The return of leverage
Leverage has been on the return, can any of the more experienced shine a light as to why its coming back and what has changed from the times when it dried up?
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It's coming back because nothing has changed from before it dried up.
So what changed when it did dry up?
People expect low returns from equities and pour their money into bonds / loans or bond / loan funds. As more money flows into the bond / loan market credit becomes easier.....
why are people expecting low returns on equities right now? bc of the recession?
when people say equities is that basically stocks (as opposed to fixed income would be like bonds)
yes.
it seems a lot of people are mainly backward looking. They see that equities had no upside in past 10 years and thus expect that to continue, while as bonds / loans outperformed.
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