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.

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

To: daffodil who wrote (131)	12/12/2000 5:13:00 AM
From: Mama Bear	Read Replies (2) \| Respond to of 158

Of course it wasn't the use of the paired strategy that killed LTCM, it was the use of leverage. Mr. Meriwether hasn't seemd to have learned his lesson as he's starting a new fund, having raised some $300 to 500 million and planning to use a generous helping of leverage. thestreet.com "According to a Bloomberg report on Tuesday, JWM aims to produce returns of 15% a year, on average, using leverage of $12 to $18 for every dollar of capital." Who the heck is dumb enough to give this guy money to manage? This way to the egress...don't miss your chance to see the egress. Regards, Barb

To: daffodil who wrote (131)	12/12/2000 1:31:34 PM
From: marcos	Read Replies (1) \| Respond to of 158

Leverage can act to ensure that when you're right just a little too early you get proven wrong ... it's an empty victory to see your position win out after you've dumped it to cover the margin call during the little capitulation spike that often comes before the best moves ... for this reason i have a firm rule against using margin ... of course i break it all the time, but always with a ready exit strategy and a bit of a tingly feeling ... very very rarely over a weekend or through a period when i'm away from the computer. Great thread, daffi ... a few nights ago i tripped over the old Discuss y2k Issues thread, kind of nostalgic, i enjoyed your posts over there ... Henry Volguardsen might have an interesting perspective on margin, currency trading works on leverage of 19-to-1 or better .... also back on some thread TLC has an outstanding story of a short squeeze where leverage played a major role in a one-hour wipeout of an account.