View this post on X
Fast growth can hide a fragile foundation. Leveraged ETFs show how doubling down on something that is working can produce incredible results when conditions are favorable, then create much bigger problems when those conditions change.
That became especially relevant during the AI and semiconductor boom, when investors increasingly looked for ways to amplify their exposure to rising technology stocks. Leveraged ETFs offered exactly that by multiplying the daily movement of an investment. The strategy could accelerate gains, but its growing popularity also revealed a lesson that extends beyond investing. Businesses face a similar risk when one successful growth channel becomes responsible for too much of their success.
Success Makes It Easy to Keep Doubling Down
When something consistently produces results, putting more resources behind it can accelerate growth. TQQQ demonstrates why that strategy can become so attractive. The fund targets three times the daily performance of the Nasdaq 100, meaning a 2% daily increase in the index would correspond to a roughly 6% target increase for TQQQ before fees and expenses.
The strategy became especially powerful as technology stocks surged. By June 2026, TQQQ had gained roughly 54.6% for the year, showing how leverage could magnify a favorable market. Leveraged products were also multiplying, with more than 400 of the roughly 700 leveraged ETFs in the United States launching within the previous two years.
Businesses experience the same temptation when one customer acquisition channel starts outperforming everything else. If paid advertising consistently generates profitable customers, increasing the budget makes sense. The danger begins when rapid growth from that channel gets mistaken for strength across the entire business.
Dependence Turns Growth Into Vulnerability
The more that success depends on one source, the more damaging it becomes when that source changes. Leveraged ETFs illustrate this because their targets reset daily, so longer term performance can differ significantly from simply multiplying the total return of the underlying investment. ProShares itself explains that higher volatility can cause returns to deviate substantially from the fund's daily target over longer periods.
LittleThings experienced the business version of this problem. The digital publisher built enormous reach through Facebook and became one of the largest lifestyle publishers online. When Facebook changed its News Feed to prioritize posts from friends and family in 2018, LittleThings CEO Joe Speiser said the company's valuable organic and influencer traffic fell 75%. The company shut down shortly afterward.
Facebook had been an effective growth channel, but LittleThings became vulnerable because so much of its distribution depended on a platform it could not control. The growth was real, yet the foundation underneath it was fragile.
Use Fast Growth to Build Independence
A successful channel becomes more valuable when businesses use it to create growth they can keep. Instead of judging success primarily through views, clicks, or followers, companies can examine whether that attention creates customers who stay, purchase again, and recommend the business to others.
That also means using periods of rapid growth to develop additional ways of reaching customers. Search, email, referrals, partnerships, organic content, and paid advertising can prevent one platform from determining the future of the entire company. The objective is not to abandon a channel because it works, but to turn its temporary advantage into lasting customer relationships and independent demand.
Takeaway
Leveraged ETFs demonstrate what happens when exposure to a winning trend increases. The upside becomes larger, but changing conditions can expose weaknesses just as quickly. LittleThings shows how the same principle can appear in business when growth becomes concentrated around one outside platform.
The strongest businesses still take advantage of opportunities that are working. They use that growth to build retention, customer relationships, and additional sources of demand so the business can keep growing after the advantage that originally accelerated it disappears.
