There's leverage... and there's leverage. If you are leveraged that you loose a significant or all of your portfolio from a 1% market move, you are over-leveraged. If you are leveraged that you can easily absorb a 75% drop in the market, then you are fine.
Interactive Brokers Interest/Margin Rates
- Thread starter HappyTrader
- Start date
Never said use of leverage or the dangers was about your wealth. Obviously not.
I was referring to how a folksy billionnaire can comfortably talk down people using leverage (when they themselves have a history of using leverage), when the people that use leverage are obviously taking known risks to try to 'catch up' in wealth. Not everyone can be like BRK and buy shares in cash and sit on it for 10 years through thick and thin while you continue living the rich comfortable life. Some people want the rich life now. And they only have a few nickels to try to do it.
I think most people who use leverage and gets destroyed knows it's their own fault. I don't think the majority of those losers go and try to blame others people other than themselves.
Leverage is a tool. It's there. You don't have to use it but you can if you want.
If I was flipping burgers making minimum wage, and have $5K to my name to invest, I will be using leverage. I will probably not listen to people who tell me to put it in an index fund for long term investment earning 6% appreciation a year. Obviously it is like gambling to use leverage. But when you're poor, and that's your only way out, you might just use a bit of leverage.
I think as always, as the same rules apply to a casino, don't bet what you can't afford to lose.
So nobody should be throwing their food money into gambling or the stock market. But net of living expenses, if you're of sound mind making a decision to take a little risk to make money? I don't see a problem with it. Leverage gives people hope and a chance to succeed. They should know the odds are stacked against them for failure. But there is a chance if they want it. Just like a casino.
IB absolutely trounces the competition when it comes to the margin interest rates. For the life of me, I don't understand why IB doesn't advertise this more prominently. When I mentioned to a colleague of mine the ~2% margin rate that IB currently charges, he didn't believe me until I showed him the website.
Oh yeah ?
Most of the noise you hear, you know "slippage", "the evil broker hunted my stops" etc. is all those losers trying to blame others.
While you're busy quoting Warren Buffett, professional traders and funds will contunue to use margin to reduce, not increase, risk. No one is forcing you to magnify your exposure with margin.
Name a single successful hedge fund that does not use margin.
"successful" and "hedge fund" ... didn't think the words went together
Plus, retail traders should not be comparing themselves to hedge funds, that's delusional.
So basically you have no knowledge of how professional traders operate.
Or rather you don't, given your odd comments.
Welcome to by blocklist, I've got better things to do with my time than respond to trolls.
I like to compare IB's short stock fee compared to Tasty Works. how do they compare? Tasty Works capped commissions may make it more attractive a broker? opinions?