It's incredible that he managed to be that leveraged to begin with. So much of the modern economy is built up on debt and leverage. Sometimes I can't help but feel it will all unravel, very quickly. What will it take? An asteroid impact?
Another strange thing is the following:
> U.S. rules prevent individual investors from buying securities with more than 50% of the money borrowed on margin. No such limits apply to hedge funds and family offices. People familiar with Archegos say the firm steadily ramped up its leverage. Initially that meant about “2x,” or $1 million borrowed for every $1 million of capital. By late March the leverage was 5x or more.
Why are the rules not also applied to hedge funds? I wish I could say this is the only one, but from my knowledge there are a lot of rules that pretty much only apply to retail.
Another strange thing is the following:
> U.S. rules prevent individual investors from buying securities with more than 50% of the money borrowed on margin. No such limits apply to hedge funds and family offices. People familiar with Archegos say the firm steadily ramped up its leverage. Initially that meant about “2x,” or $1 million borrowed for every $1 million of capital. By late March the leverage was 5x or more.
Why are the rules not also applied to hedge funds? I wish I could say this is the only one, but from my knowledge there are a lot of rules that pretty much only apply to retail.