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Interactive Brokers Will Lend You 1M Euros At 1.4% To Gamble On Shares

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Just watching bloomberg and this ad has come up numerous times for Interactive Brokers, at the beginning there is a big play saying that central banks around the world are throwing out cheap money, the next minute they are offering you 1m Euros at 1.4% for every 200,000 on a margin account.

I assume they are wanting to place bets with this money on the stock market etc...

Wasn't this what completely screwed the market in 29? People taking out loans and pumping it into the stock market all on margin?

Or isn't this as insane as it sounds?

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Just watching bloomberg and this ad has come up numerous times for Interactive Brokers, at the beginning there is a big play saying that central banks around the world are throwing out cheap money, the next minute they are offering you 1m Euros at 1.4% for every 200,000 on a margin account.

I assume they are wanting to place bets with this money on the stock market etc...

I presume so, and that the money has to stay in the brokerage account else they'll have people putting down 1M Euro, taking 5m and scarpering

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No, it's more insane than it sounds.

It's true though.

Hedge Fund managers get multi-billion dollar loans at 0.5% these days. That never stopped.

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Just watching bloomberg and this ad has come up numerous times for Interactive Brokers, at the beginning there is a big play saying that central banks around the world are throwing out cheap money, the next minute they are offering you 1m Euros at 1.4% for every 200,000 on a margin account.

I assume they are wanting to place bets with this money on the stock market etc...

Wasn't this what completely screwed the market in 29? People taking out loans and pumping it into the stock market all on margin?

Or isn't this as insane as it sounds?

They have pretty solid margin management checks in place at IB. Yes you could lose everything, but it won't damage the other customers' accounts.

(Unless there is a flash crash and complete loss of liquidity of course.)

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http://market-ticker.org/akcs-www?post=168400

"Interactive Brokers will lend $1 million dollars for every $250,000 in a stock margin account."

Ok, so I take my $1.25 million and I buy EQIX yesterday before earnings @ $105, or 11,900 shares. After all, stocks only go up.

Then the stock does this:

I now have 11,900 shares @ $70, or $833,000 worth.

There's a problem. I borrowed $1m, and only had $250,000 in equity.

Unfortunately I'm now underwater by about $170,000 and my phone is ringing. It's the broker, and he wants the $170,000 - right now - by wire transfer - or he's going to liquidate me and then sue to take my house since I can't cover the margin call.

Of course I don't happen to have an extra $170,000......

This, incidentally, is not myth and it happens far too often. Two friends of mine had this exact thing happen to them during 2000 when the Tech Market cracked, and in both cases they got caught long stocks that detonated with no chance to do anything about it before they were well-into six figures underwater.

Remember the article not long ago in TIME telling "young people" to buy stocks on margin?

Yeah, well, at the time I said "Here Come The Shears", and now you know why.

Play safe folks.

Ed: Just heard the commercial again. It's $1m on $200k, so it's even worse. Not that it matters at this point; would you like to shoot yourself in the head once or twice?

The sure fire way to get rich.

Still I'm sure there will be safe guards to stop this from happening....

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http://market-ticker...www?post=168400

The sure fire way to get rich.

Still I'm sure there will be safe guards to stop this from happening....

It's actually equivalent to 80% LTV if you think about it. Pretty conservative...

And probably a good gamble when everyone says shares are going to crash rather than house prices always go up.

Not that I am saying it is a good thing, but I see nothing out of the ordinary in this considering the times we live in. Paulson can borrow $1bn at 0.5%.

Edited by _w_

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  • 246 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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