Wednesday, May 31, 2017

Equity Management #14 : Starting positions of my leveraged account.

This is going to be a short post.

Following up on my previous post, I have managed to set up a margin trading account with Maybank Kim Eng and used $10,000 from May's dividends pay-out to get started on a portfolio with leveraged yield.

I chose four starting positions which has the following criteria - Must yield at least 7% and has to contain stocks which I do not currently own in my main portfolio. With the exception of Manulife, the financial costs of the leverage is about 2.88% with Manulife going at 3.5%.

[ I really hope no one tries to replicate my four stock choices, for one thing, they do not exist in my main portfolio and are chosen to diversify my holdings further.  This blog does not make stock recommendations or give financial advice. ]

My "suicide squad" of four stocks are : Frasers L&I, Manulife REIT, EC World REIT and Far East Hospitality Trust.

For now I'm only applying 100% leverage so I should end up holding around $20,000 in stocks. In three months, I would try to top up my account and try to maintain it at 200% margin so that I will not end up with a nasty margin call when markets turn south. If everything works out, I should be looking at a portfolio which gives me about 10% yield on my $10,000 "tuition fee".

That's if it does not die a horrible death.

( You'll never know whether Trump will end up getting impeached or if UK decides to vote Labour. )


Ben said...

Hi Chris,

I personally do not advocate such account. Tread this account with care.

All the best!


Christopher Ng Wai Chung said...

My risk is less than 1% and that's if I lose it all.

SGDividends said...

Isn't your leverage 50%?

Buy 10k you our own money, 10k borrowed?

Christopher Ng Wai Chung said...

Yup, it's 10k own money and 10k borrowed.

It should technically be 200% leverage as it is the % in my equity over % change in value of underlying stock. ( Leverage ratio )