stocks were at their hottest, a friend asked me whether they should chase it. My advice back then was simple: when the hype is too high, for small-capital investors, avoid FOMO as much as possible—the risk-reward ratio is no longer as attractive.
Looking back now, many people should have started to feel the pressure from this round of adjustment.
On July 17, the Nikkei index fell by about 4%. The Korean KOSDAQ index has already pulled back by more than 20% from its mid-June peak. Although the decline in the three major US stock indexes was relatively limited, what’s truly under pressure is the AI industry chain. Sectors such as chips, memory, and optical communications have generally weakened. Micron fell by more than 5%, Nvidia fell by more than 2%, SanDisk fell by nearly 9%, and related stocks such as SK Hynix have also shown clear adjustments.
The most profound takeaway from this drop is this: global capital markets’ reliance on the AI narrative is even higher than many people expect. Once expectations cool off, the speed at which capital leaves can be extremely fast.
At the same time, discussions about global economic slowdown and financial risks have been increasing in recent times. On the other side, Berkshire Hathaway, led by Buffett, has continued to raise cash reserves and reduce some equity assets in recent years. This defensive-style allocation is also worth the market’s attention.
Looking at the US fiscal situation, the pressure has actually been there all along. For fiscal year 2026, net interest expense on US Treasury debt is expected to be close to $1 trillion, while total fiscal revenue for the year is about $5.5 trillion—meaning nearly one-fifth of fiscal revenue will be used to pay interest. If the debt scale continues to expand, interest spending over the next decade could rise further, which will undoubtedly keep increasing fiscal pressure.
Whether a financial crisis will erupt in the future is something nobody can be certain about. But what can be certain is that in a market environment where high valuations, high leverage, and high expectations coexist, risks are continuously accumulating.
For ordinary investors, more important than guessing the top and bottom is controlling position size, diversifying allocations, not blindly chasing hot themes, and always leaving yourself enough room to deal with extreme market conditions.
The market will always have opportunities, but the prerequisite is: you’re still sitting at the table.
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