Richardcyoung.com

The Online Home of Author and Investor, Dick Young

Buying on Margin

By

Margin calls can ruin a portfolio when the bills come due. This from WSJ Wealth Advisor:

Loans backed by investment portfolios have become a booming business for Wall Street brokerages. Now the bill is coming due–for both the banks and their clients. Some lenders, including Bank of America Corp., are issuing margin calls to clients after the global market drubbing of the past week, forcing investors to choose between either putting up more money or selling some of the securities underlying the loans, writes Wealth Adviser at WSJ.com. Banks, meanwhile, are likely to take a hit to a key profit source if investors pull back from these loans as many expect. “Your largest wealth creator for the top end has been inflation in financial assets. You’re now seeing wealth destruction,” says Charles Peabody, a bank analyst at Portales Partners LLC. Even including Wednesday’s stock-market rally, the Standard & Poor’s 500 Index is down 5.8% in the year to date.

The following two tabs change content below.

E.J. Smith - Your Survival Guy

Preparing your investments and family for when disaster strikes.
E.J. Smith is the Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH, where he completed course-work in Practical and Defensive Handgun, Conceal Carry Pistol, Shotguns, Precision Scope Rifle and Kidnapping Prevention. E.J. plays a Yamaha Recording Custom drum set with Zilldjian cymbals. His first drum set was a 5-piece Slingerland with Zilldjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@youngresearch.com. Sign up here to receive all the best content from Richardcyoung.com each week.