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Friday, June 10, 2011

Sexy margin account 911: what to do to protect your asset

The TSX is facing close to the 13 000 points. Can it go any lower? Maybe. I don’t know. But what I do know for sure is that my portfolio is strong enough to go through this. I of course transfer the 5 000$ available of my credit line to my margin account. That bring my margin account usage to 36 000$. Currently, my non-registered portfolio is down to 112 875$.

My portfolio is strong enough to support what’s going on right now, but if the TSX go through another 100-300 points loss, I may at a time received a margin call or – even worst, TD Waterhouse could eventually sell part of my asset without me knowing. Anyhow, I am the one who wanted this and now, my margin is sexier than ever... Sexy like hell.

Some of my assets like BNS, X, PPL, ENF, EIF, SII and a couple other are still doing well. SII is exceeding the 8$ per unit, which is very good. NFI.UN, DGI.UN and a few others are not doing that well. However, I do not regret any of this. What’s going on at this time is a phase in which the market realize what’s going on in Greece and once pass, it will get better. In any way I want to sell my precious asset.

If the situation gets really bad, I could eventually transfer the holding of my TFSA into my non registered account in order to add to the portfolio. But even there, we are only talking of 4 000$. Still, that’s money, and a 4 000$ could add to the value of my margin account.

Transferring asset from the TFSA to the non-registered margin account is an extreme solution. But still, it’s a solution. I don’t plan to precede with the transfer of my TFSA holdings to my margin account unless the situation gets desperate. That meaning a TMX loosing another 200-300 points.

Another option would be to sell what I hold in my US account and transfer the money to the Canadian margin account. At the current time, I only hold Sprott Physical Silver Trust ET (PSLV) in my US broker account. The investment currently worth more than 2 600$ US. I could eventually sell my PSLV units and transfer the US money into my Canadian margin account. This could be another extreme solution. But I wish it won’t go through that point.

The best thing to do at this time is to hold and see what’s going to happen on Monday.


Ron said...

If you only have 36k used on your margin, you should have at least 30k available which means your portfolio would have to go down another 50k in order to get a margin call. You still have lots of room available and will take more than a drop of 100 to 300 points from the TSX to get a margin call. The TSX would have to go down much lower as your portfolio can be down 44% from today's value before getting a call. That means unless the TSX fall under 9000, you should have no problem, so I don't see the need to transfer 5,000 from your line of credit.

Sunny said...

I am ok for now, but during day time, when I see the TSX loses points, i always transfer the 5 000$ over my margin. That's the usual.

But what my post was about if, it's the TSX would lose another 100+ points or more. There, I would be in need of doing something. But at that point, I will ask advice from TD.

Ron said...

I'm telling you that if you have 30,000 available on your margin, the TSX will have to go down at least 4000 points and maybe much more to have a margin call so transferring the $5,000 is pointless right now


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