Leverage up to the Eyeballs  👀

Table of Contents

Leverage up to the Eyeballs 

Invstr’s new Power Up feature is allowing the community to go double or nothing on stock market no-brainers, simulating real-world leverage. It’s a delicate tool; high risk, high reward, but we can learn from history!

Warren Buffett occasionally borrowed other people’s money to trade. He put the extra capital to work eighteen years ago to leverage a bet on PetroChina. It was an oil company with tapped out fields and out-of-control costs, but a dramatic turnaround sent the Oracle’s shares soaring. He scored a seven-bagger thanks to the leverage, a “seven-bagger” being Street slang for a 700% gain!

It’s not always sunshine and roses, though. When you play with fire, expect to get burnt. There was once a Manhattan office full of 16 of the smartest guys in America, including two Nobel Prize-winning economists. They were all expert financiers with hundreds of hours of combined experience, a formidable team, and they all had their personal fortunes tied to one simple objective; beating the market. Their fund was called ‘Long Term Capital Management,’ and it relied on lots and lots of leverage.

Long Term Capital Management went bankrupt in the late nineties. The brainiacs got overconfident in themselves and started taking real-world ‘Power Ups’ too lightly. It goes to show; getting good at leverage comes with keeping a level head, not being a genius.

Finally, we have trader Andy Kreiger. He made a short bet against the Kiwi dollar back in 1986, right after Black Monday. Investors were panicked and fled to foreign currencies like the New Zealand dollar, but Kreiger knew that wouldn’t last. He made such a large return that market historians can only assume the use of leverage, more risky than usual on a short bet, but clearly with the conviction to compensate.

If leverage works out, you’re a genius. You get terrific numbers. When things go sour, it’s something you wish you could undo!

In real life, various assets you already own, called ‘collateral,’ back up the borrowed money you’re given. You can’t have paper losses impairing your base of ‘collateral,’ else you get a ‘margin call,’ and have to quickly scramble to restore the collateral very quickly.

This is what makes leverage a double-edged sword, but we hope our community can be the best safe zone to let you learn the trade. You can find Power Ups in the latest version of our app. Get ready for some dramatic Fantasy League moves!

Share:
More Posts
The Crude Oil Bust 🛢

Surging global crude oil prices, driven by factors like OPEC+ production cuts have pushed U.S. West Texas Intermediate futures to over $95 per barrel.

Metaverse Returns 🤖

Meta, led by CEO Mark Zuckerberg, is intensifying its commitment to innovation in the Metaverse through the introduction of the Quest 3 VR headset.

Higher Rate Households 📈

The recent Fed decision to pause rates has left the federal funds rate at its highest level since 2000.

Get your daily Invstr Crunch

Get the market news and updates you need, delivered to your inbox or available on our daily podcast.

Risk Disclosure:

Invstr is not a bank and banking services are provided by Vast Bank, N.A.

Brokerage and Banking services are currently only available to U.S. residents.

Invstr app and web services are provided by Invstr Ltd. Advisory services are provided by Invstr Financial LLC, an investment adviser registered with the Securities Exchange Commission (SEC) details of which can be obtained here. Securities brokerage and custody services are provided by Apex Clearing, a broker dealer registered with the SEC and a member of FINRA and SIPC. There is no bank guarantee on securities and securities may lose value.

Investing involves risk and can lead to losses. Past performance does not guarantee future results.

Invstr app and web services are provided by Invstr Ltd. Invstr+ advisory services are provided by Invstr Financial LLC, an investment adviser registered with the Securities Exchange Commission (SEC). Securities brokerage and custody services are provided by Apex Clearing, a broker dealer registered with the SEC and a member of FINRA and SIPC. There is no bank guarantee on securities and securities may lose value. Vast Bank N.A. a nationally chartered bank and member of the FDIC, provides the banking products, including the products and services related to digital asset accounts. As with any asset, the value of Digital assets can go up or down and there can be a substantial risk that you lose money buying or holding digital assets. You should carefully consider whether trading or holding Digital assets is suitable for you in light of your financial condition. Your digital account does not support wallet to wallet transferring of your digital assets (i.e. cryptocurrencies) outside the platform. Any Digital Assets in your digital asset account are not insured by any government entities, including but not limited to FDIC or SIPC. The Invstr Visa® Debit Card is issued by Vast Bank, N.A. pursuant to a license from Visa U.S.A Inc and may be used everywhere Visa debit cards are accepted. Invstr Ltd, Invstr Financial LLC and Invstr Securities Ltd are subsidiaries of Marketspringpad Holdings (collectively “Invstr”) and Invstr is solely responsible for the application services and website content.

Watchlists provided when users first access the service are not a recommendation to invest. Instead they are provided to help users better navigate the service. Users are free to edit and create their own watchlists. From time to time, Invstr will suggest instruments solely based on an individual’s interest and the interest levels of the Invstr community. The statistical and portfolio builder models generated by Invstr do not reflect actual investment results and are not guarantees of future results. Comments provided by Invstr leaders, influencers or members of the Invstr Community are not recommendations and should not be construed as such. Invstr does not endorse the content or the positions posted by them. Their investment approach, and that of the models provided by Invstr, may be different from yours and may not be appropriate for you.