Leverage is the ladder to wealth

His name is bill hwang,. Today, almost every group in the circle is brushing his screen. He is famous all over the world overnight because more and more information has been leaked out, confirming that the recent collapse of US stocks in Chinese stocks is because this guy's fund has exploded.

He made his debut from the Tiger Fund in his early years, and it is rumored that he started with $200m and traded with high leverage (3-5x), earning up to $15 billion, plus leverage, a total position of nearly $100 billion.

His highly leveraged fund Archegos Capital has placed a lot of Chinese stocks, including the recent collapse of who to learn, Baidu, Fog Core e-cigarette, Tencent Music, as well as disca, viac and other senior stocks. He did not reduce his position in this wave of US stock correction in March and chose to fight hard.

The trigger was viac's announcement of an additional stock offering, which was not ideal and triggered a crash. The share price fell from $100 to $48 in four trading days, and then the South Korean brother exploded.

After the explosion, in order to make up the margin, we can only sell stocks in other positions, so Baidu and Tencent Music plummeted collectively.

It was a vague rumor a few days ago, and it was suddenly hotly debated today because two institutions, Nomura and Credit Suisse, jumped out and admitted that big clients raised money from them, but leveraged positions were blown out. Nomura said it had $2 billion in losses to claim, while Credit Suisse did not give a specific figure, saying the losses were large.

The share prices of these two institutions also plummeted today, because if the general position is blown up by a huge amount of money, the claim can not be compensated. When our A-share crash in 2015, many investors' leverage was pierced, and the brokerage silently swallowed a lot of bad debts.

At present, this is only an isolated case and does not cause systemic risk to US stocks. Some say bill hwang lost $15 billion a day on Friday, giving it the chance to hit the biggest one-day loss in securities history.

Boss's world is really wonderful.

I guess some readers must have read it and sighed that they had already made $10 billion, so why risk four or five times the leverage? Isn't it good to put all your money in the bank and eat interest for the rest of your life?

It is normal for ordinary people to have such an idea, but the reason why the boss is the boss is because his brain circuit is not ordinary people.

Because if you have the idea of "make enough money and enjoy life", not to mention $10 billion, it may have stopped before $1 million. If the boss didn't have some paranoia and madness, he wouldn't be able to do such a big thing. Think of Wang Jianlin, think of Xu Jiayin and think of Zhang Jindong. The richer they are, the more they dare to borrow money. Tsinghua University and Peking University are not as bold as they are.

To achieve the transition of the wealth class, leverage is the invisible ladder. It's just that this ladder is very unstable and sometimes, if you keep climbing and don't want to stop, it's inevitable that you will fall off.

Path dependence is too hard to break, especially if you always rely on this path to victory, it is difficult to stop. There are often German military fans who fantasize about it. If they did not fight the Soviet Union during World War II and quit as soon as they were ready, the Fuhrer would have succeeded. Ha, if it had stopped, it wouldn't have been Hitler.

What do you think of leverage? will low-magnification leverage, such as financing, be used? Do you use it for a long time?

I don't use leverage, and I never recommend that readers use leverage. I use the futures index to buy according to the planned position, the purpose is to eat discount, never exceed the forehead position to increase the position. Using leverage is like taking drugs. Once you've used it, it's hard to quit.