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Strategies & Market Trends : Margin Calls - Share The Pain

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To: daffodil who wrote (57)	12/1/2000 8:17:18 AM
From: Jay k.	Read Replies (4) of 158

Well here is my sad tale on what happened when I jumped aboard the margin bandwagon. I started Y00 at approximately 70k in cash. I initially started with 5k in 97. Took it to 11k in 98 and then a staggering(for me) 33k in 99. The last 2 months of of 99 was a godsend.. I mean anything I bought only seemed to go up and I made alot of mistakes but still managed to more then double my money playing havok in technology. At approximately NASD 4200.. I decided that this market was insane and I started buying technology puts(namely QQQ). I kept buying puts until nasd 4800 where I decided the pain was too much and I sold my position.(Talk about stupid). Needless to say watching the nasd collapse in April was not fun to watch.. since after I sold my puts.. I decided to go long QQQ since this market seemed unstoppable. At this point I was very demoralized and actually didn't trade for over a month.. I just watched.. which was probably the smartest thing that i did since the NASD collapsed in APR and MAY. From this point on I was leary of holding anything so I just did short term position trades or day trades. I actually managed to hold my own and increased my total portfolio value by 10-15k. I was sitting pretty with about 35k in my trading port(bad but maybe i could make a huge comeback). At this point.. after the successes of daytrading behind me.. i thought I could tackle the market again. To increase my leverage I decided to ask for "margin" permission from my brokerage and I used it extensively.. At first everything seemed ok and I prospered nicely. This all came to a crashing end when I decided to venture heavily into the DSL sector prior to its utter collapse. If you can think of a DSL stock.. I owned it. PSIT,COVD, NPNT, TSTN, CMTN, VRTA CTLM. I kept telling myself the worry of capex spending was overblown and all these stocks had taken a great beating for no reason.(I'm not sure how I came to this conclusion, I guess people always believe what they want to believe).. anyway.. as the DSL stocks kept falling.. I kept buying and before I knew it.. I was in margin up to the hilt. Then CMTN warned and the next day the NASD opened limit down and I watched the DSL sector begin to liquidate. I couldn't believe it. I was so petrified that I shut down my TV and computer and went to work hoping that It would all just go away. The next 2 days didn't improve things much. The DSL stocks kept selling.. before I knew it.. I got the dreaded call and poof.. when it was all said and done.. I had $3000 left to me. $3000!!!!!!! from the 5k I started with in 97. Needless to say.. I am thankful at least for my health and family. I guess the mantra goes.. easy come.. easy go.. I for one learned a great lesson. Never to trade on Margin again.

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