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To: SargeK who wrote (64674)	4/15/2000 11:41:00 AM
From: SliderOnTheBlack	Read Replies (2) \| Respond to of 95453

SargeK - great post on the "double edged Sword" of Margin use... Excellent post and it happens very, very often. If you use margin - you MUST - ABSOLUTELY use "stop loss orders" - unfortunately, they cant be used on NASDQ stocks fwiw.... for that reason, I would not margin many NASDQ listed Oilpatch stocks either. I would not margin a new sector, or even use margin on stocks, or sectors that I was not following for a daily basis for 6 mos. at least - I learned the hard way in the Oilpatch "June Swoon of 1998" not to keep averaging down - chasing stocks. The single hardest thing to learn in being a trader - is the ability to sell and to take a loss ! I know people who have never sold a small - quick loss; they allways average down, sell other stocks to chase the loser etc - all bad habits & terribly destructive to trading. If you can't take a 5-7% loss and just walk away; you have no business trading, or EVER using margin imho. We all only learn to not touch fire - by either getting burned, or feeling the heat... I tend to use margin for individual stock "position trades" versus portfolio-wide positions and use stop's and use it for position trades & not for buy & hold positions & you MUST be able to follow the tape on a daily basis imho, or don't use it - period. The "double-edged" nature of margin was seen rather clearly yesterday in the oilpatch. HOFF is a an offshore marine construction/service company; lays pipeline, installs/salvages production platforms etc - a great niche company that compete's with GLBL among others. HOFF is a nasdq stock , can't use stop's; yesterday the stock sold off 20% ! on moderate volume and watching the tape, it was NOT on big block institutional patterned trading, but rather a series of 100-400 share blocks getting blown through. An aire of the specialist just running the stock down & shaking out the tree; appeared to be happening. HOFF is pushing strongly into International markets, is poised perfectly in the specific nice area of offshore GOM Nat Gas & Intnl Offshore nuts & bolt type's of market areas that are taking off right now. For this stock to sell off 20% in one day - was ludicrous. Those who were holding on margin in HOFF; easilly saw 40 to 60% of their capital lost if they were not watching the tape, or did not sell. - this is the type of company and the timing in which I will step in an start margining a stock on its freefall down. I also will not chase teenies, or even 1/2 pt moves here. On HOFF, I'll sit now at $5 3/4 and $4 7/8ths for my final buys. Give yourself room for the stock to fall through where you think support lies (I think mid $5's finds tremendous buying support - but, I allow myself a margin of error - with that final buy at $4 7/8ths before being tapped out). The reverse side to that double edged sword; is if you catch a falling knife bottom and margin it - there is tremendous upside leverage to buying the bottoms on margin. But, caveat - emptor; the same leveraged downside exists if the stock continues in free fall; so one had better either be watching the tape, to exercise a self-imposed stop loss - sell, trim, or just walk away; or be able to bring more money to the stock if you still like the story & the stock; to average down & chase it. If you use margin, you had better have a gameplan; being killed on an intraday market blowoff day and being heavy on margin is NOT the time to not have a gameplan... One thing that I do; is to keep 3 actual portfolio's - now with 3 different brokers. One account is aggressively using margin to trade, not intra-day - day trade; but position trading; trying to margin leverage retraces and to sell into pops, catch falling knife bottoms etc. The other, I keep my core companies - presently the likes of RIG FLC SII BJS CAM WFT HAL BHI PGO GLBL VTS TX P UCL MRO COCb etc. This portfolio I sometimes add to - on margin at cycyle bottoms and will also sell the "margined" portion on the "pops" - often then using the profits to add to positions, or to transfer that profit money to my more aggressive trading account; which gives me more money to be aggessive with. My 3rd portfolio; is my smallest - it's my long term drawer account; literally stocks I will keep for 3-5 years and don't trade; except in major, major swings. I often take 10% of my stock from profitable trades, or sector moves and throw these shares into this account. By using these 3 acounts; I limit the danger I can do to myself with margin-leveraged trading. I can allways, liquidate some "Cash Position" holdings, or small caps held in cash; to meet a "trading leveraged" margin call; but allways pay myself back - reallocating those funds back to their original position. The other thing I do on margin; is to continually take profits perhaps quicker than many here on this thread. At least take the margin profits all off - then let the cash position only run... Probably sounds pretty elementary to most here; but the MARGIN subject needs those of us who have learned the hard way to present both sides, the warning to NOT do it; unless you've followed a sector, or stock for 6 mos imho, and can follow the tape daily... Hope this helps someone...

To: SargeK who wrote (64674)	4/15/2000 12:25:00 PM
From: Think4Yourself	Read Replies (1) \| Respond to of 95453

Sarge, that was definitely your best post this year. Have been in that guy's situation in the past, and can totally relate. The most important thing I learned when it happened to me was that the PE is THE most important thing to look at. When the market goes insane and trashes everything, the "favorites" and the stocks who are the most underpriced relative to earnings are almost always the first to recover. That in fact was the reasoning behind my difficult decision to sell my only OS holding this week.