Am I missing something? Magnifying dividend payment on margin. Safe and profitable?

Quote from pan:


Now, if I take the highest 5 dividend paying companies in the Dow Jones Index (averaging 5% return), it's pretty safe, no? I mean, 7% return isn't even considering the fact that the DJIA historically appreciates 5% / year on average over the past hundred years.
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Google "Dogs of the Dow".
Also that list of "safe" high paying stocks used to include such gems as the company formerly known as GM.
 
y, you can do it, but if you drop below 100k in your IB acct there goes your portfolio margin.

So the main thing to figure out is how to constuct a delta neutral portofolio that pays a high rate of interest.

The second thing you should work on is the optimal amount of leverage to use.

Start with 66% Stock Basket and 33% Ultra Short S&P (SDS).

I think there is no free lunch but you should earn at least a snack if you set it up well.

-KZ
 
Quote from trading spaces:

Have you heard the interactive brokers ad on Bloomberg radio? They are suggesting this strategy using portfolio margin of 5x!
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Bingo! This ad over the last year or more has made me wonder even more about IB. It isn't just on Bloomberg, it is in magazines and CNBC too. Makes me wonder what actually stopped them from buying MFGlobal? Maybe a regulator contacted them and put a bug in their ear as to what they were trying to do and they decided the publicity might not be worth the risk, let alone the ocst of lawsuits of trying to pawn off the idea that they had any idea of what they were purchasing. The more time I have had to think about it the more I think they thought they had a plan to make some money and pawn off the liability, but someone tipped them off they would get beaten to a pulp in the current regulatory environment, and they bailed out. If it went through the boys and girls at the top would have walked away unscathed financially, but as usual everyone else would have been screwed to the max.
I love the idea of their rates, but this crap and the lack of reinvestment into customer service keeps me away from doing business with them.
 
Op, I like the way you are thinking in terms of 'arbitraging,' but in the same breath I'll tell you to get ready for maint. margin calls... If you're all in with your $100k, that means liquidating.
 
Quote from stock777:

is the previous poster a full retard?
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Is that directed at me stock? Do you really think that couldn't be the case? I guess Fantasy Island is a good place for people who actually don't trade, and put no money at risk. For me I take risk everyday and have no appreciation for firms that put me at extra risk without my knowledge. Maybe you didn't catch the threads where the good IB people who respond on here had no idea about a significant policy change, and customers apparently weren't notified before the fact. If that works for you, hey more stupidity to you.
I don't tolerate b.s. from anyone I do business with, but those who want to for a cheap price, go ahead.
 
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