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margin debt

Valuation Bonanza – March 2014

By |2014-03-11T16:33:30-04:00March 11th, 2014|Markets, Stocks|

Margin Debt New Record (FINRA) Stock Margin Accounts Net Worth (total margin debt minus free cash balances and credit) Finally Surpasses Dot-com Peak Rate of Change In Net Worth Total Margin Debt Scaled to Nominal GDP Shiller CAPE Tobins Q (market value of corporate equities divided by corporate net worth) Corporate Equities Scaled to GDP Does any of this scream [...]

The Year of Leverage

By |2014-01-28T17:38:23-05:00January 28th, 2014|Economy, Federal Reserve/Monetary Policy, Markets, Stocks|

The theme of stock margin debt and its obvious correlation to QE episodes continued into December. Margin debt levels are at record highs, but more importantly investor net worth in the aggregate has finally closed in on the dot-com levels. While just a bit short of the most extreme month of the dot-com mania, margin debt and negative net worth [...]

Finally On The Radar

By |2014-01-10T17:12:44-05:00January 10th, 2014|Markets|

While the applications of monetary policy are clearly missing their mark on "Main Street", there is the other side of the equation where the leading edge of psychology is firmly planted. Extreme levels of pretty much everything, from stock buybacks and investor sentiment to margin debt and leverage, have caught the attention of policymakers for good reason. Click here to sign [...]

Stealing From Tomorrow

By |2013-12-01T23:22:13-05:00December 1st, 2013|Economy, Federal Reserve/Monetary Policy|

Most of the nation's major retailers are now open on Thanksgiving, providing a convenient excuse for millions to get away from that irritating relative or family friend that you see only on holidays. You still have to put up with their bad jokes, their insistence on starting family debates about politics or religion and stories you've heard a million times [...]

The Ostrich Strategy

By |2013-11-22T16:07:39-05:00November 22nd, 2013|Markets|

Given recent and growing consternation about stock prices and financial assets, it has been heartening to some that so many people are now talking about bubbles. The logic here is that if everyone “knows” there is a bubble there simply cannot be one. Even Robert Shiller, newly minted Nobel Laureate, was pulled into the discussion. With the recent creep upward [...]

What Could Possibly Go Wrong?

By |2013-10-27T16:50:07-04:00October 27th, 2013|Federal Reserve/Monetary Policy|

The US stock market, now joined by most of the rest of the world, continues its one way march higher. Those who focus on fundamentals, economic or stock market, have been scratching their heads all year for an explanation, but the reality is that there is no fundamental reason for the 20%+ run this year. Earnings growth has been lackluster [...]

What A Market Top Might Look Like

By |2013-10-02T16:35:49-04:00October 2nd, 2013|Markets|

Despite the title of this post, I won’t presume to call a market top for anything, particularly in an environment rife with artificiality. Asset bubbles include a regular feature of going a long way past any even semi-rational level of departure, before turning on some wholly unexpected event or parameter. However, if you were brave/foolish enough to look for one [...]

Everything Has Happened Before, Con’t

By |2013-07-31T15:21:26-04:00July 31st, 2013|Markets|

I have plotted a chart of the S&P 500 (taken from the research of Robert Shiller) for a particular period in time. It shows the sometimes tenuous relationship between stock prices and underlying earnings. Prices and earnings largely behave as you would expect in the first half of the chart above – prices anticipating changes in the earnings environment (economy) [...]

Investor Complacency Shifts

By |2013-07-30T15:28:53-04:00July 30th, 2013|Markets|

Given the volatility in bond markets and the introduction of the word “taper” it is little surprise that equity investors increased the equity or free cash in their stock accounts. Taking a little off the rapid rise in margin debt usage, the high level of complacency and extended leveraged positions was due for a re-allocation as it was. The last [...]

Greenspan Without Style

By |2013-05-29T14:44:08-04:00May 29th, 2013|Federal Reserve/Monetary Policy, Markets, Stocks|

When I mentioned that Greenspan’s market has persisted long after his words fell from memory, that extended to overextended stock investors as well. By almost any measure, Ben Bernanke has outdone the “record” of his predecessor, yet he has so few quotable lines outside of those really bad predictions during the runup to the 2008 panic. Greenspan will be forever [...]

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