Now is the Time to Get a Margin Loan

[Garpal Gumnut]

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

 

[tech/a]

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 !

 

[Logique]

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]

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!

 

[Garpal Gumnut]

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.

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!

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

gg

 

[nioka]

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!

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.

 

[Intrinsic Value]

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!

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.

 

[Logique]

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

KIERAN Kelly, managing director of Sirius Funds Management in Sydney...
...Kelly hasn't given up on our sharemarket.

"I started buying last week," he said on Friday, adding that he was glad he had done so cautiously, given our subsequent market drop.

 

[Dona Ferentes]

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.

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.