Prof G Markets · Tuesday, August 4, 2026
Michael Green, chief strategist at Simplify Asset Management, discusses the catastrophic losses that can occur from excessive leverage in AI investments, likening it to a "wounded shark" attracting predators. He highlights how a small price decline can trigger a cascade of forced selling due to high leverage.
“You know, the quick answer is is that when you look at somebody who is engaged in the behaviors that Leo has, there's really no mechanism for him to have learned not to do this.”
“But when you start running strategies that are running that much leverage against this much volatility for the individual securities, unfortunately, it blows up becomes inevitable.”
“Nobody in their right mind should give a 25-year-old, $20 billion at 4X leverage. But you actually can't blame the 24-year-old. Right?”
“Once you become that large, the street actually identifies you as a target. You effectively become a wounded shark and a feeding frenzy emerges.”