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TMFDanDzombak (79.11)

Signs of a Bubble: 4x Leverage Brokerage Account Ads

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December 15, 2009 – Comments (4) | RELATED TICKERS: IBKR

Saw this in the Wall Street Journal today and it blew my mind!

http://bit.ly/5oLW42

The ad is from Interactive Brokers (Nasdaq: IBKR).

Shows how you can get 20% total returns from 4x leverage and five 5% dividend paying stocks. My absolute favorite line is:

IB will lend me x4 at 1.25% (with Portfolio Margin I can leverage up to 6.6 to 1, but I will leave a cushion)

The two things that have led the most men (and women) astray are debt and alchohol. I will leave the 4x leverage to someone braver (read: less brains)

Dan Dzombak

 

4 Comments – Post Your Own

#1) On December 15, 2009 at 4:13 PM, chk999 (99.97) wrote:

The root of all financial catastrophes is debt.

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#2) On December 15, 2009 at 7:43 PM, ChrisGraley (29.69) wrote:

Dan, you forgot to put women into the unholy trinity.

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#3) On December 15, 2009 at 11:16 PM, nuf2bdangrus (< 20) wrote:

You've got to be kidding me.  OH, well, think of them as options and appropriate risk capital accordingly

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#4) On December 15, 2009 at 11:27 PM, tkell31 (33.34) wrote:

1.25% for the year?  I thought only the govt was lending money for free.

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