A Sign of the Times? Message from e-Trade
Q: Your brokerage firm is furnishing this document to you to provide some basic facts about purchasing securities on margin, and to alert you to the risks involved with trading securities in a margin account. Before trading stocks in a margin account, you should carefully review the margin agreement provided by your firm. Consult your firm regarding any questions or concerns you may have with your margin accounts.
A:
But just about all of that was already
covered in the customer agreement when opening the account.
I just bought about $500,000 of stock in the past few days
and I'm $400,000 on margin.
It seems all the talk about recession, margin calls,
and "wait another 3 months before buying" reaches the
loudest level whenever the Wall Street
want to buy stocks for themselves.
Notice the guy from Morgan Stanley Dean Witter on CNBC
today telling everyone that a recession is coming.
You know that they're really buying behind the scenes
when that happens.
Here are the signs that tell you when to buy and sell:
When to sell:
1. When a CEO gets on CNBC and tells everyone, "Things are going
great!"
2. When an analyst or mutual fund manager on CNBC recommends any
stock as a buy and the stock trades significantly greater
than net tangible book value.
When to buy:
1. When an analyst or mutual fund manager on CNBC tells everyone
to sell or avoid and the stock trades at anything less than
net tangible book value, unless net tangible book value
is less than zero of course, usually in cases where the company
has too much debt and will probably go bankrupt.
2. Chances are that if a stock is a real buy, it will never get
mentioned on the news.
Just for once I'd like to hear a CEO on CNBC say:
"Things are going down the toilet and our stock is
grossly overvalued."
An honest appraisal would sure be refreshing once in a while.