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Strategies & Market Trends : Margin Calls - Share The Pain -- Ignore unavailable to you. Want to Upgrade?

To: Jaroslav Skrenek who wrote (67)	12/1/2000 8:27:20 PM
From: A.L. Reagan	Read Replies (2) \| Respond to of 158

Margin is like any other debt, except "faster." After the Great Depression countless millions of folks vowed never to be in debt again - never let their homes, farms, and businesses be at risk. Does that mean that you shouldn't have a mortgage on your home? You could lose your job, the neighborhood could go to hell, or property taxes could skyrocket. So, is the correct lesson to listen to the horror stories of folks who have been through foreclosure and vow never to have a mortgage? Is margin debt inherently worse than any other debt? Is everybody better off borrowing from VISA than from Datek? Daffodil is doing a tremendous educational service here, so that folks can understand the risks of margin and the rules of the game. I don't lose a whole lot of sleep being on modest amounts of margin when the market in general appears undervalued. By modest I mean never >25% of gross portfolio value. And I've used margin availability to support short positions when hedging a long portfolio.* I've also used broker margin from time to time to substitute for other more expensive debt I might need on a short-term basis. Point being, be smart, understand the rules, but no need to be a Luddite. ------------------------------------------- * Question for Daffodil: if a customer has a debit margin balance on a long position, do most brokers credit short sale proceeds against the debit amount for purposes of calculating interest charges? Obviously it can't be credited for purposes of calculating maintenance requirements, but I've never figured out the interest calcs.