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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Dennis O'Bell who wrote (75678)	4/22/2001 1:32:05 PM
From: Haim R. Branisteanu	Respond to of 99985

Dennis, did the market collapse wen the FED hiked rates by 10% ? The answer is no. From 1993 to 1995 the fed hiked interest rates by 100% and the market did not collapse. Doing the same with margin requirements would set margins at a mere 10% for financial assets for most financial institution, and as such the lust for speculation will be moderated a bit and from a risk reward ration more money will flow to less volatile investment ------- which means the real economy. Just think about the prospects that an 1% rise in the SPX for example will return 20% on you equity as such 5% fed funds or 6% fed duns barely matters. On the same token an 10% margin your gain is only 10% and 1% change in interest rates does matter twice as much. ............... and that is the key to avoid careless speculation and a return to real investments. BWDIK Haim