MB -
I suspect that the FED is outsourcing margin tightening.
I got a letter from Schwab today saying in part -
"Your margin account currently holds 281 share(s) of ANALOGIC CORP
After careful evaluation and extensive consideration, Charles Schwab & Co, Inc. will no longer be extending margin credit on this security. Therefore we have moved it to your cash account." (If you do not get this stock out of our sight by 12/31/99, we will move it to OUR cash account.)
-g-
This stock is NOT an Internet stock, at $35 being at about 1.75X book and 1.5X sales.
Calling the Schwab margin department revealed that, YTD, they have de-margined about 2000 stocks, presumably not including the ones with increased margin requirements.
This is much greater than last year.
The following criteria apparently are used to de-margin stocks -
1. Stock price less than $5 (assumed standard)
2. Low daily volume. (in this case, maybe 10-15K shs/day)
3. Low liquidity. (no details)
4. High volatility of VOLUME. ( it sounds like a single day of high volume in a year will count )
Since I'm about 90% in cash, there is no great significance here, but it might be a sign of the tide starting to recede.
Regards, Don |
