To: Night Trader who wrote (82674 ) 8/5/2000 4:35:00 AM From: Bilow Read Replies (3) | Respond to Hi martin knight; Re low margin requirements in the 20s... Isn't the "Livermore" book merely purported to be by him? And might his wife have had access to sufficient wealth that loaning her $10 grand wasn't a sweat? And given the fact that it is written anonymously, couldn't some of the information be a bit fictional?One of the paradoxes of speculation is that the loans that underwrite it are among the safest of investments. They are protected by stocks which under all ordinary circumstances are instantly salable, and by a cash margin as well. (p 21)In fact, the Federal Reserve was helpless only because it wanted to be. Had it been determined to do something, it could for example have asked Congress for authority to halt trading on margin by granting the Board the power to set margin requirements. Margins were not low in 1929; a residue of caution had caused most brokers to require customers to put up in cash 45 to 50 percent of the value of the stocks they were buying. However, this was all the cash numerous of their customers had. An increase in margins to, say, 75 per cent in January 1929, or even a serious proposal to do so, would have caused many small speculators and quite a few big ones to sell. (p32)
