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They get loans using their portfolios as collateral and then use the loans to buy stocks. This is very standard.
by irrational 2y ago
They get loans using their portfolios as collateral and then use the loans to buy stocks. This is very standard.
- JackYoustra 2y agowouldn't a drop in equities be the worst thing for them then? That'd trigger a margin call and liquidation; at the very least, they can do that without the shares falling. You're implicitly saying that they have an enormous if not cash position then leverage capacity that they're holding out on with the opportunity to buy more shares. In which case I challenge you: tell me where! I see tons of evidence of rich people completely shifted to risky risky equities (accredited investments have many attractions, one of them is not risk / 'volatility' (depending on your definition, see matt levine for details)!).