Posted by Ricky Yeo > 2019-11-07 10:01 | Report Abuse

@Icon8888 there is alot of nuance in your "depends how you manage it" which most likely ruled out 99% of people from using margin.

Remember, those that refused to evacuate before Hurricane Katrina hits New Orleans are those that have survived all the previous hurricanes, and their experience betrays them.

Not saying something bad will happen to your way of using margin, but what is important is not 'I have survived so many black swans before using margin", rather it is "will I survive the next black swan?". Remember you only need to get it once. It is like playing Russian roulette. Will you play it once to make $10 million? Sure but you're still dumb. But no one would play it 6 times in a row, because that is just beyond dumb.

And then there is the problem of "I have survived so many black swans before using margin". If Titanic never sank, you'll be pretty sure human will continue to build bigger and bigger ships until one eventually sinks (to learn the lesson). Similarly, if one never ever get caught in irreversible losses for using margin, that person is going to keep increase his leverage (risk) until he hits one. So be careful with that.

Posted by stockraider > 2019-11-07 10:01 | Report Abuse

If u act like a pondan, u may better off just use cash & buy without use of margin loh....!!

Margin is for u to whacked big when they is big profit opportunity loh..!!

Just like my armada, i could not afford to buy much, if i do not use margin loh....!!

Posted by Icon8888 > Nov 7, 2019 9:39 AM | Report Abuse

I have been using margin for more than 30 years

never once margin call

survive so many black swans white swans grey swans red swans yellow swans, absolutely no problem

it boils down to how you manage it

margin is actually good stuff, very good stuff

those that don't use it don't know what they are missing

Posted by Choivo Capital > Nov 7, 2019 9:41 AM | Report Abuse

Keep margin below 30% of capital/equity, and think about your risk properly in terms of sizing, and you should do fine.

Quite a good tool in that case.

Just not a fan of the higher brokerage fees.

Posted by Icon8888 > 2019-11-07 10:04 | Report Abuse

margin is not supposed to be used for holding Dutch Lady for 10 years

it is costly

with interest rate of closed to 8%, it eats into your capital gain

(KYY always told people margin interest is only 4% or 5%... that is BS (as it is only partially true). If you use margin to buy Blue Chips, you tend to get low interest rates as per KYY. But if you buy any other stocks, expect closed to 8% rate)

it is not meant for nurturing your investment over long period of time

it is best use for quick money, especially for low risk sure return scenario that is almost arbitrage quality

one good example is CIMB recently I bought at 4.95 using margin

it has since gone up to 5.33

a gain of 8% over few weeks.

without margin, you can only look at it with mouth wide open when an opportunity like this presents itself

Posted by Icon8888 > 2019-11-07 10:10 | Report Abuse

margin also helped me a lot when I punted Airasia back in 2016 / 2017

when Tony announced he was subscribing for 10% by pumping in RM1 bil (or RM2 bil ? I can't remember), I margin to buy more

like they say, the rest is history

(Ricky, no need to tell me Katrina Hurricane story. I am a pragmatist)

Posted by stockraider > 2019-11-07 10:11 | Report Abuse

This perception is totally wrong loh....if 99% investors lose monies loh......!!

The correct figure is about 55% of the investors lose monies but the ratio is much higher for newbies & uninformed upto 75% loh...!!
WHY leh ?? Bcos they are actually gambling instead of investing loh..!!

Posted by 1Bid > Nov 7, 2019 9:59 AM | Report Abuse

Because you're one of the very few exceptional investors in i3.

KC is right. 99% of stock market players lose money. Margin should be avoided. If you can make money you can make money. Cash account should be alright.

Btw, TSM is a good call. Thanks for sharing.

Posted by Icon8888 > 2019-11-07 10:14 | Report Abuse

don't be afraid of margin

I some time geared up to the max of my credit limit

that is risky territory

but I won't stay there for extended period of time

most of the time, within the subsequent few weeks or months, some of my stocks will go up, and I sold to take profit

and my margin automatically drops to very very safe level

no sleep lost

Posted by Icon8888 > 2019-11-07 10:18 | Report Abuse

recently I saw a lot of newbies appeared in i3 (they seemed to come out of no where, strange)

I look at the way they punt, I shake my head

people like that no need margin also will die kow kow

if they use margin, they die even faster

but they are not the majority

the rest of the people in i3 are quite high quality

they are the type that can use margin....

..... very comfortably



Posted by stockraider > Nov 7, 2019 10:11 AM | Report Abuse

This perception is totally wrong loh....if 99% investors lose monies loh......!!

The correct figure is about 55% of the investors lose monies but the ratio is much higher for newbies & uninformed upto 75% loh...!!
WHY leh ?? Bcos they are actually gambling instead of investing loh..!!

Posted by 1Bid > 2019-11-07 10:18 | Report Abuse

You also know 75%. 7 of 10 people lose money in stock market no matter what methods they use. KC is teaching new generation how to survive in stock market. You just proved that he is absolutely correct regarding this MARGIN.

Posted by Ricky Yeo > 2019-11-07 10:19 | Report Abuse

Pragmatist or not, there is a fine line between experience helping and deceiving you. If that is valuable for a non-margin person, then it is live or death for a margin person.

Posted by SALAM > 2019-11-07 10:19 | Report Abuse

Knowledge and discipline determines the outcome.......

Posted by Icon8888 > 2019-11-07 10:22 | Report Abuse

Ricky too academic

every of his sentence I need to read at least twice in order to understand

most of the time I never understand

Posted by Ricky Yeo > 2019-11-07 10:24 | Report Abuse

Haha. Just be careful. Every black swan is different.

Posted by KClohloh > 2019-11-07 10:25 | Report Abuse

Icon8888, don't forget to take your medicine

Posted by stockraider > 2019-11-07 10:38 | Report Abuse

U need to understand & differentiate between investing & financing loh.......!!

1. U need to get your investing technique right, that i suggest u can learn from KC loh.....!!

2.If u has master the investment technique successful, the next thing u can consider whether u should use margin loh...!! Using margin is neutral & not an evil thing...it just like any businessman who is contemplating expanding their business using bank loan loh...!!

If u r young, based my experience, u better jump right in earlier to use margin, do not wait until u r 40 to 55 years old, b4 u use margin, if u make a mistake at this age, it may be disasterous and take along time for u to recover loh...!!

Just can start small while u r young, it is ok to master the art of margin given time loh....!!

Posted by Icon8888 > 2019-11-07 10:38 | Report Abuse

No matter what kind of black swans , if you stick to proper margin principle (mine is one), you will be safe

First of all, This has been proven empirically over past 30 years I used it

Secondly, logic dictates that I will be safe - I will only get forced selling if black swan is so big until my entire portfolio plunged 30% or more in a day. If that happens, that means the market has been hit by something catastrophic. Under that kind of scenario, a seasoned investor will be able to benefit immensely from the following up bargain hunting (maybe over next six months, one year or two years). I always say that don’t be afraid of net worth shrinkage when market plunge , you should only be afraid of net worth shrinkage during normal market (meaning you made terribly wrong investment decisions) , because there is no bearish sentiment for you to capitalise on to recover

Posted by 1Bid > 2019-11-07 10:45 | Report Abuse

Posted by stockraider > Nov 7, 2019 10:38 AM | Report Abuse

If u r young, based my experience, u better jump right in earlier to use margin, do not wait until u r 40 to 55 years old, b4 u use margin, if u make a mistake at this age, it may be disasterous and take along time for u to recover loh...!!

Totally understand this part. I believe we have gone through this stage. I once lost everything. It was only few thousands back in the days. But I have learnt the crucial mentality and knowledge to not to repeat the same mistake today.

Posted by Icon8888 > 2019-11-07 10:51 | Report Abuse

Yes, if you are young, and you know how to punt properly, you should do as raider said “jump into margin”

When I was young, I have no capital. I only have a job. So I cash advance using my credit card, and then use the cash to buy shares, and then use the shares to margin

That is what I did to kick start my investment portfolio

Was I being reckless ? Of course not. I knew I have a stable job that generates recurrent free cash flow at month end. So I know I can service the credit card interest rate and principal repayment

Anyway, the credit card debt didn’t last very long time. By end of year I also got bonus from boss, and it went into repayment

To sum it all up, don’t be afraid of debts, manage your cash flow properly and debt can be a productive instrument

(Btw, The above is only useful for gearing up to skilfully invest. If you withdraw credit card cash advance to buy TV buy holidays, you are not acting wise)

Posted by Cakes Moon > 2019-11-07 10:52 | Report Abuse

All the sifus are here, I learnt a lot from all the experience & knowledge shared here.
Thank you so much.

Posted by Icon8888 > 2019-11-07 11:37 | Report Abuse

usually margin facility has two critical levels to watch out for

if your portfolio shrinks by lets say 20%, it will trigger "no more buying"

then you know your portfolio is heading in wrong direction, and you need to start paying attention, or even start trimming exposure

if portfolio drops further to lets say shrinks by 30%, it will trigger margin call, that is when you really need to trim to avoid force selling

from No Buy level to Force Selling level will usually take days or weeks, so you will have ample time to think and react

it is not as scary as what you think

Posted by yoyo > 2019-11-07 12:08 | Report Abuse

Thanks KCChong for giving such in-depth lesson on margin finance

Posted by Lukey_Greek > 2019-11-07 12:26 | Report Abuse

Margin of financing is like borrowing money for business, ie gearing. No one will dispute whether business should or should not borrow.

The key questions are whether:
1) the business is profitable (your share selection)
2) how you manage the cashflow/ margin
3) whether are you over gear (margin again)

Posted by popo92 > 2019-11-07 12:50 | Report Abuse

If you are really scare of getting margin call, you may wait until your origin portfolio is profiting. Let said your existing portfolio raise 30%, you buy extra using margin base on this 30%. By protecting your capital in many ways, managing your portfolio well, cutting loss on shares that bought using margin can minimize your fear on getting margin call. People I have seen struggling with using margin usually lost money in share investing without using leverage too. Over optimistic sailang and go beyond own financial capability is the real problem kc had illustrated, leverage itself is never the problem don’t you agree?

Posted by Choivo Capital > 2019-11-07 13:32 | Report Abuse

Icon, i think you're overpaying for your margin.

Mine is only 4.8% interest.

Posted by Choivo Capital > 2019-11-07 13:39 | Report Abuse

Having said that, there are three ways for a smart guy to screw up his life.

1) Ladies
2) Leverage
3) Liquor

I keep margin mainly for the optionality, and keep it way below 30% of portfolio most of the time. Its currently like 3-4% only. Its only for me to leverage up in downturns or interesting opportunities, with salary going in next month to pay it off.

Posted by rojakmee > 2019-11-07 13:46 | Report Abuse

Mine is 4.5% with Maybank

Posted by Choivo Capital > 2019-11-07 13:49 | Report Abuse

same, you need to get the Maybank one, not the Maybank IB one.

but can't buy structured warrants lah

Posted by Gem Wong > 2019-11-07 13:53 | Report Abuse

provided you don't get into margin call and need extra money to put in loh....

Posted by Connie555 > 2019-11-07 16:37 | Report Abuse

This Choivo...smh...wonder how is his portfolio doing while at here lecturing other ppl...so as this Ricky Mudafucker...go and become University professor

Posted by Connie555 > 2019-11-07 16:58 | Report Abuse

both choivo and ricky full of warrren buffet shit, but cant perform...crazy

Posted by Connie555 > 2019-11-07 17:00 | Report Abuse

ricky say tguan how la how la...ended up tguan moved today....choivo say mbmr hw la hw la i can find 10 co selling cheaper than mbmr la blablabla...yet mbmr share price been sustaines at above RM4 for so long....if you guys really wanna show off hw knowledgable u are...go to the uni and become lecturer.

Posted by Connie555 > 2019-11-07 17:03 | Report Abuse

so as this kc....the more he use jaks as scenario the more i feel like puking....jaks already come bck frm 0.40 last time keep talk bull shit cashflow this that....nw that it bck to 1.1 he come out advice ppl this that...once i see...ah diu jaks again....yau hai this kcchong....wahlan.....instant turn off my cpu...u knw why? i duwan sit my electric bill on this bull shit

Posted by paperplane > 2019-11-07 17:03 | Report Abuse

haha. good discussion around here as all sifu gather here. good discussion.
Well, my advise still use margin wisely. its not that bad, else in offshore mkt nowadays, ppl wont be launching margin x2, x3 kinda unit trust funds.

You know how unit trusts evolved nowadays? there was unit trust use x2,x3 leverage to get extra income. as overall unit trust price is stable by investing in broad market overall, they add in margin to make it looks attractive, with traditional unit trust stable, its kinda a good strategy to look at investment. And I think it could be a trend for future.

Posted by paperplane > 2019-11-07 17:06 | Report Abuse

the margin charges actually depends on your size, and perhaps how u negotiate with respective bankers etc. sometimes i think the head or SVP could have some privilege to give certain clients cheaper rates.

and for dutch lady kind of cases, if you have enough power to hold( use lower margin), actually in longrun you are still a great winner.

Posted by paperplane > 2019-11-07 17:09 | Report Abuse

next yr GOLD would be a good thing to look at. and IM using some MARGIN x30.....though small, still if Gold hit 2000, my return would be near 1000%. is the risk worth taking, i think so. Thts how you use margin

Posted by paperplane > 2019-11-07 17:10 | Report Abuse

Some pro traders in HK use margin x50, YTD they earned 2 Ferraris....is ferrari a risk you can take? Stop loss is always the disciplines to have for traders and investors.

Posted by Ricky Yeo > 2019-11-07 18:06 | Report Abuse

make my day -> ricky say tguan how la how la...ended up tguan moved today

Please prepare me a report of 'how tguan move everyday' thank you

Posted by Connie555 > 2019-11-07 18:48 | Report Abuse

ha...ha...ha...

ve...ry...funny...

reminds me bck in the days those nerds that study day and night...

Posted by Ricky Yeo > 2019-11-07 19:05 | Report Abuse

I'm glad you enjoy the joke. Don't be so serious, no one gets out alive.

Posted by ChoCho > 2019-11-07 21:35 | Report Abuse

Share margin financing is very cheap. Pledged FD can get interest income around 3.8%p.a. Brokerage charge interest 4.5%p.a Simple net effect is 0.7%p.a chargeable upon drawdown only. Effective interest will abit higher because of the leverage mechanism. Find 1Malaysia also cannot find cheap financing 0.7%p.a. I am using Maybank. Brokerage commission is abit higher la...at least rm30 or so. But its ok la. Profit 1 time 4-5 digit. Let brokerage earn abit lah. We must be thankful to them for providing such facilities.

Posted by kcchongnz > 2019-11-07 21:50 | Report Abuse

Posted by Connie555 > Nov 7, 2019 5:03 PM | Report Abuse
so as this kc....the more he use jaks as scenario the more i feel like puking....jaks already come bck frm 0.40 last time keep talk bull shit cashflow this that....nw that it bck to 1.1 he come out advice ppl this that...once i see...ah diu jaks again....yau hai this kcchong....wahlan.....instant turn off my cpu...u knw why? i duwan sit my electric bill on this bull shit

After reading other article boasting and propagating margin finance, I wrote this article to provide an opposite view, in fact on both advantages and disadvantages of SMF for readers who are interested to read and perhaps learn something.

Seriously I did not expect anyone to become vulgar and started to personally attack others. I wish the society here is more civilized than that. Most of us were educated to be as such. Anyway, can't expect everyone to be the same.

But serious, if you start to puke seeing my name in the article, just get away from it and don't read. Don't have to get upset. Life is short.

Posted by ChoCho > 2019-11-07 22:16 | Report Abuse

RE: kcchongnz

Think about the 10 or more persons who are giving positive feedback on your article and forget that 1 person who is criticizing you. :)

Posted by kcchongnz > 2019-11-08 00:21 | Report Abuse

Posted by ChoCho > Nov 7, 2019 10:16 PM | Report Abuse
RE: kcchongnz
Think about the 10 or more persons who are giving positive feedback on your article and forget that 1 person who is criticizing you. :)


You are one of the 10. Thank you.

It is ok for me to receive negative feedback, or opposing views, or criticisms. There are indeed more opposing views than those agreeing with me in this issue of SNF. I have no problem that, as everybody is different.

But some comments involving personal attack, and it is always involve the same people is way overboard.

I guess can't expect there is no weird people around. That is ok with me too.

Posted by kcchongnz > 2019-11-08 00:48 | Report Abuse

I am often very perplexed by this statement and always want to make a fair comment,

"Our famous chartist and fund manager also sold all his and his clients’ shares at about Rm 1.50 so that he can buy back at cheaper prices. In fact, he has circulated his sell recommendation to all his clients because he believes the right issues will dampen the price. Obviously, he is also wrong. Unfortunately, many shareholders have been misled and they sold their holdings too early."

Why you have to do that in all your articles on Dayang? Why you always hit on this "famous chartist and fund manager" every time you write Dayang?

You know "Our famous chartist and fund manager" sold all his Dayang 3 months ago at RM1.50 and circulated the same sell recommendation, bought and replaced a buy recommendation on Jaks which was at about 75 sen then.

Dayang's share price has been lingering at about RM1.90 and only the last few minutes today rose by 7 sen, of for a gain of 40 sen, or about 26%, whereas Jaks has risen to RM1.11 today, for a gain of 36 sen during the same period, or about 52%, double the gain of Dayang.

What is wrong with selling Dayang and bought Jaks?

Who made better gain?

Why do you have to keep on repeating your criticisms?

Posted by paperplane > 2019-11-08 10:00 | Report Abuse

https://www.cnbc.com/2019/11/06/ray-dalio-says-the-economy-isnt-growing-because-the-world-is-mad.html

Posted by paperplane > 2019-11-08 10:03 | Report Abuse

its a good discussion here. NO right or wrong. still, use margin wisely.

Posted by Lukey_Greek > 2019-11-08 11:48 | Report Abuse

For margin financing, you can also pledged your asset play/ long term shares as collateral for additional financing, eg MAA or Kbunai, for your other short term high profit growth stocks.

You don’t need to dispose your current shares. Margin financing now is in a way ‘monetise’ your asset that you intend to hold long term.

Posted by rojakmee > 2019-11-08 22:13 | Report Abuse

you must be good in selecting stock to use SFM, check my tread I have been holding uptrending Naim(70 cents) MBMR (2.80), UWC 1.95, MI(1.95),ROHAS(0.58),lately all during the last 3 month (only one stock then jump to the next one)

SFM increase profit... its all about probability sometimes you lose but not much but the gain are much higher with higher probability.

Posted by RJ87 > 2019-11-11 19:21 | Report Abuse

Good simple explanation. Summary is if you find that you behave like Jesse, better start learning from Ben.

i would love to listen to Icon8888 method of balancing his portfolio.

Posted by 3iii > 2019-11-11 19:50 |

Post removed.Why?

Posted by stockraider > 2020-02-28 23:01 |

Post removed.Why?