The surge in Japan's margin trading is not an isolated phenomenon but an extreme extension of the "Japanese stock revival narrative" from 2023 to 2026: Buffett's significant increase in holdings of Japan's five major trading companies in 2023, the Tokyo Stock Exchange's push for "market capitalization management reform," and the Nikkei index rising from 16,000 points in 2020 to over 40,000 points in 2026, forming a positive feedback loop of "value reassessment → foreign capital inflow → leveraged bets."

Similar cases can be compared to the Japanese bubble formation period from 1985 to 1989—during which the Nikkei index soared from 12,000 points to 38,000 points, with an average annual increase of 75%. The core drivers were "uncontrolled credit creation + land mortgage financing"; the surge in margin trading in 2026, however, is backed by "improving corporate earnings + corporate governance reforms," reflecting the essential difference between "fundamentally supported leverage" and "pure speculative leverage."

In terms of capital pathways, the current Japanese market presents a dual-track structure of "foreign capital dominance + domestic leverage": foreign capital (such as Buffett and BlackRock) holds quality blue chips, while domestic retail investors chase high-volatility targets through margin trading, creating a layered market of "foreign capital locking in positions + domestic speculation," similar to the meme stock trend in the U.S. in 2021 characterized by "institutional holdings + retail options frenzy."

Essentially, this represents a "restart of the leverage cycle" within the context of capital concentration: as asset prices continue to rise and volatility declines, investors shift from "low leverage" to "high leverage." The underlying mechanism is that "margin trading" offers the temptation of "amplified returns," but the lessons from 1990 show that "leverage peaks" are often synchronous indicators of "market tops"—not causal, but signals of extreme sentiment.

ABAB News · Law of Cognition

Margin trading is not confidence; it is greedy leverage.
The lesson from 1990: Leverage peaks = market tops.
The truth of bubbles: It is not that prices are too high; it is that too much money is borrowed.