“We’ve never had people in a more gambling mood than now,” Warren Buffett told CNBC on May 2, 2026, during Berkshire Hathaway’s annual meeting. On one-day options: “That’s not investing. It’s not speculating. It’s gambling, just totally.” His metaphor: “I’ve compared the markets to a church with a casino attached. The casino has gotten very attractive to people.” Buffett rarely names the mechanism. The data does it for him: leveraged and inverse ETFs.
What the Numbers Show
Per Todd Sohn, ETF strategist at Baird Strategas, roughly $200 billion sits across about 700 leveraged ETF funds. Because these products use derivatives, that $200 billion controls a notional value near $500 billion, real market exposure about 2.5 times the money invested. AUM runs 13:1 leveraged long versus short: for every $1 wagered on things falling, $13 is wagered on things rising. The exposure is concentrated almost entirely in tech. This is what Buffett describes without ticker symbols: a behavioral warning backed by half a trillion dollars of one-directional leverage.
What These Products Actually Are
A leveraged ETF uses derivatives and borrowed money to deliver a multiple (usually 2x or 3x) of a benchmark’s daily return. The catch: they reset daily, engineered for one-day holds, not buy-and-hold. ProShares UltraPro QQQ (NASDAQ:TQQQ), the 3x Nasdaq-100 fund, alone holds AUM north of $32 billion. A 10% drop in the Nasdaq-100 translates to roughly a 30% loss for TQQQ holders in a single period. TQQQ is up 46.69% year to date, on a Nasdaq-100 gain of 18.1%. The math only cuts one way when it reverses.
The Part That Changes How Stocks Trade
Leveraged ETFs must rebalance at the end of each session to maintain their target multiple, making them mechanical forced buyers into rallies and forced sellers into declines. With $500 billion in notional leverage concentrated in tech, that daily rebalancing is now a meaningful force in US equity markets. Sohn ties it directly to whipsaws in Micron Technology (NASDAQ:MU | MU Price Prediction) and SanDisk (NASDAQ:SNDK). Micron dropped 5.35% on Monday alone; SanDisk shed 8.63%. These same companies just posted seven consecutive EPS beats at Micron and a 59.67% EPS beat at SanDisk. The retail investor watching Micron lurch on a quiet news day is feeling the downstream wake of concentrated leverage rebalancing. Market makers like Citadel and Jane Street profit from the volatility this rebalancing manufactures.
Joshua Brown Says the Quiet Part Out Loud
Brown, CEO of Ritholtz Wealth Management, seized on Sohn’s data in a LinkedIn post around July 7, 2026: “The modern investor doesn’t need margin to speculate anymore. No brokerage platform is doing anything to discourage this. In fact, I think they love it. I know the market makers like Citadel and Jane Street do.” Brokers earn more from active trading, market makers earn more from volatility, and no one in the chain has an incentive to slow the wheel.
The Scale, and a Warning From Treasury
Nearly 700 new ETFs have debuted in 2026 so far, roughly 200 leveraged or inverse, the vast majority tied to single stocks, per Motley Fool. Leveraged ETF average daily trading volume hit about $45 billion in 2026, up 50% year over year (Seeking Alpha). Zero-day-to-expiration options now make up over half of all options volume, per Palumbo Wealth Management. Treasury Secretary Scott Bessent in a May 1, 2026 Associated Press interview warned about get-rich-quick behavior among young men: “The best thing you can do is not play the lottery.” A Berkshire legend and the sitting Treasury Secretary flagging the same behavior in the same month is a notable convergence.
The Counterpoint
Leveraged ETFs are legal, disclosed products. Sophisticated traders use them for tactical hedging. The 13:1 long tilt partly reflects genuine optimism about AI capex and memory pricing that Micron’s 345.72% YoY revenue growth arguably validates. Timing markets on behavioral alarms has historically cost investors money.
Still, the structure is what it is: half a trillion dollars of daily-resetting, tech-concentrated leverage, with every party in the chain paid to keep the wheel spinning. As Brown put it: “It’s an absolute casino. The only thing missing is Siegfried and Roy.”
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