Hey guys. First post here, and I would normally never consider buying on margin. Not saying that everyone should think similarly, but it's just not something that I have ever considered. BUT, I really think that the stock market is going to come raging back as soon as we legitimately turn the corner and start recovering from the worst of the coronavirus. So, is anyone here thinking of margin for the first time (or perhaps the first time since 08-09)?
You are not wrong to be tempted by the sale prices. Typically times of panic are great times to buy. Use margin if you want, but have a plan in place because the market ALWAYS tends to go lower than you expect during a bear market.
I'm still mostly long with no intention to sell anything. Further, I expect the market to go down a bunch more. I haven't used margin since the 1990s but I've invested money from real estate projects and then not sold and returned the money, when it was needed to deploy. Instead, opting to use our operating line. Perhaps the key point here, at least for someone like me, is that we were doing extremely conservative things with the money and our investments were long term stable, strongly distributing, companies. In each case, the distribution covered more than the interest on the operating line. We probably would have done a lot better, if I had been more aggressive and used leverage more over the last 30 years. The odds of us still having to work at this point, would be a lot higher, though. Margin, on the other hand, has no tolerance for devaluation. If you buy a company on margin and it goes down further, you will be injecting money into your account or the equity will be sold at market and margin returned. It seems like risky business to me. Taking a personal loan would be safer and cost less interest. I suggest you consider the risk versus reward. It sounds like you have a specific idea. I wish you well with it.
I'm not interested in buying on margin. I have a margin account. But have never bought on margin. The rates are a little high for me. You usually do not buy long term hold on margin. I guess you could. But I wouldn't. If I had some inside information......you bet. Bud Fox says "buy Blue Star". Balls to the wall. Sell everything. Put it all in, and double down with margin.
