*A:M User* Roger Posted May 6, 2013 *A:M User* Share Posted May 6, 2013 So I have been looking at opening a brokerage account, and have been checking out my options. I've noticed in my research that a few places offer margin trading? I thought margin trading was one of the things that led to the stock market crash of 1929 and was either tightly regulated or outright banned at that point? I know that a lot of tihngs that they put in place to protect against another Great Depression (like the Glass-Steagall act) have been dismantled, so is this something that changed? Anyone with more knowledge of this sort of thing want to explain to me why they might want to allow trading on margin again if it was regulated/banned at one point? Perhaps I'm mistaken and this has been around for a while. I have only really started investing in the last 8 years and am basically just parking my money in index funds, not trying to time the market or get fancy tracking an extensive portfolio. Quote Link to comment Share on other sites More sharing options...
*A:M User* Roger Posted May 6, 2013 Author *A:M User* Share Posted May 6, 2013 Again, I'm not a sophisticated investor (although I'm trying to educate myself) and maybe this is something that has always been around and never went away to begin with, and I'm confused as to exactly what regulations were put in place during the Depression to prevent further crashes. Has been a while since my high school and college econ classes. Quote Link to comment Share on other sites More sharing options...
Hash Fellow robcat2075 Posted May 6, 2013 Hash Fellow Share Posted May 6, 2013 Here's a primer on it http://www.investopedia.com/university/margin/margin1.asp Historically, I think the percentage you could borrow was much higher in 1929 than it is today. The risk of losing everything in margin trading is much greater because a stock doesn't need to drop to zero, it just needs to drop enough so that what you do own isn't enough to pay the brokerage firm back for what they loaned you. I don't think the market is predictable enough to beat and I don't think anyone's research is worth much either. I recently inherited a bunch of stuff from my dad and as I've watched the various expert recommendations on them there seems to be no correlation between their "buy" and "sell" advice and what ends up happening with the stock. Right now we're in a booming market and that makes people look like geniuses who normally wouldn't look like geniuses. Quote Link to comment Share on other sites More sharing options...
*A:M User* Roger Posted May 6, 2013 Author *A:M User* Share Posted May 6, 2013 Here's a primer on it http://www.investopedia.com/university/margin/margin1.asp Historically, I think the percentage you could borrow was much higher in 1929 than it is today. The risk of losing everything in margin trading is much greater because a stock doesn't need to drop to zero, it just needs to drop enough so that what you do own isn't enough to pay the brokerage firm back for what they loaned you. I don't think the market is predictable enough to beat and I don't think anyone's research is worth much either. I recently inherited a bunch of stuff from my dad and as I've watched the various expert recommendations on them there seems to be no correlation between their "buy" and "sell" advice and what ends up happening with the stock. Right now we're in a booming market and that makes people look like geniuses who normally wouldn't look like geniuses. Yeah, I'm not nearly smart enough to think I can beat the market. My investment strategy consists of tucking away what I can in index funds that charge few or no fees, and trying to forget about it, other than checking my statements when they come in. As far as single stocks go, I try not to to invest in stuff I know nothing about. Quote Link to comment Share on other sites More sharing options...
Hash Fellow robcat2075 Posted May 6, 2013 Hash Fellow Share Posted May 6, 2013 If I were going to tell someone what advice to buy it might be to subscribe to one of the stock picker plans at MotleyFool.com which are relatively inexpensive, some of them have a good track record. But I'm not sure one of those even makes sense unless you have an extra $10,000 a year that you won't need for a long time. Their standard advice for most people is what you are already doing, an index fund. One problem I've noticed with internet brokers... I'm tempted to check my portfolio every ten minutes even though there's no chance I'm going to change anything today based on what happens. It's a time waster like Facebook but without the funny cat pictures. If it had cat pictures it would be dangerous. Quote Link to comment Share on other sites More sharing options...
Hash Fellow robcat2075 Posted May 13, 2013 Hash Fellow Share Posted May 13, 2013 I'm down $39.04 so far today but that's better than it was an hour ago. Quote Link to comment Share on other sites More sharing options...
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