GINGER 1978

Raising Margin Requirements May Spike Oil Prices Higher

Remember the internet stock crash of 2000-2001? The margin requirement was changed by NYSE member firms on various internet stocks. The requirements varied. Some companies required investors to put up 100% cash for purchase and others something less and others got by with the regular margin requirment. The mistake by all was not to recognize upon first notification that the requirements had changed, that the securities should be sold and then shorted.

Raising Margin Requirements May Spike Oil Prices Higher

Raising margin requirements requires more capital. The long term market value of the asset or whatever it is that requires more capital after than before will always decline as the market will reposition capital to where the capital is treated the best. Look out below.