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NYSE Margin Debt Hits Fresh Post-Lehman High

Tyler Durden's picture




 

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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Mon, 02/07/2011 - 15:53 | 941182 FunkyMonkeyBoy
FunkyMonkeyBoy's picture

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.

Mon, 02/07/2011 - 16:01 | 941185 william the bastard
william the bastard's picture

Yet another bullish sentiment reading, yawn.<sar/>

Mon, 02/07/2011 - 15:54 | 941186 Rogerwilco
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as increasingly more investors continue to purchase securities on margin

"Investors"? LOL

Speculation =/= investment, just ask Q3 2008.

Mon, 02/07/2011 - 17:36 | 941505 SheepDog-One
SheepDog-One's picture

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'. 

Mon, 02/07/2011 - 15:57 | 941194 AccreditedEYE
AccreditedEYE's picture

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!

Mon, 02/07/2011 - 17:37 | 941508 SheepDog-One
SheepDog-One's picture

SAME deal right before the huge great depression plunge, everyone all-in on big margin!

Mon, 02/07/2011 - 15:57 | 941197 MrTrader
MrTrader's picture

Short 55.000 ES, long 16.000 1340 strike March puts. Trade of the year! ;=)

Mon, 02/07/2011 - 16:17 | 941256 topcallingtroll
topcallingtroll's picture

You got some calculations on that, bud? Or are you going to make us do it ourselves? Dont leave me hanging!

Mon, 02/07/2011 - 15:58 | 941199 Greater Fool
Greater Fool's picture

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.

Mon, 02/07/2011 - 15:59 | 941201 dryam
dryam's picture

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.

Mon, 02/07/2011 - 16:12 | 941245 topcallingtroll
topcallingtroll's picture

Hamy? Is that you?

Mon, 02/07/2011 - 16:15 | 941253 hack3434
hack3434's picture

Exactly! I'm selling my left kidney to buy NFLX.

Mon, 02/07/2011 - 16:01 | 941209 buzzsaw99
buzzsaw99's picture

Risk free trade imo. Borrow as much as you can and buy crAAPL.

Mon, 02/07/2011 - 16:02 | 941212 william the bastard
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Apple? The toy company?

Mon, 02/07/2011 - 16:06 | 941223 buzzsaw99
buzzsaw99's picture

NFLX too.

Mon, 02/07/2011 - 16:08 | 941233 Rusty Shorts
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Bernanke's qualifications.

http://www.youtube.com/watch?v=_biYsGMcs30

Mon, 02/07/2011 - 16:32 | 941296 wisefool
wisefool's picture

<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.

</ #2 >

Mon, 02/07/2011 - 16:11 | 941240 topcallingtroll
topcallingtroll's picture

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.

Mon, 02/07/2011 - 17:20 | 941446 Yen Cross
Yen Cross's picture

AKA Algos.

Mon, 02/07/2011 - 16:16 | 941242 hugovanderbubble
Mon, 02/07/2011 - 16:13 | 941249 A Man without Q...
A Man without Qualities's picture

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.

Mon, 02/07/2011 - 16:24 | 941272 gwar5
gwar5's picture

The domestic carry trade.

Mon, 02/07/2011 - 16:25 | 941276 system failure
system failure's picture

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.

Mon, 02/07/2011 - 16:31 | 941286 topcallingtroll
topcallingtroll's picture

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.

Mon, 02/07/2011 - 16:56 | 941367 Bam_Man
Bam_Man's picture

To me, she just looks like Lilly Munster.

And if at 5'5" Maria has a 34" waist, she is a far dumpier version.

Mon, 02/07/2011 - 16:33 | 941298 JW n FL
JW n FL's picture

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.

Mon, 02/07/2011 - 16:37 | 941310 buzzsaw99
buzzsaw99's picture

Enjoy the moist organic stock market flow.

Mon, 02/07/2011 - 16:48 | 941344 bigDaddy
bigDaddy's picture

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.

Mon, 02/07/2011 - 17:10 | 941420 Downtoolong
Downtoolong's picture

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.

 

 

Mon, 02/07/2011 - 18:38 | 941658 economists_do_i...
economists_do_it_with_models's picture

Good point by Downtoolong.

Mon, 02/07/2011 - 18:52 | 941694 walküre
walküre's picture

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?

Mon, 02/07/2011 - 22:09 | 942066 Quaderratic Probing
Quaderratic Probing's picture

Leverage is a GDP component now. The more we borrow the richer we are. Why didn't the stupids think of this long ago.........

Mon, 02/07/2011 - 22:21 | 942086 wisefool
wisefool's picture

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.

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