freeus,
It may sound like a mantra coming from me after every earnings, but here goes:
1. Margin is dangerous. You are essentially giving up your long term rights to hang onto the equity that you have promised as collateral. In effect, you are more likely to sell when you are forced to, than when you want to.
2. Nobody can time the market. Nobody. Repeat for the third time, nobody. So, lightening up on margin in good times is a myth over the long run. If one can do that, they can successfully time the market. And, I repeat for the 4th time, nobody can.
3. Put sells backed by cash, and that is the most crucial point, backed by cash are almost similar (in fact slightly better) than going long the equity outright. But put sells not backed by cash are suicidal and are no different than an outright margined long position (I can mathematically prove this for you, if you want) which as you already know is not found money.
4. Buying and holding a diversified portfolio (of growth companies if you are so inclined, as long as they are in different industry sectors) long term w/o use of leverage continues to be the best strategy IMHO.
-BGR. |
