FormerXBC Inc XEBEQ

Put it this way.

[tamaracktop]

At 25% margin value, someone with 4000 shares could buy another 1000 shares and still have $1400 excess margin ( at $5.80 ). 
     The bank now has a $5800 loan outstanding, collateralized with $29,000 worth of Xebec shares held in an account with them. That would seem to be very favourable terms for the bank with regards to risk assessment .
     You can be quite sure the other banks will follow suit.

[ZouZS3]

So if I understand well, I would have to open a margin account, buy 1000 shares with $1,450 upfront? The bank would have an outstanding loan of $5800 (@5.80) and they would hold my existing 4000 shares in collateral. But If my shares are held in a TFSA they are not eligible for collateral right?! So how can I do this if I don't hold XBC shares in a non-reg. plan? Thanks TT for your

[tamaracktop]

Unfortunately that's not the case. You cannot use stocks held in a registered account to pledge as collateral for positions in a margin account.       To put it simply, if a stock has 25% margin value, you wold have to deposit 75% of the cost of your purchase at the very minimum, in your margin account. If you cut it too close you run the risk of a margin call.    

[ZouZS3]

Thank you so much for taking the time to explain this to me TT. I probably won't do it given how risky it could be but always nice to understand new things! I think I get it now. So there is different possibilities. 1) If you already hold a 4,000 shares in a non-reg cash account. You can buy an additional 1000 shares (20% more) and pledge 29,000 as collateral with a 5,800 outstanding loan. You

[tamaracktop]

Pm me and I'll send you my email so I can walk you through it without tying up the board.

[tamaracktop]

One last thing about margin. I'm not advocating it, as it's not suitable for everybody. The fact remains that some here might not fully understand exactly how it works.    Margin debt is not exactly the same as a loan. You don't have to make payments per se. Every month the interest is added to the debit in your account. Margin interest at the Royal Bank is now 4% I believe

[Newtrader1982]

even if you theoretically never had to pay due to increase in share price you are still being charged the interest so there is a cost. Also margin calls can force you into a situation where you have to sell at a loss if you don't have extra cash to back up the margin in the event the stock price goes down. Be careful when using margin you can find yourself in a sticky situation really quickly

[tamaracktop]

I believe I pointed that out quite clearly.

[tamaracktop]

Thats a revelation. There's a cost to borrowing money? When did that happen? That changes everything.

[Newtrader1982]

It just seemed like the way you were explaining it was like it was free due to a rising stock price and a tax write off. Just wanted to drive home the ugly side of margin because unless you have extra money to back it up or a line of credit or something else to back it up it can get ugly really fast. I should know I went through it and it scared me out of wanting to use margin again. Sure it's

[tamaracktop]

When it involves 2% -3% after tax to own shares in Xebec, that's pretty much as free as anything you'll ever buy in your lifetime. I'm fairly confident of that, because it's very likely true. That's what I think. Let me know. Please. Whisper in my ear when I'm on my deathbed, if I was right. I'm sure I'll die with a smile on my face.

[tamaracktop]

I'm hoping as many people as possible listen to me. It will be my legacy. What other motive could I possibly have. I have less than 3000 shares people have said they bought for me. I have never personally met any of them. I don't know if they are sincere, but I recently asked GGreen if he could sell 100 shares he said he had bought me, and send the profit. He did it that very day. $200 in