Why Market Surges Should Make You More Nervous, Not More Confident

The Phone Was Ringing Off the Hook

My flight got canceled, and while I was waiting for the next one, my phone would not stop buzzing. Everyone wanted to know the same thing: what do I think about the rally? Markets are going crazy, records are being talked about, and investors are excited.

Here is what I told every single one of them. When markets race through the roof like this, I am a hell of a lot more cautious and nervous than I am when they are going down. That might sound backwards to you. It is not.

What Actually Triggered This Move

Let me give you my read on what sparked this particular rally. Treasury Secretary Scott Bessent went on CNBC and was forceful about his belief that a deal is going to get done. There are stories circulating that back up that assertion, including some that suggest our missile stockpiles are severely depleted after sustained engagement. Iran is signaling it may allow Europeans in with minesweepers for the Strait of Hormuz cleanup. Oman appears to be involved in brokering some kind of framework.

Bottom line: the market smelled an all-clear signal and reacted accordingly. Fast and violently to the upside.

The Riptide Effect Is Real

This is something longtime listeners have heard me explain before. Think about what happens when you get caught in a riptide at the ocean. If you try to swim directly against it, you will drown. It does not matter how strong you are. The current wins. The only move is to swim sideways, out of the pull, and then make your way back to shore.

That is exactly what is happening in these extreme market swings. Here is why they are so exaggerated right now:

• Leveraged financial instruments have massive momentum baked into them
• Financial engineering amplifies moves in both directions
• Once momentum starts in one direction, you cannot fight it
• The same mechanics that push markets violently up will push them violently down

When everyone piles into these kinds of instruments, the swings become unnatural. You are not seeing organic price discovery. You are seeing a system that overreacts in both directions.

What Smart Money Does at the Top

At Markowski Investments, our strategy during moments like this is consistent and disciplined. We do not get swept up in the euphoria. We do the opposite of what the crowd is doing.

• Take profits on positions that have run hard
• Trim positions rather than riding them into uncertainty
• Rotate assets into areas with better risk-reward profiles
• Resist the urge to chase what already moved

There is nothing wrong with locking in gains. In fact, that is the entire point. You do not get rewarded for holding something indefinitely. You get rewarded for buying smart and selling smart.

The Broader Warning

The geopolitical optimism driving this rally may be real. A deal in the Middle East and stabilization of the Strait of Hormuz would genuinely matter for energy markets and global trade. But markets have now priced in a best-case outcome before that outcome has actually materialized.

If the deal falls apart, if the framework collapses, if the minesweepers never show up, the same leveraged instruments that drove this rally up will drive it back down. Hard and fast.

The lesson here is not to be pessimistic. It is to be disciplined. Rallies are not invitations to buy more. They are opportunities to review your risk, lock in gains where appropriate, and make sure you are not overexposed when the riptide reverses direction.