Margin loan approved - advice please

[Ken]

Hi,

I just got my margin loan approved.

The following shares are what have lodged.

MIG 1000
SEL 1500
BHP 600

I am able to borrow around $45,000- $50,000.

I am looking at ANZ, WBC, BHP, RIO, WPL.

I believe resources can still kick back. What sort of split would people look at if they were in my shoes?


Advice please.

 

[smoothsatin]

Re: margin loan approved Advice please

IT all depends on your requirements, but i wouldn't buy bank shares because of inceasing competition and shrinking margins in many of their business units. You already have plenty of exposure to mining etc through BHP, so unless you have an exceptional understanding of commodities, maybe go elsewhere.

SEL is a good stock to hold, keep it, perhaps even increase your holdings and keep them for a bit (12 months at least) after they are transformed to MFS.

Look into EPY MAA AEZ BBI, each are very different but something there might suit you preferences.

My investment themes going forward are continuing decreases in interest rates (thus Infrastructure and Prop trusts are good). This is for two main reasons:
1) The second wave of globalisation will kick in, i.e. increased labour mobility, in response to labour shortages in the west, this will put downward pressure on price levels/push interest rates downward in Wesern countries.
2) Global macro imbalances will need to be sorted out (USA twin debts). Fiscal policy is useless to stimulate the US economy given the Governments high deficits already, so monetry policy will need to be eased (i.e interest rates decreased) to try and stimulate their economy.

Good luck with it...

 

[tech/a]

Re: margin loan approved Advice please

You going to sit on them or TRADE them??

Everyone is different.
I trade margin using a mechanical system which has even parcel sizes.
However if I was trading longerterm discretionary I would be holding those performing and moving funds from the non performers to the performers.
I would have stops that were tight and would take the stop well before margin calls.

Ive never had one!

You have many options you can weight your holdings as time goes buy into performers,you can ease into a position.
You can exit initial capital cost at some future date and trade profit only.
You can increase your holdings on increased equity.
You can hold 1 or multiple stocks depending on the market and the performance of those stocks.

Think outside the square but

ALWAYS hold winners and CUT losers fast.
I personally have found from testing 100s of portfolios that is a stock retraces more than 10% of initial purchase price it only has a 23% chance of taking out the initial purchase price in the near future without falling more.

The main aim initially is to STAY IN THE GAME!

Enjoy.

 

[Ken]

Re: margin loan approved Advice please

E-Pay Asia Limited (EPY, formerly SkyNetGlobal Limited) focuses on the delivery of secured remote access to corporate networks, across multiple technologies, through one single service from anywhere in Australia and the rest of the world. The company has three business divisions, including Broadband, Lifestyle and Wireless Hotspots.

thanks for the advice. probly looks a bit high risk for me at this stage

 

[smoothsatin]

Re: margin loan approved Advice please

The business has now changed. In a nutshell, they buy bulk mobile phone time and sell it in smaller amounts through mainly monopoly/high traffic outlets to end use consumers. They are in prime position to lead the charge away from the old school "scratchy" manual way of buying phone credit.

 

[Ken]

Re: margin loan approved Advice please

i have been caught out a couple of times holding onto stocks which have dropped.

bought IGR at 18 cents now 14 cents....

i dont have a heap of them so i doesnt hurt too much, but if i was trading big.... i would be down 20% plus

 

[Ken]

Re: margin loan approved Advice please

epy do you hold them?

if so what valuation would you see them in 1-2 years, are they over valued now?

recommendations from brokers?

 

[smoothsatin]

Re: margin loan approved Advice please

I do hold some, approx 6% of my total gross portfolio.

Extremely difficult to value, but fy06 is likely to be somewhere around 4 cents eps, with massive growth potential/momentum. Which makes 40c look very cheap. There is some risk there in terms of competition, but weighed up, the reward risk profile looks exceptional. One of the few stocks in my portfolio that could realsitically triple in 24 months.

I don't think any brokers are covering the stock.

 

[Ken]

Re: margin loan approved Advice please

Thanks for the heads up.

Will do some more research.

I may reduce some of small mining stocks and I look at this as an option.

I am not a massive reader on graphs, it looks steady at the moment.

 

[smoothsatin]

Re: margin loan approved Advice please

Yeah, it has been stuck on 40c for awhile, but the volume spikes have been positive OBV, i.e, they have been bought rather than sold, i am not a charting guru by any stretch of the imagination, but i know this on its own to be one of the best forward indicators around.

 

[stockpanther]

Re: margin loan approved Advice please

I also own EPY....I'll be alot more confident/unconfident about the holding after the 3rd quarter results are released.

I think EPY has brilliant growth potential...and if it delivers it will double in value in an 18month period i think...but remember, it still has to deliver.

I'm more a conservative value investor though, this is my first 'growth' stock holding. RHD has been my core holding for the last month and a half...a cheap value purchase that has jumped 30% very quickly!

I only own 2 shares EPY 33% of portflio, RHD 67%.

 

[MichaelD]

Re: margin loan approved Advice please

Advice please.

STOP IMMEDIATELY before you destroy your capital. You MUST have a robust written down plan to engage the markets - it isn't a one way elevator to instant wealth. This is even more critical if using leverage.

Tech/A has posted much sage advice on how to develop a business plan to engage the markets. You would do well to seek out these threads and read them carefully.

 

[lesm]

Re: margin loan approved Advice please

I just got my margin loan approved.

I believe resources can still kick back. What sort of split would people look at if they were in my shoes?

Advice please.

STOP IMMEDIATELY before you destroy your capital. You MUST have a robust written down plan to engage the markets - it isn't a one way elevator to instant wealth. This is even more critical if using leverage.

Tech/A has posted much sage advice on how to develop a business plan to engage the markets. You would do well to seek out these threads and read them carefully.

Just to emphasise what MichaelD has said in a more direct manner. Why have you taken out a margin loan, if you are asking such a ****** question?

Don't mean to offend, but you really should sit back and think about this.

 

[KaneX]

Re: margin loan approved Advice please

STOP IMMEDIATELY before you destroy your capital. You MUST have a robust written down plan to engage the markets - it isn't a one way elevator to instant wealth. This is even more critical if using leverage.

Tech/A has posted much sage advice on how to develop a business plan to engage the markets. You would do well to seek out these threads and read them carefully.

I have to agree here. If you have taken out a margin loan before you even know what to do with your increased capital(risk), then I think you need to take a step back and understand the inherent risk you have now taken on.
I would like to think you've studied the market and accumulated an understanding of stocks, trends(current and long term), etc. before you take on the next step of leverage in your investment plan.
You have to excuse me if im wrong here but it sounds as though you're yet to
establish a share portfolio. (If so I imagine you wouldnt require any guidance here).

 

[Ken]

Re: margin loan approved Advice please

I have had the loan approved and have lodged the shares with BT.

However i Have no intentions of going in and trying to make a quick buck with speculative stocks.

I have simply set up the option to do so, as the process was a lengthy one and when an opportunity comes along i want to be able to make the most of it.

At Present my long term holdings look like this:

SEL 1500 - bought in at 3.53 sold 4.79 when market opened, bought in at 4.20 with view to become an MFS shareholder at a discount.

MIG 1000 - bought in at 3.18 (attractive dividend and feel undervalued)

BHP 600 - bought in at 26.38 ( i believe resources its a must have at 21 years of age)

COE 3000 - bought at .49 cents and believe has the potential to be another beach Petroleum.


At the moment i am dealing on a 12 month plan . I have a contact who works for a well known broking firm and there are certain recomendations that i get from him, which they give to their clients.

At the moment

Argos investments, James Hardie, Woodside Petroleum, and Rio tinto, along with a few others are heavly recommended for the next 12 month period.


The aim of starting this thread was more to get a rough idea of how people go about setting up a margin loan porfolio. Obviously earnings and losses are enhanced dramatically, and was really just looking for some safer stocks with good yields, e.g banks....

I do understand the risks involved.

 

[Ken]

I'm basically looking for undervalued businesses.

I'm not a day trader.

 

[Realist]

Well Ken,

Have a look at Fosters, Westfield, Rinker, Amcor, and Woolworths as well. And maybe PRG and BSL.

These are not overvalued, pay good dividends, are near monopolies, solid and reliable. And while I agree resources have a run in them still and BHP and RIO are buys you do want to diversify, and you do want dividends (which resource companies are not great at paying).

 

[nizar]

and you do want dividends (which resource companies are not great at paying).

please take a look at ZFX

 

[nizar]

Re: margin loan approved Advice please

ALWAYS hold winners and CUT losers fast.
I personally have found from testing 100s of portfolios that is a stock retraces more than 10% of initial purchase price it only has a 23% chance of taking out the initial purchase price in the near future without falling more.
The main aim initially is to STAY IN THE GAME!

Excellent!
That was the sort of data i was looking for
Aha! Now tight stops makes sense...!

Thanks once again

 

[Realist]

please take a look at ZFX

Last year ZFX paid a measley 4c dividend.

The year before that ZFX paid nothing at all!!

But you are right, they have an excellent (special) dividend this year.

The difference is Fosters and others like it pay excellent consistent mostly ever increasing dividends every year and have done so for over 20 years and will more than likely do so for the next 20 years.

I'm not saying don't buy ZFX, I'd love some myself. But as a safe diversified away from resources almost crash proof consistent dividend paying stock FGL is a far superior longterm hold than ZFX. Look up Pasminco if you disagree.