To: michael r potter who wrote (2950 ) 5/26/1999 2:43:00 AM From: michael r potter Read Replies (1) | Respond to
-OT- Why the pre-occupation with margin -OT- on the SFE thread? 1.If the views are correct, it could save some reader or friend a lot of heartache if acted upon. 2. Since SFE is now considered about 70% to 80% internet stock, and moves with the group, possible margin liquidation in the group could have considerable effect upon SFEs performance and how low this current downtrend ultimately carries. As to the timing re. forced liquidation, and speculation that it may occur very soon...the previous posts are just a best estimates. Maybe the high zoot stocks will come out of this with another miraculous recovery and this will be seen in retrospect as just another buy the dip opportunity. But...disregarding timing, ask yourself. Of all the margin debt piled up in the past few months, what will will be the ultimate fate of that debt? Will those who recently piled it on, hang on, the market rallies, and those behind it wisely get off when the air is electric at a top? Or, will those responsible play with fire until they get burned? Will this impact SFE's price? Will this surge in borrowing be seen as an astute collective act in retrospect? Why was there not a tremendous surge in margin debt last Oct. when SFE was $18, EBAY at $10, AOl $20, QCOM $19, or even TLAB at $18?. Did the $40B in debt piled on in March/April go into the new emerging leaders like Alcoa, Intl. Paper, Temple Inland TIN etc. or, did it go into the stocks with the most extreme valuations that had already risen 5 to 10 fold in 5 mo.? Was anyone bragging to their friends that they went on margin to buy Case tractor, Exxon, Dow Chemical or Georgia Pacific a couple of months ago? It would have been a wiser use of margin. We don't know the answers to these questions, but we individually may have a pretty good idea-and it does matter, sooner or later. Best of luck to all. Mike
