Margin lending

Who does it ?

You mean buying stock on the margin? Well for day traders it's a great way to lose a of lot $ in a bear market if you're going long. 2022 was one of them. The past 2 weeks have been painful so I assume a lot of margin calls were made (which forces the account holder to sell stock at the lowest price / worse way).

Myself i've done gone on the margin many times but for ONLY short periods of time where I wanted to buy now but could not fund the account. Nowadays it's not so simple moving large sums of $ internationally so i've been on the margin for many weeks.

Been there and done it in the past. I do operate a CFD account which is by definition purchasing or selling on margin.

A long time ago, used Leveraged Equities in NZ but I always thought they were too restrictive on how much stock you could lend (for shorting) and did not like the high interest rates charged for the margin.

But in a bull market it can be useful if you are patient and can contend with the ups and downs. Don't fully lever yourself, a margin call will come if there is not enough balance and the market has a few down days.

You need to be very targetted ie it isn't appropriate for a normal portfolio investment approach? Why? Because volatility will likely see your positions knocked out or require massive amounts of added margin. So big amounts of stand by capital is required and you need to watch it all the time. Plus you probably need strict stop losses as a tool.

For targetted long or short it can work but you have to have high conviction based on fact and not on a belief or feeling. Margin is really only suitable to a pro, ie someone with a lot of significant exeperience

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Originally Posted by Dassets

You need to be very targetted ie it isn't appropriate for a normal portfolio investment approach? Why? Because volatility will likely see your positions knocked out or require massive amounts of added margin. So big amounts of stand by capital is required and you need to watch it all the time. Plus you probably need strict stop losses as a tool.

For targetted long or short it can work but you have to have high conviction based on fact and not on a belief or feeling. Margin is really only suitable to a pro, ie someone with a lot of significant exeperience

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The smart investors that use margin, use it as a tool to simply take advantage of a buying or shorting opportunity. But that does not come form day to day or weekly trades. It comes from a long term approach like now. If the market drops another -20% in 2023, going long term on the margin would be more beneficial despite rising high interest rates. Another words in baseball terms, you want to be in the 7th or 8th inning. For the past month is more like the 2nd or 3rd inning and those that started on the margin too early will bear a greater chance of having margin calls.