"Margin loans at high levels, client cash at low levels and account holders at the firm logging in frequently."
If you didn't know any better, you might think the above is yet another example of someone describing one of the dynamics driving China's self-feeding equity mania. After all, the country's "world-beating" rally has everyone from housewives to banana vendors opening stock trading accounts by the millions while piling on margin debt and trading so often that the computers tracking volume literally give up and shut themselves down.
Alas, the quote featured above is actually from TD Ameritrade CEO Fred Tomczyk and he's describing America's own legion of day-trading BTFDers who are apparently all-in at just the wrong time:
A broad look at the 6.5 million customer accounts at TD Ameritrade indicates that retail investors are "pretty fully invested" in stocks, the online brokerage's CEO said Thursday.
Fred Tomczyk cited several signs of this: margin loans at high levels, client cash at low levels and account holders at the firm logging in frequently. "It's usually a good indication that people are very engaged in the markets and watching their investments closely," he said on CNBC's " Squawk Box ."
But Tomczyk acknowledged the potential pitfalls of these trends and what they may portend for stocks. "I wouldn't be surprised if we have a correction here. We've had six [or] 6½ years of up markets here."
Ultimately then, the greater fool theory of investing whereby it doesn't matter how much you pay as long as the next guy is willing to pay more — the same greater fool theory of investing that China's regulators have warned has taken hold in Chinese stocks — may have just run out of fools, but we suspect that's fine as long as price-insensitive corporate management teams can issue new debt and plow the proceeds back into their own stock.