Qualcomm Incorporated (QCOM) Message Board

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Technology Stocks : Qualcomm Incorporated (QCOM)

QCOM 166.40

+1.9%

1:42 PM EST

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To: JGoren who wrote (39419)	9/1/1999 8:55:00 PM
From: mthomas	Read Replies (1) of 152472

I am thinking of the fact that when out on margin, if the account balance falls below the marginable amount, the account has 3 business days to cover the difference or the broker must start selling securities to cover the difference. Anyone out on margin when a stock really drops gets hit double hard, since the marginable limit is dependent on the equity in the account. Not only does the equity fall quickly, but the margined dollar amount stays the same while the underlying stock drops in value as well. This has the effect of drying up the available margin, forcing one to either sell or put up more bucks. Margin Call is the term. Buying high and selling low... Not pleasant, but once this happens, the demand for the stock can drop precipitously, enabling bottom fishers to snap up the stock real cheap. Just depends on the type of investors in a particular stock, whether this phenomena will be significant or not. Like I said before, I got caught once, pretty much as a fluke, and for that reason I do not margin anymore. I would just prefer to hang on to my quality equities for the longer term and not play with other peoples' money. Martin

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