what will happen in a credit free market

rukaa · 1 what will happen in a credit free market Sun Aug 07, 2011 10:23 am

rukaa

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It is said that credit has gone down to 2b fro 8b. How many months it takes to reduce this level? If we go with this policy further, how long it will take to finish balance? Will credit free market create a better condition for trading..... ?

hawklk · 2 Re: what will happen in a credit free market Sun Aug 07, 2011 10:48 am

hawklk

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My opinion is that credit should be there. But it should not be given to every "Tom, Dick and Harry. " It must be controlled and monitored, like banks.
Stock Brokers should act more like banks. Can you get credit facilities just because you open a saving account or a current account. No. Not even a credit card. Bank give credit only if you are worthy of credit or have some strong security. Stock brokers also should do the same. Just because someone opens a account he or she should not be given credit. At least there should be one year of transaction and performance or some sort of security. This makes money flow in. When I invested 1.5mil 3 years ago, I was given an additional 1mil as credit. Though I did not use it, I should not be given that credit. Now that my investment has grown, may be I am worthy of credit. This is my view.

Market Sucker · 3 Re: what will happen in a credit free market Sun Aug 07, 2011 12:51 pm

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without credit share prices may be stagnant,due to low participation of traders.

StocksWatch · 4 Re: what will happen in a credit free market Sun Aug 07, 2011 2:45 pm

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hawklk wrote:My opinion is that credit should be there. But it should not be given to every "Tom, Dick and Harry. " It must be controlled and monitored, like banks.
Stock Brokers should act more like banks. Can you get credit facilities just because you open a saving account or a current account. No. Not even a credit card. Bank give credit only if you are worthy of credit or have some strong security. Stock brokers also should do the same. Just because someone opens a account he or she should not be given credit. At least there should be one year of transaction and performance or some sort of security. This makes money flow in. When I invested 1.5mil 3 years ago, I was given an additional 1mil as credit. Though I did not use it, I should not be given that credit. Now that my investment has grown, may be I am worthy of credit. This is my view.

That is very well said mate. Credit should be given to the people who can afford to pay it back without selling their shares off when the share prices go down. Do we often see people who get loans to build a house or buy a vehicle are selling that asset to pay back the loan?

Investor99 · 5 Re: what will happen in a credit free market Sun Aug 07, 2011 3:00 pm

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The brokers and investors need to comply with the T+3 (T+5) rule and SEC needs to monitor this so unregulated credit is not provided by the brokers.

duke · 6 Re: what will happen in a credit free market Sun Aug 07, 2011 4:35 pm

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There's always credit. Any credit should be backed by assets which can be used if the debtor cannot pay the debt.
Anyway some broker companies have already setup separate parties for margin trading. It has been happening throughout this year. The broker credit is already there but not wal buru credit as before.
The thing is you can't trust what the brokers do. That's why SEC should be tough.

ShareShares · 7 Re: what will happen in a credit free market Sun Aug 07, 2011 5:50 pm

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Growth in a credit free market would sustain, that would attract more investments. That would reflect corporate earnings. No room for gambling. Foreign funds would return. CSE would have a good reputation, dependable reliable stock market can sustain a steady upward momentum.

mark · 8 Re: what will happen in a credit free market Sun Aug 07, 2011 7:56 pm

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we all know that traders use debt for trading,investors use their own money,so who contribute the market volatility Question

.its traders who contribute mainly,so share prices are go up and down due to traders participation.........if traders dont have buying power,then share price may stagnant or may have little ups and downs without steep driving ups and downs,so traders dont participate market highly if they dont have buying power.....

so credit may be a good factor to share prices movements,so cant expect a credit free market in any atmosphere.

NightStalker · 9 Re: what will happen in a credit free market Sun Aug 07, 2011 8:41 pm

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StocksWatch wrote:

hawklk wrote:My opinion is that credit should be there. But it should not be given to every "Tom, Dick and Harry. " It must be controlled and monitored, like banks.
Stock Brokers should act more like banks. Can you get credit facilities just because you open a saving account or a current account. No. Not even a credit card. Bank give credit only if you are worthy of credit or have some strong security. Stock brokers also should do the same. Just because someone opens a account he or she should not be given credit. At least there should be one year of transaction and performance or some sort of security. This makes money flow in. When I invested 1.5mil 3 years ago, I was given an additional 1mil as credit. Though I did not use it, I should not be given that credit. Now that my investment has grown, may be I am worthy of credit. This is my view.

That is very well said mate. Credit should be given to the people who can afford to pay it back without selling their shares off when the share prices go down. Do we often see people who get loans to build a house or buy a vehicle are selling that asset to pay back the loan?

Agreeing with both of you on checking credit worthiness, disagree on that the broker should be the one making the decision.

Chanuque · 10 Re: what will happen in a credit free market Mon Aug 08, 2011 7:10 am

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I do not believe in credit restrictions; however, it should be monitored to avoid unnecessary garbage fillings of the entire portfolios and indebted massively ..

Soundchips · 11 Re: what will happen in a credit free market Mon Aug 08, 2011 7:53 am

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Chanuque wrote:I do not believe in credit restrictions; however, it should be monitored to avoid unnecessary garbage fillings of the entire portfolios and indebted massively ..

selling pressure goes up .... credit filled stocks continue to decline as there is no settlement at the end....