Borrowing to buy shares

[pinkboy]

It's all tax deductible, so who cares what it costs?

pinkboy :

 

[burglar]

Have you got shares, Burglar?

I have literally millions of shares, galumay! *biglaugh*

 

[Nortorious]

What's other members thoughts on using CFD to leverage stock trading?

I'm looking into this but commsec seem to have a questionnaire with some questions that look some what subjective. Is it a matter of answering what they want to hear?

One question for example:

5. When the market receives important unexpected news, will it be more likely to:
A) Stay where it is, because good and bad news are already factored into market prices
B) Become more volatile as prices react to unexpected news
C) Automatically closes

My opinion is that the price will move dependant on the supply and demand and if the stock has been accumulated, news could be used to drive the price up, preying on the public buying into the good news and the professionals offloading.... or the opposite. It could drop so the weak holders are absorbed. So I guess that could be B.

But fuzzymentalists may think that the news is factored into the price already by the "insiders"...

And C, the stock would go into a halt if the news is price sensitive....

Is there an all of the above option?

I find it an interesting question.

 

[themeinvestor]

What's other members thoughts on using CFD to leverage stock trading?

I'm looking into this but commsec seem to have a questionnaire with some questions that look some what subjective. Is it a matter of answering what they want to hear?

One question for example:

5. When the market receives important unexpected news, will it be more likely to:
A) Stay where it is, because good and bad news are already factored into market prices
B) Become more volatile as prices react to unexpected news
C) Automatically closes

My opinion is that the price will move dependant on the supply and demand and if the stock has been accumulated, news could be used to drive the price up, preying on the public buying into the good news and the professionals offloading.... or the opposite. It could drop so the weak holders are absorbed. So I guess that could be B.

But fuzzymentalists may think that the news is factored into the price already by the "insiders"...

And C, the stock would go into a halt if the news is price sensitive....

Is there an all of the above option?

I find it an interesting question.

What a great question. Isn't this question all about efficient market hypothesis? It all depends on whether you believe the market is weak-form efficient, semi-strong-form efficient or strong-form efficient (and more fundamentally whether you believe in the efficient market hypothesis at all).

I think you need to answer what CommSec believes the answer would be.

I think the answer is B. C is just wrong. A is also wrong - we see it daily on the market that a company surprises the market with bad news or good news (notwithstanding a few insider trades here and there).

Also I think this acts as an educational tool - ie "Be careful the market can be volatile...."

I'd be interested to know the answer.

 

[Value Collector]

What's other members thoughts on using CFD to leverage stock trading?

I'm looking into this but commsec seem to have a questionnaire with some questions that look some what subjective. Is it a matter of answering what they want to hear?

One question for example:

5. When the market receives important unexpected news, will it be more likely to:
A) Stay where it is, because good and bad news are already factored into market prices
B) Become more volatile as prices react to unexpected news
C) Automatically closes

My opinion is that the price will move dependant on the supply and demand and if the stock has been accumulated, news could be used to drive the price up, preying on the public buying into the good news and the professionals offloading.... or the opposite. It could drop so the weak holders are absorbed. So I guess that could be B.

But fuzzymentalists may think that the news is factored into the price already by the "insiders"...

And C, the stock would go into a halt if the news is price sensitive....

Is there an all of the above option?

I find it an interesting question.

They want you to write B.

I think they are just trying to make sure you know markets can be volatile.

 

[Hodgie]

What's other members thoughts on using CFD to leverage stock trading?

I'm looking into this but commsec seem to have a questionnaire with some questions that look some what subjective. Is it a matter of answering what they want to hear?

One question for example:

5. When the market receives important unexpected news, will it be more likely to:
A) Stay where it is, because good and bad news are already factored into market prices
B) Become more volatile as prices react to unexpected news
C) Automatically closes

My opinion is that the price will move dependant on the supply and demand and if the stock has been accumulated, news could be used to drive the price up, preying on the public buying into the good news and the professionals offloading.... or the opposite. It could drop so the weak holders are absorbed. So I guess that could be B.

But fuzzymentalists may think that the news is factored into the price already by the "insiders"...

And C, the stock would go into a halt if the news is price sensitive....

Is there an all of the above option?

I find it an interesting question.

It has to be option B. The key here is that the news is unexpected therefore it will not be factored into the price. its the exact reason you get a big market reaction with something like an unexpected interest rate cut (such as last week - I think only about 1 in 5 economists were predicting a cut).

 

[Nortorious]

Thanks for your thoughts folks. Not sure if Commsec will provide answers to the questions when I get around to putting in a CFD application form.

I'm trading stocks at the moment and looking to leverage up with CFDs. Also keen to move into futures but it's finding the time at night to dedicate to learning that game...

 

[themeinvestor]

And C, the stock would go into a halt if the news is price sensitive....

By the way, I said in an earlier reply that "C is just wrong". I said that because the question says the MARKET will shut, not that the stock would go into a halt. Your point about halts and price sensitive disclosures is valid.