The concept of margin lending is advantageous to the lender. He cannot lose. If the portfolio tumbles and the borrower cannot top up to meet the margin call, the shares are sold up even eating into the shares owned outright.
Margin lending is promoted as a means of magnifying returns using other peoples'money. Very atractive until there is a global financial crisis or earthquake/ tsumani. Forced selling by the margin lender has the ripple effect , panic sets in and those with long pockets buy at bargain basement prices. . Margin lending could be looked upon as a form of gambling with disastrous consequences when things go wrong as noted from postings on this CDU forum.
CDU Price at posting:
$3.09 Sentiment: LT Buy Disclosure: Held
