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Strategies & Market Trends : MDA - Market Direction Analysis

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To: Matthew L. Jones who wrote (31216)	10/24/1999 4:03:00 PM
From: Eric Wells	Read Replies (1) of 99985

>>Let me offer this perspective to margin debt increase. Matthew L. Jones: you bring up good points about the margin debt issue. Of course while decreasing stock prices may have the impact of inflating the percentage of margin debt (and perhaps not the total actual amount) - they may also have the impact of increasing the risk of margin debt, which could have just as bad (or worse) of an impact as increasing the overall amount of debt. However, the margin debt article posted on Excite stated that actual margin debt (not percentage) had increased. An interesting statistic to evaluate (if it were available) would be one that showed the percentage of margin debt to total account value of all accounts that hold margin. It would also be interesting to see the types of stocks in which margin debt is being invested. One could put forth the notion that margin debt is more likely to be employed by daytraders or online traders in risky investments such as internet stocks - if this is true, I would view this as increasing the risk of current margin debt. Thanks, -Eric Wells

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