There is no thread on this topic and i am thinking of doing some borrowing until my money comes in to take advantage of the current financial turmoil

Let's discuss the PRO's and CON's

And experience if any.

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Added on January 17, 2008, 2:11 pmCIMB is offering BLR+0.75%

This post has been edited by Neo18: Jan 17 2008, 02:11 PM

My advice is don't use it, it is a highly risky game, only use when or know prefectly what are you doing.

Share margin only good when bull time, at bad time, you double the losses. Imagine you do share margin account, your holding of shares value become lesser, while still need to pay up the bank on interest. Also when share price goes down, you will be facing margin call to top up.

Dear Cherroy,

Yes, I know the risk involved... But i plan to take loan only for 2 month period until my CASH comes in. Then i plan to pay up immediately

ok, that's different as said know what you are doing. If just for the sake to 'double up' without cash backing in near term, 90% will result in some unwanted circumstances. I have seen a lot of individual using margin account to 'double or triple up', eventually most (8/10) resulted in bigger losses.

Share margin is good for syndicate to use short term cash for their 'goreng' purposes but doesn't mean surely gain also for them, there are plenty of 'fail goreng' too.

Why you really need to use the share margin to buy right now, can't wait another 2 months? share might be cheaper then or can be more expensive.

This post has been edited by cherroy: Jan 17 2008, 02:31 PM

If you confirm will pay me back, I lend you at BLR enough le... better than I go in stock market myself... sure win.

why would want to borrow money to buy stock?

agree with cherroy, share might become cheaper in 2-months time (of course i don't deny that it might also appreciate)

however if really missed the boat, there is always another chance coming up, no?

actually i told myself this:-

for good fundamental counter, if the price comes down 10% from my cost, i will do Dollar Cost Averaging.

It happen yesterday and also was there this morning, until it rebounded.

That is why i was thinking about buying more!!! but unfortunately no bullet...

It has got nothing to do if in 2 month time, it will come down more.

Ok fair enough.

But what if it drops another 10%, average again using margin? then it drop further another 10% doing triple margin on it?

buy transmile again?

He disposed already, if not mistaken.

transmile got no fundamental la.. i dispose liow!!!i bought because Robert Kuok bought!! not a good reason, i know!!!

i was thinking of buying Petra Perdana. I bought @RM5 it went down to 4.66..

this counter very strong fundamental la...

Can you list out points stating Petra Perdana sounds strong fundamental? I personally dont think so...
The company is so new that it just listed last year...


This post has been edited by keith_hjinhoh: Jan 17 2008, 09:54 PM

If things really go your way all the time like you describe, do you think you will face the situation you are in right now.
Market will go up and down.
If your 'eye' really that sharp, you should have bought it earlier rather than buying at the highest price.
Just let it go.

If you lose all your savings, you can start new. But if you bancruptcy, then you are done for good.
Just look at how many STEEL counters that has gone bust. STEEL price going up till now and never really drops.
Yet counters like Wing Tiek Holdings, NCK all gone bust.

Another point to make, it is always advisable (don't mean it is a must) share margin or leverage play when shares are really damm cheap and trade at insane cheap level. In between, If you can get right everytime, then share margin will make you rich, but if not, better becareful.

Just like I posted the sceario, it drop from 5 to 4.50, you do share margin, then market continue to drop, then it become 4.00, margin again? then become 3.50, another margin? at that time, you pay triple interest charges, only when shares rebound back quickly to 4.50-5 then you are making a gain. But if shares price stay and stagnant at that level, then you are paying 3x interest to banks. So if shares only rebound to 5.00 after 2-3 years, you gain nothing as interest can 'eat up' your gain.
But to be fair, on the other hand, if shares do rebound and shoot higher to 6-7, then you earn 3x profit.

Just my 2 cents, judge your own.

in Malaysian market, you only can go mostly long position.. margin financaing will kill you once the market tumble.. as you can't go to a short position fast

Anyone mind to share what is the share margin or leverage rates currently available in Malaysia? As in how high can the margin be? Does every bank has their own margin or what? Thanks

It depends, as far as I knows, it can be varied depends on banks and individual credit creditibility.

I work for a stock broker, and from the comments of staff and remisiers, they sum up that most margin clients lose money over the long term. So, no money, don't play. Don't go and play with borrowed money.

Yes, most margin users are losing money rather than making one. You only use margin when in bull run, in other time, you are almost surely lose out as you have 1/3 of chance of winning.

Market up - gain
Market stagnant - loss out on interest charges
Market down - loss out on interest charges + capital.

OK, I have some newbie questions. How does share financing work?

1. Lets say I have $10k worth of shares in my account. Will I be given another $10k of margin to buy stocks?

2. If I buy $20k worth of shares, and these are bought with $10k in cash and $10k in margin financing. So comes T+3, do I settle $10k or $20k?

3. Is the interest rate charged on the financing a monthly rate or annual rate?

4. If I share finance $10k to buy $10k worth of shares, what will happen when the share price drops to $8k? Do I have to top up cash $2k? If the shares rise back to $10k, will I get back my $2k?

5. Can I just pay the interest alone, or do I have to interest + principal (like a loan installment)?

This post has been edited by simplesmile: Apr 18 2009, 07:58 AM