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Strategies & Market Trends : Cents and Sensibility - Kimberly and Friends' Consortium -- Ignore unavailable to you. Want to Upgrade?

To: Smart_Money who wrote (97256)	4/15/2000 3:09:00 PM
From: tennessee_ted	Read Replies (1) \| Respond to of 108040

Here's an unpleasant to contemplate question about margin, the past week and trading accounts. I didn't permit myself the temptation of a margin account, but have cash accounts at Etrade and Mytrack. I'm fine, but if the nasdaq is now down 1/3 and there are so many margin inflated accounts that are now worth 1/3 what they were (or less), all that borrowed money is wiped out if the typical account is 50% marginable. That means 1/2 of the remainder needs to be sold to pay off the lost margin amount (which is staggering to think about by itself- talk about a meltdown). At some point, will the brokerage not be able to "redeem" accounts if you or I decide to cash out and put the money in a nice safe US gov. insured BANK account instead of a broker account? What if some of them do go belly up, where does that leave our money? I think we need to think about this now, not later, and consider if the potential gain to be made by keeping the cash in the trading account is worth the risk of losing a big chunk of it in a bankruptcy proceeding, which would also take forever to resolve. I admittedly don't know much about the way the brokerages cover this possibility, but I hope someone who already knows these answers can post a brief reply. Thanks! -Ted