The Hedge Fund Double-Uno Reverse | Hurting the Stock Market

well everyone meet kevin here it

happened again mark you pulled another

uno reverse card on us that's two in a

row that's kind of as if we've got like

a double uno reverse going on or

something here

but it's not like we're getting the

reverse back in our favor or anything no

no no it just

the same crap happened to us twice

market goes up twice

yay market's going up nope just kidding

and then

same thing this morning this is what

happened thursday market goes up

oh nope just kidding this is despite the

fact

that this morning goldman sachs via the

bloomberg terminal says

oh higher rates are priced in or good

we don't have to worry anymore folks i

think

this archagos and this is just my

speculation here but i think this

arcade goes family fund disaster

where this family fund ended up having

not just and when i say family fund

basically think hedge fund

with more secrecy rules they had

8 to 20 x leverage by rehypothecating

the same

collateral i would not be surprised if

we have a lot

more leverage issues on wall street than

we even realized today

quick explanation as to what that means

so you go to a bank and you're like yo

i want to buy a house i got this uh

hundred thousand dollars to use as a

down payment

usually when you buy a house i mean this

is how it would work you would put your

hundred thousand dollars

into an escrow company the lender the

bank would look and go ah okay you got

your hundred thousand dollars there okay

now we will give you the other nine

hundred thousand dollars so you could do

ten percent down on your million dollar

house let's say hey that's normally how

it works

but because these private hedge fund

family fund

bull crap secrecy rules basically

this uh arcade goes dude is able to go

hey um

and put 10 down on this house over here

except instead of a house it's

you know contracts on stocks

uh which we've explained in a different

video we're not going to re-explain it

here

uh you could look that one up just type

into youtube meet kevin uh here

youtube.com meet kevin

hedge fund uh leverage your margin meet

kevin hedge fund

margin and uh yeah yeah will the hedge

fund melt down crash markets okay so if

you want an explanation in terms of

what kind of derivatives they were

buying that's a good one okay so watch

that one

but this is kind of part two to that uh

and the reason it's part two is because

we explained what this guy was doing

let's go back to this house example

you take a hundred thousand dollars with

these secrecy rules you're like yeah

yeah yeah

this hundred thousand dollars is my

collateral let me

borrow 3x to go buy stocks

totally normal okay no problem you you

got your hundred thousand dollars

no problem here we got three hundred

thousand dollars we can play with now

except in this case instead of being a

hundred thousand dollars

and three hundred thousand dollars it's

two billion dollars

and six billion dollars in in leverage

that he's basically able to use in total

but now this company goes around to all

the different banks

does the same thing there's no escrow

company because there are privacy rules

there's no

there's no rule that says okay well

you've got to take your collateral and

park it over here

no no you just keep your collateral well

now he's able to use that same

collateral

for multiple different banks potentially

five to six different banks

and leverage up as high as 8 to 20

times on his bets well the market

doesn't have to go down a lot for you to

get screwed in that kind of scenario

look if you've got a hundred percent

leverage on let's say tesla stock

and it goes down around 35 percent

you're probably gonna get a margin call

if you got eight to twenty times

leverage on something the market

probably only has to go down like five

to eight percent for you to start

bleeding and maybe ten percent for you

to start getting liquidated

and that's kind of all it took with

this hedge fund and so what does this

have to do

with now well folks

let's get your hit points up basically

and yeah that's

actually kind of what i mean i believe

that it's possible

a lot of hedgies are using way more

leverage than they should be and

potentially the reason we keep seeing

these uno reverse

the the uno reverse is these false

starts

in basically a stock recovery

after this six month crash is because

every time stocks go up hedge funds

realize you know what this is a good

time to rebalance

pay off some more debt i don't know

i could be wrong but the problem i'm

seeing is

is we don't have a very clear rotation

anymore it used to be you know initially

the first three weeks it was like oh

just plow money into

recovery stocks sell tech really but

wait a minute

dave and buster's is down you've got

redfin down you've got end phase down

enfie's not

tech you've got uh other companies over

here

like cheesecake two percent down the

simon property group's down

you've got nordstroms that's down macy's

that's down gap that's down and these

are mixed in here with

airbnb and darden uh and of course

the uh you know end phase and zom and

there goes canoe

10 percent you know here's uh etsy 5.3

percent here's

matterport like it almost doesn't make

sense

like wayfair was actually one of the

companies that was holding up pretty

strongly while tech was selling off

or the furniture companies buying no no

literally

every stock is going through its

sell-off period every stock is almost

going through its

initial round here of deleveraging

which is kind of interesting because it

really echoes what ray dalio talks about

in this potential great deleveraging

coming

personally i think this early round of d

leveraging that i think we're seeing

with the weenie babies basically like oh

my gosh we got a lot of margin too we

don't want to be in our cages

let's sell and sell let's cover a little

bit and let's reduce our risk a little

bit at higher valuations

i wouldn't be surprised if that's

exactly what's happening now we don't

know with certainty and we probably

won't know uh for

for weeks or potentially even months

until we get some more clarity

why is all of this volatility happening

but the money's

not clearly going from one place to

another anymore

i think it's it's too simple to be able

to say oh well kevin i mean it's going

from the airlines today to the cruise

lines today

well the problem is when airline

shares go down like when a stock goes

from a hundred dollars to let's say

eighty dollars

and hedge funds are like oh we should

rotate over to cruise lines

it's not like they've got to pocket that

twenty dollars if people stop wanting to

buy shares at a certain price

that money just instantly evaporates

like that's the interesting about

or interesting thing about stocks i mean

ask yourself this

why is it that a billionaire can be

created because they own let's say

a million dollars worth of stock uh in

their company

and one day it's worth ten dollars

so you know they're a 10 millionaire

and the next day every share is worth a

thousand dollars because they ipo'd

like literally nothing really changed

there jerome powell didn't come in and

print the money printer just all of a

sudden because that

company is now publicly trading that

person shares that we're worth a dollar

each are now worth a thousand dollars

each

that's literally money created out of

thin air that same thing happens in

reverse

so i don't necessarily think this is the

hedge funds and the weenie babies here

winning i don't think they're winning

right now i think they're they're

feeling the same

pain that a lot of us are feeling in the

market the difference is i think they're

over

leveraged and they have to sell this is

why we saw people like chamath liquidate

virgin galactic

you think after coming up on stage and

telling everybody how great

and when i say stage the public domain

telling everybody how great virgin

galactic is and how excited about virgin

galactic he is and

how great its profitability is going to

be in two years you think after that

he wanted to sell i don't think so i

think he got forced to sell because he

was

so highly margin so highly leveraged

that basically in order to remain

competitive

in the hedge fund world you pretty much

got to sit at like 80 to 100

margin call me crazy but i think these

uno reverses we're seeing

or a a symptom of weenie babies being

weenie babies they're not a symptom of

you making poor stock picks

the companies that we're buying

especially the companies we talk about

on this channel

they're phenomenal companies these are

these are christ attunities

to be buying these stocks at just cheap

levels uh in my opinion relatively cheap

levels like tesla under 700

it's still cheap even though we ran to

like 7 10 7 15 today

now we're under 688 again

you know end phase under 150 come on

canoe you can't tell me that's an eight

dollar combine

whatever whatever the point is and

and canoe is a little bit more of a

speculative rebound play anyway it's not

like a big position

but anywho uh i might i might add to

that one because that one's getting real

cheap

anywho this this is not uh to me

anything but

d leveraging and in in a that's what's

happening in my opinion

but the second thing or the b which is

actually a good thing

is that the more this happens the more

this uno reversing happens

in my opinion the more we're de-risking

the market and i'm not just talking

about prices going down

i'm talking about because we're getting

this like up and down stair stepper

of we're up uno reverse we're up una

reverse we're up una reverse

we're actually or at least some hedge

funds some weeny beams are able to use

those profits to pay down margin

and then they get back in the game pay

down margin get back in the game pay

down margin get back in the game

and hopefully it's de-risking the entire

financial system now i don't know

that is just a hope that i have but

personally

and this is the big bottom line for for

everyone

get your margin down if you have margin

remember

options contracts do not give you margin

uh like they don't offset the margin

that you have

however the cool thing about options is

you can't get margin called

so like if you want to leverage

sometimes options are nice about that

we'll be releasing 14 lectures on margin

and option

in the stocks and psychology of money

group great they're super fun lectures

uh but anyway and then we'll be adding

even more because i'm always adding

content to these courses

uh but anyway this is really a big

warning shot just keep that margin down

that you have

and go shopping take this extra time

that we're getting this extra blessing

of more

time and go shopping just my two cents

let me know what you think in the

comments down below thank you so much

for watching and we'll see

you