Cash deposit or selling stocks to meet margin? (humming)
Feelings. Nothing more than feelings.
Trying to forget my...feelings of...loss.
Just when I thought I was numb. The feelings are still there. Raw and real as ever when I received a call from an unrecognizable number. "Good morning, Ms. Wilkes. This is a courtesy call from TD Bank. You have until 2 pm today to meet your margin." "I'm in the middle of something very important. Can I do it before the markets close?" "No. The most I can do is 3 pm."
I had a few hours to think about what I should do. Down another 10% today on these oil stocks, for a total of 35%. I still have enough cash to cover this margin, but at this rate of decline, it will soon be depleted. Then I will have no choice but to sell my shares. I am still being offered all kinds of loans and LOCs, but with the rates rising at this pace, no thanks.
I have exited oil twice because there was so much fear lingering on the back of my consciousness. But then, me being me, I could hardly sit still...
I'm going back and re-evaluate all the reasons I decided to go all in (and more) on oil and these reasons are still valid. The fundamentals are still strong; the companies' FCF and valuations are projected on the price of oil being around $60; Mr. Buffet just invested a prodigious sum of money into these oil companies; Dan Payne did not rise to #1 out of 7,900 analysts by "throwing darts"; supply remains tight; oil is crucial to survival and prosperity of our human species etc.
But then the headwinds...I can't shake them off and pretend that they don't exists.
With almost 40% of our capital going into real estate investments, these rate hikes will cause a world of pain to both the homeowners and our economy. It's not the same when I invested. A big detached in Toronto could have been had for 500k, rate fixed at 5.75 and cash flow positive from the get-go. The recent buyers paid a lofty valuation for their house, chose variable rate because they thought it'd stay at that level forever. (I've talked to some and they refuse to believe that the central banks will increase rates to 5%).) They then took out HELOCs as soon as the market went up to invest in equities. Now with rates rising, they are quickly approaching the trigger rate and payments will increase quickly to cover the interest payments. This means more selling off of equities. There won't be much interest in blue chip dividend stocks when they only pay 4% and the interest on these HELOCs are a few percentage higher. The exorbitant costs of living will mean less money to invest.
If you invest on margin, what are you planning to do in this environment?