“如果对投资方向信心十足，且是基于长期投资逻辑的判断，时间是最大的盟友。杠杆让时间对你不利，因为贷款方的投资期限未必与你一致。”
With a sound long-term investment thesis, time can be your greatest ally. But with leverage, time can suddenly work against you.
This was one of the points I shared with Lianhe Zaobao 联合早报 on the use of leverage in investing.
When markets are going our way, leverage can look very attractive. Same capital, bigger exposure, potentially bigger returns.
And leverage also comes in different forms. Beyond 𝐦𝐚𝐫𝐠𝐢𝐧 𝐭𝐫𝐚𝐝𝐢𝐧𝐠 and 𝐂𝐅𝐃𝐬, products like 𝐃𝐚𝐢𝐥𝐲 𝐋𝐞𝐯𝐞𝐫𝐚𝐠𝐞 𝐂𝐞𝐫𝐭𝐢𝐟𝐢𝐜𝐚𝐭𝐞𝐬 (𝐃𝐋𝐂𝐬) and 𝐒𝐭𝐫𝐮𝐜𝐭𝐮𝐫𝐞𝐝 𝐖𝐚𝐫𝐫𝐚𝐧𝐭𝐬 (𝐒𝐖𝐬) can similarly amplify market exposure with a smaller amount of capital.
And that's where things can get tricky.
What concerns me more is not just the bigger losses. It is that leverage can take away something investors often underestimate, 𝐭𝐢𝐦𝐞.
You may have done your homework. You may even be right about the company or investment theme over the longer term. But if the position moves sharply against you, margin calls or forced liquidation can mean you simply don't get the chance to wait for your thesis to play out.
That's why when it comes to leverage, I think the starting point shouldn't be “How much can I borrow?”
It should be “How much risk can I comfortably take?”
A strong investment thesis and good risk management need to go hand in hand. Conviction is important, but conviction alone doesn't keep you in the game.
𝐒𝐨𝐦𝐞𝐭𝐢𝐦𝐞𝐬, 𝐛𝐞𝐢𝐧𝐠 𝐫𝐢𝐠𝐡𝐭 𝐢𝐬 𝐧𝐨𝐭 𝐞𝐧𝐨𝐮𝐠𝐡. 𝐘𝐨𝐮 𝐚𝐥𝐬𝐨 𝐧𝐞𝐞𝐝 𝐭𝐨 𝐛𝐞 𝐚𝐛𝐥𝐞 𝐭𝐨 𝐬𝐭𝐚𝐲 𝐢𝐧 𝐭𝐡𝐞 𝐠𝐚𝐦𝐞 𝐥𝐨𝐧𝐠 𝐞𝐧𝐨𝐮𝐠𝐡 𝐭𝐨 𝐛𝐞 𝐫𝐢𝐠𝐡𝐭.
A big thank you to Lianhe Zaobao 联合早报 Business Journalist Sierra Zhang（财经新闻记者 张仕婷） for putting together such a thoughtful piece. I really appreciate the effort she took to explore the topic from different angles, and more importantly, to make a sometimes complicated subject easy for everyday investors to understand. Always a pleasure exchanging views with Sierra and seeing how she brings these market conversations to life for readers.
#MarketInsights #理财精囊 #Leverage #Margin #CFD #StructuredWarrants #DLCs #TradeSGX #POEMS #danccs
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