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.

Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: SargeK who wrote (64711)	4/17/2000 9:16:00 AM
From: SargeK	Read Replies (1) \| Respond to of 95453

Margin or Quicksand? Telemarker: "Margin debt, on the other hand, is real in the sense that every penny of it will have to be repaid, with interest. Margin call sellers are quite often aggressive sellers - further magnifying the relationship described above. Finally, as has been noted on this thread, much of the existing margin debt may simply represent the further leveraging of debt capital raised elsewhere (directly or indirectly), thus possibly magnifying the debt burden and accompanying value volatility." "USN&WR" "In hock for stocks" - In addition, anecdotal evidence suggests that investors have been borrowing freely from other sources too. Paul Carey (Securities and Exchange Commissioner): "I have heard stories of investors using home equity lines or cash advances on their credit cards at particularly high interest rates in order to finance stock purchases." Greg Smith, brokerage analyst at Chase H & Q added: "What's driving all this leverage is the boom in online trading. People become bigger risk takers, he argues, when they can play the market in secrecy. People regard borrowing on margin as a more seductive type of borrowing than, say, using a credit card. The borrower isn't required to make payments, Interest gets added to the customer's debt, but brokerages don't for instance, send out a monthly bill. It's a bizarre kind of situation that just hits the gambling bone." Comment: Without question, Friday's plunge was accelerated by margin calls. Further, the market correction has dealt many out of the game, permanently; BECAUSE of injudicious use of DEBT. Borrowing money to buy stock and then using the stock as collateral to buy MORE stock is NOT investing. It is high stakes/risks gambling. FWIW SargeK