# Now is the Time to Get a Margin Loan



## Garpal Gumnut (5 March 2011)

I have decided to re-enter this limpet market.

But not quite yet. 

I have negotiated quite an attractive Margin Loan agreement with a major bank, and await Armageddon.

If you are in to leverage, it is important to get the lender onside, before interest rates skyrocket, and stock prices plummet.

Go for it mesdames et messieurs.

gg


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## robusta (5 March 2011)

Garpal Gumnut said:


> I have decided to re-enter this limpet market.
> 
> But not quite yet.
> 
> ...




You mean get it approved now in order to activate in the next major correction / crash?

Do they honour current interest rates in the future?


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## robusta (5 March 2011)

I am considering getting a line of credit on my mortgage only the be drawn on when the "Chinese Miracle Economy" catches a cold. 

A margin loan on top of this is a consideration but I think I would need to see GFC MK2 to get that greedy.


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## Garpal Gumnut (5 March 2011)

robusta said:


> You mean get it approved now in order to activate in the next major correction / crash?
> 
> Do they honour current interest rates in the future?




You can choose the length of the loan, depending on prevailing sentiment a longer period may be cheaper than a shorter. 

Mine has been in place for 3 weeks , so I cannot comment on today's rates. 



robusta said:


> I am considering getting a line of credit on my mortgage only the be drawn on when the "Chinese Miracle Economy" catches a cold.
> 
> A margin loan on top of this is a consideration but I think I would need to see GFC MK2 to get that greedy.




Never put the hoochie on the line, always nice to sleep well at night.

gg


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## Sean K (5 March 2011)

Garpal Gumnut said:


> Never put the hoochie on the line, always nice to sleep well at night.
> 
> gg



Yes, that piece of plastic should never be held to ransom easily.


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## tothemax6 (6 March 2011)

I never really understood margin loans. Is it not just a line of credit, like a credit-card provides? So wouldn't you just open the margin loaning account, ready for the China crash?
If there is a crash, the first thing the central bank will do is slash rates - this is their default response. So would you not secure a variable-rate margin loan instead of a fixed-rate one?
Also, would the issue not be that if there is a crash, the bank will freeze new credit, whether you already had a margin loaning account or not?

Cheers


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## Garpal Gumnut (6 March 2011)

tothemax6 said:


> I never really understood margin loans. Is it not just a line of credit, like a credit-card provides? So wouldn't you just open the margin loaning account, ready for the China crash?
> If there is a crash, the first thing the central bank will do is slash rates - this is their default response. So would you not secure a variable-rate margin loan instead of a fixed-rate one?
> Also, would the issue not be that if there is a crash, the bank will freeze new credit, whether you already had a margin loaning account or not?
> 
> Cheers




Ah so.

Depends.

gg


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## Liar's Poker (7 March 2011)

Yep - I have had mine in play for the last 5 months. 

Mind you, it is at a very conservative ratio and will remain so for the next 4 months before my time frees up enough to monitor it more frequently.

-Liar-


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## Garpal Gumnut (7 March 2011)

Liar's Poker said:


> Yep - I have had mine in play for the last 5 months.
> 
> Mind you, it is at a very conservative ratio and will remain so for the next 4 months before my time frees up enough to monitor it more frequently.
> 
> -Liar-




Agree, best be conservative, unless the charts say otherwise.

Many noice tiddlers out there, but if everything goes aresup, they will go first.

gg


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## Sugar Dunkaton (9 May 2011)

So how is everyones Margin Loans going? 

its been a choppy twelve months with no real gains cant seem to break that 5000 level - does anyone short with their margin loan?


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## poverty (9 May 2011)

Sugar Dunkaton said:


> So how is everyones Margin Loans going?




I'm in buffertown


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## Garpal Gumnut (9 August 2011)

It probably is the time to take out a margin loan, if you haven't done so already.

gg


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## alexc2005 (9 August 2011)

Garpal Gumnut said:


> It probably is the time to take out a margin loan, if you haven't done so already.
> 
> gg




Far too busy losing my own money to lose borrowed money also


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## bellenuit (9 August 2011)

Garpal Gumnut said:


> It probably is the time to take out a margin loan, if you haven't done so already.
> 
> gg




Mailed my application in last night.


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## Junior (9 August 2011)

Garpal Gumnut said:


> It probably is the time to take out a margin loan, if you haven't done so already.
> 
> gg




GG, did you pin your ears back at 1pm and buy furiously?  Nice 5% gain already.  Bigger gain with leverage.


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## Garpal Gumnut (9 August 2011)

Junior said:


> GG, did you pin your ears back at 1pm and buy furiously?  Nice 5% gain already.  Bigger gain with leverage.




Whenever I divulge buys on ASF they tank.

I spent some of the afternoon with the fire brigade trying to get a broker down out of a tree.

gg


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## majorca (9 August 2011)

Garpal Gumnut said:


> Whenever I divulge buys on ASF they tank.
> 
> I spent some of the afternoon with the fire brigade trying to get a broker down out of a tree.
> 
> gg




I would have assumed the best way to do that would be with a rifle?


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## Tyler Durden (9 August 2011)

If I had taken out a margin loan in March this year I wouldn't have much of an appetite right now...


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## AlexP (16 August 2011)

Tyler Durden said:


> If I had taken out a margin loan in March this year I wouldn't have much of an appetite right now...




Can you explain me how margin loan works and is it beneficiary for everyone? How much one can gain from it? I am thinking of it.


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## nomore4s (16 August 2011)

majorca said:


> I would have assumed the best way to do that would be with a rifle?




hahaha, that's gold


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## Garpal Gumnut (19 August 2011)

I should have said at the beginning of the thread, that having a margin loan does not compel one to trade from the onset of the loan.

One can have a loan and bide one's time, until opportunity presents.

The time of opportunity, to go long, may be soon approaching, for spectacular profits.

That is not to say it is yet.

It is however time to get a margin loan, should you not have one already.

gg


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## tech/a (19 August 2011)

Garpal Gumnut said:


> Whenever I divulge buys on ASF they tank.
> 
> I spent some of the afternoon with the fire brigade trying to get a broker down out of a tree.
> 
> gg




Thought youd already bought !


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## Logique (19 August 2011)

Positive commentary is being ignored in a panicky market. 

In northern hemisphere markets, there's a big quotient of fear built into current prices. Returning from summer _vacances sur la plage_, when traders get back to their desks and notice how oversold markets are, look a for a shift in mindset. For these traders, the market has performed admirably in their absence hasn't it.

There's a nice boost to superannuation balances underway, for anyone who had the presence of mind earlier in the year to dial their policies to cash.


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## tech/a (19 August 2011)

> Positive commentary is being ignored in a panicky market.




The financial industry have agenda.
Its going to be slaughtered.
Positive spin is all it has. 

The US is Insolvent and in not state to control its debt
The European union cant control its debt and looks like the Banks wont be able to get them out of it!

Spin as much as you like.
Those selling are astute in my mind not panicking!


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## Garpal Gumnut (19 August 2011)

Logique said:


> Positive commentary is being ignored in a panicky market.
> 
> In northern hemisphere markets, there's a big quotient of fear built into current prices. Returning from summer _vacances sur la plage_, when traders get back to their desks and notice how oversold markets are, look a for a shift in mindset. For these traders, the market has performed admirably in their absence hasn't it.
> 
> There's a nice boost to superannuation balances underway, for anyone who had the presence of mind earlier in the year to dial their policies to cash.






tech/a said:


> The financial industry have agenda.
> Its going to be slaughtered.
> Positive spin is all it has.
> 
> ...




You are both correct.
There is demand and supply.
It's all very exciting.

gg


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## nioka (19 August 2011)

tech/a said:


> The financial industry have agenda.
> Its going to be slaughtered.
> Positive spin is all it has.
> 
> ...




Meanwhile China is laughing all the way to its bank. Lucky that we can bank on China. I'm not selling, hope to do some more buying but definitely not bank stocks. I've a feeling they will be left to fend for themselves this time.


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## Intrinsic Value (19 August 2011)

tech/a said:


> The financial industry have agenda.
> Its going to be slaughtered.
> Positive spin is all it has.
> 
> ...




You are only really astute if you are selling bad businesses.

You are more even astute if you are buying good businesses that are being sold off in the general panic and fear that is gripping the markets at the moment.


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## Logique (22 August 2011)

Well this fund manager might be working their margin loan. Pretty good take on the interaction with US politics. Salutary lesson in the Bow Energy price this morning, up 62% on a takeover offer. Sorry about that you shorts.



> http://www.theaustralian.com.au/bus...ocal-stockmarket/story-e6frg9jf-1226119189609
> *Fundamentals sound but negative mindset in the US * weighs on local stockmarket
> Andew Main From: The Australian August 22, 2011
> 
> ...


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## Dona Ferentes (4 June 2022)

Garpal Gumnut said:


> If you are in to leverage, it is important to get the lender onside, before interest rates skyrocket, and stock prices plummet.
> 
> Go for it mesdames et messieurs.



Pertinent and time for a revisit.



Sugar Dunkaton said:


> So how is everyones Margin Loans going?  Its been a choppy twelve months with no real gains;  can't seem to break that 5000 level - does anyone short with their margin loan?



_Short with a margin loan? Just buy BBOZ on it. LoL_
...---... ...---... ...---...
So here we are at another inflection point. another choppy 12 months; 7500 is the new barrier.

Here's my story; I've been running a margin loan since JB Were personally let me sit at his knee. The HIN is X0000 then 6 digits. And now it's time to close it. Or maybe just put it into hibernation. Why? Well, the maths don't add up.

Like many I fell for the siren call of leveraging up assets. The story was simple; buy more shares, claim a tax deduction, use the dividends to pay interest. (Never compound a debt !!). But it is a life-cycle story that has a few pitfalls if not careful.
1. First lesson was the GFC. Early 2007, had $150K loan against $750K of blue chips. Sounds like a great LVR, nothing to worry about. But then on days as the crisis deepened, when there were 7-8% drops in a day, suddenly the LVR was over 40%, close to 50%. Watching the Iress screen, 2;30pm was the scary time when it was forced selling if cash couldn't be lodged that morning.
2. But the upside, when things settled, was companies launched discounted capital raises. The survivors were bolstering balance sheets and the line of credit was useful.
3. Since then, I transferred out those SPP and rights allocations to my SMSF as CGT was minimal, I've been banking dividends and the asset base is up to a mill, with loan balance down to $80k.
4. Current prepaid is 4.70%, variable is 6.00% but the new pre-July offer is 6.90% for 12 months. Looking at the maths, my marginal tax is lower, and dividends are yielding 3% plus franking on average, then I'd be going backwards. This is the new reality.
5. Luckily in Nov I took some money off the table which is now going to pay off this ML. Don't need to continue using it.
6. Always have a Plan B, a bit of cash somewhere.

And another point; when the ML providers put forward the wonderful numbers, how it can work, there is an omission in the calculations whereby the interest is not included in returns. It's a cost, foregone or lost opportunity, money you no longer have.


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