nioka, i know you've been around the block a few times and have enjoyed success. And I enjoy your posts.
I'm just concerned with how your message may come across to those with less experience. My intention was to present a counter argument to get others thinking
he one thing thats clear to me, is there are so many strategies to succeed, and we all tend to sway to the one that suits us best.
I think theres a lot of wise heads in this thread, and while i dont agree with it all, i think theres a lot of wisdom contained that should at least be pondered about as to why its said. Whils i dont agree that gearing is the answer or should be avoided, both cases have a strong argument for and against , and i think at least being aware of those reasons is the key. You will ultimately determine your own risk tolerance and what suits one person will not necesarily suit the others or work for them.
Good health discussion guys. Me personally i use an equity loan thats about 10% of my portfolio, it used to be 50% ,so its not subject to margin calls. There are times when i like to be geared eg: when your buying at the bottom of a GFC, and when things have been going up for a while and are due for pullbacks, i like to avoid gearing. But me personally, i would never ever have a margin loan.
What i detest about margin loans is that your getting hammered with a call and forced to sell, virtually exactly when you should be trying to buy. If i hold a stock and its fundamentals are good. If it drops 35% for no reason other then market sentiment, i want to be buying not selling.
Its a bit like your house, if someone comes up to you and says hey mate house prices have dropped 30%, are you going to rush out and sell your house??? not likely, so why would you do it with sound investments if youve already suffered the loss. Its got to be closer to a buy then a sell.
Sure sell at the top and buy at the bottom if you can time it , but once you ve incurred the loss and its bottoming, why sell, if its still a sound stock thats well under value. ???
A lot to ponder.
So far AUT this morning is a great example, i bet those who sold at 2.62 feel pretty regretful at present with the sp green at 2.78 ....... well i guess they can officially call themselves lemmings. We wont know whether they are the lemmings or us for a few days or weeks. But right now its odds on them.