Finance brehs, how do you lose 20 billion in two days
- Thread starter Ya' Cousin Cleon
- Start date
Leverage (think of it like a loan).
Leveraged Blowout: How Hwang’s Archegos Blindsided Global Banks
I put $1 in my cash and my broker puts up an additional amount of funds at a certain ratio (let’s say 4:1) so my 1$ turns into $5 worth of buying power.
“ To execute such a swap, Archegos would put up a percentage of the position’s value in cash as margin. The rest of the trade would be financed by the prime broker. “
Leveraged Blowout: How Hwang’s Archegos Blindsided Global Banks
I put $1 in my cash and my broker puts up an additional amount of funds at a certain ratio (let’s say 4:1) so my 1$ turns into $5 worth of buying power.
“ To execute such a swap, Archegos would put up a percentage of the position’s value in cash as margin. The rest of the trade would be financed by the prime broker. “
Chrishaune
Veteran
GREED
SleezyBigSlim
Banned
Pitiful, he was borrowing money to make trades ofcourse that shyt would run its course and crash
Pitiful, he was borrowing money to make trades ofcourse that shyt would run its course and crash
It really is an industry standard
The amount of leverage he got + risk assessment from the brokers really fukk it up
Exactly. Leverage is how people get rich in the market and it’s only a rare thing in the US to have large amounts of it. You don’t even have to be a billionaire or a fund manager to do it outside of the US. In the UK, Asia, Canada, and EU your average retail trader can access all sorts of derivatives (like security swaps) that give them up to 50X leverage. Can you imagine that? That is like an office worker putting 10k in cash down, but having half a million$ in buying power. Makes the returns from options contracts look like chump change.It really is an industry standard
The amount of leverage he got + risk assessment from the brokers really fukk it up
Obviously, as an American this is off limits to you and I because the US is unusually anal about going into its people’s finances. EU firms won’t even offer these derivatives to a US national for fear of sanctions by US agencies. It’s Very similar to how we have all sort of bizarre babysitter rules like “pattern day trading” or that thing about IRS monitoring of foreign income/investments which got nothing to do with the US.
With all that being said, there are lessons to be learned from Bill Hwang. Obviously his risk appetite was excessive; but I think the bigger lesson here is how he was able to extraordinarily extend the resources given to him by banks from 3 different continents by casting a wide net and playing their ignorance/greed against eachother. I think this principle can be abstracted and used in other areas of life even for a normal dude.
Last edited:
Exactly. Leverage is how people get rich in the market and it’s only a rare thing in the US to have large amounts of it. You don’t even have to be a billionaire or a fund manager to do it outside of the US. In the UK, Asia, Canada, and EU your average retail trader can access all sorts of derivatives (like security swaps) that give them up to 50X leverage. Can you imagine that? That is like an office worker putting 10k in cash down, but having half a million$ in buying power. Makes the returns from options contracts look like chump change.
Obviously, as an American this is off limits to you and I because the US is unusually anal about going into its people’s finances. EU firms won’t even offer these derivatives to a US national for fear of sanctions by US agencies. It’s Very similar to how we have all sort of bizarre babysitter rules like “pattern day trading” or that thing about IRS monitoring of foreign income/investments which got nothing to do with the US.
With all that being said, there are lessons to be learned from Bill Hwang. Obviously his risk appetite was excessive; but I think the bigger lesson here is how he was able to extraordinarily extend the resources given to him by banks from 3 different continents by casting a wide net and playing their ignorance/greed against eachother. I think this principle can be abstracted and used in other areas of life even for a normal dude.
I’m personally torn on this debate. Yes, leverage is the name of the game (under favorable terms ofc) but survivorship bias is a real thing… and for every “I made 100k on 1k worth of options” on Wall Street bets… u got 5x the amount of people who blew up.
Honestly, retail shouldn’t have access to exotic derivatives
. The market it too thin.They can hardly handle vanilla
Hell, even on RH they had puts/calls advertised as “ if you think the stock is going up, buy a call & the inverse for puts”. This is just so wrong on so many levels. During AMC & GME puts where actually getting more expensive
.Dorian Breh
Veteran
Until insider trading is legal (yea you heard me) you'd have to be crazy to do this sort of shyt
Youre 100% right on survivorship bias, beyond just Wallstreetbets guys that applies to all the big money managers like Warren buffet etc as well
Archegos founder Bill Hwang found guilty of fraud
The collapse of Archegos Capital Management caused billions of dollars in losses for several big banks.
www.bbc.com
Archegos founder Bill Hwang convicted of fraud
6 hours agoBy João da Silva, Business reporter
Share
Guilty verdict comes three years the collapse of Archegos Capital Management
A jury in New York has found the Wall Street investor, Sung Kook ‘Bill’ Hwang, guilty of fraud and market manipulation.
It comes three years after the failure of his investment fund Archegos Capital Management, which caused billions of dollars in losses for several major banks.
Prosecutors accused Hwang of lying to lenders as he secretly amassed large bets on several companies.
When Archegos was unable to repay the banks, it prompted a mass sell-off of stocks and the fund collapsed.
Hwang's deputy at Archegos and co-defendant, Patrick Halligan, was also found guilty on the three counts he faced.
Sentencing has been scheduled for 28 October. Both men will remain free on bail.
"While we respect the jury, we intend to appeal and believe our client will be exonerated," Mary Mulligan, Halligan's lawyer, told BBC News.
One of Hwang's lawyers, Barry Berke, did not immediately respond to a request for comment from the BBC.
"Hwang and Halligan lied about Archegos’s positions in these companies and just about every other materially important metric investment banks would use in determining the firm’s creditworthiness," US attorney Damian Williams said after the verdicts.
"In doing so, Hwang and Halligan were able to fraudulently inflate a $1.5 billion (£1.17bn) portfolio into a $36 billion portfolio," he added.
Hwang had pleaded not guilty to one count of racketeering conspiracy, three counts of fraud and seven counts of market manipulation.
Halligan had pleaded not guilty to one count of racketeering conspiracy and two counts of fraud.