Margin debt at record levels - Is another stock market crash imminent?

[lukemg]

http://www.etf.com/docs/IfYouCan.pdf

Read this, setup a 3 fund portfolio, invest monthly, ignore the noise, hold your nerve....

[DimPrawn]

I'm surprised northern folk aren't richer.

BBC News - World record price paid for Belgian racing pigeon Bolt

All this funny money is going into non productive asset booms.

No investment, just speculation.

http://www.bbc.co.uk/news/entertainment-arts-24922106
http://www.thejewelleryeditor.com/20...p-for-auction/
http://www.thompson-morgan.com/world...-snowdrop-bulb
http://www.theatlantic.com/internati...r-fish/282826/

[Zero Liability]

"The record amount being borrowed by investors"

That makes no sense. If you don't have money to invest you borrow it?

Super doomed.

I think the problem is more that the investments to which the money is going are going to be exposed for shams once interest rates normalise, as were many "investments" during the more recent crash. It's funny how the current nascent boom, not even a few years after the previous one, is a rinse-repeat of it.

[BrilloPad]

Precisely...

Although in the good ole property speculation days, it was also known as a "100% mortgage". Buy a house with no deposit, don't bother letting it out - too much hassle, sell it a year later at a profit.

100% mortgage? Only for pussys. Those with balls went for 125%. Northern Rock? That ended well didn't it....

[centurian]

That makes no sense. If you don't have money to invest you borrow it?

Precisely...

Although in the good ole property speculation days, it was also known as a "100% mortgage". Buy a house with no deposit, don't bother letting it out - too much hassle, sell it a year later at a profit.

[scooterscot]

"The record amount being borrowed by investors"

That makes no sense. If you don't have money to invest you borrow it?

Super doomed.

[xoggoth]

Don't care anymore. Just less for the government to steal in inheritance tax or care home fees.

[Zero Liability]

QE just helps make the eventual explosions all the flashier.

[BrilloPad]

Its different this time. Due to QE.

[OwlHoot]

OTOH

2014-06-27 Why "Margin Debt" Is Meaningless In The New Shadow Banking Normal

[OwlHoot]

The record amount being borrowed by investors is a worrying sign for markets

‘Margin debt’ is the term used to describe money investors borrow from their stockbroker in order to buy shares. Naturally enough, when people feel bearish about markets, they tend not to borrow anything while, by the same token, the more bullish they feel the more they are inclined to borrow. As a result, margin debt levels are viewed by some as a way of gauging market sentiment.

Keen students of behavioural finance may not be too surprised to learn that, over time, margin debt levels have tended to be at their highest just before markets crash while, just before markets take off, investors tend to have net cash in their trading accounts. According to the New York Stock Exchange (NYSE), which publishes monthly data on the subject, net debt currently stands at record levels.

Now, in theory, investors could borrow money from their brokers and just let it sit in cash and the NYSE would still report that as a build-up of margin debt. To take this possibility out of the equation, therefore, a better way of considering the issue is to look at investors’ ‘free credit balance’, which – put simply – shows how much money they have borrowed specifically to buy shares.

This is what Advisor Perspectives has done in the chart below, where the red areas indicate a negative credit balance – and by extension bullish sentiment. ...

The article is six weeks old, granted, but by now the situation could be even more extreme.