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I still fail to see how this new rule will help and protect your friend against himself or anybody else for that matter.
Granted, it may be a little harder for him to scrape together a $25K stake, but what difference does it make?
Instead of buying 100 shares of a $40 stock, he'll buy 100 shares of a $20 stock. Or, instead of 1 trade, it will take him 2 trades to wipe out his account. Or, maybe he'll discover the futures market where the typical margin leverage runs around 2 - 3 %. There is always the options market where he can "control" a stock for pennies on the dollar, where his account will last until the next expiration date. Too much trouble opening and maintaining a trading account? Why not go to Vegas, or better yet, just log on to one of those on-line casinos; if he is really keen on stock trading, there are many of these casinos/bucket shops where you can actually gamble on stocks or indexes at $20 - $50 a pop.
In the mean time, those of us who are not just "playing" the market, but WORKING and working hard to make an honest and honorable living for ourselves and our families will get the short end of the stick.
Best regards,
Levent Erbora
-----Original Message-----
From: Norman Phair [SMTP:ericrogers@xxxxxxxxxxxxx]
Sent: Tuesday, February 01, 2000 8:20 PM
To: realtraders@xxxxxxxxxxxxxxx
Cc: realtraders@xxxxxxxxxxxxxxx
Subject: [RT] Re: SEC New Margin Rule Proposal
If you have 2000 eggs or if you have 25,000 eggs and you
put them in one basket, you had better dam well
watch the basket. Howard, since you are still around and
able to trade I must assume you were able to lose
the $45,000 without losing any sleep. Nobody should
play the market with money they cannot afford to
lose. If they do, they will surely lose because their
emotions will defeat them. Ira's comment is why margins
are going up. I have a friend who is on disability. He
scrapped together $2000 to open a margin account with
money he can not afford to lose. The minimum margin has
been $2000 for a long time, this is way overdue.
A fool and his money is soon parted. Unfortunately this
bull market has made people think they can get rich without
working.
Norman E.
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