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Pastimes : Alan Greenspan MUST GO: -- Ignore unavailable to you. Want to Upgrade?

To: BWAC who wrote (31)	5/24/2000 7:44:00 PM
From: Master (Hijacked)	Read Replies (5) \| Respond to of 494

I handle accounts for about half a dozen friends. Here's the experience of two of them over the last month and a half. Both friends have margin accounts. The first one was more of a risk taker and he utilized his margin to its fullest. Recently, during one of those market crashes provoked by interest rate fears, the value of his stocks dropped nearly 50% overnight. He lost $150,000 that day before I even had my first cup of coffee. The problem is that he only had $115,000 in his account. His discount broker(TD Waterhouse) is now chasing him for $35,000, money which he doesn't have. The second friend was more prudent. He only utilized 25-30% of his margin. His stocks included the likes of NT, CSCO, CLS and JDSU. Even if the stocks dropped 20% he would have plenty of room on his margin to absorb the loss without having to reinject new capital in the account. Unfortunately, we were wrong. Following one of Greenspan's timely speeches concerning the tightening of credit for investments, the broker decided to reduce the margin allowance from 70% to 50% for CLS and JDSU. That was then followed by a market crash because of comments made by the Fed which resulted in drops of nearly 50% in these stocks. This second friend as well received a margin call. The value of his capital dropped so considerably that he was forced to take a second mortgage in order to protect his investment. And despite his additional injection of funds, the account is still in a tight situation. Both of these friends have put their vacation plans aside. One had just gotten married and was planning to buy a house. The other intended on purchasing a new computer for his children. Neither one dines out anymore. Just like these two friends of mine, I am sure there are thousands and thousands of other investors in a similar predicament. My question to Mr. Greenspan is: how is their plight beneficial to the economy??? Vince