Sentences with phrase «margin debt»
Margin debt refers to the money borrowed from a brokerage firm to buy stocks or other investments. It is the debt amount that an investor owes to the brokerage firm when they use borrowed funds to make investment purchases. Full definition
So the long - term increase in margin debt certainly has some «structural» features to it.
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It's 45 % greater than the amount of margin debt outstanding at the peak of the 2007 bubble.
Additionally, I have never considered investing with margin debt.
When margin debt peaks and then begins reversing itself, though, severe stock declines have followed.
Essentially, higher margin debt means the risks to the downside are increasing.
Look how the market immediately crashed nearly 23 % when margin debt went vertical in 1987.
I used margin debt before too — in 1999.
When margin debt spikes, it's sometimes followed by a sharp market decline.
The broker charges you interest and has the right to force you to come up with more collateral, or even pay off the entire margin debt balance, at a moment's notice.
Since we are talking about money when talking about margin, why don't we compare margin debt with base money?
Public company valuations were at all - time highs in relation to earnings, driven in part by investor enthusiasm and soaring margin debt.
Not surprised with the pull back as there have been several distribution days which are a negative on the stock market along with large margin debt and high optimism.
The record level of margin debt is an indication to me that we are closer to the end of this run in the equities market than the beginning.
Combine this with rising interest rates, high margin debt, age of this bull market and lack of fear a potential bear market might not be that far off.
Additionally, I have never considered investing with margin debt.
According to NIA, after the dot - com bubble had burst, the NYSE margin debt in nominal terms rose from its low of $ 130.21 billion in 2002 to a high of $ 381.37 billion in 2007 — that is a rise of 193 %.
NYSE margin debt for May was posted.
Many point to higher levels of margin debt as indicating a potential market downturn, but competi...
Another red flag the market is raising is growth in margin debt levels among companies listed on the New York Stock Exchange.
The NYSE margin debt rose by $ 42.22 billion about 8.863 % in the past two months — and by 13.081 % or a total of $ 62.317 in the past three months!
A new high in margin debt doesn't mean the stock market has peaked or a -LSB-...]
Tweets about margin debt new high Déjà Vu All Over Again We went through this exact same exercise a year ago.
Nevertheless, benchmark progress has been insubstantial since margin debt peaked.
I know we are at all time highs of margin debt which in the past has signaled market tops.
Perhaps ominously, all three circumstances currently exist, with margin debt at an all - time peak and IPOs at their highest level since 2007.
This is certainly no assurance of the market outcome in the present instance, but in the context of an overvalued, overbought, overbullish market with margin debt near record highs, it's also not a feature of the present environment that we're inclined to overlook.
So far, real S&P 500 growth has managed to hold up since margin debt peaked a little more than a year ago.
The following scatter plot relates monthly S&P 500 Index return to same - month change in NYSE margin debt over the available sample period.
But because the equities market is at such high levels with a record margin debt, this combination along with the shift in investor sentiment could lead to a significant and dramatic sell - off.
Stock Market Leverage: How much margin debt is too much, that it helps create systemic risk?
Posted in Austrian Economics, Behavioral economics, Contrarian investment, tagged Margin Debt on June 3, 2013 4 Comments»
As of last week, the market remained characterized by an overvalued, overbought conditions, complicated by extremely high leverage through margin debt, and record bullishness among institutional investors, according to the Barron's Big Money Poll.
The one thing that we do know is that significant margin debt decreases tend to precede massive leverage unwinding alongside severe stock price depreciation.
High count on distribution days, High margin debt reading and great optimism do not make great bullish arguments...
Posted in Austrian Economics, Behavioral economics, Contrarian investment Tagged Margin Debt 4 Comments
With sentiment indicators buoyant, margin debt close to historic levels and indices trading close to their 2 standard deviation based on forward PE over five years, investors need to be mindful that a correction can easily unfold.
Other considerations that have historically been important would persist independent of our various concerns about profit margins, Fed - induced yield - seeking, covenant - lite leveraged loan issuance, equity margin debt, economic deceleration, and so forth.
The unsystematic variations of average returns across quintiles undermine belief that variations in margin debt reliably predict stock market returns.
The Pearson correlation for the two series is 0.39 and the R - squared statistic is 0.15, indicating that monthly change in margin debt explains 15 % of the same - month movement in the S&P 500 Index.
Interestingly, the S&P 500 actually peaked one month before margin debt did in 1987.
Surprisingly, the nominal NYSE margin debt reached bottom in 2009 at $ 173.3 billion and since has risen to the current highs of $ 507.15 billion, which is an all time increase of 193 %!
At $ 551 billion, it's double the amount of margin debt outstanding at the peak of the tech bubble in 2000.
Great post and interesting point regarding margin debt.
I also find margin debt adjusted for inflation as more informative than as precentage of market cap, but thats just my opinion.
They are trying to be more liberal about liquidating margin debt.
If you buy a US stock in a USD account without the cash to cover it, you will end up with USD margin debt.
You're probably betting that Facebook (FB) and Google / Alphabet (GOOG) have forged a new economic paradigm where credit cycles, business cycles and margin debt deleveraging are irrelevant.
Margin debt reversal accompanied stock price disintegration in 2000's «New Economy.»