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Strategies & Market Trends : DAYTRADING Fundamentals -- Ignore unavailable to you. Want to Upgrade?

To: Apakhabar who wrote (12870)	5/4/2001 5:29:21 PM
From: YxY	Read Replies (1) \| Respond to of 18137

I'm not sure that the leverage increase under the new margin rules will make things less risky...

To: Apakhabar who wrote (12870)	5/4/2001 5:42:33 PM
From: Jon Tara	Read Replies (1) \| Respond to of 18137

Brokerages will not accept credit cards, though. It's a shame that casinos do...

To: Apakhabar who wrote (12870)	5/4/2001 6:00:29 PM
From: bozwood	Respond to of 18137

>Dominick, they have every right to make whatever rules they want when it comes to MARGIN, which is, after all, a loan. Shouldn't that decision be on a brokerage by brokerage basis? Also, can't the decision be made on a person by person basis? >As for Bozwood's point about credit cards at the casino, that again is a loan the bank issuing the card is willing to make. Yes, but again, that decision is made by the bank. How would people feel if the government stated that anyone making under 30,000 could not get credit because it is a risk to the system? >The more I think about it the less I think it's a big deal. Tell me the difference between getting denied a loan for a house because you don't have a big enough down payment, and these new margin rules. It's a matter of collateral. Down payment stipulations are made on a person by person basis and is not dictated by a regulatory agency. Have you seen the 105% mortgages offered? This new requirement is across the board. Also, having a larger down payment for a house reduces the bank's exposure. How does having 25,000 for margin reduce the risk for the brokerage? It's just as easy to lose that amount as it is $20,000 margined. These rules were hatched during the period of hype regarding daytraders. Every period of excess has its scapegoat and daytraders are in the sites right now. Finally, if the government is so worried about risk to the system, maybe they should up the margin requirements to 70%, 80% or even 100%. That would seem to be more logical. It was even talked about, but shot down. I don't think, though, that many people here would be arguing for that move.

To: Apakhabar who wrote (12870)	5/4/2001 11:32:46 PM
From: Dominick	Read Replies (1) \| Respond to of 18137

Apakhabar: Tell me the difference between getting denied a loan for a house because you don't have a big enough down payment, and these new margin rules. It's a matter of collateral. Normally people obtain loans because the do not have the money to buy it out-right. Therefore the bank's parameters must be met to protect its self in case of default. But this is not necessarily so with a stock account that may have ample funds. Which brings me to my pet-peeve. Which is, the issue of being forced to use margin when shorting. They say "you're borrowing a stock". I say, "like hell", I have ample funds to cover it and you're holding my money. If the firm incurred expenses in getting that stock then debt my account for it. But don't force me to do it by loan and pay interest on 50 % of the value. To be clear, I'm speaking of a standard margin account. I totally distrust any organization that want's to be my big brother. Dominick