Hallo Jack,
Although the Vortex TurboVest Model is based on calling upon more money than the Reserve would allow at any time, TurboVest it not a Margin Trading System.
As I understand Margin Trading this is for example borrowing $ 5000 from a broker and let him buy $ 10000 worth of equity for you, and you have a Debt of $ 5000. The Broker controls the equity and can sell it anytime he wants to.
If the price drops right away the Debt-load rises with the loss on the $ 10000 worth of equity. That is dangerous. It works fine for rising prices IF one sells in time. The danger here is that as prices rise the investor is lured to borrow more money to buy more equity. . .If then the prices drop suddenly he can looses a great amount and may end up with a Debt much greater that the original $ 5000 that was borrowed. . .It is a bit like Roulette Gambling.
With TurboVest this does not happen unless the investor starts to Gamble foolishly. With TurboVest he investor starts out AIMing normally with a healthy Portfolio. . . Like you did in your example. When process go up no borrowing is done!
As the prices drop and the investor needs to “borrow” money he must never allow his Debt to a money lender. . .a Bank or a friend. . . come close to the Break-Even Point so that the Portfolio Value remains always positive. In some cases the investor has extra assets of his own and he can decide to borrow against that . . .or he can simply add money to his Reserve.
Of course, if one does this with a Deep Diver it could go wrong id one is not smart, so one should NOT do this with a Deep Diver. . . only do it with a healthy fund. Moreover I advise the investor to use the TurboVest "borrowing" only if he has sufficient assets of his own that he couls draw on later . .I advice not to borrow money from a Margin Broker.
Normally if one borrows from a normal bank and use Equity Credit they use a Safety Margin of 30 or even 30% This assures that the investor hat he gets sufficient time to see his Debt approach the Safety Margin and take appropriate measures to present a disaster or he can decide to provide more money to his Reserve to reduce the Debt.
