No matter how much we prepare, we are constitutionally incapable of readying ourselves for sudden drops. This is why we have roller coasters. Even though we know the drop is about to happen, and although we know the car will not fly off the rails, we experience an extreme sensation anyway. We are going though that now with the markets.
My greatest concern, one that I have often written about, is excess borrowing to buy stocks. FINRA margin debt stands at $1.454 trillion, up 37.19% from a year ago as of the September report. People are mostly borrowing these unprecedented amounts to speculate in the same handful of technology stocks. Since these same stocks dominate the major indexes, such as the S&P 500, nobody is unaffected.
Growth is excellent and the economy is sound. Interest rates are up largely because economic growth is creating competition between the private sector and the government for capital. I shall not repeat here what I have said in the newsletter.
There are elections coming up in the United States and in Europe. This always creates uncertainty. Riots in France are making headlines, and while lamentable, balance sheets in Europe are generally better than in the United States, even in France. What they do not have is the world's reserve currency. Instead, they have a common currency.
Europe and bonds rebounded last week, as roller coasters do. Those who panicked and sold have lost out forever. Many will have an unnecessary tax bill too. I see tremendous opportunities ahead for income investors. At the same time, we are reviewing our positions and our strategy with deliberation. We need to keep our objectives in mind, not short-term movements that are out of our control.
Call us about your concerns. We are happy to review your plan, your performance, and your objectives. Thank you for your business.
* Financial Industry Regulatory Authority. https://www.finra.org/rules-guidance/key-topics/margin-accounts/margin-statistics. Accessed on 10.19.2026.