Dear JDN: The one thing I disagree with is your using the term, "young." Although usage of this term is relative to the speaker, I think you and most people normally do not think of an investor in his/her late 40s as one of the "young inexperienced." The person I know here who was both maxed-out on margin as well as to the limit on credit cards (for buying those options) is closer to 50 than 45 and has just about 2 years investing experience.
Although people from time to time complain how quiet the EMC thread gets, how "boring" it can be to follow this stock, I sure would rather have my money on big, dull EMC and hang-out on this thread when the market takes a hit. Sure we might bitch and moan but if I was a betting woman, I'd bet that no one here would voice his/her panic over facing a margin call or facing financial ruin. Other thread? Definitely.
Although you are right that most of the inexperienced people are going after the low priced stocks for a quick hit to increase their assets, there is also a group of these people going after the likes of QCOM. If you spend a little time over there you will see my market for the smelling salts and Kleenex I stock piled :)
Even freedom loving people have to be protected from themselves. Brokerage houses have minimum dollar amount requirements for opening accounts then additional minimum portfolio values for getting in preferential categories. Maybe its time for them to come up with requirements for people to get access to margin, say a specific, minimum number of years of investing experience plus a minimum portfolio value that most new investors do not have, say a minimum of $250,000.
These strung-out on margin people do not just hurt themselves. If there are too many of them and they get called, we indirectly get (temporarily) wacked, too.
Regards,
Lynn |
