The five tenets of Leverage in Portfolio Management
Leverage, an emotional word in finance. Many company bankruptcies have originated from high leverage. What a few informed managers have discovered
that the other extreme has been supercharged profits. Most situations offer a pro and con.
Advanced Portfolio management means "experienced" and "few mistakes", with high leverage requires an immense concentration and attention to detail,
low to zero mistakes in analysis, planning and execution. Margin has been offered in the terms of calls & puts to the everyday investors,
Similar to race car driving, the faster the car the harder it is to drive. Professionals only drive fast cars.
In this Series we offer a detailed while concise analysis at the 5 ingredients to successful use of Leverage.
Some are Multipliers of risk, while others are dividers.
Drawdown - Risk received when a position becomes negative.
Timing - Correct time to enter the position to reduce risk.
Portfolio - Different stock positions that form a portfolio
Leverage - How much to borrow and its risk to the portfolio
Interest - current margin Interest rate and the comparison of different brokers.
Conclusion - How to put together all five ingredients in Portfolio Management to supercharge profits