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- When does margin trading make sense?<\/li>\n\n\n\n
- How important is the will to succeed?<\/li>\n\n\n\n
- Somebody asked “why are poor people usually more kind than rich people<\/a>?”. Is it really true. <\/li>\n<\/ul>\n\n\n\n
Se volete che risponda a qualche domanda su Quora o YouTube, o se state cercando di investire, non esitate a contattatemi<\/a>, e-mail (advice@adamfayed.com) o utilizzare la funzione WhatsApp qui sotto.<\/p>\n\n\n\n
Alcuni dei link e dei video a cui si fa riferimento potrebbero essere disponibili solo nelle risposte originali. <\/p>\n\n\n\n
Fonte di tutte le risposte: la pagina Quora di Adam Fayed.<\/p>\n\n\n\n
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When does margin trading make sense?<\/h2>\n\n\n\n
The vast majority of do it yourself (DIY) investors and even some institutional ones, get their fingers burned using leverage.<\/p>\n\n\n\n
Using leverage in stocks isn\u2019t the same as property or a primary business.<\/p>\n\n\n\n
If you buy a property on leverage via a mortgage, you can get into negative equity in a worst case scenario, or even lose your home.<\/p>\n\n\n\n
If you don\u2019t stretch yourself too much though, all that matters is that the property goes up a bit over time.<\/p>\n\n\n\n
In some circumstances that is enough to make it cheaper than renting, even though it is a misconception that renting is dead money. It can be cheaper.<\/p>\n\n\n\n
US and some other stock markets have beaten most property markets long-term, adjusted for dividend reinvestment.<\/p>\n\n\n\n
However, you have to factor in these things:<\/strong><\/p>\n\n\n\n
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- Most of the returns of the stock market are for a few stocks. So, even if the S&P500 is up 15% for a given year, that could be because of the over performance of forty or fifty stocks<\/li>\n\n\n\n
- Stocks are more volatile than property. This makes controlling emotions more difficult for most people, as big losses or gains tends to affect people\u2019s decisions. Panic selling or taking too much risk after seeing big gains from leverage is normal.<\/li>\n\n\n\n
- In terms of the volatility, if you are 50% down, you need to double your money to get back to break even. So, you can wipe yourself out with leverage and get a margin call<\/li>\n<\/ul>\n\n\n\n
Where leverage can make sense is if you only use it when the indexes are down, and you have balls of steel.<\/p>\n\n\n\n
If somebody had bought MSCI World or the S&P500 with leverage, every time there was a 20%+ decline and upped the stakes if the decline were 30%-50%, they would have made a fortune in the last half century and more, had they:<\/strong><\/p>\n\n\n\n
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- Been patient and waited for markets to fully recover, even if it takes years<\/li>\n\n\n\n
- Reinvested dividends<\/li>\n\n\n\n
- Been sensible with leverage. If you have say $1m in your brokerage account, and you only use $200,000 on leverage, that isn\u2019t the same thing as taking out $1m or $2m.<\/li>\n<\/ul>\n\n\n\n
The majority of people should still avoid it though, as it requires a certain temperament, and in some ways the above isn\u2019t \u201cmargin trading\u201d, as you are aiming to hold the leveraged positions for a long time.<\/p>\n\n\n\n
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