/biz/ - Business & Finance

[Anonymous No.13560685]

I am new to this. If the sp500 has pretty much increased for all its history and come back from even its worst crises, what's wrong with just putting your money in an index fund (or a CFD tied to the Sp500) with big leverage? With a x20 leverage and an annual return of 5% your position would double every year. What's the catch?

[Anonymous No.13560733]

>>13560685

Congratulations Anon.

[Anonymous No.13560756]

>>13560685
20x leverage means you lose everything if there is a 5% dip, which there will be.

[Anonymous No.13560774]

>>13560685
check out the index for japan starting 1980. it's not the most unlikely scenario to come

[Anonymous No.13560790]

don't listen to the jaded poor retarded doomers here, there's a reason they're poor.

longing the major indexes with leverage is the best kept secret around. any fucking idiot can magnify their wealth this way, but if too many people start doing it, you know we're close to the end

[Anonymous No.13560830]

>>13560756
Yes but assuming it comes back, which it always have

Isnt it safe if it even came back from the dotcom crisis and the subprime crisis?

[Anonymous No.13560850]

>>13560774

America is growing again, China is shrinking.

Hell, even manufacturing is having a renaissance in the US again.

How many billionaires are you aware of who made their fortunes shorting American industry?

Zero.

[Anonymous No.13560896]

>>13560830
your broker will invoke what's called a margin call and liquidate your position, since it's possible that it won't "come back" any time soon and they don't want to be on the hook for your losses.

[Anonymous No.13560903]

>>13560790
Op here again. Why would it be a secret? It seems like a very obvious thing to think about even for a complete beginner like me. So I assumed it must be too good to be true

[Anonymous No.13560910]

>>13560896
Op here

How bad does it have to be for them to do that? Has it ever happened?

[Anonymous No.13560926]

>>13560910
https://www.firstrade.com/content/en-us/education/margin/marginrequirements/

>>13560790
OP was asking about 20x leverage you dunce, not 2x.

[Anonymous No.13560934]

>>13560903
that's the way things happen in markets, it's a big battlefield of human emotions and psychology, people think that the low hanging fruit must be too easy so they start inventing ridiculous shit like TA and meme lines to feel like they're an expert while they gamble their life savings away on intraday price action

>>13560926
20x is still sane in traditional markets

[Anonymous No.13560988]

>>13560934
>20x is still sane in traditional markets
to suggest this to someone who doesn't understand how margin works is a bit silly. of course, there are the big boys with derivatives to hedge highly levered investments, it's not applicable to this conversation.

[Anonymous No.13561041]

>>13560988
a bit silly but you can't stop me from practicing my favorite passtime

[Anonymous No.13561061]

>>13561041
What, being a degenerate gambler?

[Anonymous No.13561085]

>>13561061
no, telling other people that that's the path to their freedom

[Anonymous No.13561103]

>>13561085
You’re alright buddy

[Anonymous No.13561129]

>>13560685
if you can finance 20x leverage over 10-20 years as a private person with basically a zero coupon bond you deserve every shekel you make from it