RE:RE:RE:RE:RE:RE:Very interesting note from my BrokerageKadiddelhopper wrote: HHmmm..., have a Cash/Margin account, but do not use the margin ... I just set a Sell price on my stock to hold it at bay from the Shorter, but don;t really know if that actually is effective.. Try to set it at a reasonable outside level but not at crazy outlandish price. as someo0ne else suggested a few posts preious.
Don't misinterpret my point, but your comment raises a question.
I've seen many people get themselves into very serious trouble by over-extending themselves using margin, but used judiciously, margin is a very viable tool.
Exro isn't yet marginable to any great extent, some firms might give it 25% margin value over $2.00, but if you have a diversified portfolio it often makes sense to consider the numbers.
Margin intetrest is tax deductible, so I'll make some wildly conservative assumptions to make a point.
Assume you're in a 30% marginal tax bracket ,and assume you pay 10% margin interest.
If you were to buy 2000 shares of Exro at $2.65 you would pay $530 in tax-deductible carrying charges over one year.
After taxes, you're out of pocket $371 in interest charges.
If you were to sell your shares in one year at $2.87, you'd report a tax-gain of $440, half of which would be taxable.
You'd pay $66 in taxes on your $440 capital gain. ( $440 x 50% x 30% )
Your net after-tax gain is $374.
Exro would only have to gain 22 cents, or 8.3%, in the next year to offset your carrying charges.
If you aren't confident it will do that, why bother owning it?
I'm in no way advocating the use of margin, and this is a very simplified example, and I don't want to set off a firestorm of debate.
I'm just saying.