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Strategies & Market Trends : Rande Is . . . HOME

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To: gamesmistress who wrote (23070)	4/1/2000 10:31:00 AM
From: Rande Is	Read Replies (5) of 57584

90 percent of the wipeouts I've heard about were caused by margin trading. . . getting overextended. . .riding losses down. . .getting liquidated. If you insist on trading on margin. . .I have a new slogan for you. . . "The market hates you and will do anything it can to see you fail." This is what we have seen 4 times in 2000 with the 4DML [4-Day Margin Liquidation] play. Look at a 60 min of the Nasdaq Composite Index. . . you will see them. . . the first started the first day of January. . . the rest are obvious. . . you could cut and paste the charts over top one another. .. they generally take 5 days to cycle from top to bottom, but we don't count the first day, since the margin calls are not generated until the 2nd day. On the 4th day of a margin call, where the customer is in default the brokerage may liquidate your assets between the hours of 2:00pm and 3:30pm EST. On EACH of the 4 4DML plays in the year 2000, the low of the week was hit between the hours of 2:00pm and 3:30pm EST of the 4th day of the play. Anyway, it is always tragic to see losses by the little guy. . . and I must say that because of forums like Silicon Investor, etc. we individual investors are getting sound guidance. I am not seeing nearly as many wipeouts as I use to see a year or two ago. That may be why the major brokerages are playing such a tough game of late. . . to meet their quotas of margin account liquidation income. I would love to tap into learning which was the "most margined stock of the week" at the biggest brokerage houses. . . then watch to see if they upgrade the stock to entice more traders to buy on margin. The really tragic thing is that many of those who cannot get a loan to buy a car, can get themselves 50% margin credit on their stocks. . . and far too often those are the same folks that feel the need to make moves with extra risk. . . even desparation. How about a new regulation that allows the brokerage customer in a margin call to pay 1/2 the call in good faith within 3 days and the balance paid in full within say 14 days.. . with liquidation on the 15th day on defaulters. Hello, SEC? You listening? In my opinion, this would greatly discourage brokerages from pulling the 4DML play. Rande Is

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