Investment guru please stand up.

[iGas]

Anyone here margin trading?
Is the risk worth it in the long run?

I have an extra 20K that I'm not worry if I lose it, but I would prefer making money from it. And, I'm thinking of trying out margin trading instead of the usual buy & hold method that I have been doing.

Thanks.

 

[theflyingpig]

lol. Asking the internet for advice on how to spend your 20K. lol.

 

[SleepWhere]

i know this guy in nigeria....

 

[Engineer]

I used to trade on margin...

until I lost $59,000 +

I don't have a margin account any more and I don't buy individual stocks any more (wife's orders and I don't blame her).

That is all....

This has been a Public Service Announcement from Engineer - don't be stupid like he was.

That is all...again.

 

[preslove]

A good rule of thumb with margin trading is to only leverage 10X your annual income.

 

[iGas]

lol. Asking the internet for advice on how to spend your 20K. lol.

IMHO, some of the investment knowledge here are better than I'm and investment managers that I have seen.

My portfolio did very well for 2009, but in the last 2.75 months it stalled and haven't made any head wave, hence I want to try out margin trading with a small amount that I'm not going to lose any sleep over if I lose it.

 

[Engineer]

If you're got money that you can "lose", why use margin (borrowing money against stocks you own to buy more stock)? Why not day trade if that's what you are talking about. I'm confused.

 

[iGas]

I used to trade on margin...

until I lost $59,000 +

I don't have a margin account any more and I don't buy individual stocks any more (wife's orders and I don't blame her).

That is all....

This has been a Public Service Announcement from Engineer - don't be stupid like he was.

That is all...again.

Thanks Engineer.

I lost almost as much on NVDA alone in 2008, but for 2009 I have more than gain back the position, and have made an additional 53% over that of my 2008 high before the crash.

 

[mshan]

Why don't you just wait till there is a new sustained bull market where some froth is starting to show, and then try gambling with your money?

That could be many years, so just put the money in a good money market fund and be patient.

Or just go to Vegas and bet it all on red.

 

[iGas]

If you're got money that you can "lose", why use margin (borrowing money against stocks you own to buy more stock)? Why not day trade if that's what you are talking about. I'm confused.

I can't day trade because I no longer work at a desk.

 

[Engineer]

Thanks Engineer.

I lost almost as much on NVDA alone in 2008, but for 2009 I have more than gain back the position, and have made an additional 53% over that of my 2008 high before the crash.

I didn't lose and make back, I lost and had a margin call that wiped me out for that year and will be claiming the $3,000 loss for 17 more years on my taxes (carry-over loss from stock sales - max $3,000 per year). Talk about ripping your guts out. I don't recommend it unless you're fully prepared to lose more than you put in.

I lost over 60% in my 401k plan but have made a huge chunk of that back. Not the same thing as losing money on margin calls through. (not saying that you will lose money...just you could lose money).

Good luck.

 

[preslove]

If you're got money that you can "lose", why use margin (borrowing money against stocks you own to buy more stock)? Why not day trade if that's what you are talking about. I'm confused.

Or play the options market.

 

[Engineer]

Or play the options market.

Yes, that too. I first thought that was what the OP had in mind, not margin as margin involves borrowing money but he/she states that they have the money to lose, so why borrow?:hmm:

 

[iGas]

I didn't lose and make back, I lost and had a margin call that wiped me out for that year and will be claiming the $3,000 loss for 17 more years on my taxes (carry-over loss from stock sales - max $3,000 per year). Talk about ripping your guts out. I don't recommend it unless you're fully prepared to lose more than you put in.

I lost over 60% in my 401k plan but have made a huge chunk of that back. Not the same thing as losing money on margin calls through. (not saying that you will lose money...just you could lose money).

Good luck.

Thanks,

I'm going to back out from the margin trading idea & stick the money back into my regular portfolio.

PS. TCK.B, GCE, GC, TKO, TLM, and DW have been very nice for me in 2009/2010.

 

[preslove]

Yes, that too. I first thought that was what the OP had in mind, not margin as margin involves borrowing money but he/she states that they have the money to lose, so why borrow?:hmm:

I was going to be the first poster with my little "10x your annual income joke," but held off in case he meant something I wasn't familiar with.

And my joke then got lost in the thread

 

[preslove]

Thanks,

I'm going to back out from the margin trading idea & stick the money back into my regular portfolio.

PS. TCK.B, GCE, GC, TKO, TLM, and DW have been very nice for me in 2009/2010.

Uh... the entire market had a great 2009 because 2008 was an apocalypse...

 

[iGas]

Or play the options market.

I though about trying out option, but I'm a bit weary of it.

 

[iGas]

Uh... the entire market had a great 2009 because 2008 was an apocalypse...

Most companies stock only double in price because they didn't lost much more than 1/2 of their position. Some made 200%, but stock such as TCK did a whopping 1400% gain to get back to where they were.

 

[preslove]

I though about trying out option, but I'm a bit weary of it.

Why would you be more wary of a strategy that only risks money you bet rather than one that risks borrowed money? The former is the logical strategy when you have a predefined lump of cash you're willing to lose.

 

[iGas]

Why would you be more wary of a strategy that only risks money you bet rather than one that risks borrowed money? The former is the logical strategy when you have a predefined lump of cash you're willing to lose.

Thanks, I'll look into it more closely.

 

[Blackjack200]

I have an idea.

Why don't you take that $20k and buy a sailboat.

And use all those hundreds of hours you would have spent trading and racking up brokers fees to sail it.

Seriously. I would love to do this, and with $20k you bet your ass I would.

I just do not understand the mentality. 'Let me take my hard earned money (or easy earned, or however you got it) and buy into what is essentially a fixed game that I cannot win.' I looked at some of those stocks you posted. You understand that there are all kinds of hedge fund managers and mutual fund analysts whose job it is to watch those companies like a hawk. They are very smart, and they like money just as much as you do.

The moment one of them falters, they will cash out and head for the exits before you can blink, and you (and the other small investors) will be left holding the bag.

If you're really just treating this like a game; and you really don't care if you lose the $20k, then go ahead. You might get lucky and pick a couple of winners and do well. It's far more likely that you'll lose some or most of it. I just don't see the appeal though.

 

[ShawnD1]

I have an extra 20K that I'm not worry if I lose it, but I would prefer making money from it. And, I'm thinking of trying out margin trading instead of the usual buy & hold method that I have been doing.

If you want to get rich quick, go to Vegas and start gambling.

If you actually want to make some money that you can retire on, make wise investments. Only buy companies that you are familiar with. Try to stick with large companies that will likely not go bankrupt even during the worst recessions. Only buy companies that regularly make large amounts of money. Big companies like IBM and General Mills almost always make money. IBM, as an example, has paid dividends almost every quarter.

The same general ideas apply to bonds. Only buy bonds from groups that you know. I know which country USA is, so it's ok to buy US treasury bonds. I can't locate Nigeria on a map, so I probably should not buy any bonds from that country. Their appointed king still owes me like 10k. What a bastard.

 

[wiredspider]

Bet it on red

 

[Blackjack200]

Only buy companies that you are familiar with. Try to stick with large companies that will likely not go bankrupt even during the worst recessions. Only buy companies that regularly make large amounts of money. Big companies like IBM and General Mills almost always make money. IBM, as an example, has paid dividends almost every quarter.

I've heard this advice before and have never understood it. Why is a company that you are familiar with likely to perform better than a company that you are not familiar with?

An awful lot of people were familiar with Enron, Lehman Brothers, Bear Sterns, GM...

 

[ShawnD1]

I've heard this advice before and have never understood it. Why is a company that you are familiar with likely to perform better than a company that you are not familiar with?

Would you invest in a company when you don't even know what they do? That's as bad as lending money to people you've never met before. Actually, that's what it is. You're putting money in a company that you've never met before.