Equedia Letter

How Leveraged is the Stock Market?7 min read

Comments (14)
  1. Jennifer Rand says:

    How can the regulators allow so much debt? This seems absurd to me.

    1. Kelvin Hardy says:

      Jennifer, they allow it because these funds have stock market that is used as collateral for bigger bets, like all margin trading accounts. That’s why Mr. Lo said if the market turns, all of these guys will be scrambling to cover by selling other stocks and hence a big swing to the downside.

    2. don says:

      The regulators are the Government..

    3. jrj90620 says:

      It’s American voters,who choose the politicians,who promise,the most “something for nothing”.An honest person,like Ron Paul,would never be elected President,because he tells the truth.So,in conclusion,as a whole,the country is getting the leaders,it deserves.

  2. The Random says:

    Obamacare will destroy the American economy. Obama will make the next President pay for his mistakes. Universal healthcare makes sense, but not when it will destroy our childrens’ future.

  3. don says:

    I personally believe sociopaths have taken over our Governments , don’t matter who you vote for , were in serious decline because of them.

  4. Gary Harany says:

    The USA finds themselves riding in a leaky boat and drilling a hole in the bottom to let the water out.

  5. jrj90620 says:

    Health care insurance is too expensive,because health care providers massively overcharge,for their services.That’s why I won’t be buying,I can afford to self insure and will do that.There are no enforcement,in Obamacare,of penalties levied,for not having health care insurance.If everyone had NO health care insurance,people would have skin in the game ,wouldn’t pay the overcharges and prices would fall.I have to negotiate,still overpriced services,when I need them.Still much better deal than paying for insurance.What’s going to happen,with Obamacare,is that the sick,who use a lot of healthcare and the poor,who will get govt subsidies,will sign up.The healthy and non poor,the ones Obama is counting on to pay for the others,hopefully will,like me,not sign up and we can sink this fascist(govt force against citizens) program.

    1. Harrison says:

      That’s the problem. It will raise the price that healthcare providers charge because they know the government will fit the bill for the poor.

  6. paul says:

    Thank you..informative, concise, precise.

  7. J Peter Milner says:

    Actually Ivan, what you pull back on are “reins” not “reigns”. Sorry, I can’t help it, I was a teacher for 38 years.(and your word correction won’t help you as they are both correctly spelled (or spelt as some prefer.) All that aside, I enjoy each issue of the Equedia Investment. Letter they are extremely thought provoking.

  8. Lee says:

    A lending institution (bank) to start up needs real capital injection (asset=debit),
    for example.
    bank A starts with 10 investors $1MM
    Lends to 10 borrowers (credit) $1MM
    collects principal plus interest
    Leveraging starts.(the snow ball effect)
    Bank A phones the FED bank as they
    have a loan payable to them now $1mm
    FED debits their out of thin air account
    sends $1MM to Bank A
    FED debit——————————-$1MM
    Bank A credit—————————$1MM
    Bank A loans out—————-$1MM
    Receives from borrowers———$1MM
    Borrowers pay principal and interest on these loans to Bank A
    Bank A repays back the FED IOU
    Principal and interest minus their
    interest spread (commission)
    Principal———————————-1MM
    Interest net say 2% to Fed—————$20TH
    FED receives this credit and cancels
    their out of thin air Debit
    What just happen ?.
    Bank A earned their commission (interest spread) as the middle man and the FED collects principal and interest created out of thin air =to nothing.
    Remember that the original asset of $1MM at bank A is the only real asset still existing.
    Think about it, principal and interest paid back out of thin air, for what? to have the FED manage the global banking system.. Seems to me an illegal rate charged to the borrower. There are laws against this type of monopoly, however the FED themselves have written any laws they so please for their own gain and protection ? they think. until the 90% of us say no more.. FED is a private corporation . No access to their own records by the public. No full disclosure. So many laws broken against the Natural Being (human race) Remember that the Debit & Credits continue to take place out of thin air. We made to believe that the fact that homes have gone up in value that we are benefiting, this is cause we don’t look at the other side of the transaction. A $35k home (my dads home in Toronto) in 1970’2 was $30 thousand now about $300-400k is there a positive to this investment. do the math, taxes, expenses etc.Inflation is the other side of the equation that leaves us all blind to the fact it has. It benefits whom?.
    The USA housing market collapse, Was the FED out of pocket money??? besides these folks are experts in economic manipulation. did they short the housing market for double the profits. We will never know // ALL THIS CAN BE FIXED BY HAIVNG EACH GOVERMENT PRINT THEIR OWN OUT OF THIN AIR MONEY and of course there are rules, same rules we are using now on qualifying etc. but rather to pay principal & interest to a private corporation we the citizens pay back to our own country or our own banking system for which we can still use debits and credits thus benefiting all of us. THIS WILL BE THE FUTURE BANKINGG SYSTEM once most of us wake up from this dream. Bank A is not authorized to leverage under their own existing laws. Only the FED and yet its a practice well accepted by society cause we are not informed otherwise (no disclosure). thus all lending beyond the original $1MM capital + interest (corp. net-worth ) is UNLAWFULL. There’s so much to say, please dig yourself the knowledge for at least be a little bid informed. Example of $1MM is just for example purpose only, to keep it simple as different countries have different rules on the amount of leverage allowed.so lets keep it simple.
    LET THE UNIVERSAL MIND ALLOW US TO BELEIVE THAT THERE IS A BETTER WAY AND EVENTUALLY IT WILL TAKE PLACE PEACEFULLY.
    IN GOD WE TRUST.

  9. SteveD says:

    The federal debt is essentially interest earning savings accounts at the Federal Reserve Bank. Normally folks do not lose their sanity when a bank has a rather large number of dollars “residing” in accounts at their bank. Somehow, for reasons beyond logic, savings accounts at the FRB exceeding $13t in marketable securities somehow verges on economic Armaggedon. How ludicrous! FACT: Interest on the federal debt is paid for by selling more securities. The principle on the federal debt is NEVER spent. Stop blowing smoke and ignorance. Plus, debt/GDP (ratio) is a meaningless equation for a currency sovereign such as the US.

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