Re:Stocks trampled as Nikkei crashes 13%
by wcoenen on Monday August 05, 2024 @04:18AM
(#41159115)
Selling of all risky assets tends to be correlated. It's called "risk off" sentiment.
This happens because when one asset drop in price, leveraged investors (i.e. those who borrowed to buy) may get "margin calls" from their lenders. This means that the total value of their portfolio (when including the loan) is in danger of going negative, and they may need to sell everything.
This happens because when one asset drop in price, leveraged investors (i.e. those who borrowed to buy) may get "margin calls" from their lenders. This means that the total value of their portfolio (when including the loan) is in danger of going negative, and they may need to sell everything.