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This from today's Nihon Keizai Shimbun:
> With the unrealized profit/loss rate of shares bought in margin
> trading by individuals having widened to a negative double-digit
> percentage, those traders are becoming less and less prepared to
> accept risks, observers note.
Now ordinarily, you might think this is a stunning statistic given
the 225's advance since April, but there is a mitigating fact you may
not know (and which the article doesn't explain, either): Margin
contracts in Tokyo are for a *maximum* term of 6 months. The position
can be "rolled over", but you have to actually close it and open a
new one by the six month term. So, nobody is sitting on any
*original* long positions opened more than 6 months ago; most of them
would have had to take profits and reestablish new positions, or will
soon be forced to do so. Therefor, a lot of margined profit has been
taken off the table (or rolled over into new positions with
substantially less paper profit, if any), and that may account
somewhat for the dismal retail balance right now.
But still, that percentage is really dismal. ^^_^^ It means to me
that the average retail margin position being held right now was
established somewhere not too far from the very top of the current
formation. In any case, Mr. Margin Call is going to be paying some of
these folks a visit in the near future, and the market has a terrible
record of coming to the rescue of these folks. Quite the contrary,
here is the news in our big financial paper; who do you think might
be getting ready to take advantage of this? A sharp drop from here,
even temporary, would blow a lot of longs out. A quick return and
then another drop to the same level (say below 9800) would probably
push a lot more over the cliff who didn't jump the first time.
Anyone know what the margin balances look like in the US these days?
Yuki
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