If you feel this is time to go on margin after 6 consecutive months and 3 consecutive weeks of QE-propelled gains without any meaningful pullback or correction, just when the Fed is beginning to lay the grounds for a “soft” exit out of QE and on an index options expiration week prior to an even more shaky VIX expiration week, I think you are becoming too complacent and long-biased opinioned. You probably didn’t prepare for a plan B just in case the market decides to sell-off suddenly due to a logical change in order flow at such a mature stage of a bull advance.

We don’t know when the sell-off will come but it can happen at any moment from now on and we have to be ready for it. It might even be more nasty than usual precisely because of the current historical high levels of margin debt only seen just before the 2000 and 2007 crashes. Margin calls can create a panicky snowball effect; professionals know it and will seek opportunities to shake out investors exposed on margin.

Now, I admit that topping most often is a slow process and vigilant observers of the market should have second chances to exit near the temporary highs. But that will happen on very volatile and frightening moves, not an ideal time to be on margin.

Go on margin if you really believe it is the best strategy, but please take quickly your leveraged profits off the table while you have them and cut your losses as much faster as you are leveraged!
Just your old chap sentiment here.
Billy

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