ARCHEGOS: MARGIN CALL VOLATILITY IN THE RED
Any investment is a big risk. Now turning that risk into profit
is up to your ability to lure more investors to your corners. Either
way the payoff will be massive. This story came to my attention yesterday
and it took me a while to digest all the info about it.
The stock market when you look at the banking sector, it is not moving as swift
since they are the one with huge quantity of funds.
Before I go further, #wallstreetbets found a way to crack jokes about institutional investors. It is pretty tough when retail and institutional investors are going after the same pile of money. The mindset is similar except one got more funds to play with and sometimes it plays over the counter.
#archegos story is in anyway selfish but when profit is the only cause of the debate you can see how far things can blow in your face. This story makes more sense to spell backwards cause this is the way it got out. Morgan Stanley saw an issue with couple stocks they got from Archegos and they quickly found a way to dump them quick to avoid huge loss.
So Archegos is a family office hedge fund doing business with the family money to start. It sound weird but they acquire
leverage from many big Banks to purchase multiple stocks through margin calls.
Somehow the banks did not know Archegos kept pushing a certain companies. I had tried margin call myself and it is not
fun when it turns to red. You will be direct with a maintenance call where you have to add more fund or they will sell your
position so they can get their money back.
This was the case with Archegos with Goldman and Morgan. It is like they got out of the water quick before it turns sour. Since I tried margin I know it is something I personally will NOT go crazy for in this market. I have a sense of understanding why this case is out of proportion right now.
Archegos as a family office hedge fund does not need to report his business to the sec as long they do not own more than 10%
of shares of any given companies. As you can see this is not the case with them. By leveraging many banks to place margin
swap to Viacomcbs and other companies. Those stocks skyrocket to a value where it is like okay at first.
The problem is all the banks did not know it was their money putting together pushing the stocks higher.
Welcome to the pumps and then dumps in the stock market.
The risk Archegos was taking has backfired when Viacomcbs decided couple weeks
to offer more stocks in the value of $3 billion. This alone is a big problem for investors.
If you have stocks prior, it will be diluted
by adding more to the market. I open a little window: Do you see why CUB Finance and Leo burn the token in a regular basis?
The answer is to keep the value at bay. No need to be greedy when things are going good.
In the same tone Viacomcbs was happy to see their stock moving higher
with no true underlying composition. Definitely three greedy moves collapsing the stock and many losses thereafter.
IF you listen to wall street folks, they quick to emphasize crypto is so volatile. Just look what just happen between them. Due to leverage
MOrgan and Goldman quicklydumped their positions of Viacomcbs. Others like Credit Suisse took a beating. Archegos lost a lot more. Funds and credibility are out of the door. Is this greed at his best?
Every time I circle around this story, it gives me another layer of understanding about the stock market.
Since the stock market has no blockchain, we are all rely on what come out of this debacle.
As always since the stock market runs on laws, you can be sure family office funds will be looked at really close. More discipline will be coming to this sphere. It is an assurance that while the stock market is shaky, having the institutional investors coming over to crypto they have to play by the rule where code is law. I do not know the real impact it will have on crypto. I know for sure the train is passing by and I am onboard. #defi is making a turn of the century where retail investors have option. Needless to say wherever you invest it has to be a long term goal for you not to get burned. Volatility will always be waiting by the next evolution. I have seen margin all over the exchanges. It has its purpose, use it wisely cause you are on the hook either it turn green or red. Keep stacking satoshis.
Posted Using LeoFinance Beta
