After a few years practicing your trading and/or investing skills in the stock market and your friendly and thoughtful brokers haven't review your brokerage account size, trading limit, and commissions; you have not generate enough business for your brokers to warrant their attention to up your game plan!
When Uncle8888 seriously began to be active in the stock market in Jan 2000 His buy limit was just $20K and T+3.
Buy limit $20K. Where got enough?
He called his broker to review this buy limit and adjusted to $50K
Soon $50K also not enough. He called his broker to adjust his buy limit. His broker was happy to adjust to $100K and offered him T+5 to help to make him more money and FIRE sooner.
One day; his broker called to tell him this good news after reviewing his account performance and offered to up his game level. Broker has lowered his commission from 0.275% to 0.22% and up buy limit to $200K and then to $300K when $200K limit was hit several times.
Buy limit: $300K, T+5, Commission at 0.22%
Huat liao! FIRE soon! That was his thinking in 2007
When the Game is over!
What left?
Read? CDP - No more printed copy. Now it is History!
The moral of the story:
Never under-estimate the greed in us when we are winning big and on the way to FIRE faster!
Posts
In this game, the real and true winner is your broker when you up your game level. Lol
ReplyDeleteCW,
DeleteLucky you not into leverage at that time. Only contra.
Your broker not "aggressive" leh. Should have enticed you or worked with "vested interests" to lull you into "investing" with leverage!
Then your broker can also charge CPF like interests on your positions ;)
Must develop multiple souces of income from the SAME client mah!
Trading with leverage is a given - forex, futures, CFDs, etc. That's why 90% of traders fail.
But to encourage "investing" with leverage to bei kambings???
Sell to experienced and veteran investors OK as they know risk management.
But then again, veteran and experienced no need others to tell them what to do. So its back to bei kambings as targets for milking and fleecing...
Somebody is goona get hurt...
Agree with SMOL. What's with this Leverage pitch within our community lately. Scary !
Deletehttps://www.cnbc.com/2018/04/12/warren-buffetts-big-life-lesson-to-students-dont-borrow-money-like-donald-trump.html
We are likely to be guided by our personal experience or personally witness it with our own eyes. Read? Is Bear Market that Scary??? (2)
DeleteI avoid margin or shares financing to enhance capital base. I rather save up longer for bigger capital base.
I suspect in S'pore it's the reach for yield. And with FIRE replacing YOLO among the millennials .... how to generate $50K or more "passive income" on a portfolio of only $300K or $500K ?!?
ReplyDeleteSecret sauce called leverage lorr!! LOL!
And not just millennials ... with the persistent slump in rental yields, the old standby for lau kok koks --- property --- just doesn't cut it anymore. :)
And govt policies to limit property price takeoff doesn't help. Now is property purgatory in S'pore --- high prices but limited upside, low rental yields, constrained population growth, stagnant growth of high salary expats. Hohoho!!
Btw it's the same in US --- margin financing has never been higher. :)
The chart below displays US margin debt inversely. It should be noted that margin debt drops sharply just prior to peaks in the S&P500 i.e. short-term leading indicator. Which indicates that quite a few using margin financing in the US are institutional or sophisticated investors.
https://kimblechartingsolutions.com/2018/04/margin-debt-hits-historical-levels-watch-spread/
The latest FINRA margin debt as of June 2018 is still hovering around $650B. But I won't be surprise if the number drops over the next couple of months as the stock markets go thru their usual Aug-Oct slumps.
http://www.finra.org/investors/margin-statistics
Ha ha. You can control!
ReplyDeleteActually, the buy and sell limit indirectly control our itchy fingers from over reacting to market volatility.
ReplyDelete