Comments on: Mr. Cheap Answers – Should I Buy Some Stock on Margin?

By: Four Dividend Raisers in the news | Finance Blog

Four Dividend Raisers in the news | Finance Blog — Wed, 06 Jan 2010 09:46:27 +0000

[...] an interesting and attractively valued stock that I will consider for further research. Thus do not margin your way into the stock. One problem is that since I already have an allocation to tobacco stocks like [...]

By: Dividend Growth Investor

Dividend Growth Investor — Sun, 08 Nov 2009 00:45:45 +0000

Wow, I hope I impress at least someone with my posts

I don’t use margin either. Earlier this decade I played around with S&P 500 futures and lost a lot of money in the process ( well not a lot, but it felt like it). Basically the main idea behind S&P 500 e-mini futures is that for a low downpayment of $4K-5K ( margin) you could control a vehicle that’s worth $50K ( assuming S&P 500 is trading at 1000). Thus for each “point” that the S&P 500 moves you make/lose $50. I thought I could make 2 points/day, but at the end it ended up more like losing $100/day ;-(

As far as dividend stock investing is concerned I would not rely on any particular stock too much. I try to be diversified, dollar cost averaged, reinvesting dividends selectively and not to overpay for stocks. I also own a long term bond(zero coupon, purchased when interest rates were a little higher) which would mature in a few decades that would provide me with return of capital of my principle invested in a few decades.

I also hate paying commissions. There are several US brokers which have virtually free stock trades ( provided that you maintain a minimum balance there).

By: Intelligent Speculator | Financial Ramblings

Intelligent Speculator | Financial Ramblings — Sat, 07 Nov 2009 13:10:31 +0000

[...] BlueNile reported more impressive earnings @ ZachStocks Shares slump on US employment data @ BBC Buying stocks on margin@ FourPillars 5 good financial habits in your twenties @ MoneyUnder30 Returns of the top 10 Canadian [...]

By: A Lap Of The Blogs : WhereDoesAllMyMoneyGo.com

A Lap Of The Blogs : WhereDoesAllMyMoneyGo.com — Thu, 05 Nov 2009 23:17:06 +0000

[...] Four Pillars answers a reader’s question about a strategy using margin. [...]

By: Canadian Capitalist

Canadian Capitalist — Thu, 05 Nov 2009 20:30:45 +0000

I avoid margin entirely. The equity-risk premium may not be much more than the premium that margin accounts charge over the risk-free rate. Why even bother?

By: Jess

Jess — Thu, 05 Nov 2009 16:50:07 +0000

At 21, I invested in Real Estate first and start a home business. Starting with RE and Home Based Business gives me an education and experience you will not get from school. For example I gain education and experience in looking at Financial Statements, cash flow management, sales, marketing, and etc… By gaining at these, I’m able to invest properly when it comes to stocks, mutual funds and etc… I can read their financial statements. I have a feel of where the trends are. Right now, I’m educating myself about Derivatives and how to create them.

By: Nurseb911

Nurseb911 — Thu, 05 Nov 2009 15:40:26 +0000

Margin? I have an investment LOC that I prefer to use over margin (although this is the same principle of borrowing to invest). I wrote a piece on leveraging dividends earlier in the year and its still a path that I follow for my dividend growth portfolio. As long as you have the cashflow (dividends + savings) to meet your interest payment and repay some of the principal each month then I think its a good strategy for a conservative investor. If you’re stretching yourself too thin and picking the wrong type of stocks in proportion to each other then I think you can find yourself in a lot of trouble as we say with margin calls last year.

By: Four Pillars

Four Pillars — Thu, 05 Nov 2009 15:34:27 +0000

I just noticed that in the email he mentioned having an account at Scottrade – sorry I didn’t see that before.

By: Four Pillars

Four Pillars — Thu, 05 Nov 2009 14:57:57 +0000

I don’t think Scottrade is available to Canadians. Zecco and TradeKing are cheaper than Scottrade for Americans. Questrade at $4.95 is the best deal for Canadians.

And yes – margin/leveraged investing/SM/Smith Manoever is no free lunch.

By: Rob Bennett

Rob Bennett — Thu, 05 Nov 2009 13:18:37 +0000

What this person is doing is taking the conventional investing wisdom — that stocks are always best for the long run, blah, blah, blah, blee, blee, blee — to its logical conclusion. He is taking marketing slogans seriously.

A dangerous idea.

The Roches had a song in which they argued that “it’s stupid to believe in things that happen on a stage.” I think that wisdom applies here. Are the people who tell you that stocks are always best for the long run going to cover your losses if it doesn’t work out? I wonder why not. I wonder why they aren’t willing to put their own money behind this “wisdom” they push with such confidence and certainty.

Rob