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Strategies & Market Trends : Analysis Class for Beginners

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To: Arthur Tang who wrote (707)	2/9/1998 8:10:00 AM
From: Arthur Tang	Read Replies (1) of 1471

Sins in investing in equities? Greed and fear, in entering and exiting on investing in any stock, often hurt the inexperienced investors. But more disastrous is margin account. Since whatever gains is measured by your total commitment, margin accounts doubles you nest eggs. However, the $5/share qualifying rule means you have to stay way above that on any stock you pick. You also have to worry about the stocks in your margin accounts, whether any of them will drop 30% or 70% on pull back. Margin calls are never pleasant. Most of the time people get margin calls, they know their account is wiped out. Some then commit the second sin, which is having stop loss orders on all the stocks; only to find out that stop loss order, because of their publication, usually gets taken out by market makers. You automatically lost the amount you set, in your stop loss order. Many people swallowed hard and suffered the horrendous losses, with no one to blame but themselves. After a few years, they will come back with a new nest egg and a lot wiser doing conservative investments. My advice is to do financial planning first.

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