Investing with leverage

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#8
(01-02-2011, 09:35 PM)arthur Wrote: May I provide a different opinion to kazukirai-san.

The above sounds good, is actually very true in its contextual POV.
However, in the sentence of "only few can tame", many newbies looking for a quick buck, esp. those under-capitalised, would be thinking "why not ME?"

There you have it, everyone thinking himself as a Superman in a bull run, with the increasing share/options prices providing a destructive reinforcing confidence to the trader that he, as a newbie can do leverage well.

Only when the tides are turned that he find himself very naked, and more so since he is being leveraged THE OTHER WAY by the market forces this time round.

So dun leverage unless one is well capitalised, or one is trying to explore an aternative investment universe, options/forex. Do it with your toes into the water and do it for one full market cycle first.

Hi Arthur-san,

I don't think we're on a different page at all. I'm not advocating the use of leverage nor promoting it. While you may be leaning towards a more cautionary note, I quoted jeremy-san's entire post precisely because it is mentioned that Leverage is a beast.

I'm advocating critical thinking hence my line on the optimal use of leverage as a level that one is comfortable with. Personally, I hardly use any (well, except for my car loan at present).

I believe thinking critically is one of the most important skills to develop. If there are any younger 'investors' who think that they are Superman and end up going to lose it all due to taking on excessive leverage while the tide goes out, I think it may not necessarily be a bad thing as the lessons learnt would have come at a time where they are young enough to make mistakes. And relative to being at the conventional retirement age and losing the entire nest egg...I think that is a better option.

However, kudos to you for spelling it out as a cautionary note. I believe that is a public service annoucement all newer investors should heed.
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Messages In This Thread
Investing with leverage - by Musicwhiz - 22-01-2011, 10:51 AM
RE: Investing with leverage - by Musicwhiz - 31-01-2011, 10:32 AM
RE: Investing with leverage - by yeokiwi - 31-01-2011, 10:48 AM
RE: Investing with leverage - by jeremyow - 01-02-2011, 12:44 PM
RE: Investing with leverage - by kazukirai - 01-02-2011, 01:38 PM
RE: Investing with leverage - by arthur - 01-02-2011, 09:35 PM
RE: Investing with leverage - by kazukirai - 02-02-2011, 07:58 AM
RE: Investing with leverage - by Jared Seah - 21-05-2011, 04:09 AM

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