Use a margin loan to invest in solid companies, not the latest tech darling.
As a cushion against a sharp downswing, borrow a more reasonable 20 percent of your portfolio's value instead of maxing out to the 50 percent limit. First, you can pay cash, or you can pay some cash and some borrowed funds. Don't Let Love of a Stock Cloud JudgementIf a stock has done well for you in the past, you may feel an emotional attachment to it, which can be a dangerous thing. As all students of science know, momentum can be a hard thing to reverse. Beware of Triple Witching HourFour times a year, three speculative derivatives expire on the same Friday and the chaos of traders covering their positions can make the market crazy. Sure, once the momentum crowd has moved on, the stock may fall back some. Your brokerage firm may sell some or all of your securities without consulting you to pay off the loan it made to you.
Use a margin loan to invest in solid companies, not the latest tech darling.