Strictly: Drilling and oil-field services Message Board

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Gold/Mining/Energy : Strictly: Drilling and oil-field services

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To: diana g who wrote (66545)	5/18/2000 4:27:00 PM
From: ItsAllCyclical	Read Replies (1) of 95453

OT - Margin usage. "... how does one simultaneously maintain max margin and continuously buy the dips and double down on a "down day" ?..." Actually I'm skeptical of that strategy too - especially with the OSX at 130 this early in the cycle. I think anyone who is fully margined doesn't appreciate how quickly the market can become "irrational". Put me in the same camp as Slider. If you're maxed out on margin it doesn't take much of a downdraft to cause a lot of pain. The long term fundamentals are great, but we could easily suffer a 20-30% correction in oil stocks based purely on the broad market and momentum. On margin that's 40-60%. A 20-30% correction is a buying op. You can use margin to get your losses back pretty quick. A 40-60% correction is devastating. The risk/reward short term is about 1 to 1 in the oil patch imho. As such I'm staying fully invested, but I'm not going to use any margin until we see where the OSX is going to end up.

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