Well when the crash comes and again, you can no longer repay the loans
Well, is that the case? Afaik when they loan with a stocks amount as collateral, the X units of stock are the collateral, not the Y value of stock.
They just set aside more collateral value than the loan is worth. Say if you loan 1k the collatelar assigned will probably be 2-3k.
If the stock holding value gets dangerously low, the lender can liquidate your stock I think
But, EVEN THEN, the NET worth of say, Musk, doesn’t change too much in that case. Because net worth already has all debts subtracted from it.
It would change in the value equal to the difference between the loan value and the liquidated collateral value I guess, but I don’t imagine that would be very large? This part I’m unsure about.
So even in the end I don’t think they lose too much…
Well, is that the case? Afaik when they loan with a stocks amount as collateral, the X units of stock are the collateral, not the Y value of stock.
They just set aside more collateral value than the loan is worth. Say if you loan 1k the collatelar assigned will probably be 2-3k.
If the stock holding value gets dangerously low, the lender can liquidate your stock I think
But, EVEN THEN, the NET worth of say, Musk, doesn’t change too much in that case. Because net worth already has all debts subtracted from it.
It would change in the value equal to the difference between the loan value and the liquidated collateral value I guess, but I don’t imagine that would be very large? This part I’m unsure about.
So even in the end I don’t think they lose too much…