Saturday, January 19, 2008
Friend-of-the-blog Cassandra has been waxing lyrical on the subject of leverage recently, perhaps because of first-hand observation of what appears to be significant deleveraging activity in single name Japanese stocks.
When Macro Man proffered a modest contribution to Cassie's collection of leverage verse, occasional poster/impressive polymath/tastefully-initialled Mencius Moldbug suggested that he republish in this space. And so, by popular demand, Macro Man presents his first-ever financial sonnet!
Shall I compare thee to a levered trade?
Thou art more lovely and more temperate.
Rough winds do shake the market call you made;
Perhaps thou erred in selling options of short date.
Sometimes too hot the market darling shines,
And oft the ertswhile star is dimmed;
And every trade from time to time declines,
Alas! The over-levered ones are trimmed;
Just as a short-term extreme is made,
And soon a tidy sum thou ow'st;
Forsooth, thou start to feel afraid,
In real time, thy loss it grow'st and grow'st:
The levered trade, in time of volatility?
A dang'rous game, as you can finally see.