BobsUrUncle
331 posts

BobsUrUncle
@BobbyUndrground
Here for the money

@BowTiedBull Curious if you figured out the underlying reason why generally? Happened to me too Looking back it was my 1) concentration risk and 2) risk mgmt Needed to “diversify” my biz risk But why specifically at point of euphoria?





JUST IN: US national debt surpasses $39,000,000,000,000.00




I’ve touched on this before, but I’m really shocked that even very well off, business savvy individuals have no idea about margin loans / portfolio loans. I have a friend with $5,000,000 in his stock portfolio. He was blown away when I told him he could use some of that money to invest in a business he is currently scaling, without selling his stock. I don't know why brokerages don't promote this stuff heavy for everyone with a portfolio to take advantage of. It’s rather simple. (Not financial advice.) His brokerage (Schwab, Interactive Brokers, Robinhood, etc.) will allow him to pull out as a loan up to 50% of what he has in there, and he pays a small interest rate on that loan. The stocks stay there, hopefully appreciating in value and he gets wired the loan amount. Meaning my friend can pull out $2,500,000 and pay 5% on that loan and use that $2,500,000 to do anything he wants with it. He can use it for something fun, or he can use it to make a larger return than the 5% and essentially arbitrage that rate. What I mean by that is... he takes a loan to himself at 5% and puts it in a deal that makes 10%… and like magic he just made 5% or $125,000. This is simple math as to not go over anyones head. Now, I would never recommend pulling out the full 50% because there are certain risks with it, like getting margin called (which is when your portfolio drops enough that the brokerage calls in the loan). But at 25% margin, you are much safer. Again (Not financial advice.) PS this also works if you have $10k in an account and need to pull out $2k to cover something. Works with $20k $100k, $100,000,000 ... It can be done on a small or giant scale.












