Yea i would suggest to avoid margin cuz like you said, this administration can be erratic and something could tank the market unexpectedly, then you get margin called.
You could however liquidate some of your index stocks if youre feeling the itch for individual stock investing.
It's always challenging to liquidate when in an unrealized gain position at the highest marginal tax rate. First world problems. I cant bring myself to do it, better to liquidate when I am not shoveling out 44-53% in taxes on the taxable capital gains portion.
With that said, my historical margin plays have always been on things that have a yield. Not yield chasing, but if I have to hold at-least that yield is helping offset costs of borrowing, yield being taxable, cost of borrowing being deductible. Things that are typically beat down.
For instance, last time Trump put Tariffs on building materials here in Canada, like steel, aluminum, etc. back in 2018 REITS did pretty well. Collect the monthly distribution and saw decent upside in the price. Will history repeat itself, i'd be rich if I knew.
Its likely contrarian to do such a thing, but imo can be successful if you do it off the back of events that have cause the market to overreact.
This post was edited by SBD on Feb 28 2025 10:32am