Free ride regulation from Scottrade?
I have receive 2 warning for the free ride, what happens if i do it the 3rd time? Will I be penalize for 90 days. Thanks.Answers: Was it lone a warning or did you in actual fact make a free ride?
Scottrade will issue the free ride requirement every time you make a buy using unsettled funds. This is a reminder to you of the regulations. As long as you are just receiving warning no further action will be taken.
If you supply the newly purchased stock, back the prior sell settles after that would be a free ride. After 2 free rides Scottrade will probably restrict your account for 90 days. If you variety another free ride after the 90 day extent, your account may be restricted for always.
There is no limit to the number of warning (reminders) you can receive. They occur every time you buy next to unsettled funds. But if you are routinely getting them you should consider applying for a margin description.
I'm guessing this is an IRA account or you'd own a margin commentary by now ...
"Free riding" is not in recent times a Scottrade thing it is an SEC article and the broker can get fined if they hold excessive amounts of investors breaking the rule.
You don't want to get your article frozen, so I'd suggest just not trading til funds attain settled. Calling in information can be a PITA...
You could switch brokers to clear your history but doing that kind of verbs (ACAT) can take upto a month... which also sucks.
ps I don't know how Scottrade shows bread funds but Ameritrade has a terribly clear balance system, so you wouldn't be "free riding" unless you did it purposeful so ATMD might be a better broker for you. (Fidelity doesn't show unsettled cash balance in a clear posture either...)
Should i just sit on a mutual fund portfolio with a moderate risk and let the markets take their course?
Answers: I try to tell as many people as I can, get out of mutual funds unless you have really done your homework.
About 75% of all mutual funds under perform the stock market. All of them have management fees, usually between 1% and 2%, and some have sales loads.
I would move to ETF's or a DRIP Plan. In my opinion, there is not much sense in paying the high fees.
By all mean check out the mutual fund fees, as Jasper is right on the mark. Load funds are ridiculous and most no load funds are also too high.
Jasper told you to do your research, and i agree with him. There have been several articles written about the days of mutual fund investing being over, by credible Financial Newsletters like Motley Fool.
I think he clearly says there are some viable funds.
By the way, I am starting to believe Vanguard Mutual Funds have their salesmen on this forum. They are constantly pushing this family of funds.
I would opt for ETF.
I think Jasper pretty clearly indicates that some mutual funds are still worth investing in. He does not name any specific fund to avoid.
I am invested in 2 mutual funds, but they are not well known names and have great track records.
Still, there seems to be better options nowadays than mutual funds. ETF's on average have much lower management fees and DRIP Plans are about as low as anyone is going to get.
I encourage the individual investor to look at all the options and make a choice.
Vanguard funds do not need sales people. Their funds sell themselves with the ultra low costs they provide for the average investor. If you don't want to consider Vanguard then look at TRowe Price or Fidelity.
Cost are one thing that a investor can control. Sticking with low cost, no load funds is probably the best way to go.
Is it true that when two stocks are prepared to merge, it is other better to invest contained by the stock that will be
Is it true that when two stocks are prepared to merge, it is always better to invest contained by the stock that will be acquired? For example, XM and Sirius. If the merger is approved, XM stock holders will be issued Sirius stock. Will the larger gain be see owning XM or Sirius prior to the merge.Please state your profession or experience when answering.
Thanks.
Answers: The typical acquisition arbitrage strategy is to walk long on the company to be acquired (as you suggested) and to short the acquire company. Typically, shares of the acquirer sell bad on news of an achievement, and shares of the acquired company gain, consequence you would make a profit on both sides. However, contained by merger situations, people typically budge long on both companies, as both will benefit, and neither will have to overpay. I do not know much going on for the XM/Sirius merger, however, if it is an all-stock merge, then I doubt it would be substantially beneficial to hold XM over Sirius, as the strategy you speak of is more along the lines of acquisition, which are different than mergers. In mergers, two companies combine into one company, and neither usually pays a premium for the other company. In acquisitions, one company typically pays a premium to purchase another company outright. There typically is not a incredibly substantial arbitrage opportunity within mergers, as most arbitrage take place in acquisition. Just my opinion, I hope it help.
Best of luck!
Brendan Prewitt