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After Losses, Retail Investors Flock to 3x Leverage as 2x Product Are Restricted

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Re: After Losses, Retail Investors Flock to 3x Leverage as 2x Product Are Restricted

#71

Post by usrnm »

jdw64 wrote: post #42

As a Korean, the reason people rush into stocks is simple: labor value has been completely destroyed. Realistically, it's nearly impossible for high income young people in their 20s and 30s to buy a house in Seoul. That forces them to move to the provinces, but then there's almost no infrastructure. No companies either. So many people turn to leverage in hopes of a life changing reversal. The recent rise in the KOSPI…

> I live outside Seoul, and the infrastructure gap is about 10 to 20 years behind

That actually sounds like a business opportunity, if there is a steady stream of people moving out if Seoul.

> On top of that, there are no IT companies

Why don't Korean companies embrace WFH? Again sounds like a huge competitive advantage on the job market

Re: After Losses, Retail Investors Flock to 3x Leverage as 2x Product Are Restricted

#72

Post by anukin »

aunty_helen wrote: post #33
x313 wrote: post #20

For those who don't know what's going on in Korea, KOSPI is up 3x in the last year and a large amount of HBM employees have made huge amounts of bonus pay. This has led to an insane FOMO frenzy in a society that's already very competitive. Add to that, stock gains in Korea are often used to finance housing purchases (or real estate investment) so many retail investors are scared of being "locked out" of housing (whic…

I wish we had a word for this, where everyone’s getting rich, there’s a run on stocks, but prices of assets are all going up. Some people are missing out completely whereas a select few hoard wealth in other forms. And of course the government starting to notice and trying to intervene.

Roaring 20s?

Re: After Losses, Retail Investors Flock to 3x Leverage as 2x Product Are Restricted

#73

Post by alephnerd »

usrnm wrote: post #71
jdw64 wrote: post #42

As a Korean, the reason people rush into stocks is simple: labor value has been completely destroyed. Realistically, it's nearly impossible for high income young people in their 20s and 30s to buy a house in Seoul. That forces them to move to the provinces, but then there's almost no infrastructure. No companies either. So many people turn to leverage in hopes of a life changing reversal. The recent rise in the KOSPI…

> I live outside Seoul, and the infrastructure gap is about 10 to 20 years behind That actually sounds like a business opportunity, if there is a steady stream of people moving out if Seoul. > On top of that, there are no IT companies Why don't Korean companies embrace WFH? Again sounds like a huge competitive advantage on the job market

> That actually sounds like a business opportunity, if there is a steady stream of people moving out if Seoul.

They aren't. That's why those areas are falling behind.

Re: After Losses, Retail Investors Flock to 3x Leverage as 2x Product Are Restricted

#74

Post by itake »

purpleflame1257 wrote: post #13
trvz wrote: post #10

Earlier quoted context omitted.

Yeah, but it’s also plain greed, and it’d be hard to tell the ratio.

The threshold for greed is higher than the median net worth of an American. We tell people they need "generational" wealth to a make it in this country because housing, education, and healthcare are all so expensive

No need to tell. Just look at who can afford detached single family homes in tier1 cities: white-collar Dual-income and generational wealth families.

Governments have only managed to slow, not stop or reverse this trend.

Re: After Losses, Retail Investors Flock to 3x Leverage as 2x Product Are Restricted

#75

Post by weakened_malloc »

Galanwe wrote: post #54
mkotlikov wrote: post #27

The problem isn't leveraged funds, it's margin on leveraged funds. Leveraged funds are the safest way for the average investor to get access to leverage because unlike margin there is no risk of margin calls, and your money generally won't go to zero unlike options which are vastly more complicated and can expire. The reality is that using leveraged funds (or any leverage) is a completely rational move because the av…

> Leveraged funds are the safest way for the average investor to get access to leverage I... do not agree that leveraged funds are somehow a safest way to access leverage. Every product including leverage has inherently a non-linear P&L. And from my experience, non sophisticated investors always struggle to grasp the implications of that. It makes returns (on capital) very path dependent, and very nasty during volati…

> This is a bit disingenious, note that Buffet did not use leverage...

In a way, but Buffet wasn't making those investments exclusively using his own money. Effectively there's a degree of implied leverage when you get a performance reward from investing other people's money.

Re: After Losses, Retail Investors Flock to 3x Leverage as 2x Product Are Restricted

#76

Post by atwrk »

apparent wrote: post #55
SturgeonsLaw wrote: post #50

Earlier quoted context omitted.

Cities in Australia consistently rank in the top 5 most expensive real estate indices and we ain't short of space here, it's just not many people are interested in living in a dusty Outback desert. And for many, if the property is not within 10km of the Sydney or Melbourne city centre, it might as well be in the dusty Outback desert.

I'd think Starlink will help change this. Not for living in the actual dusty Outback (which has its own risks/dangers/inconveniences), but for living in many other places in Australia that are lovely and not too far from desirable areas.

Most people want to live where other people live, for reasons ranging from social connections to access to services and infrastructure. I doubt broadband access access plays even a small role.

Re: After Losses, Retail Investors Flock to 3x Leverage as 2x Product Are Restricted

#77

Post by itake »

mkotlikov wrote: post #27

The problem isn't leveraged funds, it's margin on leveraged funds. Leveraged funds are the safest way for the average investor to get access to leverage because unlike margin there is no risk of margin calls, and your money generally won't go to zero unlike options which are vastly more complicated and can expire. The reality is that using leveraged funds (or any leverage) is a completely rational move because the av…

[dead]

Re: After Losses, Retail Investors Flock to 3x Leverage as 2x Product Are Restricted

#78

Post by nirui »

scotty79 wrote: post #46
bananamogul wrote: post #7

"Smart men go broke three ways: liquor, ladies, and leverage." -- Charlie Munger (Which is not to imply that these are smart men).

Some time ago it occurred to me that you can't just spend extreme amounts of money. You can only lose it by gambling. In a casino, on investment or on business, it doesn't matter.

Investment or business do also have some gambling factors in it. And both usually cost extreme amounts of money to get started.

However, I found that if the bar of doing business is high enough, "investing" in stock market maybe safer than start a proper business. Because if a business failed, you likely lost a huge amount wealth, including everything you put into the business and maybe more. Whereas if you buy stock responsibly (for example, DCA VOO/&QQQ), there's a high chance you'll eventually bounce back.

Maybe that's one reason the young Koreans invested so much in their stock markets. Their country failed them by restricting them from opportunities, the only way they can save themselves is by gambling.

Re: After Losses, Retail Investors Flock to 3x Leverage as 2x Product Are Restricted

#79

Post by jdw64 »

usrnm wrote: post #71
jdw64 wrote: post #42

As a Korean, the reason people rush into stocks is simple: labor value has been completely destroyed. Realistically, it's nearly impossible for high income young people in their 20s and 30s to buy a house in Seoul. That forces them to move to the provinces, but then there's almost no infrastructure. No companies either. So many people turn to leverage in hopes of a life changing reversal. The recent rise in the KOSPI…

> I live outside Seoul, and the infrastructure gap is about 10 to 20 years behind That actually sounds like a business opportunity, if there is a steady stream of people moving out if Seoul. > On top of that, there are no IT companies Why don't Korean companies embrace WFH? Again sounds like a huge competitive advantage on the job market

To be precise, it's because of Korea's corporate structure. Korea operates in a way that favors large conglomerates. Since the media is also owned by corporations, it tends to protect corporate interests rather than amplify citizens' voices.

The core problem with 'sacrificing one region to save another' is that you need a market to consume what you're saving. But there is no market to consume it. Most regions are organized around subcontractors for specific large conglomerates.

The typical structure is: large conglomerate (prime contractor) -> powerful local subcontractor -> sub->subcontractor. Often, the powerful local subcontractors are companies founded by former executives from the prime contractor.

In other words, it's a subcontractor-of-subcontractor structure—and the state doesn't block it; it actually encourages it. To survive, independent developers have to work as sub-subcontractors. Because starting a business requires capital.

I've worked across a wide range of fields: finance, drones, factory machinery, tax SaaS, and more. I've worked in over 20 domains. Why? Because while developers are scarce in regional areas and needed, when project budgets shrink, developer labor costs are the first to be cut. Since there's no other work, developers accept poor conditions. And once you get on the wrong side of a powerful local company, finding the next job becomes difficult.

Most independent developers can't succeed unless they can handle this wide range of domains.

Suppose you make an app that 1 in 10,000 people use. In the US, with 340 million people, that's 34,000 users. Add in the English-speaking world, and the potential user base is even larger. And since the global UI/UX standards are based on US standards, it's easier for apps to scale globally.

But if you release an app in Korean, and 1 in 10,000 people use it, that's only about 5,000 users out of 50 million. The scale gap is enormous.

That's why Korea has concentrated everything into one region to maintain global competitiveness. This is the side effect.

But I think this is becoming a global problem. Just as the fertility crisis isn't unique to Korea, Korea is just a more visible case because its landmass is small. I'm convinced that all countries will eventually go through similar pains

Re: After Losses, Retail Investors Flock to 3x Leverage as 2x Product Are Restricted

#80

Post by xboxnolifes »

stickfigure wrote: post #52
x313 wrote: post #20

For those who don't know what's going on in Korea, KOSPI is up 3x in the last year and a large amount of HBM employees have made huge amounts of bonus pay. This has led to an insane FOMO frenzy in a society that's already very competitive. Add to that, stock gains in Korea are often used to finance housing purchases (or real estate investment) so many retail investors are scared of being "locked out" of housing (whic…

> housing (which is a requisite status symbol for dating or marriage I get that culture is hard to change, but it still seems easier than changing the economics. There are men and women out there who presumably are interested in partnering up; at some point you'd think biology will take over irrespective of which achievements have been unlocked. What's stopping them?

You think status signaling isn't part of biology? That it just happened to independently appear in every human culture and many animals that we are aware of?
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