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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: Epinephrine who wrote (105726)4/14/2000 7:21:00 PM
From: kapkan4u  Read Replies (1) | Respond to of 1570742
 
<The perverse part is that some of the small investors will find the money to cover. Since they are sending money in and no money is actually being lost, the money is just moved from the weak hands to the strong hands, so the net effect is money is flowing into the market. Then when the market recovers some of that extra capital is reinvested which contributes to a relief rally and the stocks shoot back up. Just without the weaker investors.>

I think that margin calls result in little or no new money coming into the market. Most people don't have a line of instant credit to cover a margin calls. Those who have CDs don't buy on margin.

So margin calls just result in position liquidations.

Kap



To: Epinephrine who wrote (105726)4/15/2000 3:57:00 AM
From: Joe NYC  Read Replies (1) | Respond to of 1570742
 
Epinephrine,

The stocks are down, so small investors get margin calls which forces some of them to sell which causes more margin calls.

Is there any evidence that small investors use margin more often than other investors? You can invest on margin regardless of whether you have $1,000, $1M or 100M.

Joe


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