Word: stock
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Dates: during 1990-1999
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...didn't leave us feeling like antiques collectors. There is very little that is practical about the Volkswagen Beetle. But like the great cars of yore, it has a personality that lets buyers say, "Look at me!" And so dealers haven't been able to keep them in stock. "The new Beetle fails at most categories," says Nissan's Hirshberg. "The only thing it doesn't fail in is drop-dead charm...
...growth is a matter for debate. Sales have increased for three years running, with Kinkade's popularity the driving force. But Kinkade has yet to make a significant dent on the East Coast, and his harshest critics may be on Wall Street. While sales have held steady, Media Arts' stock price dropped more than 60% since the beginning of the year over concerns that interest may have peaked. Says Shawn Milne, an analyst at Hambrecht & Quist: "This thing came raging out of the gate, and they're not crushing numbers anymore, so there's always the worry that...
Money managers call it the doomsday scenario, forseeing an event that could wipe out investor portfolios and wreak havoc on the stock market. The danger stems not from new financial woes erupting abroad but from something happening here. It is the explosive growth in margin debt--loans Americans take out to buy stocks. Margin debt has shot up to $180 billion at midyear, a 25% increase in just six months and by far the most ever recorded. It now accounts for 1.2% of the stock market's total capitalization...
When buying on margin, an investor who wants, say, $5,000 of AOL shares need put up only 50% of his own money. The rest ($2,500) is borrowed from a broker. It's a tantalizing deal. If AOL's stock moves up, you make twice as much profit as if you had paid all cash. If the stock dives, though, that leverage works in reverse. But few investors seem to focus on the downside...
...could margin investing turn cataclysmic? Here's the scenario most feared--and most plausible. The combination of rising interest rates, lofty P/E ratios and some unexpected Y2K problems in the period ahead could jolt the market into a major sell-off. Internet stocks would be most vulnerable, but the damage could spread to other equities as well. If a stock bought on margin falls 30%, the stockbroker typically grabs the phone and utters the dread words "margin call." It means you've lost so much money on the stock you bought with borrowed funds that you have to dig into...