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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Thomas M. who wrote (76216)	2/19/2000 11:07:00 AM
From: Skeeter Bug	Respond to of 132070

401k money isn't driving this market. if greenspan cuts credit back and decrease money growth, the market tanks. period. but he won't unless a fiscal knife is inserted... and twisted...

To: Thomas M. who wrote (76216)	2/19/2000 1:11:00 PM
From: Don Lloyd	Read Replies (3) \| Respond to of 132070

Thomas - "Wall Street in Drunken Borrowing Binge..." Like all economic indicators and statistics, the margin debt numbers have to be taken with a grain of salt before drawing any conclusions. One item that MAY make the margin debt numbers unreliable is that many forms of hedging, including collars and boxed short positions, tend to increase the margin debt numbers even though market exposure is reduced. Just an opinion on possibilities. I believe the following is true : If 100% of your account is invested in a single stock, you have no margin debt, independent of rather the stock price goes up or down. If you then sell the stock short against the box, maintaining both long and short positions, you still have no margin debt as long as the stock price remains the same as your sale price and you do not remove any funds from the account. If, however, the stock price begins to rise, you will start accumulating a margin debt from both the price rise and the margin interest that will start being assessed monthly. If the stock begins to fall, the margin debt will reduce with the stock price. This is the opposite of what one would normally expect. The point is that rising margin debt in a period of increasing stock prices is not entirely due to increased borrowing, but may be due in part to hedging. Regards, Don