Leverage - margin debt

**blast_investor** Mon Feb 21, 2005 7:50 pm

Leverage - margin debt
Leverage - margin debt

Please comment here

**wonton** Tue Feb 22, 2005 1:31 pm

Re: Leverage - margin debt
...

**blast_investor** Tue Feb 22, 2005 3:30 pm

You are right.

Financial stocks and Tech Stocks are 2 sectors that I am least comfortable right now.

Of course, certain financial stocks like FB in the article was my favorite before due to simpleness of business model. However, most of financial stocks are too complicated and the risk of derivatives are too much.

Tech stocks are just too expensive. The valuation of many tech stocks are not real and they will shake many of their investors in the coming years ahead.

:lol:

**blast_investor** Mon May 23, 2005 4:17 pm

Today's Wall Street Journal disclosed the recent the hedge fund in the rumor of crisis.

The hedge fund is very new with 2 years of history with 1.3 billion equity. The fund leveraged 2.5 times of equity (meaning buying 3 billions of stocks with 1.3 billion of its own equity) in margin debt buying into risky stock such as Tech stocks Gateway.

The fund is in heavy loss of -60% in half year and in deep pressure of redemption.

A real-life Wall Street case of mis-use of leverage. This hedge fund manager is out of his/her mind to leverage so much in margin and to invest into risky stock such as Gateway. Obvious, this hedge fund manager is not taking advice from Benjamin Graham and Warren Buffet seriously.