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Margin call is not a bad thing to have


I have written and posted more article on Dayang than any other stock I know. Recently I have posted a few articles to encourage investors to use margin finance to maximize profit.  Many readers would have followed my advice to buy Dayang and made a lot more money as the share price has been going up from 90 sen to peak at Rm 2.15, an increase of Rm 1.25 or 140% in the last 4 months as shown on the chart below.     

My last article to encourage investors to use maximum margin to buy more shares might have misled a few investors. As I said before no stock can go up or drop continuously for whatever reason. After some time, its trend will change. Since Dayang has been going up higher and higher for 4 months, suddenly without any warning, it dropped 26 sen yesterday. If have been using maximum margin finance to buy Dayang in the last few months, you would have benefitted and your average cost is still lower than the current price. If you have margin call and force to sell to meet margin call, you still can make some profit.

The 3rdquarter result is better

1stquarter EPS was -0.43 sen and 2nd quarter was 5.71 sen. As you can see the daily traded volume exceeds 10 million shares because many big fund managers expect a better 3rdquarter result which will be announced before the end of November, about 1 month from now. It is foolish to sell your holdings now.      

I think I may have margin call today. Nevertheless, my advice to use margin finance to leverage your profit is still valid, provided you do not always use maximum margin finance. 

Unless you are greedy you cannot make more money. I must be greedy and willing to take risk, otherwise I could not have co- founded IJM Corporation Bhd.  

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