Monday, October 25, 2021 -- $97,745.62 (+$729.94, +0.75%)

 

Monday, October 25, 2021 -- $97,745.62 (+$729.94, +0.75%)

This weekend I signed up for Robinhood Gold.  This is a $5/month option that allows me to use margin (essentially borrow money to invest).  This is a particularly risky strategy because if the market turns against you and you have invested on margin, losses can add up really quickly.  Se below for more detail on this.

This weekend I picked up 0.90 Bitcoin at an average price of $61,237.48.  This was helpful to offset my CCL position which is continuing to crash--this time spurred on by a downgrade from Citi analyst James Ainley who lowered his price target for CCL from $34.00 to $24.50.

Just imagine you had a $10,000 portfolio and all of it was invested in Snapchat (SNAP).  If SNAP were to go down 25%, like it did on Friday, your portfolio would be worth about $7,500.  If SNAP were to go down 50%, your portfolio would be worth about $5,000.  Now, imagine if you had purchased an additional $8,000 on margin--meaning you borrowed $8,000 and used it to purchase SNAP.  If SNAP were to go down 25%, your losses would be $4,500 and your account value would drop to $5,500.  If SNAP were to drop 50%, your losses would be $9,000 and your account value would be about $1,000.  The second scenario is not particularly likely to happen because as your account value drops, the amount you can borrow will correspondingly drop and you would receive a "margin call" in which you are asked to either deposit additional money into your account or to sell shares.  The somewhat sneakily bad aspect to this is that typically you receive margin calls when securities are at low valuations and you are forced to sell them at these low valuations which are typically lower than you purchased them.  For anyone who understands the mantra, "buy low, sell high" you know that "buy low, sell lower" is not a recipe for success.

However, since this is a go-for-broke portfolio, I'll take on the added risk and hope for the best.

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