Scarred for a generation: I have a good friend, made good money in the entertainment industry and real estate - very clever, forceful, decisive woman. So she bought the dips through '98 and '99 and '00 on AOL and HD and INTC and MSFT and SUNW and T and LU and so on and so on, all the growth "blue chips," and bought a bunch of funds, too. Went on margin pretty heavily to finish a real estate project that went (as they all do) a bit over budget. Refused to sell SUNW at 120 - didn't want to take the tax bite. A month ago, she was saying that, if she had the cash, she'd be buying.... So now she's carrying two mortgages, a big margin loan, has both her houses on the market praying that one will sell. I virtually had to beg her to cash out her stocks a week or two ago. Her MSDW broker put up strong resistance - "money on the sidelines" was going to rescue her. So, she couldn't bring herself to cash out on the funds, too (tech/growth overweighted, but more Dowish and valuish). I've been begging her for months at least to get off margin. Now, she's pretending she's safe - but can hardly stand to look at her account. I think I've gotten her at least to scale out beginning Monday (reverse dollar cost average), but, if the train wreck comes, she could still get wiped out - "poof!" Forced to sell whichever house to the first buyer who shows up with a halfway reasonable offer.
She's a reasonably sane person. How much more would it take before they start installing weapons detectors at the entrances to Schwab and MSDW and Fidelity offices? |
