Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: John Pitera who wrote (486)	3/16/2000 2:27:00 PM
From: Defrocked	Respond to of 33421

Why do you think I use an alias???? It's professionally embarrassing to waste time here.<g> How do you get away with it,JP??? Good thing I'm the boss.<g> What's surprising, other than the huge short squeeze today, is that some "good stocks" can't seem hold today's gains or even rally: HLIT, NT, and AMAT to name a few. They should be bouncing better IMHO. In '73, corn doubled. Arab crude doubled in '73, tripled in '74. Stocks saw their high in Jan. Ten yr. rates went from 6.4% to 7.5% only to return to 6.7% year end before rising to over 8%. US M3 was growing at 12% month-to-month compared with 15% Jan.99 and the Fed was tightening in both periods. DJIA rallys of 10%, even 15%, were met with substantial selling. I don't believe in direct historical correlations BTW. But there is no way US equities are priced for anything but for another "perfect" year of no inflation, low rates and 5% plus real growth.

To: John Pitera who wrote (486)	3/16/2000 3:13:00 PM
From: Stoctrash	Read Replies (1) \| Respond to of 33421

John...when was the last time you saw the SPX rocket 50+ points?? I thought the casino's were in Reno still??

To: John Pitera who wrote (486)	3/16/2000 11:17:00 PM
From: John Pitera	Respond to of 33421

Margin Loans Rose 8.9% Last Month;Investors Ignored Regulatory Alarms By RUTH SIMON Staff Reporter of THE WALL STREET JOURNAL March 15, 2000 Investors continued to borrow at record levels last month, ignoring red flags raised by federal regulators. Margin loans climbed a stunning 8.9% in February among New York Stock Exchange member firms, to $265.2 billion. That follows a 6.5% rise in January. Debt also continues to rise as a percentage of total stock-market assets. Margin debt now accounts for 1.53% of total market capitalization, according to TrimTab.com, which tracks flows of money in and out of securities markets. That is up from 1.41% at the end of January and 1.34% at the end of 1999. "The increase in margin debt is staggering," said Henry McVey, an Internet and financial services analyst for Morgan Stanley Dean Witter & Co. "Clearly ... investors are taking a more aggressive stance with their holdings." Some market watchers worry that this approach could backfire, forcing investors to sell shares to meet margin calls. Some analysts said that the boost in borrowing is largely responsible for the market's recent rise. "Without the $83 billion gain in margin debt since the end of October this market would be toast," said Charles Biderman, TrimTabs.com chief executive. Mr. Biderman said margin debt grew roughly in line with market values from the end of 1994 through last October. Since October, however, stock prices have risen 10%, while margin debt has climbed 45%, he said. The rise in borrowing follows efforts by regulators and brokerage firms to curb investor borrowing. Both Federal Reserve Board Chairman Alan Greenspan and Securities and Exchange Commission Chairman Arthur Levitt have voiced concern about the use of leverage. Many brokerage firms also have set higher borrowing requirements for technology stocks and other volatile issues. The new figures arrive a week before a House banking subcommittee is scheduled to begin hearings on the rise in margin debt. "This will actually increase the political pressure to do something," said Frank Fernandez, chief economist of the Securities Industry Association, a trade group. As recently as last month, Mr. Greenspan indicated he didn't favor changing initial margin requirements, which are set by the Fed. After the initial purchase, borrowing requirements are set by the New York Stock Exchange, but brokerage firms are free to set higher standards. In a speech earlier this month at Boston College, SEC Chairman Levitt raised concerns that, "In a wave of optimism, too many investors ... may be overextending themselves without carefully considering the consequences of their investment strategies." Margin debt appears to be growing at a faster pace at retail firms. Charles Schwab Corp. declined to provide figures for February, but a spokesman said that investor borrowing rose to 2.33% of customer assets in last year's fourth quarter from 2.15% in the first quarter. At Datek Online Holding Corp., investor borrowing was up a little more than 10% in February, the company said. "A good portion of that is just through our growth [in customer assets], but not all of it," said John Mullin, president of the firm's Datek Online Brokerage Services unit. Some analysts suggest that brokerage firms need to do more to curb investor borrowing. "Investors are actually able to margin initial public offerings that were only done nine months ago, are up 2,000% and have no earnings or trading history," says Sanford C. Bernstein & Co. analyst Steve Galbraith. More than 80% of the IPOs examined by Mr. Galbraith lost money last year, "yet virtually all of them are marginable at one Internet brokerage company or another," he says. Yet efforts to tighten lending standards have raised customer hackles. On Monday, Datek set tough new margin requirements for 85 volatile technology stocks. Investors were told they couldn't initiate new loans involving these stocks, though existing loans wouldn't be subject to the tighter standards. After hearing from its customers, Datek removed seven stocks from the list Tuesday. "Basically what they did was shut down my portfolio," says Walter High, a television and radio producer in Boston who owns several stocks on the Datek list. Mr. High, who was planning to sell shares in the next two weeks to pay his tax bill, says Datek's move "completely derailed" his trading strategy.