What are the ways to buy shares with leverage?

Mrmagoo · 29 July 2012

Aside from CFDs and going into a bank and getting a personal loan.

What kind of information to companies publish for investors to look at ? For example, sales revenue, profit margins, gross sales, the amount of debt they have, recent purchases of other companies ect..

Are there ways to get access to such information for large numbers of companies ?

So_Cynical · 29 July 2012

Re: What are the ways to buy shares with leverage ?

Mrmagoo said:
Aside from CFDs and going into a bank and getting a personal loan.

CFD's are not shares, so any talk of "buying shares" with leverage cannot include CFD's

So we are left with a loan of some kind, be it Margin, Personal, or Equity...i suppose an instalment warrant is a kind of leveraged share purchase.

Mrmagoo said:
What kind of information to companies publish for investors to look at ? For example, sales revenue, profit margins, gross sales, the amount of debt they have, recent purchases of other companies ect..

Are there ways to get access to such information for large numbers of companies ?

http://www.asx.com.au/asx/statistics/announcements.do

Mrmagoo · 30 July 2012

Re: What are the ways to buy shares with leverage ?

So_Cynical said:
CFD's are not shares, so any talk of "buying shares" with leverage cannot include CFD's

So we are left with a loan of some kind, be it Margin, Personal, or Equity...i suppose an instalment warrant is a kind of leveraged share purchase.

http://www.asx.com.au/asx/statistics/announcements.do

Ok so what if I find a stock with a nice flat growth line that never goes down by a significant amount and I have 10 grand in the bank.

So I buy at a 20% margin and hold it for 3 months. That means I have 50 grand worth of stocks and they go up 14% (actual performance of a stock I was looking at) over those 3 months then less interest I would have made about 6 grand ?

If it was 5 % growth then that is still about 1700 bucks.

Or would all the profits be eaten up by interest and brokerage if I held it over 3 months ?

b.c i see plenty of shares growing at about those amounts of a 3 month period.

tech/a · 30 July 2012

Re: What are the ways to buy shares with leverage ?

Mrmagoo said:
Ok so what if I find a stock with a nice flat growth line that never goes down by a significant amount and I have 10 grand in the bank.

So I buy at a 20% margin and hold it for 3 months. That means I have 50 grand worth of stocks and they go up 14% (actual performance of a stock I was looking at) over those 3 months then less interest I would have made about 6 grand ?

If it was 5 % growth then that is still about 1700 bucks.

Or would all the profits be eaten up by interest and brokerage if I held it over 3 months ?

b.c i see plenty of shares growing at about those amounts of a 3 month period.

A good proportion of profit will be lost to tax.
Any thoughts for say Europe falling in an abyss and your stock along with every other stock
Drops 20 % and you get margin called?

So_Cynical · 30 July 2012

Re: What are the ways to buy shares with leverage ?

Mrmagoo said:
Ok so what if I find a stock with a nice flat growth line that never goes down by a significant amount and I have 10 grand in the bank... and they go up 14% .

Then you have made your self 1400 bucks and if you can do that very 3 months that's over 5K per year (50% ROI) and your a genius and should be quite happy with that...as will be the ATO.

Mrmagoo · 30 July 2012

Re: What are the ways to buy shares with leverage ?

tech/a said:
A good proportion of profit will be lost to tax.
Any thoughts for say Europe falling in an abyss and your stock along with every other stock
Drops 20 % and you get margin called?

Have 20 grand in the bank.

Don't buy only financial stocks.

Research.

You're saying I can be taxed on the earnings, but not deduct the loses ? Jebus Christ.

Mrmagoo · 30 July 2012

Re: What are the ways to buy shares with leverage ?

So_Cynical said:
Then you have made your self 1400 bucks and if you can do that very 3 months that's over 5K per year (50% ROI) and your a genius and should be quite happy with that...as will be the ATO.

So basically it is a terrible idea.

Julia · 30 July 2012

Re: What are the ways to buy shares with leverage ?

Mrmagoo said:
Have 20 grand in the bank.

Don't buy only financial stocks.

Research.

What research will you be able to do that will tell you what will happen in Europe?
Plus remembering that the US is not much less of a basket case.

Mrmagoo · 30 July 2012

Re: What are the ways to buy shares with leverage ?

Julia said:
What research will you be able to do that will tell you what will happen in Europe?
Plus remembering that the US is not much less of a basket case.

Invest in companies which are not vulnerable to a European shock. Diversify.

Look for a constant history of small growth. High earnings ratios relevant to other stocks.

Don't know if it is possible to look at the cash and debt and types of exposure that a company might have.

A crash just means opportunity if the company has sound fundamentals.

Just learn as much as possible. Risk a little capital on fairly non-risky stocks.

Maybe the leverage I made up is too high. I don't know.

tech/a · 31 July 2012

Re: What are the ways to buy shares with leverage ?

Mrmagoo said:
Invest in companies which are not vulnerable to a European shock. Diversify.

Look for a constant history of small growth. High earnings ratios relevant to other stocks.

Don't know if it is possible to look at the cash and debt and types of exposure that a company might have.

A crash just means opportunity if the company has sound fundamentals.

Just learn as much as possible. Risk a little capital on fairly non-risky stocks.

Maybe the leverage I made up is too high. I don't know.

So we've gone from one stock you wanted to leverage to the hilt----
To your trading philosophy?

Which one is it?

Mrmagoo · 31 July 2012

Re: What are the ways to buy shares with leverage ?

tech/a said:
So we've gone from one stock you wanted to leverage to the hilt----
To your trading philosophy?

Which one is it?

Gee mate. If you're not going to actually answer my questions why do you bother posting on my threads ?

tech/a · 31 July 2012

Re: What are the ways to buy shares with leverage ?

Mrmagoo said:
Gee mate. If you're not going to actually answer my questions why do you bother posting on my threads ?

Questions have been answered.

skc · 31 July 2012

Leverage is a twin-edge sword and it multiplies gains and losses - that's simple enough to understand because it is linear and symmetrical.

But with leverage, you are also exposed to margin calls and wipe-outs (i.e. losing more than you actually own). That is asymmetrical.

I found that, anytime I take positions focusing on the rewards and not the risk, they NEVER end well.

Moral of the story - don't use leverage unless you absolutely understand the risks.

A complete other side of the coin.. one can use options to gain "leverage" with a different risk profile altogether. Not my area of expertise, however.

Mrmagoo · 1 August 2012

There will be a minimum margin which must be maintained, if the price falls I'll need to make up the short fall to reach that margin.

If I borrow $x amount to trade in $x amount of shares then the maximum amount your stand to lose is the amount your borrowed, not the amount you put down as a payment.

tech/a · 1 August 2012

Mrmagoo said:
There will be a minimum margin which must be maintained, if the price falls I'll need to make up the short fall to reach that margin.

If I borrow $x amount to trade in $x amount of shares then the maximum amount your stand to lose is the amount your borrowed, not the amount you put down as a payment.

Really
You might want to re think that.
Let's say you have a 60$ share
You have 5000 of them at 4:1 margin
It gaps down $10
How much of your 75k do you have left
After your margin call?

Mrmagoo · 2 August 2012

In that case i will have lost about 60k in equity. If the requirement was 20 perc i imagine the call would be around 62 k as deposit. However you still have the shares. If you closed the position or didnt meet the call youd have lost 60k.posting quick from phone numbers are guess.

tech/a · 2 August 2012

Mrmagoo said:
In that case i will have lost about 60k in equity. If the requirement was 20 perc i imagine the call would be around 62 k as deposit. However you still have the shares. If you closed the position or didnt meet the call youd have lost 60k.posting quick from phone numbers are guess.

Yes you can liquidate shares to come under margin.
But you will be liquidated of all if you dont pay enough to avoid margin
call.Just pointing out the two edged sword.
Provided you are aware of risks and trading within you means
then Margin isnt a problem,Been trading with it for 20 yrs.

What are the ways to buy shares with leverage?

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