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To: Jacob Snyder who wrote (13281)	12/14/1997 9:02:00 PM
From: Murti Gajjala	Respond to of 70976

Jacob, If I remeber correctly, 1. Fed regulations must be met regarding margin requirements. When you initially buy stock, you need to have 50% cash. Subsequently margin requirement is 30% (maintenance requirement). 2. In addition, broker is free to impose additional requirement to protect his money. It is upto the individual broker to impose and may vary from stock to stock. (I was one day called by the broker and told that he was increasing the maintenance requirement for LSI Logic from 30 to 40%). Murty

To: Jacob Snyder who wrote (13281)	12/14/1997 9:13:00 PM
From: Lee Penick	Respond to of 70976

Hi Jacob, Since that would maximize commissions, he should OK that idea! Lee

To: Jacob Snyder who wrote (13281)	12/14/1997 9:28:00 PM
From: carl a. mehr	Respond to of 70976

Jacob and all, RE: Margin requirements. Margin requirements vary greatly between various brokerage firms. They must, however, all comply with Regulation T and the equity maintenance requirements of the NASD. It certainly is reasonable that a brokerage firm can set the limit as high as they please, after all they must protect their own assets. Some have had clients loaded up with stocks that have cratered overnight. Bre-x and Centennial Technologies comes to mind and brokage firms have learned that they can't "squeeze blood out of a turnip". Margin requirements for one of the firms that I have an account with reads in part: INITIAL AND MAINTENANCE REQUIREMENTS (EQUITIES AND BONDS) Security, Initial, Maintenance, Release to SMA Equities, 50%, 25%, 50% Investment Grade Municipal Bonds, 30%, 15%, 70% Corporate Non-Convertible Bonds rated as investment grade by Moodys or S&P, 30%, 15%, 70% ** Concentrated accounts may have different maintenance requirements. (PS: Use commas to line up the columns) If your portfolio falls in the first group, margin calls may not result until the equity limit goes below 25%, but most brokers will probably use a higher limit. After all it is their money that we are gambling with. It is hard to know if you can fool a brokerage company into giving you a low margin limit with a variety of stocks that all move in tandem. I am trying to do that with techstocks, but is it a good strategy? best of luck, humble carl This message is getting spread out all over the place and I don't know how to control this 'word processor beast'! Well, I fixed it a bit by throwing in a lot of carriage returns. Sorry

To: Jacob Snyder who wrote (13281)	12/15/1997 12:24:00 AM
From: Math Junkie	Read Replies (1) \| Respond to of 70976

While we're on the subject of margin, I derived a formula for what percentage of equity you need to protect yourself from a margin call if your portfolio value drops by a certain percentage. In the following formulas, all percentages are expressed as fractions - i.e., 50% is expressed as 0.5. The variable names are as follows: E2 is the equity percentage to start with E1 is the equity percentage at which a margin call occurs V is the percentage of decline in stock value E2 = E1 + V(1-E1) The following table shows the results if your broker gives margin calls at 30 per cent equity: Per Initial Cent Per Cent Drop Equity Required 90% 93% 80% 86% 70% 79% 60% 72% 50% 65% 40% 58% 30% 51% 20% 44% 10% 37% If you want to start with a known equity percentage and find out what percentage of drop in stock value you can take, the formula is V = (E2 - E1)/(1 - E1) Initial Per Cent Per Cent Drop Which Equity Produces Margin Call 90.00% 85.71% 80.00% 71.43% 70.00% 57.14% 60.00% 42.86% 50.00% 28.57% 40.00% 14.29% Notice that it is rather non-linear. When you get below 60% quity, your downside protection deteriorates in a hurry.

To: Jacob Snyder who wrote (13281)	12/16/1997 1:33:00 AM
From: Paul V.	Respond to of 70976

Jacob, >Reply # of 13444 carl: re: your brokerage firm may change your margin requirement I didn't realize they would do that. I thought the margin requirement was a fixed industry standard, at 35%. I thought if I had no more than 1/3 of my stocks bought on margin (67% equity), this would provide a adequate buffer. I didn't realise that margin requirements were a moving target. How about this: instead of being 100% in AMAT, spread it out among INTC, Novellus, KLA-tencor, and AMAT? Is my broker smart enough to know that this really doesn't decrease my risk of a margin call, because all these stocks move together?< I had to come up with 70 grand once when the margin requirement for a call was changed from 30 to 40%. I have been told that they could have raised it to 50% if they wished to raise it. IMHO< Again, have a backup plan if you need additional cash or do not get into margins at all. Just my opinion. Probably Brian, can shed some more light of this issue as well. Paul V.