Re: Buying on Margin/ Using Leverage?
[ QUOTE ]
is it worth it to use Leverage when investing for the Long term ( a year, 3 years, 5 years, etc.?) or is the commissions usually too high?
[/ QUOTE ]
The trouble both with margin and short-selling is that you not only need to be right but you need to be right right now. With margin you may be right about the price being a good value and you will be proved right in the long run. But you may never get a chance to see the long run if further declines in the price and margin calls force you out of the position. Similiarly with selling short. You might have recognized what Enron was doing and sold it short at 25. In the long run as it went to 0 you would have been proved right. But if your short at 25 was on the way up you would have seen it go to 85 first, likely washing you out of the position.
It's hard enough to be right. It's really hard to be right right away.
PairTheBoard
|