"Thanks for the continued great service, particularly your balanced comments during last year's correction.

"Could you clarify for me the benefits you see in buying the actual shares of selected autonomies rather than spread betting on their price movements?

Looking at McDonalds as an example, yesterday I could buy the actual shares at 96.60 at a 2.9% yield (ignoring initial commissions) or buy the Dec-12 contract at 97.22, a 0.64% premium which annualises to approx 1% p.a. So by spread betting I lose the 2.9% yield and I have additional costs of 1% but I still have 90% of the cash that I would otherwise have had to put into buying the actual shares (assuming I leave a 10% margin with the spread betting firm). I can get 4.3% in the bank for my deposits so I will get 90% of this (3.9%) if I spread bet. My returns are equal then but I won't have to pay tax on any returns from my spread bet but will be liable for capital gains if I bought the actual shares. This would indicate to me that spread betting would be more economical, even over the long run. However I note that you only ever buy the actual shares of those companies you are interested in for the long term. Can you explain your reasoning for this as I would value a more educated view of this than my own.

David Fuller's view Thanks for your kind words and a very well informed email. In terms of number crunching for cost comparison purposes, I would say that you have the "more educated view."

Over the last decade most of my spread-bets have been in precious metals, mainly silver and gold, and share indices would probably be a distant third. This has reflected my trading interests during that period and to a lesser extent dealing costs which are much wider in shares, as you know. However, I have opened spread-bets in shares on occasion, particularly after the 2008 meltdown when I leveraged up in some of my favourite long-term investments at the time.

There is one important risk with leveraged spread-betting in shares that you are probably aware of - volatility. If you are only providing initial margin deposits, and few of us wish to leave larger amounts of cash sitting idle in a spread-bet firm which pays no interest, then you do need to have a very good working agreement with that firm regarding sudden margin calls. I had this with the two firms I had been using since the 1970s, until one of them arbitrarily scrapped the agreement following a management change that I had not heard about. Consequently, one of my accounts was liquidated during a sudden sell-off last year, even though I had never failed to meet a margin call in over 35 years. I closed the account.

With the advent of HFT, now a factor in all widely traded markets, spread-bet firms are exercising their 'right' to liquidate any account where paper losses are in danger of exceeding margin funds in the account. The onus is on the customer to anticipate this and deposit additional funds in time. This is not always possible, even if you have plenty of cash which you could tap overnight. None of us have the time or inclination to hover nervously over screens all day, worrying about the next market spasm.

Therefore, if you want to spread-bet Autonomies or anything else on a medium-term basis, without using tight stops which will be triggered more often than not, you will need to deposit considerably more cash. Alternatively, you can offer proof of cash deposits, which you have probably already done, and could try visiting the management to work our a 'next day' margin call agreement to prevent having your account closed out due to a sudden increase in volatility.