Just had a chat with a stockbroker friend of mine. She told me that a big part of the earthshaking drops we've been feeling the past few days are from margin calls. Those who gambled and bought shares on margin (in essence, credit) are being told to pay up and are being forced to dump holdings at any price to try to come up with what they owe.
Not to say that prices would be holding without these types, they wouldn't. It's just that they're contributing to the current, widespread volatility. The market, I'm told, will settle down a bit once the margin holdings work through the system. ...so I'm told.
I hope your friend is right. I have some money invested in strictly blue-chip type shares and have already lost 20% of my portfolio.
ReplyDelete