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Margin Debt Soars To New Record; Investor Net Worth Hits Record Low

 

The correlation between stock prices and margin debt continues to rise (to new records of exuberant “Fed’s got our backs” hope) as NYSE member margin balances surge to new record highs. Relative to the NYSE Composite, this is the most “leveraged’ investors have been since the absolute peak in Feb 2000. What is more worrisome, or perhaps not, is the ongoing collapse in investor net worth – defined as total free credit in margin accounts less total margin debt – which has hit what appears to be all-time lows (i.e. there’s less left than ever before) which as we noted previously raised a “red flag” with Deutsche Bank. Relative to the ‘economy’ margin debt has only been higher at the very peak in 2000 and 2007 and was never sustained at this level for more than 2 months. Sounds like a perfect time to BTFATH…

 

Record negative investor net worth…

 

and record high margin relative to stocks… (lower pane)

 

and record high margin debt relative to GDP (and rising at a near record pace which has historically signalled a slowing)…

 

should be met with BTFATH…

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