Margin Debt & the dangers of leverage
Warren has spoken about the dangers of using leverage . Latest news about margin call: Coindesk news - Crypto Traders Liquidated Ether Futures Lead $1.2B in Liquidations, Crypto Market Cap Drops 16% Overnight. Many were hit with margin calls leading to one of the biggest losses within 24 hours for cryptocurrency. Margin Debt (as per Investopedia website): Margin debt is the amount of money an investor borrows from the broker via a margin account. Margin debt can be money borrowed to buy securities or sell short a stock. Meanwhile, the typical margin requirement is 25%, meaning that customers' equity must be above that ratio in margin accounts to prevent a margin call. Margin Debt data from FIRNA - $799B as of 31 Mar 2022 Margin Debt of the US of the last 5 years Mr Buffett has said the following about Long Term Capital Management, the hedge fund ran by Nobel Prize Laureates and PhD’s, which blew up in 1998. It turned out it was heavily leveraged. "But to make money they didn...