how much did margin loans push us down, page-2

My thoughts exactly Meshachfire.

I have had a margin loan of some sort for about a decade and have also been indirectly involved with the FP industry who push them. However, over the last few years I have come to realise that margin loans are pigs. Fistly margin loans on individual stocks and short-selling cannot operate in the same market, it's just not a fair fight. Secondly margin loans are designed for the financier and adviser not for the borrower. What use is a loan if they effectively change the amount they will lend on a daily basis and can pull the borrowing on an individual stock at any time with 24hrs notice given to the borrower.

I believe we will see more margin selling on Monday and Tuesday including on TZN. There will be some investors who have been propping up their loans with additional cash, who will have now lost the battle with the slumps on Thursday and Friday. In relation to Friday's plunge the calls will be made on Monday and if they can't make good with extra cash or security the selling will be done on Tuesday.

If the price of TZN is driven down too much further by forced selling I may look to quit a position on another stock (not subject to margin selling) to top up on TZN. It depends whether any buyers emerge to help prop it up. Soon you might be able to pick up TZN based on a PE valuation of Angas alone.

In the current climate I have also been considering risks with TZN and the only worst case sceanrio I could see is if their Zinc supply contract to Korea was cancelled due to a big drop in demand for Hynudai's (or whatever they use it for over there). On the flip side spending could always be curtailed on Tala Hamza for a period of time if they had any short term supply contract problems.

Glen Stevens handed out the last parachutes earlier last week and for those (like me) that didn't take one we just have to hope that the G7 crew can land this burning wreck with as few casualties as possible. One can guess the fate of those who jump out (or are pushed out) now!