Some Christmas cheer from the Guardian

Generali

kinger101 wrote: »

Quite a few people seem to miss the point that it's leveraged too. You can't pop into the bank because you want £200K to stick into the FTSE 250.

True but your broker will happily buy you one of these:

https://www.etfsecurities.com/institutional/uk/en-gb/products/product/etfs-3x-daily-long-ftse-100-uk3l-lse

which is the equivalent of buying the index on a 33% deposit if my maths hasn't failed me.

If you want more leverage than that there are plenty of people offering spread betting and futures trading on the FTSE on a 5% margin. If you are stupid enough to want to trade FX then you can do that on a 1% margin, and you can't buy a house on a 1% deposit any more, let alone with no stamp. And a broker charges a fraction of what a solicitor charges!

It's a myth that you can't buy shares with debt. In addition, don't forget that most companies run on debt so are effectively doing the leveraging for you.

Generali

chucknorris wrote: »

It would be very interesting to see what would happen to the ftse if you could. I believe that some Chinese investors do/did borrow to buy stocks, I imagine the volatility would reach new highs and lows.

Please see my reply above. It is trivially simple to buy stocks or the index on margin.

Google 'margin trading account' for more info or check the link for a pretty reputable retail broker that will let you trade on margin:

https://selftrade.co.uk/our-services/our-products/dealing-account?nst=0&gclid=Cj0KEQiAvuWyBRDO_Yzhpv_4nvEBEiQANBdXMg5JD9HoO4WJCL1RlegLKh_FCIHNsoiG9Kzfdy-00bQaAjKj8P8HAQ

You still get your dividends like a normal stock and there is no stamp duty to pay on CFDs.

caronoel

mayonnaise wrote: »

This forum often feels like groundhog day.
Graham struggling with the difference between an asset and a consumable.
It could have been posted yesterday.

Not 100% true

even brit has given up waiting for 50% off by Christmas

chucknorris

Generali wrote: »

Please see my reply above. It is trivially simple to buy stocks or the index on margin.

Google 'margin trading account' for more info or check the link for a pretty reputable retail broker that will let you trade on margin:

https://selftrade.co.uk/our-services/our-products/dealing-account?nst=0&gclid=Cj0KEQiAvuWyBRDO_Yzhpv_4nvEBEiQANBdXMg5JD9HoO4WJCL1RlegLKh_FCIHNsoiG9Kzfdy-00bQaAjKj8P8HAQ

You still get your dividends like a normal stock and there is no stamp duty to pay on CFDs.

Thanks, I didn't know that, but does leveraged investing only represent a very small part of the overall trades?

It seems a good way for me to find a way to lose everything, so I'll give it a miss, far too risky for me. The only time that I would be tempted would be when prices have collapsed in the middle of a recession, so I have missed the boat (for now) and it wouldn't be for a massive amount either.

Generali

chucknorris wrote: »

Thanks, I didn't know that, but does leveraged investing only represent a very small part of the overall trades?

It seems a good way for me to find a way to lose everything, so I'll give it a miss, far too risky for me. The only time that I would be tempted would be when prices have collapsed in the middle of a recession, so I have missed the boat (for now) and it wouldn't be for a massive amount either.

Derivatives markets are huge. In notional terms they are far larger than the GDP of the world (GP actually when talking about the world as there is no 'domestic' bit when talking about the world).

I'm not recommending these highly leveaged investments, just showing they exist really.

kinger101

Generali wrote: »

True but your broker will happily buy you one of these:

https://www.etfsecurities.com/institutional/uk/en-gb/products/product/etfs-3x-daily-long-ftse-100-uk3l-lse

which is the equivalent of buying the index on a 33% deposit if my maths hasn't failed me.

If you want more leverage than that there are plenty of people offering spread betting and futures trading on the FTSE on a 5% margin. If you are stupid enough to want to trade FX then you can do that on a 1% margin, and you can't buy a house on a 1% deposit any more, let alone with no stamp. And a broker charges a fraction of what a solicitor charges!

It's a myth that you can't buy shares with debt. In addition, don't forget that most companies run on debt so are effectively doing the leveraging for you.

I think it's still quite different to BTL. The bank knows it has significant security on the house, as does the borrower. Having said that, FTSE100 on 33% deposit is okay if an investor is wanting to take the risk (has the money to lose).

Similarly, with companies running on debt, creditors somewhere have made a decision based on the company's financials. It's not quite the same as the bank handing someone money to "have a go" on the stockmarket. And the investor cant lose any more than they've invested with shares.

Spread betting on the other hand........

http://www.independent.co.uk/news/business/analysis-and-features/how-could-a-teacher-on-18000pa-lose-280000-spread-betting-10115157.html

Yes, that's going to end to tears for both investors and the companies offering these services. I have little sympathy for the likes of IG if they can't effect proper stops, or ascertain whether their clients are good for the money if the brown stuff hits the fan.