Hi, Bernie,
You offer very good advice. For most people, and in most circumstances, I completely agree with you: margin is something best taken in moderation, or not at all. Selling at the infamous "bottom" is an experience every investor, alas, has had, and not just once. And, I can immagine (although, mercifully, I do not know this from personal experience,) that it is even more painful when the sale is forced by a margin call, rather than voluntary. But, as a long-time blackjack card counter, I am well aquainted with "normal fluctuation." I have gotten quite used to the variance inherrent in advantage blackjack play, and, as a consequence, have learned to tolerate a high level of variance in the stock market, as well.
It is my practice to take a relatively small number of rather large positions (both long and short) in situations in which I have an extremely high degree of confidence. I have been burned badly, once or twice, but it has been a highly successful strategy for me, overall. Currently, the largest position in my portfolio is long Ligand warrants.
The usual warning, in tales like this, is "....Don't try this at home...." ;-) Indeed, if I have taken the calculated risk of allowing myself to over-leverage my positions, it definitely wasn't a decision I made lightly. I am still far from *real* trouble (I am agressive, but not completely reckless. <g>) If push comes to shove (meaning, a margin call,) I haven't left myself without a couple of cards to play.
Now, having made the obligatory disclaimer, I can tell you what I really think <g>: I sincerely believe that Ligand currently represents a truly fantastic buying opportunity. If I am proven wrong, it will be a very expensive mistake. I can live with that possibility.
Good luck,
RB |
