If You Can’t Spot The Sucker At The Table . . . .

“No, this sucker’s electrical, but I need a nuclear reaction to generate the 1.21 gigawatts of electricity I need.” – Back to the Future

Ouch, I guess eclipse jokes can be dark.

I’ve heard the phrase “If you can’t spot the sucker in the first half hour at the table, then you are the sucker,” many times in my life.

Mostly, after I’ve realized I was the sucker.

Recently, I’ve been watching the markets the same way I watch a late-night poker game at a kitchen table.  The cards are the same for everyone.  The rules are printed right there.  And yet, somehow, the same faces keep walking away with the chips.

Let’s start with three recent examples that should make people who actually save, invest, and try to play by the rules say . . . huh.

Is 2,000 pounds of Korean money a Won ton?

Let’s start with South Korea’s leveraged massacre, 2026 edition.

Normal guys in South Korea were betting on the right side of the trade.  I mean, they were on the right side of the trade before the South Korean market began hemorrhaging cash this week as China starts to look pretty strong in the chip-making business.  But before that massacre, retail traders (they call them “ants”) piled into brand-new single-stock 2x leveraged ETFs tied to Samsung™ and other Korean tech firms who were benefiting from the A.I. bubble.

The bet is simple.  If Samsung© goes up 10%, your ETF goes up 20%.  Get on the right side of the trade, and double the profits that all of the suckers are making.

By law, the products rebalance every single day by a public formula:  sell more when the stock drops, buy more when it rises.  Sophisticated trading desks know the formula, know the size of the flows, and know when they hit:  near the market close.  These firms essentially buy the stock beforehand, and scalp the 2x part of the trade.

But if the stock declines, the automated selling amplifies the decline.  Hundreds of thousands of accounts of small guys saw their accounts evaporate.  The “little guys” who thought they were investors discovered they were only “market liquidity” that got liquidated.  I imagine it’s even worse this week as their market is imploding.

I wonder after the first tsunami hit Japan if they had lots of different names for it, you know, a title wave.

Let’s move next to the microsecond arms race.

Investment firms pay serious money to put their servers inside the same data center as the exchange matching engines.  Why?  The firms can see slower orders coming, cancel their quotes, reprice, or step in front.  They legally front-run purchases, getting a bit of the action, like me getting in the cheeseburger line in front of Rosie O’Donnell, buying all the burgers, and then making her pay twice the price to me because you know she wants one.

But instead of burgers, my pension and my 401k are the funding source and the burgers.  Or they buy the burgers.  I forget.  Just thinking about Rosie eating is unsettling.

I once installed a trampoline on Aerosmith’s tour bus.  Now everyone wants to jump on the bandwagon.

Next?  A.I. bets:  Pensions and 401ks are literally soaking in it.

Nobody actually requires pension funds to buy speculative A.I. bets.  But when the benchmark rate that the fund is trying to replicate is the S&P 500©, over half of that index is now A.I.  Private credit and datacenter infrastructure funds are sold as “diversifiers.”  The Aptly Named Larry Fink has been open about it and I’ve written about him before:  a big chunk of the A.I. build-out is coming from “your savings accounts and pension accounts.”

If, or more likely when, the power plants never get built or the market discovers that no one really wants to pay a lot for A.I., the little guys eat it.  We’ve seen this movie with mortgage-backed securities in 2008, but after 20 years, who isn’t up for a sequel?  And don’t mention Star Wars®.

Those three are current “legal” scams.

There are larger, longer-running and still legal versions that hit responsible investors.  Here are a few.

Steal a man’s wallet and he’ll be broke for a day.  Teach him to play drums and he’ll be broke for the rest of his life.

Payment for order flow.
My “commission-free” IRA firm sells my orders to the big market makers.

They see the flow first.  Every time I click “buy,” someone is being paid to take the other side with better data than I will ever have.

Index and ETF reconstitution.
The rules for what goes into the big indexes are public. Active money buys the adds and sells the deletes before the passive funds are forced to do it on the effective date. If you own index funds (and most of us do, in 401ks and IRAs), you are systematically buying high and selling low on the reconstitution days. The front-runners collect the spread.

Private-equity leveraged buyouts.
A PE firm buys a solvent company, and loads it with debt.  This is what happened to Toys’r’Us©.  And Sears™.  And RadioShack©.  And TWA®.

And I could keep going.

They then extract fees and dividends, cut costs, and exit leaving a like a vampire leaving a dried husk before the Sun comes up.  The workers get fired.  The store sits empty, as what was once a business becomes a blight.  If my pension was invested in those funds, I’m also funding the vampire extraction while the downside lands on the real economy.

Glass coffins?  Schrödinger was not a fan.

Institutional money vacuuming up single-family homes.
Large capital pools decided residential real estate was an asset class.  They bought the inventory that used to go to . . . families.  Prices and rents rise.  I already owned, so I was insulated.  But the kids?

Too-big-to-fail.
When the “systemically important” institutions get into trouble, they will be bailed out.  I’m betting that OpenAI™ is working to get as big as it can as soon as it can so it can sink its tentacles into the economy deep enough that if it fails it brings the whole house down and then they will have to bail Sam Altman out so he can keep his mansions, cars, and bunker.  Hey, I guess it’s just a business model.

Even though he won, he could tell there was no future in it.

I guess I can stop pretending the game is neutral, because I could go on and on and on with more examples.  To the big players, the Elons, Altmans, the Finks, we’re just liquidity and our retirement account is being used as their stack of chips.

The cards are the same.

The edge is not.

Don’t be the sucker.