A lot of people here don't use borrowed money to invest, but simply pick the stocks you invest in. This sounds safe, but in fact you may be getting a return akin to using leverage without realizing it. The fact is a lot of the most popular stocks have borrowed heavily to expand their operations. You may think that all stocks entail equal risk, but clearly that is not so.
An excellent example of this is ARK Invest. They invest almost exclusively in “disruptive technology.” That is new firms with new products to bring to market. What does that mean? ALL HAVE LOTS OF DEBT. Ergo some do well and expand quickly, others don't and default. This is why ARK Invest products seem to have returns akin to a leveraged S&P fund, but not the day to day volatility. Part of the reason for the lack of volatility is the amount of private equity ARK invested in and those don't have the instant valuation changes public firms do.
What does this mean? Well, you may have two otherwise identical firms, except one borrows heavily to expand operations and the other doesn't. Ergo, the return of the one will behave like a leveraged investment into the other.
I will ask you to look at what you're holding, examine their debt outstanding, and ask yourself how “safe” your investment style really is. Some of you here are using margin and options to gain leverage, and so you must factor that in to the true overall leverage. In the real world, Ford has a debt to income ratio of ~1.5x, and Tesla has a debt to income ratio of ~3.6x, ergo Tesla is more risky than Ford. And both companies make electric vehicles with Ford promising to go all electric in the coming years.
To the extent shares are not equal can be shown by how borrowing to invest in a safe stock may net more returns than an unlevered investment into risky stock. There's no guarantee of this, but the best returns are always the ones disproportionate to risks taken.
Yes, margin, corporate debt, naked options, student loans, mortgages, and all the rest of it is all just leverage. Some of these are normalized and expected, others are considered exotic and risky, but it's all the same thing.
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