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The S&P 500 is down less than 1% below its all-time high. It’s mathematically impossible to lose 52% following that advice. I think “with 10% leverage” deserve
by wat10000 2y ago
The S&P 500 is down less than 1% below its all-time high. It’s mathematically impossible to lose 52% following that advice.
I think “with 10% leverage” deserves a lot more than a parenthetical here.
- EVa5I7bHFq9mnYK 2y agoTry it yourself, the game is not randomized. You should receive exactly the same result.
- TeaBrain 2y agoIf fully invested in just the S&P 500 with 10x leverage, it seems less mathematically possible to have lost just 52% unless it was an very short time horizon. If fully invested, A 5.2% decrease in the value of the S&P 500, with 10x leverage, would lead to a 52% fund draw down, given no margin call during the 5.2% S&P draw down. In most years, the S&P experiences at least one short-term draw down off the years peak of at least 10%, which would lead to a complete loss of capital, given that they hadn't already experienced a forced liquidation due to a margin call on the previously 10x levered assets, which would now be levered higher given a loss in the capital base.