Track 6 of 25

Behaviour under leverage

Why the same capable person borrows against a concentrated position twice. Anchoring, unrealised gains treated as spent, and what changes in a judgment between the month a line opens and the month it is called.

25 lessons

Mark a lesson complete and it is remembered here.

Why the second loan feels safer than the firstNothing went wrong the first time, which is a fact about the market during that period and not about the structure.7 min
Anchoring on a peak priceThe highest number a holding ever printed is the one figure in its history that enters no calculation anyone performs.7 min
Treating an unrealised gain as spentThe market can take back a paper profit, and it cannot take back the draw taken against it.6 min
Why capacity reads as permissionThe available figure is an output of the lender's recovery model, not a statement about what is comfortable.6 min
The month you open a line, from insideOrigination is the most favourable the facility will ever be, and its impressions are the ones that last longest.7 min
The month it is called, same personJudgement does not deteriorate under a call; the choice set does, and the cheapest route out closes first.7 min
What a paper gain does to a sense of skillMost of a large rise is usually the market showing up, and the market never signs its work.7 min
Mental accounting: the line and the portfolio as separate objectsA 9.2 percent return and a 7.85 percent rate look like a comfortable margin, and they are not comparable numbers at all.7 min
Loss aversion, and why a decline is held rather than acted onA round trip in price is not a round trip in position, because the balance kept moving while the price came back.7 min
The disposition effect, applied to a pledged accountSelling the winners and keeping the losers rearranges an account into exactly the holdings a lender discounts most.7 min
Sunk cost and the position you built over eleven yearsThe contributions and the effort behind them are real, and the collateral arithmetic uses exactly one number, today's mark.6 min
The endowment effect and a holding you choseWhat an owner would accept and what the same person would pay are different numbers, and only one of them is real.6 min
Why a concentrated holder resists the word concentratedTo a lender the term is a threshold with arithmetic attached; to the owner it is a verdict on their judgement.7 min
Recency, and the volatility you last lived throughThe same 19.8 percent of headroom is four ordinary months in one regime and one and a half in another.7 min
Narrative, and the story a concentration needsA sentence has no error bars, and four conditions that are each very likely are jointly close to a coin flip.6 min
Overconfidence, and calibration on the position you know bestFamiliarity narrows the range a person will state without narrowing the range prices actually travel.7 min
Confirmation, and the research read after the drawAfter money is committed, the search for information quietly becomes a search for reasons, and the two produce different reading lists.6 min
Status quo bias and the line that is never repaidA facility with no maturity date poses the repayment question zero times, and the answer given by default compounds.6 min
The illusion of control over the timing of a saleA plan to act at a price assumes the price will be available, and large moves are the ones that skip it.6 min
Why the borrower and the lender read the same collateral differentlyOne party is valuing a decade and the other is valuing five days, and neither is making a mistake.6 min
Optimism about the drawdown, and the one that arrivesA tolerance stated in percent is a forecast about a future emotional state, and the threshold may arrive several points before it.7 min
Deadline pressure and the narrowing of choicesEvery cure has a lead time, the cheapest cures have the longest, and delay removes them in order of price.7 min
Why the advice a person would give someone else differs from their ownA file of six numbers and a paragraph of history describe one account, and they do not produce the same verdict.6 min
The asymmetry of attention between a rising month and a falling oneChecking a balance more often when it is up produces a record of a year that the year did not have.6 min
What changes when the numbers are written downNaming a bias does not disarm it; a figure on paper differs from one in memory in being checkable.8 min

Educational only. Nothing in this track is investment, legal or tax advice, or a recommendation to enter into any transaction. Completion is stored in this browser and nowhere else.