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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: geoffrey Wren who wrote (44314)	9/12/2011 2:37:19 AM
From: Paul Senior	Read Replies (1) \| Respond to of 78752

"Margin rates are so high relatively for your average investor" Not sure what "average" investor means in terms of number of trades made per year or portfolio size ($). I find margin rates to be very low both absolutely and relatively. Just as a reference, I checked broker call rates on the internet. I see 2% (I'm assuming that's now the correct current number). Earlier this year, I got advert flyers from Muriel Siebert advertising their margin rates. Going to their website now, they now say: Debit balance: $15-20K: margin rate is 1.25% above broker call rate, i.e. that'd be 3.25% Debit balance: $20-25K: margin rate is 1% above broker call rate, i.e. 3% Debit balance: >$25k: margin rate is .75% above broker call rate, i.e 2.75% I believe though that an active trader with a larger debit balance could get margin rates even lower than 3%. And at every discount brokerage firm. My point though is that if you have $100K or so in a taxable account and are serious about "borrowing 20% of my portfolio at 3%", there are brokerage firms out there that will meet your requirement of margin rate no higher than 3%. (Aside: Of course margin rates fluctuate with fluctuations in call rates and with particular stocks held (i.e. some stocks aren't marginable or become less marginable). However at this time, with the Fed saying interest rates will be held down through 2012, I would expect broker call rate to remain about at current level too.)