On Margin

CategoriesOptions Trading

Margin is bad, avoid it.

Margin is expensive: 8.25% I don’t take out loans at this rate for any kind of purchases. And if I purchase assets like I purchase groceries rather than perfume, then the 8.25% financing expense is unjustifiable.

This also means that my next calculations about which security is better- or worse-performing will be based on dollar-for-dollar cash value only, and not on the fact that I can hold 30-40% of it in the margin account.

 

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