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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: MulhollandDrive who wrote (108680)3/9/2008 8:46:34 PM
From: RockyBalboaRead Replies (1) of 306849
 
Well, LTCM didnt start with 100:1. They had a leverage of an estimated 24x overall (though this doesnt tell anything about the riskiness of their positions) when they showed 5B equity and around 120B on the balance.

I have some better examples for you:

Thornburg which really tried to avoid poorly rated tranches had a leverage of 12x.
Annaly has a leverage of about 9x.
Most thrifts use 10x leverage and they also invested into mortgages.

This is why 32:1 must be considered reckless.

In these times, 8 to 10% equity might be not enough.
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