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Strategies & Market Trends : Waiting for the big Kahuna
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To: paulmcg0 who wrote (14240)2/21/1998 4:16:00 PM
From: Tommaso  Read Replies (1) of 94695
 
Someone has already mentioned yesterday's NY times story--business section--on margin debt. It appears that lots of newer investors using discount brokers are borrowing heavily against their stock gains for other purposes. They are assuming that the market will stay up permanently. I wish I could copy the entire story to this thead--it's long and full of tables and figures. At Charles Schwab margin debit is up over 50% from a year ago.

I think that margin calls go out for most brokerages when equity dips below 35%, so anyone who is 50% margined might well be forced out by a 15% correction, leaving them with a 30% loss of their capital. To state the obvious. But the obvious seems rather hard to see right now.

Maybe at first some people would try to meet these margin calls by accepting a few of these wonderful credit card offers that fill our mailboxes.

This is the time to go into bankruptcy law as a specialty.

I wonder if, with the proper disclaimers, one could call oneself a "bankruptcy advisor" without a degree in law or accounting.Might be as lucrative as the first people who set up abortion reference services.

There also in Barrons today an article about the big-cap stock buybacks that claims they have not supported the market that much. Maybe not, but they are surely part of the whole bubble.
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