El-Erian: Highly-leveraged investors face 'tipping point' despite low market volatility

Growing use of leverage in stable market

The growing use of leverage amid calm markets and rising stock prices could ultimately hurt investors, according to Allianz SE's chief economic adviser Mohamed El-Erian.

The growing use of leverage amid calm markets and rising stock prices could ultimately hurt investors, according to Allianz SE's chief economic adviser Mohamed El-Erian. Building up risk on the assumption that markets will remain stable has historically been a self-fulfilling prophecy, El-Erian has told Bloomberg.  "The more you leverage your positions, the more the markets are calm," he said. "The problem with that is you get to a tipping point at some stage."  Volatility in US stockmarkets reached the lowest level since 1993 this week, as investors focused on strong corporate ear...