UnThreaded | Threaded | Whole Thread (9) | Ignore Thread Prev Thread | Prev | Next | Next Thread
Author: aleax Big gold star, 5000 posts Top Favorite Fools Global Fool Pro Community Winner Motley Fool One Everlasting Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 77712  
Subject: Re: The One Share Club Date: 2/10/2013 10:00 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 3
A side note, you can short Corp bonds on IB as well. Generally they require larger size. Issues I have looked at were 100 bond minimums (~$100k minimum) but IB is forging ahead in a lot of these areas so what is usual is quickly changing.

Apologies in advance for my cluelessness, but isn't a typical corporate bond at $10,000 par...? Haven't bought an individual corporate bond in ages (nor shorted any bonds ever -- as opposed to bond ETFs;-), so maybe everything's changed -- but, it does seem to me as if the 100-bond min translates into roughly a "cool million", not just $100k. Is that wrong...?

Now I realize "one... million... dollars" isn't really a huge amount -- http://www.youtube.com/watch?v=l91ISfcuzDw -- but, having left all the "family money" behind in my adult children's hands in the Old Country when I last moved over 8 years ago, I'm only investing what I've been saving ever since, and even with good income and a frugal lifestyle a million's still a lot for me -- couldn't conceive of plonking that much down on one bond short unless I had make-me-illegal-for-trading inside info about the issuer going bust;-)...

IB's margin call engine from what I've seen on the tape is ruthlessly aggressive. They don't give you a "call" they give you a "5% margin" warning email, and then they liquidate you on automatically if you breach 0% margin.

Yep, that's part of why I'm not with IB -- I have a day job so I can't be wired into the market all the time... I try to position myself to fear no margin call even though everything goes against me by a factor of two, but considering that in such extremes brokers (or even the SEC) could conceivably change margin requirements all of a sudden, I can have no certainty there. OH (OptionsHouse) is slightly costlier than IB (and much less flexible: no market but US ones, no futures, &c) but I do expect a normal margin call should I ever stumble into one -- a day or so to wire more cash or at least decide which positions to close. I couldn't sleep well if I was at IB and used any margin at all... and if I self-forbid from using any margin then IB's advantage is slashed down. Which is why I'm with OH and sleep just great at night;-).

I have some small reservations about the "electronification" of our exchanges and trading, but I have to say, there have been stories of short squeezes, manipulation and various scalping activities by the main traders / MM's on wall street for years before this digitalization. bid/ask spreads used to be 12.5 cents (!!!) at a minimum... do we really want to go back to that time?

I love today's tight spreads -- and don't forget the ability to trade less than a full lot at no extra cost, that's magical for the small investor who still wants plenty of diversification!-) If we have to put up high-speed trading's woes as a cost for that, I'm all for it!-)
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (9) | Ignore Thread Prev Thread | Prev | Next | Next Thread

Announcements

Related Boards
Real Estate Investing
This is a great board for Real Estate other than REITs.

Buying & Selling a Home
Get your personal advice about mortgages, agents, etc. here.
Foolanthropy 2014!
By working with young, first-time moms, Nurse-Family Partnership is able to truly change lives – for generations to come.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Post of the Day:
Macro Economics

Economic Implications of Cuba
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement