Who else is closing down margin loan account?

[clancyfish]

Having my 'little' margin loan account suffer through one GFC I don't feel like seeing it take another hit with whatever global economic tsunami about to hit....is anyone else feeling like battening down the hatches, closing out the account and taking whatever profit?

 

[danbradster]

Re: who else is closing down margin loan account??

The ASX was 5000 not long ago and is now 4000. The bottom of the GFC was 3000-3500 for a little while. I see smallish potential downside from here. Now is a far better opportunity for leverage than 6 months ago. Although the leverage should be limited so that you could potentially afford to pay 20% in margin calls from here. Long term is up, short-medium term has about 20% maximum downside.

 

[tinhat]

Having my 'little' margin loan account suffer through one GFC I don't feel like seeing it take another hit with whatever global economic tsunami about to hit....is anyone else feeling like battening down the hatches, closing out the account and taking whatever profit?

Sounds like I should look at getting one!

 

[pixel]

Re: who else is closing down margin loan account??

The ASX was 5000 not long ago and is now 4000. The bottom of the GFC was 3000-3500 for a little while. I see smallish potential downside from here. Now is a far better opportunity for leverage than 6 months ago. Although the leverage should be limited so that you could potentially afford to pay 20% in margin calls from here. Long term is up, short-medium term has about 20% maximum downside.

Are you sure about that???

I'd say maximum downside from today is still 100% for any portfolio, regardless whether margined or funded outright. That doesn't necessarily imply that the ASX200 is likely to drop to zero; but whatever company's shares you hold in your portfolio, none will be absolutely safe from annihilation. Not one.

But why would you have to "close down" the account? A far more prudent approach would be to sell those shares that are falling and replace them by ones that still keep rising. Risk magnification aside, I can't see any reason why one would treat a margined portfolio any differently to a non-margined one: If I believed in GFC Mk2 and would move to 90% or more Cash, I'd do the same for a margined a/c. If I preferred trading short-term swings of tier 3 or lower shares, I'd check the margin lender let me do that.
But let's assume I'd held FMG in July when they traded at $6.50, I'd have sold them most definitely in early August when they dropped below $6.20 - regardless whether margined or not.

 

[Starcraftmazter]

Having my 'little' margin loan account suffer through one GFC I don't feel like seeing it take another hit with whatever global economic tsunami about to hit....is anyone else feeling like battening down the hatches, closing out the account and taking whatever profit?

If you think there is going to be a global economic tsunami, then wouldn't that be a good reason to have a margin lending account?

Make profit from it?

What am I missing here

 

[cutz]

Having my 'little' margin loan account suffer through one GFC I don't feel like seeing it take another hit with whatever global economic tsunami about to hit....is anyone else feeling like battening down the hatches, closing out the account and taking whatever profit?

GFC issues aside, margin loans here in OZ are a joke, high interest rates plus fees on what's technically a safer setup than a residential investment loan (safer for the bank that is ).