We’re not fans of leverage here at Capitalist Exploits HQ. It’s a double edged sword. It works beautifully when the trend is in your favor. But boy, it gets ugly once that trend reverses itself.

Case in point, MicroStrategy…

For a good chunk of 2025, it was one of the hottest stocks out there. Understandably so. With Bitcoin hitting record after record, MicroStrategy became the sexier bet on Bitcoin. So why even bother holding anything else?

Take this guy from LA who sold his Bitcoin and Tesla and went all in on MicroStrategy. A "very sophisticated trade," as he called it. 

Call us unsophisticated rubes, but we're left scratching our heads. Why bother with the middleman when you can just buy the underlying asset? But then again, everyone's a genius in a bull market. Doubly so when you have what's essentially a leveraged bet on an already yuugely volatile asset like Bitcoin.

Fast forward to today…

MicroStrategy is a lesson in mean reversion playing out in real time. Stocks have a nasty habit of returning to the precise point where they went parabolic. 

And you know what’s ironic? Looking at the list of MicroStrategy’s top shareholders, it's the most "conservative" suit-and-tie institutions that have been piling into the stock. Supposedly as a proxy for Bitcoin. 

Because, you know, buying the actual asset (Bitcoin in this case) is “too risky…” but loading up on a leveraged corporate vehicle wrapped around that same asset? Perfectly prudent! 

This is the kind of logic that only makes sense inside the echo chambers of institutional risk committees and compliance departments.

The lesson here isn't complicated: leverage amplifies everything. Your gains. Your losses. And most importantly, your mistakes. When the music stops, it's the leveraged players who get taken out first… usually right after they've convinced themselves nothing could go wrong.

We'll stick with boring, out-of-favor trades and the actual underlying assets, thanks very much.

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