They say everybody is a genius in a bull market, so what does that make the investors buying leveraged ETFs? Well, if they’re right, richer than your everyday investor buying a standard-issue index fund. And if they’re wrong? Cooked, probably. With stocks sitting on the verge of fresh all-time highs, bets by “degen” retail investors have taken off, with the promise of strong earnings and good vibes overshadowing fears about the market’s rich valuations and a tech slowdown.

• Bloomberg Intelligence says leveraged long ETFs — which track individual stocks, cryptocurrencies, and indexes — are on the verge of surpassing $100B in assets under management.
• At the same time, short ETFs — which allow investors to profit when an asset declines — have collapsed in value, falling to just $9B in total assets.

What’s the worry? Leveraged ETFs are nothing new; they have long catered to retail investors looking to multiply their gains — but they also multiply their losses. The last time that leveraged long ETFs ran through new records was in late 2021, right around the time that stocks hit all-time highs before plummeting more than 20% to start 2022. On some level, the boom can be partially credited to the increasing volumes of leveraged and derivative ETFs. But Chanos & Co’s Jim Chanos says that the levels of speculation are “getting back” to levels seen in 2021. Could one call it a top signal?