Bail Out in good portfolio management Plan?

[Triplethought]

Yodean is right these are general instructions and I pretty much wrote them up almost on the same day when BPCW asked for more guidance re how much cash one should have. However, one important part is that sentiment has to be taken into consideration when putting this strategy into play. So the market should be trading in the extremely overbought ranges on the monthly chart and bullish sentiment should be high. Current bullish readings are in the extreme zone.

I've personally always found the terminology of "extreme" and "insane" and whatnot incredibly hyperbolic and confusing. I wish you'd change your indexes to simply a number between 1 and 5 or 1 and 10. Coming up with ever more bombastic terminology is incredibly confusing when trying to access relative risks or where we are on the scale

[Yodean]

With IB, it's between 0.83 and 1.83% depending on the size of the account:

Hard to beat. Source: https://www.interactivebrokers.com/en/index.php?f=46376

With TD Ameritrade, it's around 8%: https://www.tdameritrade.com/pricing/ma ... rates.html

@NuclearNinja: thanks dude ... my brokerage (RBC Investing) is charging me 3.75% atm, so not great, but not too terrible either, I suppose ... been using RBC for > 15 years so a bit loath to change platforms, given familiarity with interface and my inherent laziness in such matters ...

[Centeron631]

Yodean am being charged in my 2 cdn brokers (Si and BMI) 4% per annum

[Yodean]

Yodean am being charged in my 2 cdn brokers (Si and BMI) 4% per annum - i assume and maybe incorrectly that u r using a cdn broker.

Yeh, using RBC Investing. 3.75% atm ...

[Eric]

Schwab in the US is 6.825%-8.575%

That bonkers! My credit card is 7.5% and my credit union offers margin loans at 4.25% or auto loans starting at 1.49%

[harryg]

I've personally always found the terminology of "extreme" and "insane" and whatnot incredibly hyperbolic and confusing. I wish you'd change your indexes to simply a number between 1 and 5 or 1 and 10.

I concur.


1-5 would do me.

[harryg]

Have found that IBKR are usually amongst the lowest rates for margin.

Many experienced speculators on here, but a word of warning to any beginners tempted to use margin. Look into it carefully and do some stress-testing first. Do not borrow the amount that they make available - it's far too much.

• Margin rates/requirements are variable and in volatile times they are often raised

• If things go wrong, your broker will sell some of what you have to cover. They might not sell the ones you want and they might not ask you first

• If things go very wrong, you could have very little left

[Yodean]

Many experienced speculators on here, but a word of warning to any beginners tempted to use margin. Look into it carefully and do some stress-testing first. Do not borrow the amount that they make available - it's far too much.

• Margin rates/requirements are variable and in volatile times they are often raised

• If things go wrong, your broker will sell some of what you have to cover. They might not sell the ones you want and they might not ask you first

• If things go very wrong, you could have very little left

Definitely be careful with margin ... it's like Dark Force x 6.66 ... tremendous potential for quick gains, but also unimaginable losses. Will magnify the results of your great investing decisions, but also your boneheaded ones.

Mostly, margin will leverage your luck in investing when you use it ... so be nice to Lady Luck, She rules all ...

Prolly best to start using only 10% - 20% of your max. margin limits, and cap it at 50% for MOABs and FOABs. 33.3% for SOAB (Stepmother Of All Buy) triggers. After a year or two, and you're still alive and kicking, may increase your use of Dark Force to 66.6% of max.

Alternatively, screw the above, YOLO, and max out your margin limits by buying IBM. It's fairly cheap, and pays >5% dividends atm. The dividends will pay your margin costs, plus there is some decent asymmetry for capital gains vs. losses.
(not financial advice).