To: freeus who wrote (129815 ) 5/29/1999 1:06:00 PM From: Matthew L. Jones Read Replies (1) | Respond to
Well I did bail my Dell at 44 1/8 (about an hour before the close on whatever day they were to announce earnings). I had seen too many other companies of late announce good earnings and still trigger a sell off. Problem is my system gave me another buy signal and I bought again at 35 5/16. Little did I know that after 4 straight days of selling off, some more institutions would start shorting 50,000 share blocks (via INCA) and drop the stock to the low 33's. Still, that wouldn't have been a problem except the good folks over at AB Watley decided to raise my maintenance requirement to 50%-- while I was long the stock! They had done it once before on a YHOO trade which overextended my position. (Note the problem wasn't caused by poor risk management on my part but on a "cheap shot" change of rules in the middle of the game). I always leave myself a little breathing room to allow for a drawdown, but when my brokerage decides arbitrarily to change the requirements it makes me wonder about their own financial capacity since they are guaranteeing the margin loan. They decided that now DELL, MSFT, and CSCO are all "internet stocks". I was fortunate this time to have some additional cash on hand from a real estate deal I closed, but last time it cost me $37,000 because of the increase in maintenance requirement on YHOO. Interestingly enough, within 2 weeks of the YHOO call, YHOO was making new highs and would have netted me $105K-- so really they cost me $142K!!
