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Technology Stocks : America On-Line: will it survive ...?

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To: Craig Rogers who wrote (12232)11/30/1998 9:20:00 PM
From: Elroy Jetson  Read Replies (1) of 13594
 
The reference to margin requirements was a WSJ article.

Waterhouse and many firms are applying "concentrated account" rules to people who have all of their money invested in a very few volatile stocks. For these accounts, the Minimum margin requirement is 50%.

Normally, people on margin start with a minimum 50% equity. If their stocks fall in value they are usually not asked for additional capital until their equity falls below a Minimum of 35%. This 35% equity level will now be 40% to 50% depending on how concentrated the account is.

As an example, an account invested 100% in Books-a-Million must always maintain 50% equity. At Waterhouse, an account equally split between AOL, Yahoo!, and e-Bay is diversified enough to be exempt from this new requirement.
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