Margin Calls - Share The Pain Message Board

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Strategies & Market Trends : Margin Calls - Share The Pain

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To: daffodil who wrote (99)	12/10/2000 1:57:27 AM
From: Mama Bear	Read Replies (1) of 158

One problem I had with that link was the statement that margin interest would be charged on the short sale. The only way that I would have to pay margin interest on a short sale is to exceed my equity in the account at the one brokerage I have that charges margin interest on short sales. Paying margin interest on a short sale is a rip off IMO. The sale generates cash which the broker can either put in his money market account for a risk free return or lend to other folks to buy long. The broker might make a spread of as much as 4% if he has to borrow the money to lend it to longs. He'll make the full 9 to 10% if he takes the proceeds from my short sale to lend. He'll make 6% in a money market fund. On top of this he wants 9 to 10% from me? Forget about it. One can find many brokers who don't charge interest against short sales. When I was with Datek in 1998 they didn't. I am currently with Interactive Brokers and they don't. Of course the only reason I ever exceed my equity anymore is in a paired trade, and I don't do those much anymore. Remember, exceeding your equity can be deadly. Regards, Barb

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