Speaking of margin, an excerpt from an article about 'net stock mania' in today's WSJ...
John
PS - There is one guy who always talks in CAPS on the Dell thread that apparently took just under 3 mil a couple years back and turned it into somewhere around 55 mil, he had a paragraph on him in Forbes. It does work both ways, if you are lucky enough. <ggg>
At Ameritrade Holding Corp., a graduate student from
Indianapolis named Lael Desmond opened a margin account in
late 1997 even though he didn't know what a margin account was.
Mr. Desmond, 27, had simply heard from his sister that "you can
make a lot more money quickly" that way. He concedes he didn't
read the fine print on the margin agreement.
He took notice in August, though, when his fully leveraged,
$100,000 account took a dive after stocks such as Amazon,
Excite Inc., Dell and Yahoo! stumbled. His margin calls, the
added money Ameritrade required him to put up, exceeded the
equity left in his account. Mr. Desmond wound up borrowing
about $12,000 on four credit cards, though he also filed an
arbitration complaint challenging the way Ameritrade handled the
situation. Ameritrade says it hasn't yet received a copy of the
complaint and thus can't comment.
"I will never trade on margin again," declares Mr. Desmond, who
says he thought margin loans were like bank loans, requiring
regular payments. He has since taken out a loan against his
house to pay off the credit-card balances. |
