That margin debt kept rising into the last month of last year is no surprise: after all, with a market that was destined to follow the Fed’s balance sheet through thick and thin, there was “no risk” – just remember what David Tepper said: no taper is bullish, a taper is even more bullish as it means the economy is recovering and 20x P/E multiples are just around the corner. Sure enough as reported earlier by the NYSE, margin debt rose by another $21 billion in December to an all time high of $445 billion, and up 29% from a year ago – incidentally almost identical to the increase in the S&P.
This much should come as no surprise to anyone.
However what may come as a shock to many is that the other key metric provided by the NYSE – total net free credit – also known as investor net worth (calculated as Free Credit Cash plus Credit Balances in Margin Accounts less Margin Debt) just dropped to a whopping $148 billion, double where it was in February 2013, and double where it was during the peak of the last stock (and credit and housing) bubble, when it rose to a then-all time high of $79 billion in June 2007. It was all downhill from there.