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After the market closed on Friday, the major brokerage houses announced that they are increasing their margin requirements. A margin account is essentially a credit account, backed by the brokerage house. If the stock goes up, you and the brokerage house make money. If the stock goes down, you have to make up the difference. If you can't, the brokerage house has to. There are a lot of people out there buying stock on margin (credit). In 1929, the margin was 10%. That means that for every dollar you have in your account, you could buy ten dollars worth of stock. When the market crashed, people didn't just lose their dollar, they lost ten dollars. i.e. they owed more than they had.
On Monday, they are either going to have to prove their credit worthiness or send in more money. If they can't, or don't, the brokerage house will sell the stocks. They have no choice. It's either that or run the risk themselves. They not going to do that. Brokerage houses aren't in the risk business, they're in it for the money.
The saying here is "You can't tell who's swimming naked until the tide goes out." Well, the tide is going out Monday morning. Look for a BIG sell-off.
On Monday, they are either going to have to prove their credit worthiness or send in more money. If they can't, or don't, the brokerage house will sell the stocks. They have no choice. It's either that or run the risk themselves. They not going to do that. Brokerage houses aren't in the risk business, they're in it for the money.
The saying here is "You can't tell who's swimming naked until the tide goes out." Well, the tide is going out Monday morning. Look for a BIG sell-off.
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