@Icon8888 there is alot of nuance in your "depends how you manage it" which most likely ruled out 99% of people from using margin.
Remember, those that refused to evacuate before Hurricane Katrina hits New Orleans are those that have survived all the previous hurricanes, and their experience betrays them.
Not saying something bad will happen to your way of using margin, but what is important is not 'I have survived so many black swans before using margin", rather it is "will I survive the next black swan?". Remember you only need to get it once. It is like playing Russian roulette. Will you play it once to make $10 million? Sure but you're still dumb. But no one would play it 6 times in a row, because that is just beyond dumb.
And then there is the problem of "I have survived so many black swans before using margin". If Titanic never sank, you'll be pretty sure human will continue to build bigger and bigger ships until one eventually sinks (to learn the lesson). Similarly, if one never ever get caught in irreversible losses for using margin, that person is going to keep increase his leverage (risk) until he hits one. So be careful with that.
margin is not supposed to be used for holding Dutch Lady for 10 years
it is costly
with interest rate of closed to 8%, it eats into your capital gain
(KYY always told people margin interest is only 4% or 5%... that is BS (as it is only partially true). If you use margin to buy Blue Chips, you tend to get low interest rates as per KYY. But if you buy any other stocks, expect closed to 8% rate)
it is not meant for nurturing your investment over long period of time
it is best use for quick money, especially for low risk sure return scenario that is almost arbitrage quality
one good example is CIMB recently I bought at 4.95 using margin
it has since gone up to 5.33
a gain of 8% over few weeks.
without margin, you can only look at it with mouth wide open when an opportunity like this presents itself
This perception is totally wrong loh....if 99% investors lose monies loh......!!
The correct figure is about 55% of the investors lose monies but the ratio is much higher for newbies & uninformed upto 75% loh...!! WHY leh ?? Bcos they are actually gambling instead of investing loh..!!
Posted by 1Bid > Nov 7, 2019 9:59 AM | Report Abuse
Because you're one of the very few exceptional investors in i3.
KC is right. 99% of stock market players lose money. Margin should be avoided. If you can make money you can make money. Cash account should be alright.
recently I saw a lot of newbies appeared in i3 (they seemed to come out of no where, strange)
I look at the way they punt, I shake my head
people like that no need margin also will die kow kow
if they use margin, they die even faster
but they are not the majority
the rest of the people in i3 are quite high quality
they are the type that can use margin....
..... very comfortably
Posted by stockraider > Nov 7, 2019 10:11 AM | Report Abuse
This perception is totally wrong loh....if 99% investors lose monies loh......!!
The correct figure is about 55% of the investors lose monies but the ratio is much higher for newbies & uninformed upto 75% loh...!! WHY leh ?? Bcos they are actually gambling instead of investing loh..!!
You also know 75%. 7 of 10 people lose money in stock market no matter what methods they use. KC is teaching new generation how to survive in stock market. You just proved that he is absolutely correct regarding this MARGIN.
Pragmatist or not, there is a fine line between experience helping and deceiving you. If that is valuable for a non-margin person, then it is live or death for a margin person.
U need to understand & differentiate between investing & financing loh.......!!
1. U need to get your investing technique right, that i suggest u can learn from KC loh.....!!
2.If u has master the investment technique successful, the next thing u can consider whether u should use margin loh...!! Using margin is neutral & not an evil thing...it just like any businessman who is contemplating expanding their business using bank loan loh...!!
If u r young, based my experience, u better jump right in earlier to use margin, do not wait until u r 40 to 55 years old, b4 u use margin, if u make a mistake at this age, it may be disasterous and take along time for u to recover loh...!!
Just can start small while u r young, it is ok to master the art of margin given time loh....!!
No matter what kind of black swans , if you stick to proper margin principle (mine is one), you will be safe
First of all, This has been proven empirically over past 30 years I used it
Secondly, logic dictates that I will be safe - I will only get forced selling if black swan is so big until my entire portfolio plunged 30% or more in a day. If that happens, that means the market has been hit by something catastrophic. Under that kind of scenario, a seasoned investor will be able to benefit immensely from the following up bargain hunting (maybe over next six months, one year or two years). I always say that don’t be afraid of net worth shrinkage when market plunge , you should only be afraid of net worth shrinkage during normal market (meaning you made terribly wrong investment decisions) , because there is no bearish sentiment for you to capitalise on to recover
Posted by stockraider > Nov 7, 2019 10:38 AM | Report Abuse
If u r young, based my experience, u better jump right in earlier to use margin, do not wait until u r 40 to 55 years old, b4 u use margin, if u make a mistake at this age, it may be disasterous and take along time for u to recover loh...!!
Totally understand this part. I believe we have gone through this stage. I once lost everything. It was only few thousands back in the days. But I have learnt the crucial mentality and knowledge to not to repeat the same mistake today.
Yes, if you are young, and you know how to punt properly, you should do as raider said “jump into margin”
When I was young, I have no capital. I only have a job. So I cash advance using my credit card, and then use the cash to buy shares, and then use the shares to margin
That is what I did to kick start my investment portfolio
Was I being reckless ? Of course not. I knew I have a stable job that generates recurrent free cash flow at month end. So I know I can service the credit card interest rate and principal repayment
Anyway, the credit card debt didn’t last very long time. By end of year I also got bonus from boss, and it went into repayment
To sum it all up, don’t be afraid of debts, manage your cash flow properly and debt can be a productive instrument
(Btw, The above is only useful for gearing up to skilfully invest. If you withdraw credit card cash advance to buy TV buy holidays, you are not acting wise)
Margin of financing is like borrowing money for business, ie gearing. No one will dispute whether business should or should not borrow.
The key questions are whether: 1) the business is profitable (your share selection) 2) how you manage the cashflow/ margin 3) whether are you over gear (margin again)
If you are really scare of getting margin call, you may wait until your origin portfolio is profiting. Let said your existing portfolio raise 30%, you buy extra using margin base on this 30%. By protecting your capital in many ways, managing your portfolio well, cutting loss on shares that bought using margin can minimize your fear on getting margin call. People I have seen struggling with using margin usually lost money in share investing without using leverage too. Over optimistic sailang and go beyond own financial capability is the real problem kc had illustrated, leverage itself is never the problem don’t you agree?
Having said that, there are three ways for a smart guy to screw up his life.
1) Ladies 2) Leverage 3) Liquor
I keep margin mainly for the optionality, and keep it way below 30% of portfolio most of the time. Its currently like 3-4% only. Its only for me to leverage up in downturns or interesting opportunities, with salary going in next month to pay it off.
This Choivo...smh...wonder how is his portfolio doing while at here lecturing other ppl...so as this Ricky Mudafucker...go and become University professor
ricky say tguan how la how la...ended up tguan moved today....choivo say mbmr hw la hw la i can find 10 co selling cheaper than mbmr la blablabla...yet mbmr share price been sustaines at above RM4 for so long....if you guys really wanna show off hw knowledgable u are...go to the uni and become lecturer.
so as this kc....the more he use jaks as scenario the more i feel like puking....jaks already come bck frm 0.40 last time keep talk bull shit cashflow this that....nw that it bck to 1.1 he come out advice ppl this that...once i see...ah diu jaks again....yau hai this kcchong....wahlan.....instant turn off my cpu...u knw why? i duwan sit my electric bill on this bull shit
haha. good discussion around here as all sifu gather here. good discussion. Well, my advise still use margin wisely. its not that bad, else in offshore mkt nowadays, ppl wont be launching margin x2, x3 kinda unit trust funds.
You know how unit trusts evolved nowadays? there was unit trust use x2,x3 leverage to get extra income. as overall unit trust price is stable by investing in broad market overall, they add in margin to make it looks attractive, with traditional unit trust stable, its kinda a good strategy to look at investment. And I think it could be a trend for future.
the margin charges actually depends on your size, and perhaps how u negotiate with respective bankers etc. sometimes i think the head or SVP could have some privilege to give certain clients cheaper rates.
and for dutch lady kind of cases, if you have enough power to hold( use lower margin), actually in longrun you are still a great winner.
next yr GOLD would be a good thing to look at. and IM using some MARGIN x30.....though small, still if Gold hit 2000, my return would be near 1000%. is the risk worth taking, i think so. Thts how you use margin
Some pro traders in HK use margin x50, YTD they earned 2 Ferraris....is ferrari a risk you can take? Stop loss is always the disciplines to have for traders and investors.
Share margin financing is very cheap. Pledged FD can get interest income around 3.8%p.a. Brokerage charge interest 4.5%p.a Simple net effect is 0.7%p.a chargeable upon drawdown only. Effective interest will abit higher because of the leverage mechanism. Find 1Malaysia also cannot find cheap financing 0.7%p.a. I am using Maybank. Brokerage commission is abit higher la...at least rm30 or so. But its ok la. Profit 1 time 4-5 digit. Let brokerage earn abit lah. We must be thankful to them for providing such facilities.
Posted by Connie555 > Nov 7, 2019 5:03 PM | Report Abuse so as this kc....the more he use jaks as scenario the more i feel like puking....jaks already come bck frm 0.40 last time keep talk bull shit cashflow this that....nw that it bck to 1.1 he come out advice ppl this that...once i see...ah diu jaks again....yau hai this kcchong....wahlan.....instant turn off my cpu...u knw why? i duwan sit my electric bill on this bull shit
After reading other article boasting and propagating margin finance, I wrote this article to provide an opposite view, in fact on both advantages and disadvantages of SMF for readers who are interested to read and perhaps learn something.
Seriously I did not expect anyone to become vulgar and started to personally attack others. I wish the society here is more civilized than that. Most of us were educated to be as such. Anyway, can't expect everyone to be the same.
But serious, if you start to puke seeing my name in the article, just get away from it and don't read. Don't have to get upset. Life is short.
Posted by ChoCho > Nov 7, 2019 10:16 PM | Report Abuse RE: kcchongnz Think about the 10 or more persons who are giving positive feedback on your article and forget that 1 person who is criticizing you. :)
You are one of the 10. Thank you.
It is ok for me to receive negative feedback, or opposing views, or criticisms. There are indeed more opposing views than those agreeing with me in this issue of SNF. I have no problem that, as everybody is different.
But some comments involving personal attack, and it is always involve the same people is way overboard.
I guess can't expect there is no weird people around. That is ok with me too.
I am often very perplexed by this statement and always want to make a fair comment,
"Our famous chartist and fund manager also sold all his and his clients’ shares at about Rm 1.50 so that he can buy back at cheaper prices. In fact, he has circulated his sell recommendation to all his clients because he believes the right issues will dampen the price. Obviously, he is also wrong. Unfortunately, many shareholders have been misled and they sold their holdings too early."
Why you have to do that in all your articles on Dayang? Why you always hit on this "famous chartist and fund manager" every time you write Dayang?
You know "Our famous chartist and fund manager" sold all his Dayang 3 months ago at RM1.50 and circulated the same sell recommendation, bought and replaced a buy recommendation on Jaks which was at about 75 sen then.
Dayang's share price has been lingering at about RM1.90 and only the last few minutes today rose by 7 sen, of for a gain of 40 sen, or about 26%, whereas Jaks has risen to RM1.11 today, for a gain of 36 sen during the same period, or about 52%, double the gain of Dayang.
What is wrong with selling Dayang and bought Jaks?
Who made better gain?
Why do you have to keep on repeating your criticisms?
For margin financing, you can also pledged your asset play/ long term shares as collateral for additional financing, eg MAA or Kbunai, for your other short term high profit growth stocks.
You don’t need to dispose your current shares. Margin financing now is in a way ‘monetise’ your asset that you intend to hold long term.
you must be good in selecting stock to use SFM, check my tread I have been holding uptrending Naim(70 cents) MBMR (2.80), UWC 1.95, MI(1.95),ROHAS(0.58),lately all during the last 3 month (only one stock then jump to the next one)
SFM increase profit... its all about probability sometimes you lose but not much but the gain are much higher with higher probability.
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Posted by Ricky Yeo > 2019-11-07 10:01 | Report Abuse
@Icon8888 there is alot of nuance in your "depends how you manage it" which most likely ruled out 99% of people from using margin.
Remember, those that refused to evacuate before Hurricane Katrina hits New Orleans are those that have survived all the previous hurricanes, and their experience betrays them.
Not saying something bad will happen to your way of using margin, but what is important is not 'I have survived so many black swans before using margin", rather it is "will I survive the next black swan?". Remember you only need to get it once. It is like playing Russian roulette. Will you play it once to make $10 million? Sure but you're still dumb. But no one would play it 6 times in a row, because that is just beyond dumb.
And then there is the problem of "I have survived so many black swans before using margin". If Titanic never sank, you'll be pretty sure human will continue to build bigger and bigger ships until one eventually sinks (to learn the lesson). Similarly, if one never ever get caught in irreversible losses for using margin, that person is going to keep increase his leverage (risk) until he hits one. So be careful with that.