RE:RE:Drop
Re1ndeer2 wrote: This drop in share price is definitely over done.....Don't see high volumes only weak hands(margins?).......Had to add a few more shares at this discount opportunity..
I believe it's too early for significant margin calls... as someone that constantly plays on the edge, I get 3 warning calls, the general market has stayed pretty even until yesterday and the US is up today. If your triggering your sales today you have to be heavy into something that's declined late last week or have fear. Tomorrow, Thursday and Friday are more likely margin related issues. But everyone's situations are different in how they play and with what.
That said, I'm on day one of a margin call after yesterday's action, I'll cover Thursday morning before open if needed with cash. Tommorrow, several people receive dividends from companies that payout today which will lower the cash margin requirement. Also I find that usually in the 2 days following payouts it's likely that those stocks recover the payout amounts and sometimes rise which I think is due to new money avalible for use and people who have dealer assigned DRIPS rather than company DRIPs. Most of the time I personally don't scramble and the situation fixes it self and it's usually mid-month or late-month usually on selling when stocks goes X-dividend especially after earnings season (current senario) that if I'm playing very close to the limit that I'll trigger myself. I don't think this will be a fix itself scenario, I'm expecting to put a couple thousand in to stay above board, I also have a few penny plays which I'm even on that I can take the fee hit and sell off if I want.
If your playing with margin you likely know your requirements and not likely to scramble to sales, especially if your playing that close your not likely to sell a marginable stock, especially an 70% leverage one like this currently is. When you do that you actually create a massive knock on effect throughout your portfolio until your cleaned out, which is your worst case senario. If your on a margin call and you sell a margin capable stock now you loose 50-70% of the value of that trade leverage off your buying power which you are now on the hook for, you gain some ground on the sale but only like 50-30%. If your playing that close with these stocks you must get even with cash (which will reset your clock for the next day) then sell out then cover again. Or the smarter thing to do is have a significant amount of non marginable securities in the portfolio that you can dispose of as those sales are equivalent to cash deposits as they don't effect your leverage amounts. I learned this lesson years ago when I first started playing with margin as I made a simple mistake much more expensive for myself to fix as I had to pull from credit cards to cover when I amplified my problem.
Thats likely more than you asked for and probably not the clearest of explanations. LoL
Your likely right with weaker hands and the news about Russia possibly defaulting more an issue, especially if your heavy on large allocations in major big world banks. If they default there's a high likelyhood that a large list of banks has to write down significant debts. I believe they have several days (30-90) before the loans become some level of non-accrual and that will have a ripple effect on financials valueations. I was reading some stuff on it the past few days, most of it was over my head and what I somewhat understood is what I've just mentioned and its likely not going to be the most accurate thing you read today, but it sounds pretty influential for those involved in these assets and those that are fearful.