Michael Green
speaker
318 appearances
3 recordings
1 series
first heard Dec 2025
last heard today
Michael Green’s voice in public audio — every appearance, attributed to the second.
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recordings per month · last 12 monthsRecordings per month over the last 12 months — 3 in all, peaking in Sep 2026 with 1.
Appearances
And so he had a very strong thesis.
He expressed it with the extraordinary use of leverage.
His initial exposure was largely to non-public entities, and he had grown his business under that framework, which has a component of much lower volatility framing to it because non-public entities don't reprice themselves in the same manner.
But when you start running strategies that are running that much leverage against this much volatility for the individual securities, unfortunately, a blow-up becomes inevitable.
And it really looks like what happened within Leo's portfolio is that he created conditions under which a small decline in prices would force him to sell to reduce his leverage, which in turn caused prices to fall further, which caused him to be forced to sell to reduce leverage further,
And ultimately that cascaded into an event that sent both his longs and his shorts against him.
In particular, he very much had the thesis that traditional software companies would be heavily disintermediated by the growth of AI, in particular the software sector.
That obviously contributed to the underperformance of that sector for a period.
His selling actually contributed to the underperformance of that sector.
And as he began to be forced to unwind his portfolio, that forced prices to move in the opposite direction of his underlying positioning and created conditions for the rapid collapse of the fund and the need to deliver it in as quick a time as he did.
Nobody in their right mind should give a 25-year-old $20 billion at Forex leverage, but you actually can't blame the 24-year-old, right?
The reality is he had a very strong view.
He had a very strong conviction on his view, and everything in his experience base up to that point had told him that this was the right strategy to pursue.
Once you become that large...
The street actually identifies you as a target.
You effectively become a wounded shark and a feeding frenzy emerges.
A levered ETF carries the same characteristics as Leo's portfolio, which is obviously running at 4x leverage.
And the difference between the two is that a levered ETF, because it has a prospectus that requires it to maintain that levered exposure, has to rebalance every day.
And this is where volatility creates a phenomenon called volatility drag.
if you imagine a series in which i make 10 today and lose 10 tomorrow many people would assume that the answer to that is i now have a zero return but the reality is i start with one dollar i now have one dollar and ten cents and i lose ten percent i have 0.99 99 cents i've lost a penny if i add four times leverage to that
Showing 121–140 of 318 · page 7 of 16
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