Can anybody explain “cut their exposure to equities” and “fat and flat range” for me, please?
"Someone's (or, a bank's) ""exposure to equities"" refers to the amount of value which has a risk that fluctuates with the equities market (ie: the stock market). In very broad terms, I think it might make sense to say that exposure to equities could mean, for example, owning many rental properties, if the rental market was ""highly correlated"" with the equities market. That is - if house prices go down when the equities market goes down, and if that relationship is very strong, then owning a house means you are exposed to the equities market.  However, in the sense it is used there, it seems to mean direct exposure to equities - ie: owning stocks and stock-based funds."
I think this has been clearly explained to you already.  I agree with others that you are hating on Tesla because you need to hate someone and it's been all of five minutes since you last raged.  BUT... In case that's not the case and you really just don't understand let me try and explain it.  The batteries are exactly the same, yes.  The difference between them is one is limited by software and the other is not.  There are trade offs to each choice.  Limiting the battery to 20% of it's capaciy means you can recharge to full every day and do little to no harm to your battery.  You will of course have a limited range.  With the unlocked you 75kwh battery, you get more range.  Now Tesla warns you not to charge beyond 90% of the battery capacity or you begin to damage the battery.  However you get more range.  Let's also be clear here.  The battery packs limited to 60kwh have a REDUCED price of 8500 for the vehicle.  If you want to upgrade you pay the 8500 difference, but you are also woke for tax rebates and incentives which make the upgrade cheaper.  The short: the 60kwh version is cheaper, you'll get a longer life out of your battery, and if you decide to unlock the full battery capacity, there are tax incentives making it cheaper in the long run.  Finally, your reference to this being a pay to win business model couldn't be more wrong.  From just what I've said here you're wrong.  This gets more cars into people's garage's and driveways as well as simplifies production reducing production costs.  It also provides more options to the consumer at a reasonable price.  Source: https://electrek.co/2016/06/09/tesla-60kwh-pricing-option-software-revolution-exclusive-details/ VaR does not capture overall risk, it allows you to say a statement, based on our model, K% of the time, losses will not exceed X.  The problem is,   1. How accurate is the statement out of sample?  2. What is the marginal value of this number? Are the choices I make better or worse?  3. Even with a 99.999% confidence level what is the cost to the organization if a decision is made when the model is wrong?  Personally when running multiple strategies, you always need to factor in model risk in your asset allocation/trading, i.e. either shut down or reduce exposure when assumptions are violated or run something else, for example when correlations between strategies increases, it is logical to downsize exposure to those strategies as the risk factor to equity has increased.  1. in the grand context of a bank/financial institution, if the VaR is wrong we can bankrupt or negative, so we may want to diversify revenue streams by avoiding that risk, for example correlations increase across asset classes.  2. Sizing is a key problem for banks, as the question is does model error across various platforms (FI, EQ, FICC, Transactions etc), happen at the same time? Googling vanguard target asset allocation led me to this page on the Bogleheads wiki which has detailed breakdowns of the Target Retirement funds; that page in turn has a link to this Vanguard PDF which goes into a good level of detail on the construction of these funds' portfolios. I excerpt: (To the question of why so much weight in equities:) In our view, two important considerations justify an expectation of an   equity risk premium. The first is the historical record: In the past,   and in many countries, stock market investors have been rewarded with   such a premium.  ... Historically, bond returns have lagged equity returns by about 5–6   percentage points, annualized—amounting to an enormous return   differential in most circumstances over longer time periods.   Consequently, retirement savers investing only in “safe” assets must   dramatically increase their savings rates to compensate for the lower   expected returns those investments offer. ... The second strategic principle underlying our glidepath   construction—that younger investors are better able to withstand   risk—recognizes that an individual’s total net worth consists of both   their current financial holdings and their future work earnings. For   younger individuals, the majority of their ultimate retirement wealth   is in the form of what they will earn in the future, or their “human   capital.” Therefore, a large commitment to stocks in a younger   person’s portfolio may be appropriate to balance and diversify risk   exposure to work-related earnings (To the question of how the exact allocations were decided:) As part of the process of evaluating and identifying an appropriate   glide path given this theoretical framework, we ran various   financial simulations using the Vanguard Capital Markets Model. We   examined different risk-reward scenarios and the potential   implications of different glide paths and TDF approaches. The PDF is highly readable, I would say, and includes references to quant articles, for those that like that sort of thing. "If all the property is going up and down at the same rate, it's probably a bit of a wash. However, there are markets (e.g. the Front Range of Colorado, where I live), where property at different price levels and locations has performed very differently. For a place to live, I think it's most useful to look at housing as a consumption decision, like buying a car, rather than an investment decision, like buying art (since it is similarly illiquid). Consider what you need and want (features, location), how important the ""own vs rent"" tradeoffs are to you (including the risk of losing your equity), and what you can comfortably afford. Then don't worry so much about price trends. This, it seems to me, is the lesson of the recent housing bust." "So, the term ""ready market"" simply means that a market exists in which there are legitimate buy/sell offers, meaning there are investors willing to own or trade in the security. A ""spot market"" means that the security/commodity is being delivered immediately, rather at some predetermined date in the future (hence the term ""futures market"").  So if you buy oil on the spot market, you'd better be prepared to take immediate delivery, where as when you buy a futures contract, the transaction doesn't happen until some later date.  The advantage for futures contract sellers is the ability to lock in the price of what they're selling as a hedge against the possibility of a price drop between now and when they can/will deliver the commodity.  In other words, a farmer can pre-sell his grain at a set price for some future delivery date so he can know what he's going to get regardless of the price of grain at the time he delivers it.  The downside to the farmer is that if grain prices rise higher than what he sold them for as futures contracts then he loses that additional money.  That's the advantage to the buyer, who expects the price to rise so he can resell what he bought from the farmer at a profit. When you trade on margin, you're basically borrowing the money to make a trade, whether you're trading long (buying) or short (selling) on a security.  It isn't uncommon for traders to pledge securities they already own as collateral for a margin account, and if they are unable to cover a margin call then those securities can be liquidated or confiscated to satisfy the debt.  There still may even be a balance due after such a liquidation if the pledged securities don't cover the margin call. Most of the time you pay a fee (or interest rate) on whatever you borrow on margin, just like taking out a bank loan, so if you're going to trade on margin, you have to include those costs in your calculations as to what you need to earn from your investment to make a profit. When I short trade, I'm selling something I don't own in the expectation I can buy it back later at a lower price and keep the difference.  For instance, if I think Apple shares are going to take a steep drop at some point soon, I can short them.  So imagine I short-sell 1000 shares of AAPL at the current price of $112.  That means my brokerage account is credited with the proceeds of the sale ($112,000), and I now owe my broker 1000 shares of AAPL stock.  If the stock drops to $100 and I ""cover my short"" (buy the shares back to repay the 1000 I borrowed) then I pay $100,000 for them and give them to my broker.  I keep the difference ($12,000) between what I sold them for and what I paid to buy them back, minus any brokerage fees and fees the broker may charge me for short-selling. In conclusion, a margin trade is using someone else's money to make a trade, whether it's to buy more or to sell short.  A short trade is selling shares I don't even own because I think I can make money in the process. I hope this helps." Very likely this refers to trading/speculating on leverage, not investing. Of course, as soon as you put leverage into the equation this perfectly makes sense.  2007-2009 for example, if one bought the $SPX at its highs in 2007 at ~$1560.00 - to the lows from 2009 at ~$683.00 - implicating that with only 2:1 leverage a $1560.00 account would have received a margin call. At least here in Europe I can trade index CFD's and other leveraged products. If i trade lets say >50:1 leverage it doesn’t take much to get a margin call and/or position closed by the broker. No doubt, depending on which investments you choose there’s always risk, but currency is a position too. TO answer the question, I find it very unlikely that >90% of investors (referring to stocks) lose money / purchasing power. Anyway, I would not deny that where speculators (not investors) use leverage or try to trade swings, news etc. have a very high risk of losing money (purchasing power). Ordinary investors who own mutual funds (like vanguard or whatever) are subject to HFT scalping.  Mutual funds, pensions, etc are all operating in the markets with HFTs who are front running them for a tiny spread profit.  Million of ordinary investors are invested in those funds and therefore are getting charged this spread by the HFTs. Your original example is a little confusing because just shorting for 1k and buying for 1k is 100% leveraged or an infinitive leverage ratio. (and not allowed) Brokerage houses would require you to invest some capital in the trade.  One example might be requiring you to hold $100 in the brokerage.  This is where the 10:1 ratio comes from. (1000/10) Thus a return of 4.5% on the 1000k bond and no movement on the short position would net you $45 and voila a 45% return on your $100 investment. A 40 to 1 leverage ratio would mean that you would only have to invest $25 to make this trade.  Something that no individual investor are allowed to do, but for some reason some financial firms have been able to.