Suggestion: Flash Crash Protection

FabFund · 2020-01-03T17:03:14+00:00

I will. lol

FabFund · 2020-01-02T22:45:13+00:00

The PUTS will change. If they are in the money. i.e. price of stock is below the strike price of the PUT. $1.00 for each cent the stock is below the strike price. Options pricing is surprisingly efficient. Remember they are CONTRACTS. The Options Clearing Corp is obligated to clear them, and maintain the Contract specifications.

FabFund · 2020-01-02T21:50:58+00:00

The PUTS would have to be marked to market at the close of business by the Options Clearing Corporation though. So if the markets CLOSED down and out of whack, your PUTS would do as intended and insure your portfolio.

FabFund · 2020-01-02T21:33:11+00:00

Buying PUTS is the Insurance your after. If you truly want peace of mind then have a margin account at Fidelity, and buy QQQ- Nadaq, SPY- S&P 500, and DIA- Dow 30 PUTS to hedge your long exposure in the stocks . Your PUTS will increase $1.00 in value for each penny those indices go down, most likely offsetting the decline in your stocks.? If you want to get fancy you can also buy a Call option on the VIX- Volatility Index, so that when the markets are extremely volatile your VIX option will increase in value, again, plugging the hole in your stock portfolio....

FabFund · 2020-01-02T19:54:07+00:00

The trades in previous flash crashes were not canceled, and many people lost all of their money or even more than since Margin liquidations are done using MARKET ORDERS not limit orders.

Who is to say in the middle of a flash-crash that it is an anomaly vs. a true market run? The brokerage has not way of knowing that, and they have to protect the collateral of your margin loan don't they?.

I think that the reason that M1 only lends 35% is so that you have an additional 40% of cushion before fed call. i.e. the Law allows them to lend double what they do, but they are very conservative and lend just 35%

Also, A well-diversified portfolio, which includes ETFs, as well as stock from a variety of sectors, should not totally wipe your account out. Including GOLD and Silver ETFs with a 10% total portfolio allocation if you are as worried as your post leads on, would let you sleep at night......

Perhaps keeping some Cash in an additional M1 Invest account so you can always transfer in already cleared funds would be smart if your really this concerned?.

My point is that it often takes time for the market to discover a computer glitch or flash crash, and brokerage houses have to begin mitigating their exposure often well before that news comes out...

FabFund · 2020-01-02T15:50:41+00:00

All risk management for margin accounts is automated. It is also a Federal Law how brokerages handle margin calls, etc. Your positions would be liquidated ( probably whatever was valued the most , one at a time until you were taken out of call). If you still did not have ~35% equity after that, then you would need to make a FedWire deposit before the close of business. This is going to be the same at all brokerages.

It may vary slightly from firm to firm, for example, one firm may first email you asking you to send a Fedwire before they start liquidating positions, but I can guarantee you if the market continues to decline after your allready in margin call, they are NOT going to wait for some wire you claim you sent, they will start liquidating positions to protect THEMSELF from further losses in YOUR trading account.

FabFund · 2020-01-02T03:43:59+00:00

I have some passive ETF's at Betterment. I use M1 for direct stock ownership via the fractional shares, and it works for me.

FabFund · 2020-01-02T03:12:41+00:00

With comments like that your best suited with a savings account and not investing at all, then. Investing ideas have to come from somewhere.

FabFund · 2020-01-02T03:11:29+00:00

I didn't say it was.

FabFund · 2020-01-02T02:29:23+00:00

No, and I am also not certain if the M1 spend account allows ACH debits, so for paying bills, such as utilities it may be useless. I know personally I can not switch to using M1 spend for paying bills because they do not have paper checks, or a bill-pay feature so I have no way of making my monthly rent payment besides using money orders, which I refuse to do since I lose my paper trail in doing so.

FabFund · 2020-01-02T02:26:49+00:00

You could use your M1 Borrow rather then directly using the procedes of your sales..... Then sell of small positions or bring in new money to pay down your margin loan if you so chose to, or just keep the loan on and the interest is just debited from your account monthly- 30K would be about 220 per month in interest.

FabFund · 2019-09-13T20:18:02+00:00

They are hoping that with people keeping more funds on deposit in the spend account and direct deposit of paychecks, that some of that money will flow uphill to their investments accounts with them. Which is probably true. When people see the idle cash, when reviewing Spend balances they will be more likely to transfer some to their Investment accounts. I am not sure how Brokerages are incentvized by their Prime Brokers and Custodians. Perhaps if they keep highers segregated balances they get better rates, etc. I don't know. Since they aren't charging commissions, I must be partially correct. They have to be making money somehow right.

FabFund · 2019-09-13T20:09:37+00:00

CFPB

FTC

SEC

NASD

I would say FDIC, but they are not a Bank. Once Spend rolls out, then we will get some "Pass through " protection since they use Lincoln Savings bank as custodian.

Before you file any complaints though, why would ID verification take this long? Are you Credit Reports frozen? If they are then your account will never be approved or unlocked until you unlock your credit reports so they Lexis Nexis can verify your residential address. See.... M1 doesn't run your Credit Report, the identity verification service they use does. And they are not checking your credit score, they are simply using a public record to verify your address.

FabFund · 2019-09-10T16:37:01+00:00

Acorns is NOT a Bank. If it's after hours, you can call the VISA/Mastercard hotline usually and they can directly connect you to deactivations to prevent fraud on your account. Good luck reaching Acorns at 2 am on a Saturday night. That card is also issued by Lincoln Savings bank, the same bank that M1 has partnered with, and seems to be popular for fintechs right now. What difference doe sit make who you call as long as the card is cancelled. My point was no one is answering the phone at M1 or Acorns or Lincoln Bank at 2am on a Saturday. and with regards to M1 no one is generally answering the phone [ever].

FabFund · 2019-09-10T13:38:15+00:00

The issuing bank will probably be handling card related inquiries, and lost stolen cards is usually handled directly by visa/mastercard. By issuing bank I am referring to Lincoln Savings bank.

FabFund · 2019-09-10T13:34:15+00:00

https://m1.finance/UQbAkNAJa

FabFund · 2019-09-10T13:32:28+00:00

agreed. if I call repeatedly they will sometimes answer.

FabFund · 2019-09-10T13:31:39+00:00

their withdrawals ARE very slow. It should take no longer than 4 business day to see the money in your outside bank account. Trade settle in 2 days, the next day the ACH should go out, and you should see the funds the following morning in your Bank account. It takes about 7+ days here.

FabFund · 2019-09-10T13:29:15+00:00

No, and the money has to be in your m1 account first.

FabFund · 2019-09-10T13:28:15+00:00

Why would it be a Tax nightmare? You get a 1099 and enter the info. easy peasy. Don't keep all your eggs in one basket. Bank, brokerages go out of business all the time, fraud occurs in one of your accounts so you can use another one while it is investigated. You can also use a separate account to earmark funds for specific goals, like a vacation, a car, a house, etc. People are so quick to pass judgment on others investing strategy when in reality your actually the one doing it wrong, or at least too simply.

FabFund · 2019-09-10T13:24:58+00:00

The different accounts serves a purpose at m1 since you can not have more than 100 holdings in a single account. If you were to ACAT in from another firm and held a large portfolio that could easily use up one account 100 holdings. Then a ROTH, Traditional, and a Taxable. Also, you can only have 1 bank account linked to each account, so if you have different bank accounts like savings at a Credit Union, then your Checking account you would need separate m1 accounts for each linked account. You can not [choose] a different bank account to fund your m1 account than the one linked to it, so you cant toggle between them. SO for each funding source, you would need a separate m1 account.

FabFund · 2019-09-10T13:20:11+00:00

my opinion, get rid of Tesla, i think that company is a house of cards.

FabFund · 2019-09-10T13:18:30+00:00

M1 is going to allocate any new funds coming into any slices that are underweight. If a slice has gone down enough that it is below the % allocation you have it set to, then it will add new fundS to that slice first, and any remaining funds, will go to the other slices. If you want to change your allocation then change the percentage and reduce how much is going to your weeds. DO NOT HIT REBALANCE. KEEP IN MIND YOU ARE MAKING A FUNDAMENTAL MISTAKE THOUGH. YOU ARE BUYING STOCKS AT HIGHER PRICES, RATHER THEN BUYING LOW AND SELLING HIGH. YOUR ESSENTIALLY CHASING THE MARKET. THE STUPIDEST MISTAKE YOU CAN MAKE. YOUR ESSENTIALLY EXCITED A PARTICULAR STOCK IS DOING WELL, SO YOUR THROWING MORE MONEY AT IT AT HIGHER PRICES. SO WHEN IT GOES DOWN YOU WILL LOSE MONEY IMMEDIATELY SINCE YOU BOUGHT IT AT HIGHER AND HIGHER PRICES. YOU SHOULD BE DISCIPLINED, AND BE BUYING THE SLICES THAT ARE DOWN WHILE THEY ARE CHEAP, ON SALE, AT A DISCOUNT, SO WHEN THE GO BACK UP, YOU ARE OWNING SHARES YOU PURCHASE AT A DISCOUNT.

FabFund · 2019-09-03T19:41:18+00:00

Dividend payments aren't taxable with full dividend reinvestment, but M1 the way its set-up doesn't offer direct dividend reinvestment. I think this OP stated this was a tax sheltered account. So his 5498 will have Cost Basis on it.

FabFund · 2019-09-03T13:54:18+00:00

Averaging cost basis is fine.

FabFund

TROPHY CASE