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Saturday, June 11, 2011

Major crash today on the TMX stock market, my investment portfolio is suffering

My non registered investment portfolio went to a value of 112 875$ (of previously today) to 112 477$. Here’s the actual numbers:

Margin account money being used: 41 398.61$
Non-registered investment portfolio value: 112 477$
Margin account money being non-used: 20 348.42$

That’s what the numbers are looking like for now. From the 41 398.61$, a 5 000$ had been deposit on a credit line. At anytime, the 5 000$ can go as payment on the margin account, to decrease it to 36 398.61$. Next week, I am waiting for 2 paychecks. I should be receiving a total of 1 000$. That 1 000$ will definitively go on my margin account. It will decrease it close to below 40k.

If I want to, to really decrease my margin account usage, I could sell my holding of TMX Group Inc. (X), cash in a profit and leave the money (close to 5 000$) on the margin account. But it won’t happen that way. I think my portfolio may be able to handle another 200-300 TSX points loss if it have to happen in the next couple days.

Despite today bad market condition, my Horizons BetaPro NYMEX Crude Oil Bear Plus ETF (HOD) and Horizons BetaPro COMEX Silver Bear Plus ETF (HZD) did not gain enough in order for me to sell them at profit, so I didn’t sell them. I left home in middle of the afternoon to enjoy the beautiful weather and I knew anyhow that this Friday was not going to be the day of my selling of HOD an HZD. That it happens now or on a later date is not what really matter. What really matter at this critical point is to be able to remain in control of my margin.

Margin investment is risky. It’s especially is in a bad market condition that I am able to see more of the danger of margin investment now, unfortunately. But there’s nothing I was not aware of. In the previous post, I explain what I will be doing if it happen that the TSX loose more points in the next couple of days. I will be doing what I had explained in that post if I have to. Also at TD, I also have a 1 000$ paid on another credit line type - RRSP loan. I could eventually transfer the money over my margin account in case of extreme necessity. Eventually, I could bring in more than 11 000$ on my margin account, 6 000$ in cash, and the rest in asset. It could eventually become a solution. But the real solution would be to eventually become debt free. Eventually but certainly not for now.


pete said...

besides the margin debt how much of your portfolio have you invested with your own money so far

also do you know what credit score you need to get margin at td and also do you need to be employed to get margin

Sunny said...

Hi Pete,

It will be difficult for me to answer, but I use everything include in the debt section, at the exception of the student loan of course to invest.

On how to get a margin well I don't exactly know. But for sure, TD will check your credit before giving it to you. In my case, my portfolio was pretty much establish when I request for my margin account, so that might had left. It's not like I start with nothing in my portfolio and started on margin.

If you think about margin, you can probably get it very easily but just be very careful with it. The best to go its to start to invest with your own money, build a strong portfolio and than after, bring in margin. Also, never use too much of the margin money available. The money available on the margin will vary daily, depending of the fluctuation of the market.

I am currently facing some problem because I went too deep in my margin usage. No catastrophe yet, but I need to monitor the situation and it's quite not fun, but it was wanted for my part.

TD recommend me once not to use more than 30% of the money available on the margin and that make a lot of sense.

Just be sure of what you are doing before opening a margin account.

Arunan said...

Stick with High Quality stocks and diversify your asserts. This is an only way reduce risk and escape from market crash.

Sunny said...

Hi Arunan,

Exactly, I agree with you.


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