Leveraged speculators and asset prices
Wenxi Jiang
Review of Finance, Volume 28, Issue 3, May 2024, Pages 769–804, https://doi.org/10.1093/rof/rfad037
From the episode of the Long-Term Capital Management (LTCM) in 1998 to the stock market crashes in 1929 and 1987, the quant crisis in 2007, the financial crisis in 2007-2008, and the bond market turmoil in 2020, there is ample anecdotal evidence suggesting that excessive leverage used by speculators can greatly amplify market crashes. … Read more...
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