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Strategies & Market Trends : MARGIN - Do's and Don'ts -- Ignore unavailable to you. Want to Upgrade?

To: John F. who wrote (25)	8/8/1999 9:09:00 PM
From: Greg Jung	Respond to of 35

If by not heavily margined you borrow a max of 25%, our use of margin is similar. But even at that level, how prudent and safe it is depends on the market cycle of the issues used. If you go 25% at a market slump it might become a 15% margin after a few good pops: if then you take that back up to 25% you begin playing with fire, since a retracement would take you to a 40% or so, sitting like a deer in the headlights. I prefer to look at the dollar amount (rather than "buying power" or equity percentage) and keep it within my means. As for short positions, when a short goes against you the margin gets depleted by 150% of the move: on long positions it is 50%. So since individual stocks have a much higher chance of getting out of control, I'd think an index is a better short. Really probably the real thing, futures, are better than index funds. Greg