I love the stock market for a plethora of reasons.
It’s the greatest wealth-building machine ever created. It allows you to earn a piece of the profits in the growth and ingenuity of the biggest and best corporations.
Plus the stock market is like a laboratory for human psychology and emotions. Sometimes it makes sense. Sometimes it doesn’t. Sometimes it goes insane…because people are insane!
The stock market seems relatively boring this year at first glance.
The U.S. stock market it up around 10% in 2026. Stocks outside of America have gained 13%.
But underneath the surface there are some wild moves happening.
At one point this year the entire South Korean stock market had more than doubled in less than six months.
Then it crashed more than 40% in a matter of just five weeks.
When the market opened on Friday, it was up more than 13%.
Boom, bust, boom. This is the seventh biggest stock market in the world!
Granted, the two biggest names — SK Hynix and Samsung — make up roughly 50% of the index. And both stocks just so happen to be involved in the AI arms race.
The semiconductor stocks are in a class of their own right now in terms of gigantic moves.
SanDisk is like the Trojan horse scene happens The Odyssey — it’s on another level.
At one point in late-June the stock was up more than 5,300% in the previous 12 months:
That number is almost hard to fathom in such a short period of time.
Gains of that size cannot possibly last forever and they didn’t. SanDisk crashed nearly 60% in the just four weeks.
Then yesterday the stock rose 26%…in a single day!
There’s obviously a lot going on here. Investors are trying to figure out the AI winners and losers. Semiconductor stocks have been massive beneficiaries of the hyperscaler AI spend.
There is a lot of speculation and extrapolation in the system right now. Hedge funds are retail investors alike are blowing out of positions because they took on too much leverage.
So there are outsized moves in certain stocks despite the fact that the overall index is having a relatively calm 2026.
A couple of weeks ago IBM plunged 25% after earnings, it’s worst single day in the 100+ years as a public company.
On Thursday a ton of blown out stocks experienced a year’s worth of gains in a single day — Microsoft (+15%), Western Digital (+15%), Micron (+18%) and SK Hynix (+18%) to name a few. Each of these stocks were in a big drawdown heading into the day. And those drawdowns were preceded by by gains.
On Friday Apple (-7%), Roblox (-30%) and Reddit (-21%) all had terrible days while Amazon was up big (+15%).
As market cycles speed up in the information age and more leverage is in the system, you can expect to see more wild swings like this in individual names or groups of stocks.
I love the stock market because it can make you feel like the smartest person alive. Or it can make you feel like the dumbest person on the planet. Sometimes all in the same week.
I love the stock market because it can make you wildly rich over the long haul if you’re patient enough. It can also make you broke in the short-term if you overextend yourself with the use of borrowed money.
I love the stock market because it’s a constant source of entertainment and insanity.
Are you not entertained?!
Michael and I talked about all of the crazy moves happening in the stock market under the surface and more on this week’s Animal Spirits video:
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Further Reading:
Investing in the Boom Times
Now here’s what I’ve been reading lately:
Books:
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