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NYSE Margin Debt Hits Fresh Post-Lehman High
As of the end of December, total NYSE margin debt of $276.6 billion hit a fresh post-Lehman high, as increasingly more investors continue to purchase securities on margin (i.e., debt). The $2.5 billion rise from November margin levels is the highest since September 2008, and $103 billion from the market lows of March 2009. That said, margin fever still has a way to go and it could easily reach the June 2007 all time high of $381 billion, a little over $100 billion from here. Notable is that while investors had a negative net worth for the sixth month in a row, the differential declined modestly primarily due to a jump in credit balances in margin accounts which hit $148 billion: the highest since February 2009. As historically there is a decline in credit margin balances into the new year, we expect total free credit less margin debt to increase materially in January, especially as the expected January correction (in parallel with the market activity of early 2010) has not materialized, and bullish bets have to be increasingly funded on margin. More relevantly, should short-term interest rates continue to jump (we will have more to say on the recent move in 2 Years), margin interest may soon be forced higher, making life for those who use nothing but debt to fund stock purchases a little more problematic.
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I see no problems here, and neither should you. Logic and reason is no longer warranted or required in this 'market'. You'd be an absolute fool and a liar to say you see any kind of problem here.
Yet another bullish sentiment reading, yawn.<sar/>
"Investors"? LOL
Speculation =/= investment, just ask Q3 2008.
They'd be far better off trying to call a sunburned drunken guy in pink and green golf shorts at the Blackjack table in Vegas 'an investor'.
Leverage bitchez.
Hope you momo's enjoyed the ride up, cause the ride back down is gonna SUCK. C'mon Benny, jet us thru 2800!
SAME deal right before the huge great depression plunge, everyone all-in on big margin!
Short 55.000 ES, long 16.000 1340 strike March puts. Trade of the year! ;=)
You got some calculations on that, bud? Or are you going to make us do it ourselves? Dont leave me hanging!
Seemingly there are many people out there who have not yet received the memo to BTFD. This leads me to the conclusion that I had better keep B'ingTFD.
The more margin buying the better. Dow 36,000 bitchez!. People just don't get it; things like this always end well with everyone getting rich.
Hamy? Is that you?
Exactly! I'm selling my left kidney to buy NFLX.
Risk free trade imo. Borrow as much as you can and buy crAAPL.
Apple? The toy company?
NFLX too.
Bernanke's qualifications.
http://www.youtube.com/watch?v=_biYsGMcs30
<sarc on>
that is sexist. I am really getting sick of all this blame falling on the male of the species. (the Bernake, Dimon, Blankenfeild, Obama, Paulson, Timmy, Clinton, Bush). As an investor in the huffington post I need to provide the femine balance to beatlejuice.
My name is Murphy Brown. I got pregnant by a guy named Tyler Durden in gradeshool and the problem with this economy is 2 fold. #1. There is a nice McMansion there for us to fill with chinese crap if you were not such a debt adverse momma's boy with a nintendo. When the child's real daddy built that case shiller house dodging child support I did not have these treasury bill lovehandles. Those are just for you basement boy. Grow up like I did! Stop raging against WOW princesses like Meg and Blythe. You just like them because they are smart.
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Margin calls are a bitch. Unless you are a computer playing fully hedged arbitrage games to squeak out five percent over risk free returns you should not play with margin. Take it from this early middle aged retail speculator. Got my fingers burned a couple of times before getting smart. If you got the computing and financial acumen to find and fully hedge those inefficiencies out there then more power to you.
AKA Algos.
"Esto va a petar",
This gonna blow up....
http://www.financialchat.com/sites/default/files/PAPELCOMERCIALVSBALTICDRYINDEX1.jpg
This must be the record for the quickest bubble the Fed has created.
And Ben saw every thing that he had made, and, behold, it was very good.
The domestic carry trade.
I thought the Goverernment, along with the Fed, were leading by example in better fashion than the evidence provides with marginal debt. Its obvious that these people investing on margin, had better step up to the plate with interest rates so low. I am gravely disappointed, pun intended.
Hey Maria Bartiromo is on the NYSE floor and Dr. Emmit just measured her waist size. She is a 34 and 5'5" for all you potential Maria stalkers out there. I will content myself with loving her from afar.
To me, she just looks like Lilly Munster.
And if at 5'5" Maria has a 34" waist, she is a far dumpier version.
why wouldnt everyone trade thier stock to themelves, leveraged... take the cash off the table and go long pm's?
If the stock market blows up, Ben has to cover... thusly you ride the flight to safety and the bail out waves.
Enjoy the moist organic stock market flow.
Using the data that is available since 1960, it is not the absolute level that is of concern, it is the y/y change. Usually a decline of 20%+ in the y/y margin level is a decent buying opportunity, whereas a 60%+ gain is a sign to look to sell. Last time at 60% was June '07 - and below 21% was early in '09.
I'm loving selling to these leveraged speculators right now. Just let another chunk of stocks go today.
I wonder who they plan to sell to when it's time to take profit? I hope for their sake they aren't planning to sell to me.
Good point by Downtoolong.
Who other than ZH keeps track of this?
Good work.
Recovery on smoke and mirrors.
GM stuffing dealers with trucks nobody wants to buy, creating the illusion of higher demand.
Government stuffing banks (dealers) with cheap credit to buy stocks (their own) and create the illusion of a solid stock market.
What could possibly go wrong?
Leverage is a GDP component now. The more we borrow the richer we are. Why didn't the stupids think of this long ago.........
Real Estate commisions are included in the GDP, helped us out alot during the last ten years. Litigating the rocket dockets of robosigner forclosures should move in to help us through the next 10.