Debt and leverage are like nitro for an engine. Can make it go very fast but also blow up and/or burn.
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Have you ever heard anyone going bankrupt without having debt?
No
Debt is a good vehicle to generate higher value. But one needs to learn how to use this vehicle before driving too fast
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Does the Word „anteiligen“ change anything?
Yes, it does. I think unless your debt is lower than any taxable income generating value except stocks you are fine. You can argue that the debt is not for stocks.
Anyhow, if the total value of taxable income generating goods divided by the tax is higher than the debt divided by the interest you are fine. That is what “anteiligen” means.
And as mentioned, you hardly ever get taxed as a professional, even if you don’t adhere to all the rules. Just wait, don’t wake the sleeping dogs.
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The stupidity of this plan is assuming he can identify the bottom of a crash as it happens.
So he’ll jump in as soon as the market drops 30%, with borrowed money. How long will his nerves last when the market
- stays low for another 5 years and/or
- drops another 30%
while the loan interest starts to increase and hurt?
I suggest he first read The Great Depression: A Diary by Benjamin Roth
My expectation would be that a tax office realizes that someone takes a 100k debt and two weeks later placing that amount into the stock market.
I don’t have a private loan, but I assume you would need to declare what you need it for, no?
Yes.
There are basically two situations: you’re either too poor or to rich to do this.
And for the rare person in between: stop playing when you won the game.
It is not on topic, but I do the same. Margin loans are at the top on market highs and the margin loans are down in bear markets. Just do the opposite and you are fine. Of course you need a strict plan, I use mechanical investment strategies with strict formulas for money management that includes margin loans.
In my dividend portfolio I only use margin loans when I take out money or in a bear market (needing spending money is a bad reason to sell), up to 150% meaning a credit of 50% in addition to the value. In my momentum strategy I always use margin loans depending on the actual state of the market. At market high the loan is limited to 150%, after a loss of 50% it goes up to 300%.
Don’t do that at home!
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You’re right, and to add some colour: 30% drops don’t happen overnight, the largest single drop was in 1987 as you’ll know and it was 27%, when people are describing a market crash it’s in peoples’ minds that it happened overnight, while in reality it could take 1-3 years (!!!) to play out, all with “X of the best days of the market”, dead cat bounces, fakeout shakeouts, grinding sideways…it’s a shitshow! I spent some time going through the graphs from 2000 and 2008 to try to put myself in the shoes of someone going through it, I think it’d be super stressful at best, utter soul destruction if a loan is added on to that too.
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I was fully invested until September 1987, Orange trees and the weather in Spain saved my ass, but this is off topic.
But I was fully invested 2000, 2008 and a few more bear markets. I think I count 8 bear markets where I was fully invested in 7 of it and in the last 4 I did add on margin. 3 times I was very lucky with the timing, one time I was too early and had to suffer a bit… just to make more money after.
I always wonder what all the newbies will do when a real crash happens; Trump does not even let a bear market develop… 
I mean, if you have and maintain good liquidity, don’t lose your job and can continue investing as it goes down you can make very good returns even without margin.
Remember that dividends are not so irrelevant, and diversification is important, is my guess.
You won’t get an answer until they decide it’s the case. Remember a while ago there was one person on this forum that tried to achieve the professional trader status (to offset the losses), but so far didnt manage to get this status.
How would they be able to realize that? They don’t know at what time you take out a margin loan and they also don’t care what you do with your loan.
No, you don’t need to declare what you do with the money from a margin loan. The bank/broker providing the margin loan doesn’t care what you use it for, as long as you pay the interest and have enough collateral, they won’t bother you.
A general remark, breaking one of the rules doesn’t automatically make you a professional trader. Most of the time it is also in the tax office’s interest to not classify you as a professional, as you’ll then be able to write off your trading losses.
People here on the forum do option trading (not for hedging), take margin loans, hold securities less than 6 months and none of them has been classified professional.
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