Post
Topic
Board Economics
Re: This why wall street are rich and you are poor
by
JayJuanGee
on 14/01/2022, 18:04:32 UTC
n order to get rich in the cryptocurrency market, you need to learn how to properly analyze all projects and cryptocurrency assets in order to find the best pearls that will give a good profit. in my opinion every cryptocurrency trader is much more likely to become rich than a wall street official. Today I am studying the defi platform for finance very much. Anyway, all blockchain money transfers will take the market to another level and projects like AccoinCrypto can make everyone rich.
I think what the OP is trying to say here is that when you have more money to invest in an asset, then the return you are likely to gain from the asset will be more than when the capital you are investing is less. He is right, because when you invest less money in all these types of assets, the profit you are gaining wouldn’t be as much as those who invest bigger amount of money (the whales).

So, the problem for an investor can be finance; when you don’t have enough money to invest in an asset, then you will be unable to make better profit. He then pointed out that Wall St. investors would usually borrow money to invest in the stocks or assets of their choice for them to be able to multiply their profits.

The premise of what OP saying isn't very logical. The more money anyone invests, whether it be an institutional investor or an ordinary person, that investment amount is directly proportional to the risk incurred, so why would anyone expect the profit structure to somehow stacked against the smaller investor? More risk means higher returns. Greater risks are also associated with greater losses. If a Wall street investor chooses to borrow money to invest, that's their prerogative. Recall during the GME squeeze, one of the investment firms responsible for shorting had to borrow millions in order to cover their losses. And of course, those millions went up in flames as the stock price continued to climb. In that instance, the wall street guys got burned, regardless of the access to capital they had.

For sure there are variations on the terms that anyone can get, when getting a loan, and the more resources that you have, the more likely you are able to negotiate more favorable loan terms.

So, the mere fact that poor people and/or normies might not be able to negotiate as many good terms as rich people, does not mean that they should not attempt to use the power of leverage in their favor.. to the extent that they can negotiate terms that are sufficiently acceptable to them and their contemplated way(s) to use the proceeds of the loan.

Regarding poor outcomes, such as your GME, example you are correct that even folks with the greatest of negotiating power and already existing capital could get burned pretty badly, and the loan or the additional leverage did not end up being sufficient from getting them out of their pickle or to show that they were advantaged in using the leverage... like you said, their use of leverage ended up causing them to be in even a worse position than they would have been if they had just left the matter alone....and not taken on the additional debt.